10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009

COMMISSION FILE NUMBER: 0-29302

TLC VISION CORPORATION

(Exact name of registrant as specified in its charter)

NEW BRUNSWICK, CANADA	980151150
(State or jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)
5280 SOLAR DRIVE, SUITE 300	L4W 5M8
MISSISSAUGA, ONTARIO	(Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code: (905) 602-2020

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes o No

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). o Yes o No

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b(2) of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o	Non-accelerated filer o	Smaller reporting company þ
		(Do not check if a smaller reporting company)

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b(2) of the Exchange Act). o Yes þ No

     As of November 13, 2009 there were 50,565,219 of the registrant’s Common Shares outstanding.

INDEX

PART I. FINANCIAL INFORMATION	3
Item 1. Interim Consolidated Financial Statements (unaudited)	3
Consolidated Statements of Operations for the three and nine months ended September 30, 2009 and 2008	3
Consolidated Balance Sheets as of September 30, 2009 and December 31, 2008	4
Consolidated Statements of Cash Flows for the nine months ended September 30, 2009 and 2008	5
Notes to Interim Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3. Quantitative and Qualitative Disclosures about Market Risk	30
Item 4. Controls and Procedures	30
PART II. OTHER INFORMATION	31
Item 1. Legal Proceedings	31
Item 1A. Risk Factors	31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3. Defaults Upon Senior Securities	31
Item 4. Submission of Matters to a Vote of Security Holders	31
Item 5. Other Information	31
Item 6. Exhibits	31
Signatures	33
EX-10.1
EX-10.2
EX-10.3
EX-31.1
EX-31.2
EX-31.3
EX-31.4
EX-32.1
EX-32.2
EX-32.3
EX-32.4

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PART I. FINANCIAL INFORMATION

ITEM 1. INTERIM CONSOLIDATED FINANCIAL STATEMENTS

TLC VISION CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED) (In thousands except per share amounts)

	THREE MONTHS ENDED						NINE MONTHS ENDED
	SEPTEMBER 30,						SEPTEMBER 30,
	2009			2008			2009			2008
Revenues:
Refractive centers	$	22,197		$	28,516		$	85,145		$	126,540
Doctor services		22,216			22,634			70,264			73,225
Eye care		7,212			6,384			24,097			22,221
Total revenues		51,625			57,534			179,506			221,986
Cost of revenues (excluding amortization expense shown below):
Refractive centers		17,510			22,245			65,140			89,011
Doctor services		16,371			16,618			52,462			53,439
Eye care		3,491			2,596			11,413			10,109
Total cost of revenues (excluding amortization expense shown below)		37,372			41,459			129,015			152,559
Gross profit		14,253			16,075			50,491			69,427
General and administrative		5,679			6,848			18,007			22,201
Marketing and sales		4,948			9,448			17,285			31,308
Amortization of intangibles		583			799			1,748			2,432
Impairment of goodwill, intangibles and other long-term assets		496			1,500			496			1,500
Other expense (income), net		6,471			(147	)		14,617			(703	)
		18,177			18,448			52,153			56,738
Operating (loss) income		(3,924	)		(2,373	)		(1,662	)		12,689
Interest income		—			122			168			548
Interest expense		(4,118	)		(2,577	)		(9,681	)		(7,467	)
Earnings from equity investments		230			467			1,022			365
(Loss) income before income taxes		(7,812	)		(4,361	)		(10,153	)		6,135
Income tax expense		(176	)		(218	)		(660	)		(950	)
Net (loss) income		(7,988	)		(4,579	)		(10,813	)		5,185
Less: Net income attributable to noncontrolling interest		2,057			2,132			7,415			8,024
Net loss attributable to TLC Vision Corporation	$	(10,045	)	$	(6,711	)	$	(18,228	)	$	(2,839	)
Net loss per share attributable to TLC Vision Corporation:
Basic	$	(0.20	)	$	(0.13	)	$	(0.36	)	$	(0.06	)
Diluted	$	(0.20	)	$	(0.13	)	$	(0.36	)	$	(0.06	)
Weighted average number of common shares outstanding:
Basic		50,565			50,345			50,550			50,292
Diluted		50,565			50,345			50,550			50,292

See the accompanying notes to unaudited interim consolidated financial statements.

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TLC VISION CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands)

	(UNAUDITED)
	SEPTEMBER 30,			DECEMBER 31,
	2009			2008
ASSETS
Current assets:
Cash and cash equivalents	$	13,153		$	4,492
Accounts receivable, net		16,517			16,870
Prepaid expenses, inventory and other		11,889			14,214
Total current assets		41,559			35,576
Restricted cash		1,000			—
Investments and other assets, net		9,279			11,694
Goodwill		26,755			28,570
Other intangible assets, net		8,252			10,628
Fixed assets, net		43,227			50,514
Total assets	$	130,072		$	136,982
LIABILITIES
Current liabilities:
Accounts payable	$	14,094		$	17,897
Accrued liabilities		24,444			28,076
Current maturities of long-term debt (including debt in default of $100.1 million and $82.7 million at September 30, 2009 and December 31, 2008, respectively)		106,644			89,081
Total current liabilities		145,182			135,054
Long-term debt, less current maturities		14,891			16,500
Other long-term liabilities		6,772			5,444
Total liabilities		166,845			156,998
STOCKHOLDERS’ DEFICIT
TLC Vision Corporation stockholders’ deficit:
Common shares, no par value; unlimited number authorized		339,809			339,112
Option and warrant equity		745			745
Accumulated other comprehensive loss		—			(1,545	)
Accumulated deficit		(391,886	)		(373,658	)
Total TLC Vision Corporation stockholders’ deficit		(51,332	)		(35,346	)
Noncontrolling interest		14,559			15,330
Total stockholders’ deficit		(36,773	)		(20,016	)
Total liabilities and stockholders’ deficit	$	130,072		$	136,982

See the accompanying notes to unaudited interim consolidated financial statements.

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TLC VISION CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED) (In thousands)

	NINE MONTHS
	ENDED SEPTEMBER 30,
	2009			2008
OPERATING ACTIVITIES
Net (loss) income	$	(10,813	)	$	5,185
Adjustments to reconcile net (loss) income to net cash from operating activities:
Depreciation and amortization		11,955			14,845
Impairment of goodwill, intangibles and other long-term assets		496			1,500
Earnings from equity investments		(1,022	)		(365	)
Net gain on sales and disposals of fixed assets		(303	)		(397	)
Loss (gain) on business divestitures		1,594			(139	)
Non-cash compensation expense		675			1,101
Write-down of inventory		720			—
Other		595			459
Changes in operating assets and liabilities, net of acquisitions and dispositions:
Accounts receivable		(117	)		(1,016	)
Prepaid expenses, inventory and other current assets		1,164			(963	)
Accounts payable and accrued liabilities		659			1,847
Cash provided by operating activities		5,603			22,057
INVESTING ACTIVITIES
Purchases of fixed assets		(1,259	)		(2,785	)
Proceeds from sales of fixed assets		534			774
Distributions and loan payments received from equity investments		1,564			1,682
Acquisitions and equity investments		(5,038	)		(8,332	)
Divestitures of businesses and other investments		2,181			1,128
Other		(61	)		(72	)
Cash used in investing activities		(2,079	)		(7,605	)
FINANCING ACTIVITIES
Restricted cash (increase) decrease		(1,000	)		1,101
Principal payments of debt financing and capital leases		(4,024	)		(25,818	)
Proceeds from debt financing		17,971			13,784
Capitalized debt costs		(78	)		(534	)
Distributions to noncontrolling interests		(7,754	)		(7,724	)
Proceeds from issuances of common stock		22			309
Cash provided by (used in) financing activities		5,137			(18,882	)
Net increase (decrease) in cash and cash equivalents during the period		8,661			(4,430	)
Cash and cash equivalents, beginning of period		4,492			12,925
Cash and cash equivalents, end of period	$	13,153		$	8,495

See the accompanying notes to unaudited interim consolidated financial statements.

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TLC VISION CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED INTERIM
CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2009 (Unaudited)
(Tabular amounts in thousands, except per share amounts)

1. BASIS OF PRESENTATION

     The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements. The unaudited interim consolidated financial statements included herein should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2008 filed by TLC Vision Corporation (“Company” or “TLCVision”) with the United States Securities and Exchange Commission (“SEC”). In the opinion of management, all normal recurring adjustments and estimates considered necessary for a fair presentation have been included. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2009. The consolidated financial statements as of December 31, 2008 and unaudited interim consolidated financial statements for the three and nine months ended September 30, 2009 and 2008 include the accounts and transactions of the Company and its majority-owned subsidiaries that are not considered variable interest entities (“VIEs”) and all VIEs for which the Company is the primary beneficiary. All significant intercompany accounts and transactions have been eliminated.

     A significant portion of the Company’s revenues come from owning and operating refractive centers that employ laser technologies to treat common refractive vision disorders such as myopia (nearsightedness), hyperopia (farsightedness) and astigmatism. Refractive centers, which is a reportable segment, includes the Company’s 70 centers that provide corrective laser surgery, of which 62 are majority owned and 8 centers are minority owned. In its doctor services business, the Company furnishes doctors and medical facilities with mobile or fixed site access to refractive and cataract surgery equipment, supplies, technicians and diagnostic products, as well as owns and manages single-specialty ambulatory surgery centers. In its eye care business, the Company primarily provides franchise opportunities to independent optometrists under its Vision Source^® brand.

     In the third quarter of 2009, the Company adopted changes issued by the Financial Accounting Standards Board (“FASB”) to the authoritative hierarchy of GAAP. These changes establish the FASB Accounting Standards Codification (“Codification” or “ASC”) as the source of authoritative accounting principles recognized by the FASB to be applied in the preparation of financial statements in conformity with GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP. The FASB will no longer issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts; instead the FASB will issue Accounting Standards Updates. These changes and the Codification itself do not change GAAP other than the manner in which new accounting guidance is referenced. The adoption of these changes had no impact on the Company’s financial statements.

     Effective January 1, 2009, the Company adopted the FASB’s guidance (ASC 810) regarding presentation of noncontrolling interests, previously referred to as minority interest, which has been changed on the Consolidated Balance Sheets to be reflected as a component of total stockholders’ deficit and on the Consolidated Statements of Operations to be a specific allocation of net income (loss). Amounts reported or included in prior periods remain unchanged, but have been revised to conform with the current period presentation. Loss per share continues to be based on losses attributable to TLC Vision Corporation.

     Effective January 1, 2009, the Company adopted the FASB’s guidance (ASC 815) intended to improve transparency in financial reporting by requiring enhanced disclosures of an entity’s derivative instruments and hedging activities and their effects on the entity’s financial position, financial performance, and cash flows. The guidance encourages, but does not require, comparative disclosures for periods prior to its initial adoption. The Company’s adoption of the guidance did not have a material impact on the financial statements.

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     During the second fiscal quarter of 2009, the Company adopted the FASB’s guidance (ASC 855) establishing general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued. The adoption of the FASB’s guidance did not have a material impact on the Company’s consolidated financial position, results of operations, or cash flows. The Company performed an evaluation of subsequent events through November 16, 2009, the date which the financial statements were issued, and has made disclosures of all material subsequent events in the Notes to the Unaudited Interim Consolidated Financial Statements.

2. LIQUIDITY

     The Company relies on the following sources of liquidity to continue to operate as a going concern: (i) cash and cash equivalents on hand; (ii) cash generated from operations; (iii) borrowings under the Company’s revolving credit facility; (iv) net proceeds from asset sales; and (v) access to the capital markets. The Company’s principal uses of cash are to provide working capital to fund its operation and to service its debt and other contractual obligations. The changes in financial markets during 2008 limited the ability of companies such as TLCVision to access the capital markets. The economic recession in the United States continues to impact the Company’s operations, resulting in a decline in the demand for refractive surgery and financial performance. The Company incurred losses attributable to TLC Vision Corporation of $18.2 million for the nine months ended September 30, 2009 compared to $2.8 million for the nine months ended September 30, 2008. As a result, the Company’s liquidity continued to be significantly constrained during 2009.

     Beginning in early 2008, in response to the deteriorating economic environment, the Company implemented a series of initiatives to reduce its costs of operation to levels commensurate with the new lower level of refractive procedures anticipated in fiscal 2008 and 2009. The Company continues to evaluate and implement cost reduction and cash generation initiatives, including the sale of surplus assets and the closure of underperforming refractive centers/mobile refractive routes. During the nine months ended September 30, 2009, the Company closed four majority-owned refractive centers, which performed approximately 400 and 1,000 refractive procedures during the nine months ended September 30, 2009 and 2008, respectively. During the quarter ended September 30, 2009, the Company divested one majority-owned and two minority-owned ambulatory surgical centers for a combined net sale price of $2.2 million. The divested ambulatory surgical centers performed 5,500 and 7,500 surgical procedures during the nine months ended September 30, 2009 and 2008, respectively.

     Due to the decline in customer demand during the trailing twelve month period, and the resulting decline in sales, the Company’s deteriorating financial performance resulted in the Company’s inability to comply with its primary financial covenants under its Credit Facility as of December 31, 2008, March 31, 2009, June 30, 2009 and September 30, 2009. Furthermore, the Company ceased making principal and interest payments under the Credit Facility subsequent to June 30, 2009.

     As a result of the inability to comply with the primary financial covenants, the Company has received from its lenders numerous waivers, consents and amendments to the Credit Agreement during the nine months ended September 30, 2009. All waivers, consents and amendments to the Credit Agreement are filed with the SEC as exhibits to Current Reports on Form 8-K. The following were dated during the quarter ended September 30, 2009:

• On September 10, 2009, the Company announced that it obtained from its lenders a Limited Waiver and Amendment No. 5 to the Credit Agreement, dated as of September 8, 2009, which among other things, provided a limited waiver through September 30, 2009 of specified defaults and provided that the lenders would, until October 1, 2009, forbear from exercising their rights arising out of the non-payment of certain principal, interest and other payments previously due.

• On October 1, 2009, the Company announced that it had secured from its lenders an extension to October 13, 2009 of the previously announced Limited Waiver and Amendment No. 5 with respect to its Credit Facility that expired on September 30, 2009, along with a forbearance with respect to certain payment obligations under the Credit Agreement. The extension and forbearance agreement is contained in a limited waiver, dated as of September 30, 2009, which among other things, provided a limited waiver through October 13, 2009 of specified defaults, extended the time for payment of certain principal, interest and

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other payments previously due and provided that the lenders holding a majority amount of the Credit Agreement could, in their sole discretion, extend the waiver period to October 30, 2009.

     Refer to Note 24, Subsequent Events, for additional information regarding waivers, amendments and consents dated subsequent to September 30, 2009.

     As of September 30, 2009, the Company failed to make various mandatory payments under its Credit Agreement and related amendments. Such payments included interest on the term and revolving credit advances of $2.8 million, principal payments on term advances of $0.4 million and $1.4 million of other mandatory payments.

     Given the aforementioned payment defaults, and that it is unlikely that the Company will be in compliance with the covenants currently in the Credit Facility for the balance of 2009 beyond the current waiver period unless amended, all term borrowings aggregating $76.7 million under the Credit Facility have been recorded as current liabilities as of September 30, 2009 and December 31, 2008. Accordingly, at September 30, 2009 and December 31, 2008, the Company has working capital deficiencies of approximately $103.6 million and $99.5 million, respectively.

     The Company borrowed an additional $17.4 million under the revolving portion of its Credit Facility during the nine months ended September 30, 2009, which reduced the open availability under the Credit Facility to approximately $0.6 million at September 30, 2009. The outstanding balance of $23.4 million under the revolving portion of the Credit Facility is also recorded as a current liability as of September 30, 2009.

     The Company will likely continue to incur operating losses in 2009 and its liquidity will likely remain constrained such that it may not be sufficient to meet the Company’s cash operating needs in this period of economic uncertainty. The Company is in active discussions with its lenders to ensure that it has sufficient liquidity in excess of what is available under its Credit Facility, although there is no assurance that the Company can obtain additional liquidity on commercially reasonable terms, if at all. If the Company is unable to obtain or sustain the liquidity required to operate its business the Company may need to seek to modify the terms of its debts and/or to reorganize its capital structure. There can be no assurances that the lenders will grant such restructuring, waivers or amendments on commercially reasonable terms, if at all. If the Company is unable to obtain or sustain the liquidity required to operate its business, the Company may need to seek to modify the terms of its debts through court reorganization proceedings to allow it, among other things, to reorganize its capital structure.

     The Company’s independent registered public accounting firm’s report issued in the December 31, 2008 Annual Report on Form 10-K included an explanatory paragraph describing the existence of conditions that raise substantial doubt about the Company’s ability to continue as a going concern, including significant losses, limited access to additional liquidity and compliance with certain financial covenants. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that may result should the Company be unable to continue as a going concern.

3. NASDAQ STOCK MARKET COMPLIANCE

     On September 16, 2009, the Company received letters from the NASDAQ Stock Market indicating that, for the last 30 consecutive business days, the Company’s common stock did not maintain a minimum value requirement of publicly held shares of $15 million (“MVPHS Rule”) and the bid price of the Company’s common stock closed below the minimum $1.00 per share requirement (“Minimum Bid Price Rule”) for continued inclusion on the NASDAQ Stock Market. The Company will be provided until December 15, 2009 to obtain compliance with the MVPHS Rule and until March 15, 2010 to regain compliance with the Minimum Bid Price Rule.

     The NASDAQ letters state that if, at any time before December 15, 2009, the minimum value of publicly held shares of the Company’s common stock is $15 million or more for a minimum of 10 consecutive business days, NASDAQ staff will provide written notification that the Company has achieved compliance with the MVPHS Rule and if, at any time before March 15, 2010, the bid price of the Company’s common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, NASDAQ staff will provide written notification that the Company has achieved compliance with the Minimum Bid Price Rule.

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     The NASDAQ letters also state that, if the Company does not regain compliance with the MVPHS Rule by December 15, 2009, or the Minimum Bid Price Rule by March 15, 2010, NASDAQ staff will provide written notification that the Company’s securities will be delisted. At that time, the NASDAQ Marketplace Rules would permit the Company to appeal the NASDAQ staff’s determination to delist its securities to a NASDAQ Listing Qualifications Panel.

     The NASDAQ letters of September 16, 2009 have no effect on the listing of the Company’s common stock at September 30, 2009.

4. ACQUISITIONS AND INVESTMENTS

     The Company’s strategy includes periodic acquisitions of, or investments in, entities that operate within its chosen markets. During the nine months ended September 30, 2009 and 2008, the Company made investments of $5.0 million and $8.3 million, respectively, to acquire or invest in multiple entities, none of which was individually material. Included in acquisition and equity investments are cash payments during 2009 and 2008 of approximately $4.0 million and $6.6 million, respectively, related to the Company’s 2005 TruVision™ acquisition, which were included in the initial purchase price allocation.

     During 2005, the Company acquired a substantial portion of the assets of Kremer Laser Eye (“Kremer”). As of September 30, 2009, Kremer operates three refractive centers, which the Company has an approximate 84% ownership interest, and one ambulatory surgery center, which the Company has a 70% ownership interest. As part of a transfer rights agreement entered on the acquisition date between the Company and the minority holders of Kremer, the minority holders retain options that could require the Company to purchase the remaining noncontrolling interest. The first option was exercisable during July 2009 with all remaining options being exercisable during July 2010 and 2012.

     During July 2009, the Company received formal notification from the minority holders of Kremer of their intent to exercise the first option. The option, if exercised, would transfer a portion of the remaining noncontrolling interest of Kremer to TLCVision in exchange for approximately $1.9 million payable August 2009. If the Company failed to make such payment all remaining options could become exercisable on an accelerated basis.

     During August 2009, the Company and the minority holders of Kremer executed a limited forbearance and third amendment to the transfer rights agreement (“Amendment and Forbearance”). The Amendment and Forbearance, among other things, granted the Company temporary forbearance of the $1.9 million payable, waived the minority holders’ ability during the forbearance period to force acceleration of the remaining options, required the Company to make an immediate payment to the minority holders of $0.3 million and accelerated the third option date from July 2012 to July 2011. The payment of $0.3 million was recorded as other expense during the three months ended September 30, 2009 in the Company’s Unaudited Interim Consolidated Statement of Operations.

     Effective October 13, 2009, the forbearance period expired allowing the minority holders of Kremer the right to exercise all options under the amended transfer rights agreement. As of November 16, 2009, such right has not been exercised.

5. DIVESTITURES

     During the quarter ended September 30, 2009, the Company divested one majority-owned and two minority-owned ambulatory surgical centers for a combined net sale price of $2.2 million, resulting in a net loss on divestiture of $1.6 million included in other expenses on the Company’s Consolidated Statements of Operations. The historical results of operations for these ambulatory surgical centers are included in the “other” segment of the Company’s doctor services business. The net loss on divestiture includes a $1.8 million non-cash write-off of goodwill existing at the time of disposal.

6. INVENTORY AND OTHER ASSETS

     During the quarter ended September 30, 2009, management explored terminating the Foresee Preferential Hyperacuity Perimeter (Foresee PHP^®) system distribution rights between the Company and Notal Vision^®, an entity in which the Company holds a minority investment. The distribution rights allow the Company to sell the

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Foresee PHP^® system, manufactured by Notal Vision^®, as a component of the Company’s cataract access reporting segment. During the nine months ended September 30, 2009, revenues generated from sales of the Foresee PHP^® system were $1.4 million, a decline of $0.6 million compared to the nine months ended September 30, 2008.

     Given the recent decline in revenues and profits generated from sales of the Foresee PHP^® system, the Company and Notal Vision^® mutually agreed to transfer the distribution rights to a third party subsequent to September 30, 2009. As a result, the Company determined at September 30, 2009 that approximately $0.7 million of remaining nontransferable Foresee PHP^® inventory was impaired and thus recorded a charge for this amount in costs of revenue during the three months ended September 30, 2009 in the Company’s Unaudited Interim Consolidated Statement of Operations.

7. RESTRICTED CASH

     As of September 30, 2009, the Company had $1.0 million of restricted cash to guarantee outstanding bank letters of credit for leases. As of December 31, 2008, the Company had no restricted cash.

8. INTANGIBLE ASSETS

     During the quarter ended September 30, 2009, the Company recorded a $0.5 million impairment charge in its refractive centers segment to eliminate a trade name intangible, which had a fair value of zero dollars. The Company ceased use of the trade name and does not intend to use it in future operations.

9. ACCRUED AND OTHER LONG-TERM LIABILITIES

     TruVision™ Liability

     As of June 30, 2009, accrued liabilities included $4.0 million due to the former owners of TruVision™ as part of the amended 2005 merger agreement. On August 10, 2009, the Company entered into Amendment No. 2 (“Amendment”) to the 2005 TruVision™ Agreement and Plan of Merger. The Amendment restructured the Company’s final $4.0 million purchase installment, which was due to the former TruVision™ owners during August 2009.

     The Amendment resulted in the final purchase installment being increased to an unsecured $5.4 million payable, inclusive of interest and penalties, which will be made through quarterly payments of approximately $0.3 million beginning on August 10, 2009 and extending through April 5, 2014. The amount owed is not represented by a promissory note, is not secured and will not accrue interest on a going forward basis. As of September 30, 2009, accrued and other long-term liabilities include $0.9 million and $3.3 million, respectively, representing the balances owed, net of imputed interest, under the restructured TruVision™ Agreement and Plan of Merger.

     As of November 16, 2009, the Company was unable to make a $0.3 million scheduled payment due October 5, 2009 as part of the restructured TruVision™ Agreement and Plan of Merger.

10. DEFERRED REVENUES

     The Company offers an extended lifetime warranty, i.e. the TLC Lifetime Commitment, at a separately priced fee to customers selecting a certain lower base priced surgical procedure. Revenues generated under this program are initially deferred and recognized over a period of five years based on management’s future estimates of retreatment volume, which are based on historical warranty claim activity. The Company’s deferred revenue balance was $0.8 million and $1.1 million at September 30, 2009 and December 31, 2008, respectively.

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11. DEBT

     Debt consists of:

	SEPTEMBER 30,		DECEMBER 31,
	2009		2008
Senior term loan; weighted average interest rate of 9.25% and 8.76% at September 30, 2009 and December 31, 2008, respectively	$	76,660	$	76,667
Revolving credit facility, weighted average interest rate of 9.25% and 6.60% at September 30, 2009 and December 31, 2008, respectively		23,400		6,000
Capital lease obligations, payable through 2013, interest at various rates		12,457		14,176
Sale-leaseback debt — interest imputed at 6.25%, due through October 2016, collateralized by building (Cdn $6.2 million and Cdn $6.7 million at September 30, 2009 and December 31, 2008, respectively)		5,712		5,453
Other		3,306		3,285
		121,535		105,581
Less current portion		106,644		89,081
	$	14,891	$	16,500

     The Company obtained a $110.0 million credit facility (“Credit Facility”) during June 2007, which is secured by substantially all of the assets of the Company and consisting of both senior term debt and a revolver as follows:

• Senior term debt, totaling $85.0 million, with a six-year term and required amortization payments of 1% per annum plus a percentage of excess cash flow (as defined in the agreement) and sales of assets or borrowings outside of the normal course of business. As of September 30, 2009, $76.7 million was outstanding on this portion of the facility.

• A revolving credit facility, totaling $25.0 million with a five-year term. As of September 30, 2009, the Company had $23.4 million outstanding under this portion of the facility and outstanding letters of credit totaling approximately $1.0 million. Accordingly, availability under the revolving credit facility is $0.6 million at September 30, 2009.

     Interest on the facility is calculated based on either prime rate or the London Interbank Offered Rate (LIBOR) plus a margin. As a result of certain events of default and the June 30, 2009 expiration of the Limited Waiver, Consent and Amendment No. 3 to Credit Agreement, the LIBOR advances with interest periods ending on or after June 30, 2009 automatically converted to prime rate advances at the end of such interest period. Effective June 30, 2009, the Company began incurring 2% default interest resulting from the provisions of the Limited Waiver and Amendment No. 4 to Credit Agreement.

     As of September 30, 2009, the borrowing rate was 3.25% for prime rate borrowings, plus an applicable margin of 4.00% and default interest of 2.00%. In addition, the Company pays an annual commitment fee equal to 0.35% on the undrawn portion of the revolving credit facility.

     The Credit Facility also requires the Company to maintain various financial and non-financial covenants as defined in the Credit Agreement. As of December 31, 2008, March 31, 2009, June 30, 2009 and September 30, 2009, the Company was unable to satisfy various financial covenants. Furthermore, the Company has failed to make various required payments under the Credit Facility. Refer to Note 2, Liquidity, for additional information.

     As a result of the inability to comply with the primary financial covenants, the Company has received from its lenders numerous waivers, consents and amendments to the Credit Agreement during the nine months ended September 30, 2009. All waivers, consents and amendments to the Credit Agreement are filed with SEC as exhibits to Current Reports on Form 8-K. Refer to Note 2, Liquidity, for additional information regarding waivers, amendments or consents dated during the three months ended September 30, 2009, and Note 24, Subsequent Events, for additional information regarding waivers, amendments or consents dated subsequent to September 30, 2009.

11

     As of September 30, 2009, the Company failed to make various mandatory payments under its Credit Agreement and related amendments. Such payments included interest on the term and revolving credit advances of $2.8 million, principal payments on term advances of $0.4 million and $1.4 million of other mandatory payments.

12. INTEREST RATE SWAP AGREEMENTS

     The Company does not enter into financial instruments for trading or speculative purposes. As required under the Company’s Credit Facility, during August and December 2007 the Company entered into interest rate swap agreements to eliminate the variability of cash required for interest payments for a majority of the total variable rate debt.

     Effective July 9, 2009, Citibank and the Company agreed to the early termination of the interest rate swap agreements entered August and December 2007. In consideration for Citibank’s agreement to terminate the interest rate swaps, the Company agreed that the amount due to Citibank as of July 9, 2009 (“Settlement Date”) was $1.6 million (“Settlement Amount”). The Company further agreed that interest on the Settlement Amount will accrue at a default rate from and including the Settlement Date until such date that the Settlement Amount is paid in full. As of September 30, 2009, the Company had not paid the $1.6 million Settlement Amount.

     Prior to termination, the Company’s interest rate swaps qualified as cash flow hedges. The Company historically recorded the unrealized gain or loss resulting from changes in fair value as a component of other comprehensive income/(loss). Since future cash payments relating to the outstanding Credit Facility are no longer probable, the interest rate swap is no longer deemed an effective hedge, which resulted in the Company reclassifying the entire other comprehensive loss balance to interest expense during the three months ended September 30, 2009.

13. STOCK-BASED COMPENSATION

     Total stock-based compensation for the three months ended September 30, 2009 was $0.3 million and was related to the TLCVision Stock Option Plan. Total stock-based compensation for the three months ended September 30, 2008 was $0.4 million and was related to the TLCVision Stock Option Plan and the Company’s Employee Share Purchase Plan. Effective January 1, 2009, the Company suspended future employee contributions to the Company’s Employee Share Purchase Plan due to the limited availability of Company shares under such Plan. Total stock-based compensation was $0.7 million and $1.1 million for the nine months ended September 30, 2009 and 2008, respectively.

     As of September 30, 2009, the total unrecognized compensation expense related to TLCVision non-vested awards was approximately $1.5 million. The unrecognized compensation expense will be recognized over the remaining vesting periods, the last of which expires during December 2012 for certain options.

     On December 10, 2008, the Company granted conditional options for shares. During June 2009, the condition for these options was satisfied resulting in 362,500 options for shares being granted. The Company began recognizing compensation expense related to these conditional options during the quarter ended June 30, 2009 and will continue recognizing such expense through vesting. The Company granted no other options during the three or nine months ended September 30, 2009. The Company granted options for 387,000 and 423,000 shares during the three and nine months ended September 30, 2008, respectively.

     The fair value of stock options granted to employees is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions for 2009 and 2008, respectively: risk-free interest rate of 2.5% and 3.1%; expected dividend yield of 0%; expected life of 3.8 years and 4.8 years; and expected volatility of 103% and 55%.

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14. OTHER EXPENSE (INCOME), NET

     Other expense (income), net, includes the following operating items:

	THREE MONTHS ENDED						NINE MONTHS ENDED
	SEPTEMBER 30,						SEPTEMBER 30,
	2009			2008			2009			2008
Gain on sales and disposals of fixed assets	$	(26	)	$	(108	)	$	(303	)	$	(397	)
Center closing costs		(15	)		—			701			—
Loss (gain) on business divestitures		1,594			6			1,594			(139	)
Employee severance expense		101			—			2,614			—
Financial and legal advisor costs		4,036			—			9,065			—
Miscellaneous expense (income) and other charges		781			(45	)		946			(167	)
	$	6,471		$	(147	)	$	14,617		$	(703	)

15. RESTRUCTURING OF OPERATIONS

     During 2009, the Company accelerated its cost savings initiatives that focused on employee reductions, closures of refractive centers and the reduction in refractive access routes. The restructuring efforts during the nine months ended September 30, 2009 resulted in the closure of four majority-owned refractive centers and an approximate 15% reduction of the Company’s workforce through involuntary employee separations. In addition to the cost savings initiatives, the restructuring efforts also included financial and legal advisor fees associated with the ongoing Credit Facility negotiations.

     As a result, the Company incurred restructuring charges included in other expenses totaling $14.8 million for the nine months ended September 30, 2009, which primarily included $9.1 million of financial and legal advisor costs, $2.6 million for employee severance and benefits, $0.7 million of center closing costs, and $1.6 million of losses on the divestitures of various ambulatory surgical center investments.

     The restructuring charges for the three months ended September 30, 2009 were $6.5 million, which included $4.1 million of financial and legal advisor costs, $0.1 million for employee severance and benefits, and $1.6 million of losses on the divestitures of various ambulatory surgical center investments.

     As of September 30, 2009, the Company’s restructuring reserves were $1.7 million and were included in accrued liabilities in the consolidated balance sheet.

     The following table summarizes various restructuring efforts:

	EMPLOYEE
	SEVERANCE			CENTER
	& BENEFITS			CLOSING COSTS			TOTAL
Restructuring charges	$	259		$	280		$	539
Non-cash write-downs		—			(125	)		(125	)
Cash payments		(192	)		—			(192	)
Accrual balance as of March 31, 2009		67			155			222
Restructuring charges		2,254			436			2,690
Non-cash write-downs		—			—			—
Cash payments		(588	)		(84	)		(672	)
Accrual balance as of June 30, 2009	$	1,733		$	507		$	2,240
Restructuring charges		101			(15	)		86
Non-cash write-downs		(34	)		(136	)		(170	)
Cash payments		(388	)		(89	)		(477	)
Accrual balance as of September 30, 2009	$	1,412		$	267		$	1,679

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     As of September 30, 2009, the Company currently estimates that its restructuring efforts will likely continue through the quarter ending December 31, 2009. Such estimate may change and is dependent on the outcome of various cost reduction and Credit Facility negotiation efforts.

16. TAXES

     The Company’s tax provision for interim periods is determined using an estimate of its annual tax expense based on the forecasted taxable income for the full year. The Company believes there is the potential for volatility in its 2009 effective tax rate due to several factors, primarily from the impact of any changes to the forecasted earnings.

     As of September 30, 2009, the Company continues to believe that there is insufficient evidence to recognize certain deferred tax assets. Accordingly, the Company continues to carry a full valuation allowance to offset its deferred tax assets. The determination of the appropriate amount of deferred tax asset to recognize is regularly evaluated and is primarily based on expected taxable income in future years, trends of historical taxable income, and other relevant factors.

     Section 382 of the Internal Revenue Code of 1986, as amended, imposes significant annual limitations on the utilization of net operating losses (NOLs). Such NOL limitations result upon the occurrence of certain events, including an “ownership change” as defined by Section 382.

     Under Section 382, when an ownership change occurs, the calculation of the annual NOL limitation is affected by several factors, including the number of shares outstanding and the trading price before the ownership change occurred. As a result of shareholder activity, the Company concluded that an ownership change occurred in early 2008 limiting future utilization of NOLs. The Company currently estimates that this annual limit will result in $67.7 million of NOLs expiring before becoming available.

     The Company, including its domestic and foreign subsidiaries, is subject to U.S. federal income tax as well as income tax of multiple state and other jurisdictions. Tax years 1997 through present are not yet closed for U.S. federal and state income tax purposes due to net operating losses carried forward from that time.

     As of September 30, 2009, the Company’s 2005 and 2006 tax years are under review by the Internal Revenue Service (“IRS”) regarding the Company’s employee and independent contractor classifications and the impact of such classifications on required employer tax withholdings.

17. NET LOSS PER SHARE

     The following table represents the calculation of net loss attributable to TLC Vision Corporation per common share :

	THREE MONTHS ENDED						NINE MONTHS ENDED
	SEPTEMBER						SEPTEMBER
(in thousands, except per share amounts)	2009			2008			2009			2008
Numerator:
Net loss attributable to TLC Vision Corporation	$	(10,045	)	$	(6,711	)	$	(18,228	)	$	(2,839	)
Denominator:
Weighted-average shares outstanding — basic		50,565			50,345			50,550			50,292
Effect of dilutive stock options *		—			—			—			—
Weighted-average shares outstanding — diluted		50,565			50,345			50,550			50,292
Net loss attributable to TLC Vision Corporation per common share:
Basic	$	(0.20	)	$	(0.13	)	$	(0.36	)	$	(0.06	)
Diluted	$	(0.20	)	$	(0.13	)	$	(0.36	)	$	(0.06	)

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* The effects of including the incremental shares associated with options and warrants are anti-dilutive for the three and nine months ended September 30, 2009 and 2008, and are not included in weighted-average shares outstanding — diluted. The total weighted-average number of options with an exercise price less than the average closing price of the Company’s common stock was 1.1 million and 0.8 million for the three and nine months ended September 30, 2009, respectively. The total weighted-average number of options with an exercise price less than the average closing price of the Company’s common stock was 0.1 million and 0.2 million for the three and nine months ended September 30, 2008, respectively.

18. STOCKHOLDERS’ (DEFICIT) EQUITY

     The following table reflects the changes in stockholders’ (deficit) equity attributable to both TLC Vision Corporation and the noncontrolling interests of the subsidiaries in which the Company has a majority, but not total, ownership interest.

				ATTRIBUTABLE
	ATTRIBUTABLE			TO
	TO TLC VISION			NONCONTROLLING
	CORPORATION			INTEREST			TOTAL
Stockholders’ (deficit) equity at December 31, 2008	$	(35,346	)	$	15,330		$	(20,016	)
Shares issued as part of the employee share purchase plan		22						22
Stock based compensation		675						675
Distributions to noncontrolling interest					(7,754	)		(7,754	)
Divestitures and other noncontrolling interest activity					(432	)		(432	)
Comprehensive income
Deferred hedge		1,545						1,545
Net (loss) income		(18,228	)		7,415			(10,813	)
Stockholders’ (deficit) equity at September 30, 2009	$	(51,332	)	$	14,559		$	(36,773	)

19. SEGMENT INFORMATION

     The Company’s reportable segments are strategic business units that offer different products and services. They are managed and evaluated separately by the chief operating decision maker because each business requires different management and marketing strategies. The Company has three lines of business and five reportable segments including “Other” as follows:

• Refractive Centers: The refractive centers business provides a significant portion of the Company’s revenue and is in the business of providing corrective laser surgery (principally LASIK) in fixed sites typically branded under the TLC name.

• Doctor Services: The doctor services business provides a variety of services and products directly to doctors and the facilities in which they perform surgery. It consists of the following segments:

• Mobile Cataract: The mobile cataract segment provides technology and diagnostic equipment and services to doctors and hospitals to support cataract surgery as well as treatment of other eye diseases.

• Refractive Access: The refractive access segment assists surgeons in providing corrective laser surgery in their own practice location by providing refractive technology, technicians, service and practice development support at the surgeon’s office.

• Other: The Company has ownership interests in businesses that manage surgical and secondary care centers. None of these businesses meets the quantitative criteria to be disclosed separately as a reportable segment and they are included in “Other” for segment disclosure purposes.

• Eye Care: The eye care business consists of the optometric franchising business segment. The optometric franchising segment provides marketing, practice development and purchasing power to independently-owned and operated optometric practices in the United States and Canada.

     Corporate depreciation and amortization of $0.4 million and $0.6 million for the three months ended September 30, 2009 and 2008, respectively, is included in corporate operating expenses. Corporate depreciation and amortization of $1.1 million and $1.8 million for the nine months ended September 30, 2009 and 2008, respectively, is included in corporate operating expenses. For purposes of the depreciation and amortization disclosures shown below, these amounts are included in the refractive centers reporting segment.

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     The Company’s reportable segments are as follows:

THREE MONTHS ENDED SEPTEMBER 30, 2009
                               (IN THOUSANDS)

				DOCTOR SERVICES							EYE CARE
	REFRACTIVE			REFRACTIVE		MOBILE					OPTOMETRIC
	CENTERS			ACCESS		CATARACT		OTHER			FRANCHISING		TOTAL
Revenues	$	22,197		$	5,477	$	10,787	$	5,952		$	7,212	$	51,625
Cost of revenues (excluding amortization)		17,510			3,916		8,445		4,010			3,491		37,372
Gross profit		4,687			1,561		2,342		1,942			3,721		14,253
Segment expenses:
Marketing and sales		2,458			20		1,238		93			1,139		4,948
G&A, amortization and other		1,136			33		818		1,839			1		3,827
Impairment		496			—		—		—			—		496
Earnings from equity investments		(33	)		—		—		(197	)		—		(230	)
Segment profit	$	630		$	1,508	$	286	$	207		$	2,581	$	5,212
Noncontrolling interest		40			13		—		870			1,134		2,057
Segment profit (loss) attributable to TLC Vision Corp.	$	590		$	1,495	$	286	$	(663	)	$	1,447	$	3,155
Corporate operating expenses														(8,906	)
Interest expense, net														(4,118	)
Income tax expense														(176	)
Net loss attributable to TLC Vision Corporation														(10,045	)
Depreciation and amortization	$	2,354		$	535	$	715	$	330		$	12	$	3,946

THREE MONTHS ENDED SEPTEMBER 30, 2008
                               (IN THOUSANDS)

				DOCTOR SERVICES								EYE CARE
	REFRACTIVE			REFRACTIVE			MOBILE					OPTOMETRIC
	CENTERS			ACCESS			CATARACT		OTHER			FRANCHISING		TOTAL
Revenues	$	28,516		$	5,861		$	10,177	$	6,596		$	6,384	$	57,534
Cost of revenues (excluding amortization)		22,245			4,766			7,635		4,217			2,596		41,459
Gross profit		6,271			1,095			2,542		2,379			3,788		16,075
Segment expenses:
Marketing and sales		6,651			36			1,470		120			1,171		9,448
G&A, amortization and other		1,628			(115	)		942		455			2		2,912
Impairment		—			—			—		1,500			—		1,500
Earnings from equity investments		(114	)		—			—		(353	)		—		(467	)
Segment (loss) profit	$	(1,894	)	$	1,174		$	130	$	657		$	2,615	$	2,682
Noncontrolling interest		(53	)		10			—		952			1,223		2,132
Segment (loss) profit attributable to TLC Vision Corp.	$	(1,841	)	$	1,164		$	130	$	(295	)	$	1,392	$	550
Corporate operating expenses															(4,588	)
Interest expense, net															(2,455	)
Income tax expense															(218	)
Net loss attributable to TLC Vision Corporation															(6,711	)
Depreciation and amortization	$	3,158		$	737		$	681	$	380		$	12	$	4,968

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NINE MONTHS ENDED SEPTEMBER 30, 2009
                               (IN THOUSANDS)

				DOCTOR SERVICES							EYE CARE
	REFRACTIVE			REFRACTIVE		MOBILE					OPTOMETRIC
	CENTERS			ACCESS		CATARACT		OTHER			FRANCHISING		TOTAL
Revenues	$	85,145		$	18,946	$	31,630	$	19,688		$	24,097	$	179,506
Cost of revenues (excluding amortization)		65,140			15,093		23,798		13,571			11,413		129,015
Gross profit		20,005			3,853		7,832		6,117			12,684		50,491
Segment expenses:
Marketing and sales		9,459			65		4,208		300			3,253		17,285
G&A, amortization and other		4,881			34		2,656		2,517			21		10,109
Impairment		496			—		—		—			—		496
Earnings from equity investments		(273	)		—		—		(749	)		—		(1,022	)
Segment profit	$	5,442		$	3,754	$	968	$	4,049		$	9,410	$	23,623
Noncontrolling interest		560			21		—		2,444			4,390		7,415
Segment profit attributable to TLC Vision Corp.	$	4,882		$	3,733	$	968	$	1,605		$	5,020	$	16,208
Corporate operating expenses														(24,263	)
Interest expense, net														(9,513	)
Income tax expense														(660	)
Net loss attributable to TLC Vision Corporation														(18,228	)
Depreciation and amortization	$	7,169		$	1,593	$	2,161	$	996		$	36	$	11,955

NINE MONTHS ENDED SEPTEMBER 30, 2008
                               (IN THOUSANDS)

			DOCTOR SERVICES								EYE CARE
	REFRACTIVE		REFRACTIVE			MOBILE					OPTOMETRIC
	CENTERS		ACCESS			CATARACT		OTHER			FRANCHISING		TOTAL
Revenues	$	126,540	$	23,831		$	30,527	$	18,867		$	22,221	$	221,986
Cost of revenues (excluding amortization)		89,011		18,500			22,526		12,413			10,109		152,559
Gross profit		37,529		5,331			8,001		6,454			12,112		69,427
Segment expenses:
Marketing and sales		22,794		112			4,895		349			3,158		31,308
G&A, amortization and other		5,672		(321	)		3,078		1,200			49		9,678
Impairment		—		—			—		1,500			—		1,500
Loss (earnings) from equity investments		544		—			—		(909	)		—		(365	)
Segment profit	$	8,519	$	5,540		$	28	$	4,314		$	8,905	$	27,306
Noncontrolling interest		1,189		77			—		2,704			4,054		8,024
Segment profit attributable to TLC Vision Corp.	$	7,330	$	5,463		$	28	$	1,610		$	4,851	$	19,282
Corporate operating expenses														(14,252	)
Interest expense, net														(6,919	)
Income tax expense														(950	)
Net loss attributable to TLC Vision Corporation														(2,839	)
Depreciation and amortization	$	9,499	$	2,122		$	2,055	$	1,131		$	38	$	14,845

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20. SUPPLEMENTAL CASH FLOW INFORMATION

     Non-cash transactions:

	NINE MONTHS ENDED SEPTEMBER 30,
	2009			2008
Capital lease obligations relating to equipment purchases	$	2,006		$	2,961
Other comprehensive (income) loss on hedge		(1,545	)		276
Option and warrant reduction		—			92

     Cash paid for the following:

	NINE MONTHS ENDED SEPTEMBER 30,
	2009		2008
Interest	$	7,266	$	7,197
Income taxes		858		1,172

21. FAIR VALUE MEASUREMENT

     In September 2006, the FASB issued guidance (ASC 820), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of this guidance were effective for the Company as of January 1, 2008. However, the FASB deferred the effective date of the provision until the beginning of the Company’s 2009 fiscal year as it relates to fair value measurement requirements for nonfinancial assets, such as goodwill, and liabilities that are not remeasured at fair value on a recurring basis. The Company’s adoption of the fair value guidance did not have a material impact on the financial statements.

     During the nine months ended September 30, 2009, the Company implemented FASB issued guidance (ASC 825) to require disclosures about the fair value of financial instruments in interim as well as in annual financial statements. The adoption of this guidance did not impact the Company’s financial position or results of operations.

     The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

• Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.

• Level 2: Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

• Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

     Cash and cash equivalents of $13.2 million at September 30, 2009 are primarily comprised of either bank deposits or amounts invested in money market funds, the fair value of which is based on unadjusted quoted prices in active markets for identical assets (Level 1).

     As of September 30, 2009, the carrying value and approximate fair value was $100.1 million and $95.6 million, respectively, relating to the Company’s combined term and revolving advances under the Credit Facility. The fair value was estimated by discounting the amount of estimated future cash flows associated with the respective debt instruments using the Company’s current incremental rate of borrowing for similar debt instruments (Level 3). The calculation of fair value assumes no acceleration of payments that may be required under default provisions included in the Company’s Credit Facility.

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22. EXECUTIVE OFFICERS

     On April 23, 2009, the Company announced that James C. Wachtman resigned as Chief Executive Officer and as a member of the Board of Directors of the Company, effective immediately. The Company also announced that James B. Tiffany was named President and Chief Operating Officer, effective immediately.

     On April 23, 2009, the Company also announced that it created the position of Chief Restructuring Officer and formed an Office of the Chairman. Michael Gries, a principal of Conway, Del Genio, Gries & Co. LLC (“CDG”), a financial advisory firm based in New York, NY, accepted the position of Chief Restructuring Officer. The new three-person Office of the Chairman will report to the Board of Directors and is comprised of: Chairman Warren Rustand; President and Chief Operating Officer, James B.Tiffany; and Chief Restructuring Officer, Michael Gries.

     On May 15, 2009, the Company announced that as part of its efforts to reduce costs, it terminated the employment of three executive officers, effective immediately. The three executive officers impacted were: Steven P. Rasche, Chief Financial Officer; Brian L. Andrew, General Counsel and Secretary; and Larry D. Hohl, President of Refractive Centers.

     On May 15, 2009, the Company also announced that William J. McManus, a managing director of CDG, was appointed to the position of Interim Chief Financial Officer. Mr. Andrew’s non-legal responsibilities as well as Mr. Hohl’s responsibilities have been assumed by James B. Tiffany. Mr. Andrew’s legal responsibilities have been assumed on an interim basis by Company attorneys and external counsel.

23. RELATED PARTY TRANSACTIONS

     As noted in Note 22, Executive Officers, the Company’s Interim Chief Financial Officer and Chief Restructuring Officer are employed by CDG. The Company has retained CDG to provide consulting services relating to the Company’s ongoing restructuring efforts, which include cost saving initiatives and Credit Facility negotiations. During the three and nine months ended September 30, 2009, the Company paid CDG approximately $0.6 million and $1.6 million, respectively.

24. SUBSEQUENT EVENTS

     On October 22, 2009, the Company announced that it had secured from its lenders an extension to November 15, 2009 of the previously announced limited waiver with respect to the Credit Agreement that expired on October 13, 2009, and of the forbearance with respect to certain payment obligations under the Credit Agreement. The amendment to the limited waiver, dated October 13, 2009, among other things, provides an extension of the limited waiver through November 15, 2009 of specified defaults and provides that the lenders will, until November 15, 2009, forbear from exercising their rights arising out of the non-payment of certain principal, interest and other payments previously due.

     As of November 16, 2009, the filing date of this quarterly report, the Company was operating without a current waiver of defaults under its Credit Facility.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q (together with all amendments, exhibits and schedules hereto, referred to as the “Form 10-Q”) contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which statements can be identified by the use of forward looking terminology, such as “may,” “will,” “expect,” “believes,” “could,” “might,” “anticipate,” “estimate,” “plans,” “intends” or “continue” or the negative thereof or other variations thereon or comparable terminology. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including but not limited to those set forth elsewhere in this Form 10-Q in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008. Unless the context indicates or

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requires otherwise, references in this Form 10-Q to the “Company” or “TLCVision” shall mean TLC Vision Corporation and its subsidiaries. References to “$” or “dollars” shall mean U.S. dollars unless otherwise indicated. References to “C$” shall mean Canadian dollars. References to the “Commission” shall mean the U.S. Securities and Exchange Commission.

OVERVIEW

     TLC Vision Corporation is an eye care services company dedicated to improving lives through improved vision by providing high-quality care directly to patients and as a partner with their doctors and facilities. A significant portion of the Company’s revenues come from owning and operating refractive centers that employ laser technologies to treat common refractive vision disorders such as myopia (nearsightedness), hyperopia (farsightedness) and astigmatism. Refractive centers, which is a reportable segment, includes the Company’s 70 centers that provide corrective laser surgery, of which 62 are majority owned and 8 centers are minority owned. In its doctor services businesses, the Company furnishes doctors and medical facilities with mobile or fixed site access to refractive and cataract surgery equipment, supplies, technicians and diagnostic products, as well as owns and manages single-specialty ambulatory surgery centers. In its eye care business, the Company primarily provides franchise opportunities to independent optometrists under its Vision Source^® brand.

     The Company serves surgeons who performed approximately 151,000 and 186,000 procedures, including refractive and cataract procedures, at the Company’s centers or using the Company’s equipment during each of the nine months ended September 30, 2009 and 2008, respectively. Being an elective procedure, laser vision correction volumes fluctuate due to changes in economic conditions, unemployment rates, consumer confidence and political uncertainty. Demand for laser vision correction also is affected by perceived safety and effectiveness concerns given the lack of long-term follow-up data. For additional information regarding the Company’s decline in procedure volume and the direct impact of such decline on the Company’s liquidity, refer to the section Recent Developments below.

RECENT DEVELOPMENTS

Amendments, Waivers and Consents to the Credit Facility

     As a result of the Company’s inability to comply with the primary financial covenants under its Credit Facility, the Company has received from its lenders numerous waivers, consents and amendments to the Credit Agreement during the nine months ended September 30, 2009. All waivers, consents and amendments to the Credit Agreement are filed with the SEC as exhibits to Current Reports on Form 8-K. Refer to Notes of the Unaudited Interim Consolidated Financials Statements, in particular Note 2, Liquidity, and Note 24, Subsequent Events, for additional details.

NASDAQ Compliance

     On September 16, 2009, the Company received letters from the NASDAQ Stock Market indicating that, for the last 30 consecutive business days, the Company’s common stock did not maintain a minimum value requirement of publicly held shares of $15 million (“MVPHS Rule”) and the bid price of the Company’s common stock closed below the minimum $1.00 per share requirement (“Minimum Bid Price Rule”) for continued inclusion on the NASDAQ Stock Market. The Company will be provided until December 15, 2009 to obtain compliance with the MVPHS Rule and until March 15, 2010 to regain compliance with the Minimum Bid Price Rule or may have its securities delisted. Refer to Note 3, NASDAQ Stock Market Compliance, to the Unaudited Interim Consolidated Financial Statements for additional details.

Foresee PHP^® System

     During the quarter ended September 30, 2009, management explored terminating the Foresee Preferential Hyperacuity Perimeter (Foresee PHP^®) system distribution rights between the Company and Notal Vision^®. The distribution rights allow the Company to sell the Foresee PHP^® system, manufactured by Notal Vision^®, as a component of the Company’s cataract access reporting segment. During the nine months ended September 30, 2009, revenues generated from sales of the Foresee PHP^® system were $1.4 million, a decline of $0.6 million compared to the nine months ended September 30, 2008.

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     Given the recent decline in revenues and profits generated from sales of the Foresee PHP^® system, the Company and Notal Vision^® mutually agreed to transfer the distribution rights to a third party subsequent to the quarter ended September 30, 2009. As a result, the Company determined at September 30, 2009 that approximately $0.7 million of remaining nontransferable Foresee PHP^® inventory was impaired.

     Refer to Note 6, Inventory and Other Assets, to the Unaudited Interim Consolidated Financial Statements for additional details.

Kremer Put Options

     During August 2009, the Company and the minority holders of Kremer executed a limited forbearance and amendment (“Amendment and Forbearance”) to the 2005 transfer rights agreement, as previously amended. The Amendment and Forbearance, among other things, granted the Company temporary forbearance of a $1.9 million payable due to the minority holders, waived the minority holders’ ability during the forbearance period to force acceleration of the remaining put options and required the Company to make an immediate payment to the minority holders of $0.3 million. Refer to Note 4, Acquisitions and Investments, to the Unaudited Interim Consolidated Financial Statements for additional details.

Interest Rate Swap Agreements

     Effective July 9, 2009, Citibank and the Company agreed to the early termination of the interest rate swap agreements entered August and December 2007. In consideration for Citibank’s agreement to terminate the interest rate swaps, the Company agreed that the amount due to Citibank as of July 9, 2009 (“Settlement Date”) was $1.6 million (“Settlement Amount”). The Company further agreed that interest on the Settlement Amount will accrue at a default rate from and including the Settlement Date until such date that the Settlement Amount is paid in full. As of September 30, 2009, the Company had not paid the $1.6 million Settlement Amount. See Note 12, Interest Rate Swap Agreements, to the Unaudited Interim Consolidated Financial Statements for additional details regarding the interest rate swap agreements.

Ambulatory Surgical Center Disposals

     During the quarter ended September 30, 2009, the Company divested one majority-owned and two minority-owned ambulatory surgical center investments for a combined net sale price of $2.2 million, resulting in a net loss on divestiture of $1.6 million included in other expense in the Consolidated Statements of Operations. The historical results of operations for these ambulatory surgical centers are included in the “other” segment of the Company’s doctor services business.

Center Closures

     During the nine months ended September 30, 2009 the Company closed four majority-owned centers as part of the Company’s ongoing efforts to improve overall operating performance. The majority-owned centers had procedure volume of approximately 400 and 1,000 during the nine months ended September 30, 2009 and 2008, respectively. While the Company does not have immediate plans to close additional centers, management continues to review refractive center operating performance and may chose to close additional centers in future periods as necessary.

Amendment No. 2 to the TruVision Agreement and Plan of Merger

On August 10, 2009, the Company entered into Amendment No. 2 (“Amendment”) to the 2005 TruVision™ Agreement and Plan of Merger. The Amendment resulted in the Company’s final $4.0 million purchase installment, which was due to the former TruVision owners during August 2009, being increased to an unsecured $5.4 million payable. Refer to Note 9, Accrued and Other Long-Term Liabilities, to the Unaudited Interim Consolidated Financial Statements for additional details.

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RESULTS OF OPERATIONS

     The following table sets forth certain center and procedure operating data for the periods presented:

	THREE MONTHS ENDED				NINE MONTHS ENDED
	SEPTEMBER 30,				SEPTEMBER 30,
	2009		2008		2009		2008
OPERATING DATA (unaudited)
Number of majority-owned eye care centers at end of period		62		68		62		68
Number of minority-owned eye care centers at end of period		8		10		8		10
Number of TLCVision branded eye care centers at end of period		70		78		70		78
Number of laser vision correction procedures:
Majority-owned centers		13,100		16,300		50,500		73,600
Minority-owned centers		3,200		3,500		10,900		13,900
Total TLCVision branded center procedures		16,300		19,800		61,400		87,500
Total access procedures		8,200		8,500		28,000		36,400
Total laser vision correction procedures		24,500		28,300		89,400		123,900

THREE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2008

     Total revenues for the three months ended September 30, 2009 were $51.6 million, a decrease of $5.9 million (10%) from revenues of $57.5 million for the three months ended September 30, 2008. The decrease in revenue was primarily attributable to the decline in refractive centers procedures, partially offset by higher cataract volume.

     Revenues from refractive centers for the three months ended September 30, 2009 were $22.2 million, a decrease of $6.3 million (22%) from revenues of $28.5 million for the three months ended September 30, 2008. The decrease in revenues from centers resulted primarily from lower center procedure volume, which accounted for a decrease in revenues of approximately $5.0 million. The remaining revenue decline of $1.3 million was the result of decreased revenue per procedure. For the three months ended September 30, 2009, majority-owned center procedures were approximately 13,100, a decrease of 3,200 from 16,300 procedures for the three months ended September 30, 2008. The procedure decline was attributable to the weakened U.S. economy, which has negatively impacted consumer discretionary spending.

     Revenues from doctor services for the three months ended September 30, 2009 were $22.2 million, a decrease of $0.4 million (2%) from revenues of $22.6 million for the three months ended September 30, 2008. The revenue decrease from doctor services was due principally to procedure shortfalls in refractive access and the disposal of a majority-owned ambulatory surgical center, partially offset by an increase in the mobile cataract segment.

• Revenues from the refractive access services segment for the three months ended September 30, 2009 were $5.5 million, a decrease of $0.4 million (7%) from revenues of $5.9 million for the three months ended September 30, 2008. For the three months ended September 30, 2009, excimer procedures declined by approximately 300 (4%) from the prior year period on lower customer demand and lower average sales price of 3%. The procedure decline accounted for a decrease in revenues of approximately $0.2 million and lower average sales price decreased revenues by approximately $0.2 million.

• Revenues from the Company’s mobile cataract segment for the three months ended September 30, 2009 were $10.8 million, an increase of $0.6 million (6%) from revenues of $10.2 million for the three months ended September 30, 2008. The increase in mobile cataract revenues was due to increased surgical procedure volume of 5% and a higher surgical average sales price of 3%.

• Revenues from the Company’s businesses that manage cataract and secondary care centers for the three months ended September 30, 2009 were $6.0 million, a decrease of $0.6 million (10%) from revenues of $6.6 million for the three months ended September 30, 2008. The decrease was primarily

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driven by the sale of a majority-owned ambulatory surgical center, which contributed no revenue during the quarter ended September 30, 2009 compared to $0.9 million during the comparable prior year period.

     Revenues from eye care for the three months ended September 30, 2009 were $7.2 million, an increase of $0.8 million (13%) from revenues of $6.4 million for the three months ended September 30, 2008. This increase in revenues is attributable to a 10% year-over-year increase in franchisee locations. As of September 30, 2009 the Company had 2,058 total franchisees.

     Total cost of revenues (excluding amortization expense for all segments) for the three months ended September 30, 2009 was $37.4 million, a decrease of $4.1 million (10%) from the cost of revenues of $41.5 million for the three months ended September 30, 2008.

     The cost of revenues from refractive centers for the three months ended September 30, 2009 was $17.5 million, a decrease of $4.7 million (21%) from cost of revenues of $22.2 million for the three months ended September 30, 2008. This decrease was attributable to a $1.5 million cost of revenue decline related to lower procedure volume, $2.7 million in fixed cost reductions and $0.5 million in decreased variable costs per procedure. Gross margin for centers was 21.1% during the three months ended September 30, 2009, down from prior year gross margin of 22.0% as the Company’s cost saving initiatives nearly outweighed the revenue decline caused by the refractive center procedure decline.

     The cost of revenues from doctor services for the three months ended September 30, 2009 was $16.4 million, a decrease of $0.2 million (1%) from cost of revenues of $16.6 million for the three months ended September 30, 2008. Gross margin increased to 26.3% during the three months ended September 30, 2009 from 26.6% in the prior year period. The decrease in cost of revenues was due to the following:

• The cost of revenues from the refractive access segment for the three months ended September 30, 2009 was $3.9 million, a decrease of $0.9 million (18%) from cost of revenues of $4.8 million for the three months ended September 30, 2008. This decrease was primarily attributable to $0.2 million of lower costs associated with decreased excimer procedures and lower cost of revenues of $0.7 million primarily associated with lower costs per procedure on fixed cost reductions.

• The cost of revenues from the Company’s mobile cataract segment for the three months ended September 30, 2009 was $8.4 million, an increase of $0.8 million (11%) from cost of revenues of $7.6 million for the three months ended September 30, 2008. This increase was primarily due to higher variable costs of 20% on increased surgical procedure volume, higher lens cost and a one-time inventory write-down of $0.7 million, which were almost entirely offset with fixed cost reductions of 11% as the Company continues to operate under a leaner fixed cost structure in the current economic environment.

• The cost of revenues from the Company’s businesses that manage cataract and secondary care centers for the three months ended September 30, 2009 was $4.0 million, a decrease of $0.2 million (5%) from cost of revenues of $4.2 million for the three months ended September 30, 2008. The decrease was caused by the third quarter 2009 sale of the majority-owned ambulatory surgical center, which contributed no cost of revenue during the current quarter but $0.6 million during the three months ended September 30, 2008.

     The cost of revenues from eye care for the three months ended September 30, 2009 was $3.5 million, an increase of $0.9 million (34%) from cost of revenues of $2.6 million for the three months ended September 30, 2008. This increase was due to additional costs incurred as a result of a 10% increase in total franchisee locations, which required additional operating costs to manage. Gross margins decreased to 51.6% during the three months ended September 30, 2009 from 59.3% in the prior year period on higher professional fees.

     General and administrative expenses of $5.7 million for the three months ended September 30, 2009 decreased $1.1 million from $6.8 million for the three months ended September 30, 2008. The decrease was primarily related to lower employee related expenses in refractive centers and lower non-restructuring related professional fees in corporate overhead.

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     Marketing expenses decreased to $4.9 million for the three months ended September 30, 2009 from $9.4 million for the three months ended September 30, 2008. The $4.5 million decrease was due to a $4.2 million (63%) reduction in refractive center marketing spend, specifically related to external advertising and direct to consumer marketing, in order to reduce costs during the economic downturn.

     During the three months ended September 30, 2009, the Company recorded a $0.5 million impairment charge in refractive centers on a trade name intangible as the trade name was no longer being utilized by the Company. During the three months ended September 30, 2008, the Company recorded $1.5 million of impairment charges in doctor services against goodwill and other long-term assets to adjust the carrying values of various ambulatory surgical centers to fair value.

     Other operating expenses increased to $6.5 million for the three months ended September 30, 2009 from other operating income of $0.1 million for the three months ended September 30, 2008. The $6.6 million unfavorable change was primarily related to $4.1 million of financial and legal advisor expenses and a $1.6 million loss incurred on the divestiture of three ambulatory surgical center investments, each incurred during the three months ended September 30, 2009.

     Interest expense increased to $4.1 million for the three months ended September 30, 2009 from $2.6 million for the three months ended September 30, 2008. This $1.5 million increase was primarily due the termination of the Company’s interest rate swap, which was reclassified to interest expense from other comprehensive loss during the quarter ended September 30, 2009. Also contributing to the higher interest expense are higher borrowings under the Credit Facility and the incremental default interest rate of 2.0% that began during the quarter. The average interest rate for the three months ended September 30, 2009 and 2008 was approximately 13.4% and 9.9%, respectively, which includes the impact of deferred loan costs, the Company’s interest rate swap and other fees.

     For the three months ended September 30, 2009, the Company recognized income tax expense of $0.2 million, which was determined using an estimate of the Company’s 2009 total annual tax expense based on the forecasted taxable income for the full year. For the three months ended September 30, 2008, the Company also recognized income tax expense of $0.2 million.

     Net loss attributable to TLC Vision Corporation for the three months ended September 30, 2009 was ($10.0) million, or ($0.20) per basic and diluted share, compared to ($6.7) million, or ($0.13) per basic and diluted share, for the three months ended September 30, 2008.

NINE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2008

     Total revenues for the nine months ended September 30, 2009 were $179.5 million, a decrease of $42.5 million (19%) from revenues of $222.0 million for the nine months ended September 30, 2008. The decrease in revenue was primarily attributable to the decline in refractive centers and refractive access procedures, partially offset by higher cataract volume and growth in eye care.

     Revenues from refractive centers for the nine months ended September 30, 2009 were $85.1 million, a decrease of $41.4 million (33%) from revenues of $126.5 million for the nine months ended September 30, 2008. The decrease in revenues from refractive centers resulted primarily from lower center procedure volume, which accounted for a decrease in revenues of approximately $37.7 million. The remaining revenue decline of $3.7 million was the result of decreased revenue per procedure. For the nine months ended September 30, 2009, majority-owned center procedures were approximately 50,500, a decrease of 23,100 from 73,600 procedures for the nine months ended September 30, 2008. The procedure decline was attributable to the weakened U.S. economy, which has negatively impacted consumer discretionary spending.

     Revenues from doctor services for the nine months ended September 30, 2009 were $70.3 million, a decrease of $2.9 million (4%) from revenues of $73.2 million for the nine months ended September 30, 2008. The revenue decrease from doctor services was due principally to procedure shortfalls in refractive access, partially offset by increases in the Company’s mobile cataract and other segments.

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• Revenues from the refractive access services segment for the nine months ended September 30, 2009 were $18.9 million, a decrease of $4.9 million (20%) from revenues of $23.8 million for the nine months ended September 30, 2008. For the nine months ended September 30, 2009, excimer procedures declined by approximately 8,400 (23%) from the prior year period on lower customer demand, which accounted for a decrease in revenues of approximately $5.5 million. This decrease was partially offset by a higher average sales price of 4%, which increased revenues by approximately $0.6 million, primarily caused by a 6% Intralase revenue increase.

• Revenues from the Company’s mobile cataract segment for the nine months ended September 30, 2009 were $31.6 million, an increase of $1.1 million (4%) from revenues of $30.5 million for the nine months ended September 30, 2008. The increase in mobile cataract revenues was due to increased surgical procedure volume of 4% and a slightly higher surgical average sales price of 4%, partially offset by a $0.7 million or 32% decline in PHP Foresee^® revenue on a 33% unit volume reduction as the weakened U.S. economy continues to limit consumer spending.

• Revenues from the Company’s businesses that manage cataract and secondary care centers for the nine months ended September 30, 2009 were $19.7 million, an increase of $0.8 million (4%) from revenues of $18.9 million for the nine months ended September 30, 2008. The increase was primarily driven by a 2% increase in majority-owned procedures primarily led by cataract growth. Year-to-date 2009 cataract growth was partially limited due to the early third quarter disposal of a majority-owned ambulatory surgical center, which contributed 1,900 procedures during the nine months ended September 30, 2009 compared to 2,400 procedures during the nine months ended September 30, 2008.

     Revenues from eye care for the nine months ended September 30, 2009 were $24.1 million, an increase of $1.9 million (8%) from revenues of $22.2 million for the nine months ended September 30, 2008. This increase was due to a 10% year-over-year increase in total franchisee locations.

     Total cost of revenues (excluding amortization expense for all segments) for the nine months ended September 30, 2009 was $129.0 million, a decrease of $23.6 million (15%) from the cost of revenues of $152.6 million for the nine months ended September 30, 2008.

     The cost of revenues from refractive centers for the nine months ended September 30, 2009 was $65.1 million, a decrease of $23.9 million (27%) from cost of revenues of $89.0 million for the nine months ended September 30, 2008. This decrease was attributable to a $12.9 million cost of revenue decline related to lower procedure volume, $10.7 million in fixed cost reductions and $0.3 million in decreased variable costs per procedure. Gross margin for centers was 23.5% during the nine months ended September 30, 2009, down from prior year gross margin of 29.7% as the Company’s cost saving initiatives could not outweigh the revenue decline caused by the refractive center procedure decline.

     The cost of revenues from doctor services for the nine months ended September 30, 2009 was $52.5 million, a decrease of $0.9 million (2%) from cost of revenues of $53.4 million for the nine months ended September 30, 2008. Gross margin decreased to 25.3% during the nine months ended September 30, 2009 from 27.0% in the prior year period. The decrease in cost of revenues was due to the following:

• The cost of revenues from the refractive access segment for the nine months ended September 30, 2009 was $15.1 million, a decrease of $3.4 million (18%) from cost of revenues of $18.5 million for the nine months ended September 30, 2008. This decrease was primarily attributable to $4.3 million of lower costs associated with decreased excimer procedures, partially offset by an increase in cost of revenues of $0.9 million primarily associated with higher cost procedures and additional mobile Intralase procedures, which on a procedure basis is up 11% year-over-year.

• The cost of revenues from the Company’s mobile cataract segment for the nine months ended September 30, 2009 was $23.8 million, an increase of $1.3 million (6%) from cost of revenues of $22.5 million for the nine months ended September 30, 2008. This increase was primarily due to higher surgical procedure volume of 4%, higher lens supply costs and a third quarter 2009 $0.7 million PHP Foresee^® inventory write-down, partially offset by lower costs associated with a 33% decline in PHP Foresee^® unit volume.

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• The cost of revenues from the Company’s businesses that manage cataract and secondary care centers for the nine months ended September 30, 2009 was $13.6 million, an increase of $1.2 million (9%) from cost of revenues of $12.4 million for the nine months ended September 30, 2008. The increase was caused primarily by the increase in surgical procedures and higher per procedure cataract lens cost.

     Cost of revenues from eye care for the nine months ended September 30, 2009 were $11.4 million, an increase of $1.3 million (13%) from cost of revenues of $10.1 million for the nine months ended September 30, 2008. This increase was primarily due to the 10% year-over-year increase in total franchisee locations requiring additional cost to support.

     General and administrative expenses of $18.0 million for the nine months ended September 30, 2009 decreased $4.2 million from $22.2 million for the nine months ended September 30, 2008. The decrease was primarily related to lower employee related expenses, non-restructuring professional fees and discretionary spending, partially offset by an unfavorable change in foreign exchange expense related to the Company’s Canadian operations.

     Marketing expenses decreased to $17.3 million for the nine months ended September 30, 2009 from $31.3 million for the nine months ended September 30, 2008. The $14.0 million decrease was due to a $13.3 million (59%) reduction in refractive center marketing spend, specifically related to external advertising and direct to consumer marketing, in order to reduce costs during the economic downturn.

     Amortization of intangibles decreased to $1.7 million for the nine months ended September 30, 2009 from $2.4 million for the nine months ended September 30, 2008. The $0.7 million decrease was due to a lower average intangible balance during 2009 compared to 2008 due to the impairment of multiple intangible assets during the quarter ended December 31, 2008.

     During the nine months ended September 30, 2009, the Company recorded a $0.5 million impairment charge in refractive centers on a trade name intangible as the trade name was no longer being utilized by the Company. During the nine months ended September 30, 2008, the Company recorded $1.5 million of impairment charges in doctor services against goodwill and other long-term assets to adjust the carrying values of various ambulatory surgical centers to fair value.

     Other operating expenses increased to $14.6 million for the nine months ended September 30, 2009 from other operating income of $0.7 million for the nine months ended September 30, 2008. The $15.3 million unfavorable change was primarily related to center closing costs of $0.7 million, employee severance expense of $2.6 million, $9.1 million of financial and legal advisor expenses and a $1.6 million loss incurred on the divestiture of three ambulatory surgical center investments, all incurred during the nine months ended September 30, 2009.

     Interest expense increased to $9.7 million for the nine months ended September 30, 2009 from $7.5 million for the nine months ended September 30, 2008. This $2.2 million increase was primarily due the termination of the Company’s interest rate swap, which was reclassified to interest expense from other comprehensive loss during the nine months ended September 30, 2009. Also contributing to the higher interest expense was higher average borrowings under the Credit Facility and the additional default interest rate of 2%. The average interest rate for the nine months ended September 30, 2009 and 2008 was approximately 10.5% and 9.4%, respectively, which includes the impact of deferred loan costs, the Company’s interest rate swap and other fees.

     Earnings from equity investments were $1.0 million for the nine months ended September 30, 2009 compared to $0.4 million for the nine months ended September 30, 2008. The lower equity earnings during the nine months ended September 30, 2008 were primarily caused by equity losses generated in the Company’s Laser Eye Centers of California (“LECC”) investment. Under the equity method of accounting, such losses did not recur during the nine months ended September 30, 2009 as the investment balance in LECC was reduced to zero due to the cumulative effect of historical losses incurred.

     For the nine months ended September 30, 2009, the Company recognized income tax expense of $0.7 million, which was determined using an estimate of the Company’s 2009 total annual tax expense based on the forecasted taxable income for the full year. For the nine months ended September 30, 2008, the Company recognized income tax expense of $1.0 million.

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     Net income attributable to noncontrolling interest decreased to $7.4 million for the nine months ended September 30, 2009 from $8.0 million for the nine months ended September 30, 2008 primarily due to lower profits in non-wholly owned refractive centers.

     Net loss attributable to TLC Vision Corporation for the nine months ended September 30, 2009 was ($18.2) million, or ($0.36) per basic and diluted share, compared to ($2.8) million, or ($0.06) per basic and diluted share, for the nine months ended September 30, 2008.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

     The Company relies on the following sources of liquidity to continue to operate as a going concern: (i) cash and cash equivalents on hand; (ii) cash generated from operations; (iii) borrowings under the Company’s revolving credit facility; (iv) net proceeds from asset sales; and (v) access to the capital markets. The Company’s principal uses of cash are to provide working capital to fund its operation and to service its debt and other contractual obligations. The changes in financial markets during 2008 limited the ability of companies such as TLCVision to access the capital markets. The economic recession in the United States continues to impact the Company’s operations, resulting in a decline in the demand for refractive surgery and financial performance. The Company incurred losses attributable to TLC Vision Corporation of $18.2 million for the nine months ended September 30, 2009 compared to $2.8 million for the nine months ended September 30, 2008. As a result, the Company’s liquidity continued to be significantly constrained during 2009.

     Beginning in early 2008, in response to the deteriorating economic environment, the Company implemented a series of initiatives to reduce its costs of operation to levels commensurate with the new lower level of refractive procedures anticipated in fiscal 2008 and 2009. The Company continues to evaluate and implement cost reduction and cash generation initiatives, including the sale of surplus assets and the closure of underperforming refractive centers/mobile refractive routes. During the nine months ended September 30, 2009, the Company closed four majority-owned refractive centers, which performed approximately 400 and 1,000 refractive procedures during the nine months ended September 30, 2009 and 2008, respectively. During the quarter ended September 30, 2009, the Company divested one majority-owned and two minority-owned ambulatory surgical centers for a combined net sale price of $2.2 million. The divested ambulatory surgical centers performed 5,500 and 7,500 surgical procedures during the nine months ended September 30, 2009 and 2008, respectively.

     Due to the decline in customer demand during the trailing twelve month period, and the resulting decline in sales, the Company’s deteriorating financial performance resulted in the Company’s inability to comply with its primary financial covenants under its Credit Facility as of December 31, 2008, March 31, 2009, June 30, 2009 and September 30, 2009. Furthermore, the Company ceased making principal and interest payments under the Credit Facility subsequent to June 30, 2009.

     As a result of the inability to comply with the primary financial covenants, the Company has received from its lenders numerous waivers, consents and amendments to the Credit Agreement during the nine months ended September 30, 2009. All waivers, consents and amendments to the Credit Agreement are filed with the SEC as exhibits to Current Reports on Form 8-K. The following were dated during the quarter ended September 30, 2009:

• On September 10, 2009, the Company announced that it obtained from its lenders a Limited Waiver and Amendment No. 5 to the Credit Agreement, dated as of September 8, 2009, which among other things, provided a limited waiver through September 30, 2009 of specified defaults and provided that the lenders would, until October 1, 2009, forbear from exercising their rights arising out of the non-payment of certain principal, interest and other payments previously due.

• On October 1, 2009, the Company announced that it had secured from its lenders an extension to October 13, 2009 of the previously announced Limited Waiver and Amendment No. 5 with respect to its Credit Facility that expired on September 30, 2009, along with a forbearance with respect to certain payment obligations under the Credit Agreement. The extension and forbearance agreement is contained in a limited

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waiver, dated as of September 30, 2009, which among other things, provided a limited waiver through October 13, 2009 of specified defaults, extended the time for payment of certain principal, interest and other payments previously due and provided that the lenders holding a majority amount of the Credit Agreement could, in their sole discretion, extend the waiver period to October 30, 2009.

     Refer to Note 24, Subsequent Events, of the Interim Unaudited Consolidated Financial Statements for additional information regarding waivers, amendments and consents dated subsequent to September 30, 2009.

     As of September 30, 2009, the Company failed to make various mandatory payments under its Credit Agreement and related amendments. Such payments included interest on the term and revolving credit advances of $2.8 million, principal payments on term advances of $0.4 million and $1.4 million of other mandatory payments.

     Given the aforementioned payment defaults, and that it is unlikely that the Company will be in compliance with the covenants currently in the Credit Facility for the balance of 2009 beyond the current waiver period unless amended, all term borrowings aggregating $76.7 million under the Credit Facility have been recorded as current liabilities as of September 30, 2009 and December 31, 2008. Accordingly, at September 30, 2009 and December 31, 2008, the Company has working capital deficiencies of approximately $103.6 million and $99.5 million, respectively.

     The Company borrowed an additional $17.4 million under the revolving portion of its Credit Facility during the nine months ended September 30, 2009, which reduced the open availability under the Credit Facility to approximately $0.6 million at September 30, 2009. The outstanding balance of $23.4 million under the revolving portion of the Credit Facility is also recorded as a current liability as of September 30, 2009.

     The Company will likely continue to incur operating losses in 2009 and its liquidity will likely remain constrained such that it may not be sufficient to meet the Company’s cash operating needs in this period of economic uncertainty. The Company is in active discussions with its lenders to ensure that it has sufficient liquidity in excess of what is available under its Credit Facility, although there is no assurance that the Company can obtain additional liquidity on commercially reasonable terms, if at all. If the Company is unable to obtain or sustain the liquidity required to operate its business the Company may need to seek to modify the terms of its debts and/or to reorganize its capital structure. There can be no assurances that the lenders will grant such restructuring, waivers or amendments on commercially reasonable terms, if at all. If the Company is unable to obtain or sustain the liquidity required to operate its business, the Company may need to seek to modify the terms of its debts through court reorganization proceedings to allow it, among other things, to reorganize its capital structure.

     The Company’s independent registered public accounting firm’s report issued in the December 31, 2008 Annual Report on Form 10-K included an explanatory paragraph describing the existence of conditions that raise substantial doubt about the Company’s ability to continue as a going concern, including significant losses, limited access to additional liquidity and compliance with certain financial covenants. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that may result should the Company be unable to continue as a going concern.

Credit Facility

     The Company obtained a $110.0 million credit facility (“Credit Facility”) during June 2007, which is secured by substantially all of the assets of the Company and consisting of both senior term debt and a revolver as follows:

• Senior term debt, totaling $85.0 million, with a six-year term and required amortization payments of 1% per annum plus a percentage of excess cash flow (as defined in the agreement) and sales of assets or borrowings outside of the normal course of business. As of September 30, 2009, $76.7 million was outstanding on this portion of the facility.

• A revolving credit facility, totaling $25.0 million with a five-year term. As of September 30, 2009, the Company had $23.4 million outstanding under this portion of the facility and outstanding letters of credit totaling approximately $1.0 million. Accordingly, availability under the revolving credit facility is $0.6 million at September 30, 2009.

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     Interest on the facility is calculated based on either prime rate or the London Interbank Offered Rate (LIBOR) plus a margin. As a result of certain events of default and the June 30, 2009 expiration of the Limited Waiver, Consent and Amendment No. 3 to Credit Agreement, the LIBOR advances with interest periods ending on or after June 30, 2009 automatically converted to prime rate advances at the end of such interest period. Effective June 30, 2009, the Company began incurring 2% default interest resulting from the provisions of the Limited Waiver and Amendment No. 4 to Credit Agreement.

     As of September 30, 2009, the borrowing rate was 3.25% for prime rate borrowings, plus an applicable margin of 4.00% and default interest of 2.00%. In addition, the Company pays an annual commitment fee equal to 0.35% on the undrawn portion of the revolving credit facility.

     The Credit Facility also requires the Company to maintain various financial and non-financial covenants as defined in the Credit Agreement. As of December 31, 2008, March 31, 2009, June 30, 2009 and September 30, 2009, the Company was unable to satisfy various financial covenants. Furthermore, the Company has failed to make various required payments under the Credit Facility. Refer to Note 2, Liquidity, of the Unaudited Interim Consolidated Financial Statements for additional information.

     As a result of the inability to comply with the primary financial covenants, the Company has received from its lenders numerous waivers, consents and amendments to the Credit Agreement during the nine months ended September 30, 2009. All waivers, consents and amendments to the Credit Agreement are filed with SEC as exhibits to Current Reports on Form 8-K. Refer to Note 2, Liquidity, of the Unaudited Interim Consolidated Financial Statements for additional information regarding waivers, amendment or consents dated during the three months ended September 30, 2009, and Note 24, Subsequent Events, of the Unaudited Interim Consolidated Financial Statements for additional information regarding waivers, amendments or consents dated subsequent to September 30, 2009.

     As of September 30, 2009, the Company failed to make various mandatory payments under its Credit Agreement and related amendments. Such payments included interest on the term and revolving credit advances of $2.8 million, principal payments on term advances of $0.4 million and $1.4 million of other mandatory payments.

CASH PROVIDED BY OPERATING ACTIVITIES

     Net cash provided by operating activities was $5.6 million for the nine months ended September 30, 2009. The cash flows provided by operating activities during the nine months ended September 30, 2009 were primarily comprised of the ($10.8) million net loss plus non-cash items including depreciation and amortization of $12.0 million, intangible impairment charges of $0.5 million, loss on business divestitures of $1.6 million, non-cash compensation charges of $0.7 million, an inventory write-down of $0.7 million and a $1.7 million change in working capital, partially offset by earnings from equity investments of $1.0 million.

CASH USED IN INVESTING ACTIVITIES

     Net cash used in investing activities was $2.1 million for the nine months ended September 30, 2009. The cash used in investing activities included capital expenditures of $1.3 million and acquisitions and investments of $5.0 million. These cash outflows were partially offset by $1.6 million of distributions and loan payments received from equity investments, proceeds from the sales of fixed assets of $0.5 million and $2.2 million received on the divestiture of businesses and other investments.

CASH PROVIDED BY FINANCING ACTIVITIES

     Net cash provided by financing activities was $5.1 million for the nine months ended September 30, 2009. Net cash provided during this period was primarily related to proceeds from debt financing of $18.0 million, principally due to Company borrowing against its revolving credit facility. Partially offsetting the cash provided by financing activities were cash outflows due to restricted cash movement of $1.0 million, principal payments of debt of $4.0 million and distributions to noncontrolling interests of $7.8 million.

29

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Investments

     The Company has invested in various companies, some of which are in development stages. The investments in development stage companies are inherently risky because the markets for the technologies or products these companies are developing are typically in the early stages and may never materialize. The Company could lose its various investments in development stage companies. As of September 30, 2009 and December 31, 2008, the Company had investments and other long-term assets of $4.3 million in development stage companies.

Interest Rate Risk

     As of September 30, 2009 the Company had $121.5 million in debt, which is significantly exposed to variable interest rates. As of September 30, 2009, the Company did not have any interest rate hedging instruments to hedge the variable interest rate exposure.

Foreign Currency Risk

     The Company’s net assets, net earnings and cash flows from its Canadian subsidiaries are based on the U.S. dollar equivalent of such amounts measured in the Canadian dollar functional currency. Assets and liabilities of the Canadian operations are translated to U.S. dollars using the applicable exchange rate as of the end of a reporting period. Revenues, expenses and cash flow are translated using the average exchange rate during the reporting period.

ITEM 4. CONTROLS AND PROCEDURES

     The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Principal Executive Officers and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

     As of the end of the period covered by this Form 10-Q, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Principal Executive Officers and Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based on that evaluation, the Company’s Principal Executive Officers and Principal Financial Officer concluded that the Company’s disclosure controls and procedures were effective, in all material respects, to ensure that information required to be disclosed in the reports the Company files and submits under the Exchange Act is recorded, processed, summarized and reported as and when required.

     There have been no significant changes in the Company’s internal control over financial reporting during the period that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     There have been no material changes in legal proceedings from that reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

ITEM 1A. RISK FACTORS

     There are no material changes to the risk factors as disclosed in the Company’s Annual Report on Form 10-K for fiscal year 2008.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

     Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Not applicable.

ITEM 5. OTHER INFORMATION

     Not applicable.

ITEM 6. EXHIBITS

10.1	Limited Forbearance and Third Amendment to Transfer Rights Agreement, entered August 20, 2009, by and among Michael Aronsky, M.D., Carol Hoffman, M.D., George Pronesti, M.D., and Anthony Zacchei, M.D. (collectively “Kremer Minority Holders”), TLC Vision (USA) Corporation, DelVal ASC, LLC, and TLC Management, LLC.
10.2	Engagement Letter of Conway, Del Genio, Gries & Co., LLC by TLC Vision Corporation, dated as of February 16, 2009.
10.3	Addendum to the Engagement Letter of Conway, Del Genio, Gries & Co., LLC by TLC Vision Corporation, dated April 23, 2009.
10.4	Limited Waiver and Amendment No. 4 to Credit Agreement dated as of June 30, 2009 (incorporated by reference from TLC Vision Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 5, 2009.)
10.5	Amendment to Limited Waiver and Amendment No. 4 to Credit Agreement and Amendment No. 5 to Credit Agreement dated September 8, 2009 (incorporated by reference from TLC Vision Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 14, 2009.)
10.6	Limited Waiver dated September 30, 2009 (incorporated by reference from TLC Vision Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2009.)
10.7	Amendment No. 2 to Agreement and Plan of Merger, dated as of August 10, 2009, by and among TruVision, Inc., TLC Vision Corporation, TLC Vision (USA) Corporation and Lindsay T. Atwood (incorporated by reference from TLC Vision Corporation’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2009.)

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31.1	Chairman of the Board’s Certification required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
31.2	Chief Operating Officer’s Certification required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
31.3	Chief Restructuring Officer’s Certification required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
31.4	Interim Chief Financial Officer’s Certification required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended
32.1	Chairman of the Board’s Certification of periodic financial report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, U.S.C. Section 1350.
32.2	Chief Operating Officer’s Certification of periodic financial report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, U.S.C. Section 1350.
32.3	Chief Restructuring Officer’s Certification of periodic financial report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, U.S.C. Section 1350.
32.4	Interim Chief Financial Officer’s Certification of periodic financial report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, U.S.C. Section 1350.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TLC VISION CORPORATION
By:	/s/ Warren S. Rustand
	Warren S. Rustand
	Chairman of the Board November 16, 2009
By:	/s/ James B. Tiffany
	James B. Tiffany
	Chief Operating Officer November 16, 2009
By:	/s/ Michael F. Gries
	Michael F. Gries
	Chief Restructuring Officer November 16, 2009
By:	/s/ William J. McManus
	William J. McManus
	Interim Chief Financial Officer November 16, 2009

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EXHIBIT INDEX

No.	Description
10.1	Limited Forbearance and Third Amendment to Transfer Rights Agreement, entered August 20, 2009, by and among Michael Aronsky, M.D., Carol Hoffman, M.D., George Pronesti, M.D., and Anthony Zacchei, M.D. (collectively “Kremer Minority Holders”), TLC Vision (USA) Corporation, DelVal ASC, LLC, and TLC Management, LLC.
10.2	Engagement Letter of Conway, Del Genio, Gries & Co., LLC by TLC Vision Corporation, dated as of February 16, 2009.
10.3	Addendum to the Engagement Letter of Conway, Del Genio, Gries & Co., LLC by TLC Vision Corporation, dated April 23, 2009.
10.4	Limited Waiver and Amendment No. 4 to Credit Agreement dated as of June 30, 2009 (incorporated by reference from TLC Vision Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 5, 2009.)
10.5	Amendment to Limited Waiver and Amendment No. 4 to Credit Agreement and Amendment No. 5 to Credit Agreement dated September 8, 2009 (incorporated by reference from TLC Vision Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 14, 2009.)
10.6	Limited Waiver dated September 30, 2009 (incorporated by reference from TLC Vision Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2009.)
10.7	Amendment No. 2 to Agreement and Plan of Merger, dated as of August 10, 2009, by and among TruVision, Inc., TLC Vision Corporation, TLC Vision (USA) Corporation and Lindsay T. Atwood (incorporated by reference from TLC Vision Corporation’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2009.)
31.1	Chairman of the Board’s Certification required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
31.2	Chief Operating Officer’s Certification required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
31.3	Chief Restructuring Officer’s Certification required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
31.4	Interim Chief Financial Officer’s Certification required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
32.1	Chairman of the Board’s Certification of periodic financial report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, U.S.C. Section 1350.
32.2	Chief Operating Officer’s Certification of periodic financial report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, U.S.C. Section 1350
32.3	Chief Restructuring Officer’s Certification of periodic financial report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, U.S.C. Section 1350
32.4	Interim Chief Financial Officer’s Certification of periodic financial report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, U.S.C. Section 1350

34

EX-10.1

EXHIBIT 10.1

LIMITED FORBEARANCE
AND THIRD AMENDMENT TO TRANSFER RIGHTS AGREEMENT

     THIS LIMITED FORBEARANCE AND THIRD AMENDMENT TO TRANSFER RIGHTS AGREEMENT (this “Forbearance”), is made and entered into as of August 20, 2009 with respect to that certain Transfer Rights Agreement, dated as of July 12, 2005, as amended by the First Amendment to Transfer Rights Agreement, dated as of April 1, 2007, and as amended by the Second Amendment to Transfer Rights Agreement, dated as of July 31, 2007 (as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, the “Transfer Rights Agreement”), by and among Michael Aronsky, M.D., Carol Hoffman, M.D., George Pronesti, M.D., and Anthony Zacchei, M.D. (each a “Buyer” and collectively, the “Buyers”), TLC Vision (USA) Corporation, a Delaware corporation (“TLC”), DelVal ASC, LLC, a Delaware limited liability company (“ASC LLC”), and TLC Management (Delaware Valley), LLC, a Delaware limited liability company (“Management LLC,” together with TLC and ASC LLC, the “TLC Entities”).

W I T N E S S E T H:

     WHEREAS, TLC is a party to that certain Amended and Restated Credit Agreement, dated as of June 21, 2007 (as amended as of the date hereof and as the same now exists or may hereafter be amended, modified, supplemented, extended, renew, restated or replaced, the “Credit Agreement”);

     WHEREAS, Buyers, TLC, ASC LLC and Management LLC are parties to the Transfer Rights Agreement;

     WHEREAS, pursuant to Section 2.2 of the Transfer Rights Agreement, each Buyer has a right to offer to sell a portion of his or her Original Equity Interests in ASC LLC and Management LLC to TLC on certain specified dates;

     WHEREAS, on or around June 12, 2009, Buyers provided notice to TLC that each of them was offering to sell 40% of their respective interests in Management LLC pursuant to the Transfer Rights Agreement;

     WHEREAS, TLC provided and each of the Buyers consented to a valuation of the Offered Interests on July 14, 2009;

     WHEREAS, payment on account of the Offered Interests (the “Put Amount”) was due and payable on August 12, 2009;

     WHEREAS, TLC failed to pay the Put Amount on August 12, 2009 (the “Event of Default”); and

     WHEREAS, pursuant to the terms and subject to conditions set forth herein, each Buyer agrees to forbear from (i) exercising any and all rights and remedies against TLC under the Transfer Rights Agreement, and (ii) exercising any and all rights and remedies against the TLC Entities pursuant to any other written agreement to which he or she has entered into with any or all of the TLC Entities (including without limitation any employment or non-compete agreement), in each case to the extent arising as a result of the occurrence of the Event of Default, as set forth herein.

     NOW THEREFORE, in consideration of the agreements and subject to the terms and conditions herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

     1. Definitions. Any capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Transfer Rights Agreement.

     (a) “Forbearance Termination Date” means the later of

               (i) 5:00 p.m. Eastern time on September 8, 2009, provided that if the certain Limited Waiver and Amendment No. 4 to Credit Agreement, dated as of June 30, 2009, by and among TLC, the other Loan Parties (as defined therein) and the Lenders (as defined therein) is terminated on a date prior to September 8, 2009, this Forbearance shall terminate on such date; and

               (ii) if on or before September 8, 2009, TLC, the other Loan Parties (as defined in the Credit Agreement) and the Lenders (as defined in the Credit Agreement) enter into a waiver, forbearance, amendment or other similar modification of the Credit Agreement, the earlier of (A) one day prior to the expiration of such waiver, forbearance, amendment or modification, and (B) October 12, 2009.

     (b) “Term” means the period from the Effective Date (as defined below) through and including the Forbearance Termination Date.

     2. Forbearance. Subject to the terms and conditions set forth herein and solely in respect of the Event of Default, Buyers agree to forbear, during the Term of this Forbearance, from (a) exercising any and all rights and remedies against TLC under the Transfer Rights Agreement, and (b) exercising any and all rights and remedies against any of the TLC Entities pursuant to any other written agreement to which he or she has entered into with any or all of the TLC Entities (including without limitation any employment or non-compete agreement), in each case to the extent arising as a result of the occurrence of the Event of Default.

     3. Payment Obligations. Each of the TLC Entities hereby irrevocably and unconditionally agrees, acknowledges and affirms to Buyers that TLC has an existing obligation to, and will, pay the Put Amount to the Buyers on the day immediately following the Forbearance Termination Date otherwise in accordance with the Transfer Rights Agreement, it being understood that time is of the essence.

     4. Amendment to Transfer Rights Agreement. The Transfer Rights Agreement is hereby amended as set forth below.

          (a) Employee Member Put Rights. Section 2.2 of the Transfer Rights Agreement is amended by replacing each instance of “seventh (7th) Anniversary Date” therein with “sixth (6th) Anniversary Date.”

          (b) Agreement Price Upon Termination of Employment. Section 3.1.2 of the Transfer Rights Agreement is amended by replacing “seventh (7th) Anniversary Date” in the sixth line thereof with “sixth (6th) Anniversary Date.”

          (c) Agreement Price for Put Rights and Call Rights.

               (i) Section 3.2.2 of the Transfer Rights Agreement is amended by replacing “seventh (7th) Anniversary Date” in the third line thereof with “sixth (6th) Anniversary Date.”

               (ii) Section 3.2.3 of the Transfer Rights Agreement is amended by replacing “seventh (7th) Anniversary Date” in the third line thereof with “sixth (6th) Anniversary Date.”

     5. Conditions Precedent to Effectiveness. This Forbearance shall be effective as of the date upon which all of the following conditions are satisfied (the “Effective Date”):

          (a) Payment by TLC to the Buyers, in the aggregate, the sum of $250,000 by wire transfer in immediately available funds, payable upon execution of this Forbearance; and

               (b) after giving effect to this Forbearance, the representations and warranties of the Borrowers contained in this Forbearance shall be true and accurate in all material respects.

     6. Representations and Warranties. Each of the TLC Entities hereby represents and warrants to Buyers that (a) this Forbearance has been duly executed and delivered by each TLC Entity; (b) the execution and delivery by each TLC Entity of this Forbearance is within such TLC Entity’s powers and has been duly authorized by all necessary action on its party; and (c) this Forbearance constitutes the legal, valid and binding obligations of such TLC Entity, enforceable against such TLC Entity in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

     7. Acknowledgement. Each of TLC and Management LLC, as guarantors under certain Guaranty agreements dated July 11, 2005 in favor of each of the Buyers hereby consent to this Forbearance and hereby confirm and agree that, notwithstanding the effectiveness of such Forbearance each Guaranty is and shall continue to be in full force and effect and is hereby ratified and confirmed in all respects.

     8. Costs and Expenses. Each Party shall be responsible for its own fees and expenses, including attorneys’ fees, incurred in connection with the preparation, execution, delivery, administration, modification and amendment of this Forbearance and the other instruments and documents to be delivered hereunder; provided, however, that TLC hereby agrees to pay on demand all reasonable fees and expenses incurred by the Buyers, including reasonable attorneys’ fees, in connection with any enforcement of the Buyers’ rights under the Transfer Rights Agreement after the date hereof resulting from the Event of Default or any subsequent failure to timely honor Put Rights by TLC, unless a court of competent jurisdiction finds by final, nonappealable order or judgment that neither TLC nor its affiliates were obligated to honor any such Put Right; provided further, that TLC’s liability for such fees shall not exceed $50,000 in the aggregate with respect to each of the Put Rights under the Transfer Rights Agreement.

     9. No Other Waiver or Other Forbearance. Except as otherwise expressed herein, the execution, delivery and effectiveness of this Forbearance shall not operate as a waiver of or forbearance with respect to any right, power or remedy of Buyers under the Transfer Rights Agreement, nor constitute a waiver of or forbearance with respect to any provision of the Transfer Rights Agreement. The provisions of the Transfer Rights Agreement not herein specifically amended shall continue in full force and effect. This Forbearance shall not constitute a modification of the Transfer Rights Agreement or a course of dealing between the Buyers, on the one hand, and any of the TLC Entities, on the other hand, at variance with the Transfer Rights Agreement such as to require further notice by Buyers to any of the TLC Entities to require strict compliance with the terms of the Transfer Rights Agreement in the future, except as expressly set forth herein.

     10. No Third Party Beneficiaries. Nothing in this Forbearance is intended, nor shall anything herein be construed, to confer any rights, legal or equitable in any person or entity other than the parties hereto and their respective successors, heirs, devisees, assigns, legal representatives, executors and administrators.

     11. Severability. Each provision of this Forbearance shall be considered severable, and if for any reason any provision or provisions hereof are determined to be invalid and contrary to any existing or future law, such invalidity shall not impair the operation of or affect those portions of this Forbearance which are valid.

     12. Interpretation. Each party has had the opportunity to have this Forbearance reviewed by counsel and be advised by counsel as to the rights and obligations of each party. This Forbearance shall not be construed or interpreted more strictly against one party than another on grounds that this Forbearance or any draft thereof was prepared by a party or his, her or its counsel.

     13. Counterparts. This Forbearance may be executed in counterparts, each of which shall be an original and, collectively shall constitute one instrument. Any signature delivered by a party by facsimile transmission or electronic mail shall be deemed an original signature hereto.

     14. Applicable Law. This Forbearance shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware excluding conflicts of law provisions.

     IN WITNESS WHEREOF, the parties hereto have executed this Forbearance as of the date first written above.

TLC VISION (USA) CORPORATION, A Delaware corporation
By: /s/ William McManus
	Name:	William McManus
	Title:	Interim Chief Financial Officer
DELVAL ASC, LLC, A Delaware limited liability company
By: /s/ Jonathan P. Compton
	Name:	Jonathan P. Compton
	Title:	Assistant Treasurer
TLC MANAGEMENT (DELAWARE VALLEY), LLC, A Delaware limited liability company
By: /s/ Jonathan P. Compton
	Name:	Jonathan P. Compton
	Title:	Assistant Treasurer

[SIGNATURE PAGE TO LIMITED FORBEARANCE]

BUYERS

MICHAEL ARONSKY, M.D.
 

/s/ Michael Aronsky  

CAROL HOFFMAN, M.D.
 

/s/ Carol Hoffman  

GEORGE PRONESTI, M.D.
 

/s/ George Pronesti  

ANTHONY ZACCHEI, M.D.
 

/s/ Anthony Zacchei  

[SIGNATURE PAGE TO LIMITED FORBEARANCE]

EX-10.2

EXHIBIT 10.2

February 16, 2009

Mr. James C. Wachtman
Chief Executive Officer
TLCVision Corporation
16305 Swingley Ridge Road, Ste. 300
Chesterfield, MO 63017

Dear Jim:

This letter agreement confirms the engagement of Conway, Del Genio, Gries & Co., LLC (“CDG”) by TLC Vision Corporation (the “Company”), as its restructuring advisor and with respect to other financial matters as to which the Company and CDG may agree in writing during the Term (as determined pursuant to Section C below) of this engagement (“Agreement”). All references in this letter to this Agreement shall include Schedule I hereto and Attachment A thereto.

A. Scope of Services

CDG will:

I.	Perform general due diligence on the Company which will include gathering and analyzing data, evaluating the Company’s performance, and reviewing other information with current management in order to determine the extent of the Company’s financial challenges and opportunities;
II.	Perform due diligence on the Company’s capital structure, including a review of the applicable legal agreements;
III.	Evaluate the feasibility of strategic alternatives being considered by the Company given its current operating business, current capital structure and business prospects;
IV.	Review and assess the Company’s current liquidity forecast and assist management in modifying and updating such forecast based upon current information, CDG’s observations and other information as it becomes available;
V.	Assist the Company in the development of business plan alternatives (including detailed financial projections), which would be shared with its lenders and other parties in interest;
VI.	Assist the Company in presenting its business plan and restructuring plan to its various constituencies;
VII.	Communicate with the Company’s key constituents in order to gauge their receptivity towards a restructuring transaction and advise the Company regarding the feasibility and timing of a restructuring transaction based on the feedback.
VIII.	Assist the Company with negotiating any waivers, amendments or forbearance agreements as may by necessary;
IX.	Develop valuation and debt capacity analyses for the Company on a consolidated basis;

X.	Assist the Company in evaluating restructuring alternatives available to the Company and in the development and presentation of a formal amendment or restructuring proposal;
XI.	Assist the Company in subsequent restructuring discussions and negotiations with lenders, creditors, shareholders and other constituencies.
XII.	Assist in the development of material financial information (including operating reports, cash flow forecasts, and other financial analyses) important to the restructuring effort;
XIII.	Performing such other services and analyses relating to the restructuring effort as are or become consistent with foregoing items or as the parties hereto mutually agree.

In rendering its services to the Company hereunder, CDG is not assuming any responsibility for the Company’s underlying business decision to pursue (or not to pursue) any business strategy or to effect (or not to effect) any transaction. The Company agrees that CDG shall not have any obligation or responsibility to provide accounting or audit services for the Company or to otherwise advise the Company with respect to the tax consequences of any proposed transaction directly or indirectly related to our services hereunder. The Company agrees that CDG shall not have any obligation or responsibility to provide any fairness opinions or any advice or opinions with respect to solvency in connection with any transaction. The Company and CDG confirm that each will rely on its own counsel, accountants and other similar expert advisors for legal, accounting, tax and other similar advice.

Notwithstanding anything contained in this Agreement to the contrary, CDG makes no representations or warranties about the Company’s ability to (i) successfully complete a transaction or (ii) satisfy its obligations in full or (iii) maintain sufficient liquidity to operate its business.

B. Fees & Expenses

I. For CDG’s financial advisory services provided pursuant to this Agreement, it is agreed that the Company shall pay CDG a monthly fee (the “Monthly Fee”), which shall be due and paid in cash by the Company upon the execution hereof and on the 16^th of each month hereafter during the Term (as determined pursuant to Section C hereof) of this Agreement. The amount of the Monthly Fees are as follows:

Month 1	$	200,000.00
Month 2	$	175,000.00
Month 3 and each month thereafter until terminated	$	150,000.00

II. Expenses: In addition to the foregoing, CDG will bill monthly in arrears for the reimbursement of all of its reasonable out-of-pocket expenses (including but not limited to travel costs, lodging, meals, research, telephone and facsimile, courier, overnight mail and copy expenses), incurred in connection with CDG’s obligations under this Agreement, including the fees and disbursements of CDG’s attorneys (up to $10,000), plus any sales, use or similar taxes (including additions to such taxes, if any) arising in connection with any matter referred to in this Agreement. CDG will submit to the Company monthly invoices for all services rendered and expenses incurred hereunder. The Company shall reimburse CDG for such expenses whether or not any transaction contemplated by this Agreement shall be proposed or consummated.

For purposes of this Agreement, the term “Restructuring” shall mean any of the following: (x) recapitalization or restructuring with respect to the Company’s obligations (including, without limitation, through any exchange, conversion, cancellation, forgiveness, retirement and/or a material modification or amendment to the terms, conditions or covenants of any of the Company’s obligations (including, without limitation, joint ventures or partnership interests, capital or operating lease obligations, trade credits, pension and other employee benefit obligations and other contract obligations)), including pursuant to an exchange transaction, a solicitation of consents,

waivers, acceptances or authorizations, a bankruptcy proceeding or reorganization, a refinancing or repurchase, or (y) a Sale (as defined below).

For purposes of this agreement, the term “Sale” shall mean the disposition to one or more third parties in one or a series of related transactions of (x) a significant portion of the equity securities of the Company by the security holders of the Company or (y) a significant portion of the assets (including the assignment of any executory contracts) or businesses of the Company or its subsidiaries, in either case, including through a sale or exchange of capital stock, options or assets, a lease of assets with or without a purchase option, a merger, consolidation or other business combination, an exchange or tender offer, a recapitalization, the formation of a joint venture, partnership or similar entity, or any similar transaction.

In the event CDG is requested or authorized by the Company or is required by government regulation, subpoena, or other legal process to produce CDG’s documents or CDG’s members, employees, agents or representatives as witnesses with respect to CDG’s services for the Company, the Company will reimburse CDG for its professional time and expenses, as well as the fees and expenses of CDG’s counsel, incurred in responding to such requests.

Based upon mutual discussion between the Company and CDG of the various issues which may arise in connection with CDG’s engagement hereunder, CDG’s commitment to the variable level of time and effort necessary to address such issues, the level of staffing requested by the Company and the market price for CDG’s engagements of this nature, the Company agrees that the fee arrangement hereunder fairly compensates CDG. The Company and CDG acknowledge and agree that the hours worked, the results achieved and the ultimate benefit to the Company of the work performed, in each case, in connection with this engagement, may vary, and that the Company and CDG have taken this into account in setting the fees hereunder.

To the extent that the Company requests that CDG perform additional services not contemplated by this Agreement, fees for and the scope of such services shall be mutually agreed upon by CDG and the Company, in writing, in advance.

C. Term

The term of CDG’s engagement as financial advisor to the Company (the “Term”) shall commence on the date hereof and continue until terminated by either party in accordance with the provisions of Section E hereof.

D. Staffing

CDG’s services will be led by Michael Gries and Benjamin Jones. CDG’s performance of this Agreement will also be staffed by other personnel possessing the requisite skills and experience necessary to achieve the objectives set forth above in an expeditious and effective manner.

E. Termination

Either party may terminate this Agreement on fifteen (15) days’ written notice; provided, however, that (a) termination in accordance with this Section E or through expiration of the Term shall not affect the Company’s continuing obligation to indemnify and to otherwise limit the liability of the Indemnified Parties (as defined herein) as provided for in this Agreement; and (b) CDG shall be entitled to (i) the fees earned and expenses incurred, as calculated in accordance with Section B, through the date of termination or expiration of the Term.

F. Certain Tax Disclosures

Notwithstanding anything herein to the contrary and except as reasonably necessary to comply with any applicable federal and state securities laws, the Company (and each employee, representative, or other agent of the Company) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of any transaction directly or indirectly related to our services hereunder and all materials of any kind (including opinions or other tax analyses) that are provided to any party relating to such tax treatment and tax structure. For this

purpose, “tax structure” is any fact that may be relevant to understanding the tax treatment of any transaction directly or indirectly related to our services hereunder.

G. Miscellaneous

The Company recognizes and confirms that CDG in acting pursuant to this engagement will be using information in reports and other information provided by others, including, without limitation, information provided by or on behalf of the Company and any potential acquirors, and that CDG does not assume responsibility for and may rely, without independent verification, on the accuracy and completeness of any such reports and information. The Company represents that the disclosure materials will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances in which they were made, not false or misleading. In addition, the Company represents and warrants that any information relating to the Company that is furnished to CDG by or on behalf of the Company or other relevant parties will be true, complete and correct in all material respects. The foregoing shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any Indemnified Party (as defined elsewhere in this Agreement).

The Company agrees that any information or advice (written or oral) rendered by CDG, its affiliates or any of its representatives in connection with this engagement is for the confidential use of the Company and the Company will not and will not permit any third party to disclose or otherwise refer to such advice or information in any manner without CDG’s prior written consent.

The Company agrees to provide indemnification to and to limit liability of CDG and certain other persons in connection with CDG’s engagement hereunder in accordance with Schedule I, which is attached hereto and made a part hereof.

Any controversy or claim arising out of or relating to this Agreement or the services provided by CDG pursuant hereto (including any such matter involving any parent, subsidiary, affiliate, successor in interest, or agent of the Company or of CDG) shall be submitted first to voluntary mediation, and if mediation is not successful, then to binding arbitration, in accordance with the dispute resolution procedures set forth in Schedule I to this Agreement; provided, however, the provisions of this paragraph set forth above shall not apply at any time that the Company is a debtor under any applicable provision of the U.S. Bankruptcy Code (the “Code”); in such event the appropriate court having jurisdiction over the Company as a debtor shall resolve all controversies or claims arising out of this Agreement.

Should the Company become a debtor under any applicable provision of the Code, then the Company agrees to use its best efforts to obtain the approval of the court having jurisdiction over such case for the approval of this Agreement and CDG’s retention by the Company under the terms of this Agreement. CDG shall have no obligation to provide any services under this Agreement in the event that the Company should become a debtor under any applicable reorganization law unless CDG’s retention under the terms of this Agreement is approved by a final order of the appropriate court no longer subject to appeal, rehearing, reconsideration or petition for certiorari.

IN THE EVENT MEDIATION AND/OR ARBITRATION ARE UNAVAILABLE TO RESOLVE A DISPUTE BETWEEN THE PARTIES HERETO, THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION OR PROCEEDING ARISING IN CONNECTION WITH OR AS A RESULT OF THE ENGAGEMENT PROVIDED FOR IN THIS AGREEMENT.

The Company expressly acknowledges that CDG has been retained solely as an advisor to the Company, and not as an advisor to or an agent of any other person, and that the Company’s engagement of CDG is not intended to confer rights upon any persons not a party hereto (including shareholders, employees or creditors of the Company) as against CDG, CDG’s affiliates or their respective directors, officers, agents and employees. It is further understood and agreed that CDG will act under this Agreement as an independent contractor with duties solely to the Company as and to the extent set forth herein and nothing in this Agreement or the nature of CDG’s services shall be deemed to create a fiduciary or agency relationship between CDG and the Company or its shareholders, employees or creditors. The obligations of CDG are solely entity obligations, and no officer, director, employee, agent, member,

or controlling person shall be subjected to any personal liability whatsoever, nor will any such claim be asserted by or on behalf of any other party to this Agreement.

If any term, provision, covenant or restriction contained in this Agreement is held by a court of competent jurisdiction to be void, invalid, or otherwise unenforceable, in whole or part, the remaining terms, provisions, covenants and restrictions contained in this Agreement shall remain in effect.

This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York without reference to principles of conflicts of law other than Section 5-1401 of the New York General Obligations Law.

This Agreement shall constitute the entire understanding among the parties hereto with respect to the subject matter hereof, and supersedes and cancels all prior agreements, negotiations, correspondence, undertakings and communications of the parties, oral or written, respecting such subject matter.

Upon termination of this Agreement, CDG may publicly disclose its role as financial advisor pursuant to this Agreement; provided that if CDG’s engagement becomes public prior to termination of this Agreement by any reason other than disclosure by CDG, CDG may publicly disclose its role as financial advisor at such earlier time.

This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.

[The remainder of the page is intentionally blank.]

This Agreement is important to us and we appreciate the opportunity to serve you. If you are in agreement with the terms set forth herein, please confirm that the foregoing is in accordance with your understanding of our agreement by signing and returning this letter along with a check for the first Monthly Fee in the amount of $200,000.

Very truly yours,

Conway, Del Genio, Gries & Co., LLC
 

By: /s/ Michael F. Gries  

Consented and Agreed to:

TLCVision Corporation

By: /s/ Brian Andrew General Counsel and Secretary

Schedule I
INDEMNIFICATION, CONTRIBUTION, LIMITATION OF LIABILITY AND MEDIATION

This Schedule I and Attachment A hereto are a part of and incorporated into that certain letter agreement (together, the “Agreement”), dated February 16, 2009 between CDG and TLCVision Corporation. All capitalized terms used but not defined herein shall have the same meaning as set forth in the Agreement.

The Company agrees to indemnify and hold harmless each of CDG and its affiliates, consultants, and independent contractors and each of their respective members, officers, directors, employees, agents, controlling parties and representatives (each, an “Indemnified Party” and collectively, the “Indemnified Parties”) against any and all Losses caused by, relating to, based upon or arising out of (directly or indirectly):

i.	this Agreement;
ii.	the Indemnified Parties’ acceptance of or the performance or non-performance of the services that are the subject of this Agreement and related activities prior to the date of this Agreement;
iii.	any document or information, whether oral or written, provided to CDG by the Company or any of its representatives; or
iv.	the breach of any representations, warranties or covenants by the Company given pursuant hereto or in connection herewith;
v.	CDG’s involvement in any Restructuring or any part thereof;
vi.	any filings made by or on behalf of any party with any governmental agency in connection with any Restructuring; or
vii.	any Restructuring (items (i) through (vii) are collectively referred to herein as the “Indemnified Events”).

As used herein, the term “Losses” shall mean any and all losses, claims, damages, liabilities, penalties, obligations and expenses, including, but not limited to, reasonable attorney’s fees, disbursements and court costs, and costs of investigation and preparation as and when incurred in investigating, preparing, pursuing or defending any action or claim (whether or not in connection with (x) pending or threatened litigation in which any Indemnified Party is a party, or may reasonably be expected to be made a party, or (y) enforcing this Agreement) and whether or not joint or several.

The Company agrees that it will not, without the prior written consent of an Indemnified Party, settle, compromise, discharge or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding based upon or in any way related to or arising out of any Indemnified Event and to which an Indemnified Party is or may reasonably be expected to be made a party unless (i) the Company has obtained a written agreement, approved by the relevant Indemnified Party (which approval shall not be unreasonably withheld or delayed) and executed by each party to such proposed settlement, compromise or discharge, or (ii) such settlement includes a provision unconditionally releasing such Indemnified Party and holding such Indemnified Party harmless against all liability in respect of claims by any releasing party relating to or arising out of the Indemnified Event. The Company will be liable for any settlement entered into by an Indemnified Party of any claim against such Indemnified Party made with the Company’s prior written consent, which consent shall not be unreasonably withheld or delayed.

If any action, proceeding or investigation is commenced to which any Indemnified Party proposes to demand indemnification hereunder, such Indemnified Party will notify the Company with reasonable promptness; provided, however, that any failure by such Indemnified Party to notify the Company will not relieve the Company from its obligations hereunder, except to the extent that such failure shall have actually prejudiced the defense of such action. The Company will on demand, advance or pay promptly, on behalf of each Indemnified Party, all Losses that are asserted in good faith by the Indemnified Party to be subject to indemnification hereunder. Each Indemnified Party hereby undertakes, and the Company hereby accepts its undertaking, to repay any and all such amounts so advanced

if it shall ultimately be determined that such Indemnified Party is not entitled to be indemnified therefor. If any such action, proceeding or investigation in which an Indemnified Party is a party or is threatened to be made a party is also against the Company, the Company may, in lieu of advancing the expenses of separate counsel for any such Indemnified Party provide such Indemnified Party with legal representation by the same counsel who represents the Company, provided such counsel is reasonably satisfactory to such Indemnified Party, at no cost to such Indemnified Party; provided, however, that if such counsel or counsel to the Indemnified Party shall determine that due to the existence of actual or potential conflicts of interest between such Indemnified Party and the Company such counsel is unable to represent both the Indemnified Party and the Company, then the Indemnified Party shall be entitled to use separate counsel of its own choice and the Company shall promptly advance its reasonable expenses of such separate counsel upon submission of invoices therefor. Nothing herein shall prevent an Indemnified Party from using separate counsel of its own choice at its own expense, and the Company agrees to cause its counsel to cooperate with such counsel to the Indemnified Party.

In the event the foregoing indemnity is unavailable to an Indemnified Party for any reason, the Company agrees to contribute to any Losses related to or arising out of any Indemnified Event. Each of the Company, on the one hand, and the Indemnified Parties, on the other, shall contribute in such proportion as is appropriate to reflect the relative benefits received (or anticipated to be received) from the actual or proposed transaction giving rise to this Agreement; provided, however, in no event regardless of the legal theory advanced or the allegations made in connection therewith shall the Indemnified Parties’ aggregate contribution to the amount paid or payable to all parties exceed the aggregate fees actually received by such Indemnified Party under this Agreement. For any other Losses, or for Losses referred to in the preceding sentence if the allocation provided for therein is unavailable for any reason, the Company and CDG shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of each of the Company and the Indemnified Parties in connection with the statements, omissions or other conduct which resulted in such Losses, as well as any other relevant equitable considerations. Benefits received (or anticipated to be received) by the Company shall be deemed to be equal to the aggregate cash consideration and value of securities or any other property payable, exchangeable or transferable in such transaction or proposed transaction, and benefits received by the Indemnified Parties shall be deemed to be equal to the compensation payable by the Company to the Indemnified Parties in connection with such engagement. Relative fault shall be determined by reference to, among other things, whether any alleged untrue statement or omission or any other alleged conduct relates to information provided by the Company or other conduct by the Company (or its employees or other agents) on the one hand or by the Indemnified Parties on the other hand. The Company and CDG agree that it would not be just and equitable if contribution were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above.

The Company will not be liable under the foregoing indemnification provision to any Indemnified Party to the extent that any Loss is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) on the merits to have resulted primarily and directly from such Indemnified Party’s gross negligence or willful misconduct.

The Company agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company or its owners, parents, creditors or security holders for or in connection with the engagement of CDG, except to the extent of any such liability for Losses that are found in a final judgment by a court of competent jurisdiction (not subject to further appeal) on the merits to have resulted primarily and directly from such Indemnified Party’s gross negligence or willful misconduct. Notwithstanding anything contained herein to the contrary, in no event regardless of the legal theory advanced or the allegations made in connection therewith shall payments made by an Indemnified Party exceed the aggregate fees actually received by such Indemnified Party under this Agreement.

The rights provided herein shall not be deemed exclusive of any other rights to which the Indemnified Parties may be entitled under any applicable law or otherwise.

Attachment A
Dispute Resolution Procedures

The following procedures shall be used to resolve any controversy or claim (“dispute”) as provided in our letter agreement dated February 16, 2009 (the “Agreement”).

Mediation

A dispute shall be submitted to mediation by written notice to the other party or parties. In the mediation process, the parties will try to resolve their differences voluntarily with the aid of an impartial mediator, who will attempt to facilitate negotiations. The mediator will be selected by agreement of the parties. If the parties cannot otherwise agree on a mediator, one will be appointed by the American Arbitration Association (“AAA”). However, any mediator appointed by the AAA must be acceptable to all parties.

The mediation will be conducted as specified by the mediator and agreed upon by the parties. The parties agree to discuss their differences in good faith and to attempt, with the assistance of the mediator, to reach an amicable resolution of the dispute.

The mediation will be treated as a settlement discussion and therefore will be confidential. The mediator may not testify for either party in any later proceeding relating to the dispute. No recording or transcript shall be made of the mediation proceedings.

Each party will bear its own costs in the mediation. The fees and expenses of the mediator will be shared equally by the parties.

The mediation shall take place in the Borough of Manhattan, New York, New York.

Arbitration

If a dispute has not been resolved within 90 days after the written notice beginning the mediation process (or a longer period, if the parties agree to extend the mediation), the mediation shall terminate and the dispute will be settled by arbitration. The arbitration will be conducted in accordance with the procedures in this document and the Commercial Arbitration Rules of the AAA. In the event of a conflict, the provisions of this document will control.

The arbitration will be conducted before a panel of three arbitrators, regardless of the size of the dispute, to be selected as follows: CDG and the Company will each select one arbitrator and the third arbitrator will be chosen by the two previously selected arbitrators. Any issue concerning the extent to which any dispute is subject to arbitration, or concerning the applicability, interpretation, or enforceability of these procedures, including any contention that all or part of these procedures are invalid or unenforceable, shall be governed by the Federal Arbitration Act and resolved by the arbitrators. No potential arbitrator may serve on the panel unless he or she has agreed in writing to abide and be bound by these procedures.

Unless provided otherwise in the Agreement, the arbitrators shall have no power to award (i) damages inconsistent with the Agreement or (ii) punitive damages or any other damages not measured by the prevailing party’s actual damages, and the parties expressly waive their right to obtain such damages in arbitration or in any other forum. In no event, even if any other portion of these provisions is held to be invalid or unenforceable, shall the arbitrators have power to make an award or impose a remedy that could not be made or imposed by a federal court deciding the matter in the same jurisdiction.

No discovery will be permitted in connection with the arbitration unless it is expressly authorized by the arbitration panel upon a showing of substantial need by the party seeking discovery. All aspects of the arbitration shall be treated as confidential. Neither the parties nor the arbitrators may disclose the existence, content or results of the arbitration, except as necessary to comply with legal or regulatory requirements. Before making any such disclosure, a party shall give written notice to all other parties and shall afford such parties a reasonable opportunity to protect their interests.

The result of the arbitration will be binding on the parties, and judgment on the arbitrators’ award may be entered in any court having jurisdiction.

The arbitration shall take place in the Borough of Manhattan, New York, New York.

EX-10.3

EXHIBIT 10.3

April 23, 2009

Mr. Warren Rustand
Chairman of the Board
TLCVision Corporation
16305 Swingley Ridge Road, Ste. 300
Chesterfield, MO 63017

Dear Warren:

This letter agreement (the “Agreement”) serves as an addendum to the letter agreement between Conway, Del Genio, Gries & Co., LLC (“CDG”) and TLCVision Corporation (the “Company”), dated February 16, 2009 (the “Original Agreement”). Except to the extent specifically modified by this Agreement, the Original Agreement shall remain in full force and effect, and all references in the Original Agreement to this engagement and this Agreement (and words of similar meaning) shall include the terms and conditions of this Agreement and the services provided by CDG hereunder.

A. Scope of Services

The Company has requested, and CDG and the Company agree that, commencing on April 23, 2009, CDG’s scope of services shall be expanded to include the following:

1.	Make Michael F. Gries available to serve as the Chief Restructuring Officer of the Company;
2.	Serve as the principal contact with the Company’s creditors with respect to the Company’s financial and operational matters;
3.	Assist management with the development and implementation of the Company’s restructuring plan, and in connection with negotiations with the various stakeholders; and
4.	Identify areas for cost reduction and other operations improvement opportunities.

B. Fees

In Section B.I., the reference to the Monthly Fee for Month 3 and each month thereafter until terminated is hereby increased from $150,000 to $175,000, commencing with the date hereof.

C. Insurance

The Company’s Directors and Officers insurance policy includes any past, present or future officer or director of the Company as an “Insured Person” under the policy and the Company’s employment practices policy includes any individuals who are or were owners, partners, employees, directors or officers of the Company as an “Insured” under the policy (collectively, the “Policies”). A true, correct, and complete copy of the Company’s current Directors and Officers liability insurance shall be promptly furnished to CDG. The Company represents that the premiums associated with the Policies have been paid in full and that no notice of termination or conversion has been received with respect to the Policies. The Company shall use commercially reasonable efforts to maintain directors and officers liability insurance coverage of not less than $15,000,000 and otherwise comparable as to premiums, terms and amounts as that provided under the Policies during the term of this Agreement, with any replacement coverage being obtained from an insurer with a rating from a nationally recognized rating agency not lower than the present insurer.

D. Miscellaneous

Except to the extent amended or supplemented herein, the terms of the Original Letter shall remain in full force and effect.

This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.

This Agreement is important to us and we appreciate the opportunity to serve you. If you are in agreement with the terms set forth herein, please confirm that the foregoing is in accordance with your understanding of our agreement by signing and returning this letter.

Very truly yours,

Conway, Del Genio, Gries & Co., LLC
 

By: /s/ Michael F. Gries  

Consented and Agreed to:

TLCVision Corporation

By: /s/ Brian Andrew General Counsel and Secretary

EX-31.1

EXHIBIT 31.1

CERTIFICATION

     I, Warren S. Rustand, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of TLC Vision Corporation (the registrant);

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

     (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

     (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 16, 2009

/s/ Warren S. Rustand  

Warren S. Rustand 

Chairman of the Board 

EX-31.2

EXHIBIT 31.2

CERTIFICATION

     I, James B. Tiffany, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of TLC Vision Corporation (the registrant);

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

     (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

     (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 16, 2009

/s/ James B. Tiffany  

James B. Tiffany 

Chief Operating Officer 

EX-31.3

EXHIBIT 31.3

CERTIFICATION

     I, Michael F. Gries, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of TLC Vision Corporation (the registrant);

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

     (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

     (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 16, 2009

/s/ Michael F. Gries  

Michael F. Gries 

Chief Restructuring Officer 

EX-31.4

EXHIBIT 31.4

CERTIFICATION

     I, William J. McManus, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of TLC Vision Corporation (the registrant);

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

     (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

     (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 16, 2009

/s/ William J. McManus  

William J. McManus 

Interim Chief Financial Officer 

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHAIRMAN OF THE BOARD
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of TLC Vision Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Warren S. Rustand, Chairman of the Board, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 16, 2009

/s/ Warren S. Rustand Warren S. Rustand

Chairman of the Board

* A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to TLC Vision Corporation and will be retained by TLC Vision Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF OPERATING OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of TLC Vision Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James B. Tiffany, Chief Operating Officer, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 16, 2009

/s/ James B. Tiffany James B. Tiffany

Chief Operating Officer

* A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to TLC Vision Corporation and will be retained by TLC Vision Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.3

EXHIBIT 32.3

CERTIFICATION OF CHIEF RESTRUCTURING OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of TLC Vision Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael F. Gries, Chief Restructuring Officer, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 16, 2009

/s/ Michael F. Gries Michael F. Gries

Chief Restructuring Officer

* A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to TLC Vision Corporation and will be retained by TLC Vision Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.4

EXHIBIT 32.4

CERTIFICATION OF INTERIM CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of TLC Vision Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William J. McManus, Interim Chief Financial Officer, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 16, 2009

/s/ William J. McManus William J. McManus

Interim Chief Financial Officer

* A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to TLC Vision Corporation and will be retained by TLC Vision Corporation and furnished to the Securities and Exchange Commission or its staff upon request.