1 800 CONTACTS INC, S-1/A, 1998-01-16

1 800 CONTACTS INC
S-1/A, 1998-01-16
OPTICAL INSTRUMENTS & LENSES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 16, 1998

REGISTRATION NO. 333-41055

=============================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

---------------------

PRE-EFFECTIVE

AMENDMENT NO. 1

FORM S-1

REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

---------------------

1-800 CONTACTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<C> <C> <C>
DELAWARE 5961 87-0571643
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>

13751 SOUTH WADSWORTH PARK DRIVE, SUITE D-140
DRAPER, UTAH 84020
TELEPHONE: (801) 572-8225
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S EXECUTIVE OFFICES)

JONATHAN C. COON, PRESIDENT
1-800 CONTACTS, INC.
13751 SOUTH WADSWORTH PARK DRIVE, SUITE D-140
DRAPER, UTAH 84020
TELEPHONE: (801) 572-8225
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)

COPIES TO:

<TABLE>
<C> <C>
DENNIS M. MYERS, ESQ. DAVID A. ZAGORE, ESQ.
Kirkland & Ellis Squire, Sanders & Dempsey L.L.P.
200 East Randolph Drive 4900 Key Tower, 127 Public Square
Chicago, Illinois 60601 Cleveland, Ohio 44114
(312) 861-2000 (216) 479-8500
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
------------------

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

================================================================================
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS, DATED JANUARY 16, 1998

2,200,000 SHARES

1-800 CONTACTS LOGO

COMMON STOCK

Of the 2,200,000 shares of Common Stock, par value $.01 per share ("Common
Stock"), offered hereby (the "Offering"), 1,925,000 shares are being offered by
1-800 CONTACTS, INC., a Delaware corporation (the "Company"), and 275,000 shares
are being offered by the Selling Stockholder (as defined). See "Principal and
Selling Stockholders." The Company will not receive any of the proceeds from the
sale of any shares of Common Stock by the Selling Stockholder. Prior to the
Offering, there has been no public market for the Common Stock of the Company.
It is currently anticipated that the initial public offering price will be
between $10.00 and $12.00 per share. See "Underwriting" for information relating
to the factors to be considered in determining the initial public offering price
of the Common Stock.

The Company's Common Stock has been approved for inclusion on the Nasdaq
National Market System under the symbol "CTAC."

SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN MATTERS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
======================================================================================================================
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDER
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share............. $ $ $ $
- ------------------------------------------------------------------------------------------------------------------
Total(3).............. $ $ $ $
==================================================================================================================
</TABLE>

(1) The Company and the Selling Stockholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."

(2) Before deducting estimated expenses of $750,000, which will be paid by the
Company.

(3) The Company has granted to the Underwriters an option, exercisable within 30
days hereof, to purchase up to an aggregate of 330,000 additional shares of
Common Stock at the price to the public, less underwriting discounts and
commissions, solely to cover over-allotments, if any. If such option is
exercised in full, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Company will be $ , and
, respectively. See "Underwriting."
------------------

At the request of the Company, up to 110,000 shares offered in the Offering
have been reserved for sale to directors, officers and employees of the Company
and certain members of their families at the initial public offering price. The
shares of Common Stock are offered by the Underwriters, subject to prior sale,
when, as and if issued to and accepted by them. The Underwriters reserve the
right to withdraw, cancel or modify such offer and to reject any order in whole
or in part. It is expected that delivery of the shares of Common Stock will be
made against payment therefor at the offices of McDonald & Company Securities,
Inc. or through the facilities of The Depository Trust Company on or about
, 1998.

MCDONALD & COMPANY MORGAN KEEGAN & COMPANY, INC.
SECURITIES, INC.

The date of this Prospectus is , 1998
<PAGE> 3

[PICTURES ILLUSTRATING: (I) A CALL CENTER
AGENT TAKING AN ORDER; (II) A PANORAMIC
VIEW OF THE COMPANY'S CALL CENTER; AND
(III) COPIES OF THE MATERIALS THE COMPANY
USES TO ADVERTISE AND DELIVER ITS
PRODUCTS.]

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK, INCLUDING
OVER-ALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE SHORT COVERING TRANSACTIONS
AND PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements and
notes thereto included elsewhere in this Prospectus, including the information
contained under the heading "Risk Factors" beginning on page 5. Unless otherwise
stated, the information contained in this Prospectus: (i) assumes no exercise of
the Underwriters' over-allotment option; (ii) reflects the reincorporation of
the Company from Utah to Delaware and the associated changes to the Company's
charter and by-laws in connection with such reincorporation; (iii) reflects a
414.175-for-one stock split to be accomplished in connection with the
reincorporation; and (iv) gives effect to the exercise by the Company of an
option to repurchase a portion of the Company's outstanding common stock upon
completion of the Offering. See "Certain Transactions" and "Description of
Capital Stock." Unless otherwise stated in this Prospectus, references to the
"Company" shall mean 1-800 CONTACTS, INC. and its predecessors.

THE COMPANY

1-800 CONTACTS, INC. (the "Company") is a leading and rapidly growing
direct marketer of replacement contact lenses. Through its easy-to-remember,
toll-free telephone number, "1-800 CONTACTS" (1-800-266-8228), the Company sells
substantially all of the most popular brands of contact lenses, including those
manufactured by Johnson & Johnson, CIBA Vision, Wesley Jessen/Barnes-Hind,
Bausch & Lomb and CooperVision. The Company's high volume, cost-efficient
operations, supported by its proprietary management information system, enable
it to offer its products at competitive prices while delivering a high level of
customer service. As a result of its extensive inventory, the Company is
generally able to ship approximately 80% of its orders within 24 hours of
receipt. The Company believes that it offers consumers an attractive alternative
for obtaining replacement contact lenses in terms of price, convenience and
speed of delivery. The Company's net sales have grown rapidly, from
approximately $3.6 million in 1996 to approximately $21.1 million in 1997 and
its net income has grown from approximately $348,000 in 1996 to approximately
$1.0 million in 1997.

The Company markets its products through a national advertising campaign.
As compared to other direct marketers of replacement contact lenses, the Company
believes that its toll-free telephone number, 1-800 CONTACTS, affords it a
significant competitive advantage in generating consumer awareness and repeat
business. The Company believes, based upon an independent source, that "vanity"
numbers, like 1-800 CONTACTS, generate higher response rates than traditional
1-800 numbers. After the Company first began using the 1-800 CONTACTS number in
July 1995, net sales per advertising dollar increased by over 20%. The Company
believes its marketing strategy, combined with the higher response rates
attributable to the 1-800 CONTACTS telephone number, allows the Company to
acquire new customers at a lower average cost per customer. The Company spent
approximately $4.8 million (including the capitalized portion thereof) on
advertising in 1997, and plans to use a significant portion of the net proceeds
from this Offering to increase its sales and marketing activities. The Company's
experience has been that increases in advertising expenditures have had a direct
and immediate impact on the growth of net sales. The Company believes that the
planned increase in advertising activities will enable it to attract significant
numbers of new customers.

The Company operates within the large and growing contact lens industry. In
1996, sales of contact lenses in the United States totaled approximately $2.5
billion and, according to industry analysts, the U.S. market for contact lenses
is expected to grow by approximately 10% per year through the year 2000. This
anticipated growth is due largely to the shift in the contact lens market away
from traditional soft lenses, which generally are replaced on an annual basis,
to disposable lenses, which are replaced on a daily, weekly or bi-weekly basis.
Over the last decade, the contact lens industry has experienced significant
changes in the ways in which contact lenses are sold to consumers in the United
States. Driven primarily by the growing popularity of commodity-like contact
lens products, such as disposable lenses, direct marketers of contact lenses
have emerged as an attractive alternative to more traditional providers, such as
eye care practitioners and retail optical chains. The Company estimates that
direct marketers accounted for approximately 5% of contact lenses sales in the
United States during 1996. The Company believes that consumers are increasingly
seeking the convenience, speed and home delivery that can be provided by direct
marketers of replacement contact lenses.
1
<PAGE> 5

The Company's sales and marketing efforts, combined with its focus on
delivering a high level of customer service, have built a loyal customer base.
Historically, each $1.00 of sales to new customers has generated approximately
$0.78 of reorder sales within 12 months. During December 1997, approximately
$1.0 million of the Company's net sales were to repeat customers, compared to
net sales to repeat customers of approximately $123,000 in December 1996. The
Company's proprietary management information system creates a customer profile
containing prescription information, address and payment history, which allows a
repeat sale to the customer to be made in approximately one-third the time of a
sale to a new customer. The shorter call duration of a repeat order is more
convenient for the customer and more profitable for the Company. The Company
believes that as more wearers switch to disposable contact lenses, its ability
to attract and retain its customers will play an integral role in the Company's
continued growth.

COMPETITIVE STRENGTHS

The Company attributes its success in the direct marketing segment of the
contact lens industry and its significant opportunities for growth to several
competitive strengths, including the following:

- Proprietary Management Information System. The Company believes that
the operating efficiency resulting from its proprietary management
information system is largely responsible for average sales per employee
being approximately three to five times higher than its largest direct
marketing competitor.

- Customer Service. Delivering high quality, consistent customer service
has been a cornerstone of the Company's strategy since its inception,
and the Company believes that consistently providing every customer with
prompt and courteous service throughout their relationship with the
Company increases the Company's ability to attract and retain customers.

- Extensive Inventory; Convenient, Rapid Delivery. The Company stocks a
large inventory of contact lenses from which it can ship approximately
80% of its orders within 24 hours of receipt and intends to use a
portion of the net proceeds from the Offering to invest in additional
inventory.

- Competitive Pricing. The Company believes that its prices are generally
25% lower than prices typically charged by eye care practitioners and
comparable to those charged by large retail optical chains and mass
merchandisers, who generally do not offer the convenience of telephone
ordering and home delivery.

GROWTH STRATEGY

The Company believes that it has significant opportunities to attract and
retain new customers and increase sales through several strategic initiatives,
including the following:

- Expand Sales and Marketing Activities. Following the Offering, the
Company plans to significantly expand its sales and marketing activities
to attract new customers and increase sales to existing customers. The
Company's experience has been that increases in advertising expenditures
have had a direct and immediate impact on the growth of net sales.

- Continue to Deliver High Level of Customer Service. Historically, each
$1.00 of sales to new customers has generated $0.78 of reorder sales
within 12 months. The Company expects its sales to repeat customers to
continue to grow as the contact lens market continues to shift towards
disposable contact lenses, and consumers increase the frequency with
which they replace their contact lenses.

- Leverage Existing Infrastructure. To support anticipated growth, the
Company has expended considerable resources in establishing proprietary
management information and telecommunication systems and operating and
distribution facilities that have the capacity to handle the Company's
contemplated sales growth for the foreseeable future with minimal
additional capital expenditures.

2
<PAGE> 6

The Company was incorporated under the laws of the State of Utah in
February 1995 and will be reincorporated under the laws of the State of Delaware
prior to the completion of the Offering. The Company is the successor to the
business founded by the Company's Vice President of Operations in March 1991.
The Company's principal executive office is located at 13751 South Wadsworth
Park Drive, Suite D-140, Draper, Utah 84020 and its telephone number is (801)
572-8225. The Company maintains a website on the Internet at
www.1800contacts.com. The Company's website and the information contained
therein shall not be deemed to be part of this Prospectus.

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company............. 1,925,000 shares(1)
Common Stock offered by the Selling
Stockholder................................... 275,000 shares
Common Stock outstanding after the Offering..... 6,141,818 shares(2)
Use of Proceeds................................. The net proceeds to be received by the Company from
the Offering will be used: (i) to fund additional
sales and marketing activities; (ii) to increase
inventory; (iii) to repay certain existing
indebtedness; (iv) to fund the S Corporation
Distribution (as defined) of approximately $0.8
million; (v) to repurchase approximately 442,651
shares of Common Stock from an existing stockholder
of the Company for $1.9 million; and (vi) any
remaining net proceeds for general corporate
purposes, including working capital. The
anticipated uses of the net proceeds are subject to
change due to the actual circumstances of operating
the Company's business. Pending such uses, the
Company currently plans to invest the net proceeds
in investment grade, short-term, interest-bearing
securities. See "Use of Proceeds," "S Corporation
Matters" and "Certain Transactions."
Nasdaq National Market Symbol................... CTAC
</TABLE>

- ---------------
(1) Does not include the Underwriters' over-allotment option granted by the
Company for an aggregate of 330,000 shares of Common Stock.

(2) Does not include 203,140 shares of Common Stock issuable upon the exercise
of outstanding options granted to certain members of management or an
additional 310,000 shares of Common Stock available for future issuance to
employees or non-employee Directors under the Stock Option Plan (as
defined). See "Management--Incentive Stock Option Plan."

RISK FACTORS

Prospective investors should carefully consider the factors set forth under
"Risk Factors," as well as the other information set forth in this Prospectus
before making an investment in the Common Stock offered hereby. Such risk
factors include, among others, that: (i) the Company has experienced rapid
growth and has a limited operating history; (ii) a substantial portion of the
Company's sales do not comply with applicable state laws and regulations; (iii)
the Company currently purchases a substantial portion of its products from
unauthorized distributors, such as large optical retail chains with excess
inventory, and purchased from a single distributor approximately 27%, 40% and
21% of its inventory in 1995, 1996 and 1997, respectively, and purchased
approximately 40% of its inventory from another distributor in 1997; (iv) the
Company is dependant upon its telephone and management information systems; (v)
the retail sale of contact lenses is highly competitive;

3
<PAGE> 7

(vi) the Company is dependent upon the continued contributions of key management
personnel; (vii) upon completion of the Offering, the existing stockholders of
the Company (the "Existing Stockholders") will control approximately 64% of the
aggregate voting power of the Company; (viii) the direct marketing industry is
experiencing technological changes in marketing methods; and (ix) the Company
does not have and cannot acquire any property rights to the 1-800 CONTACTS
telephone number under the applicable regulations of the Federal Communications
Commission (the "FCC").

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA

<TABLE>
<CAPTION>
PREDECESSOR(1) COMPANY
--------------------------------------------- -------------------------------
FEBRUARY 1, 1995
YEAR ENDED YEAR ENDED ONE MONTH ENDED TO YEAR ENDED
DECEMBER 31, DECEMBER 31, JANUARY 31, DECEMBER 31, DECEMBER 31,
1993 1994 1995 1995 1996
------------ ------------ --------------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................ $151,026 $212,584 $21,552 $587,918 $ 3,628,296
Gross profit......................... 48,784 95,258 8,483 232,452 1,412,990
Selling, general and administrative
expenses........................... 46,899 78,584 9,369 317,898 1,041,312
Income (loss) from operations........ 1,885 16,674 (886) (85,446) 371,678
Net income (loss)(2)................. $ 1,885 $ 16,674 $ (886) $(94,551) $ 348,363
======== ======== ======= ======== ===========
PRO FORMA STATEMENT OF OPERATIONS DATA:
Pro forma net income (loss)(3)....... $(58,149) $ 214,243
======== ===========

<CAPTION>
COMPANY
------------

YEAR ENDED
DECEMBER 31,
1997
------------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................ $21,115,314
Gross profit......................... 7,090,791
Selling, general and administrative
expenses........................... 5,945,221
Income (loss) from operations........ 1,145,570
Net income (loss)(2)................. $ 1,032,408
===========
PRO FORMA STATEMENT OF OPERATIONS DATA:
Pro forma net income (loss)(3)....... $ 634,931
===========
Pro forma basic net income per common
share.............................. $ 0.14
===========
Pro forma diluted net income per
common share(4).................... $ 0.13
===========
Supplemental pro forma diluted net
income per common share(5)......... $ 0.15
===========
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------------------------
PRO PRO FORMA AS
ACTUAL FORMA(6) ADJUSTED(7)
------------ ----------- ------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)......... $(1,621,522) $(2,335,597) $14,838,563
Total assets...................... 7,781,064 7,781,064 21,440,331
Total debt (including current
portion)........................ 2,759,837 2,759,837 90,409
Stockholders' equity (deficit).... 854,358 (456,583) 16,586,167
</TABLE>

- ---------------

(1) The term "Predecessor" is used herein to refer to the historical financial
and operating data of the Discount Lens Club.

(2) For all periods indicated, the Company has operated as an S corporation and
has not been subject to federal and certain state income taxes.
(3) Pro forma net income reflects historical net income less pro forma income
taxes. Pro forma income taxes are provided at an assumed 38.5% effective
income tax rate, as if the Company had been a C corporation rather than an S
corporation for the above periods. Prior to the closing of this Offering,
the Company's S corporation status will terminate; at that date, the Company
will record a non-recurring, non-cash charge to earnings to recognize
deferred income taxes in accordance with Statement of Financial Accounting
Standards No. 109 ("SFAS 109"). See "S Corporation Matters."

(4) Pro forma diluted net income per share is based on the weighted average
shares of Common Stock and Common Stock equivalents outstanding, including
actual shares outstanding and shares deemed to be outstanding. The shares
deemed to be outstanding include the number of shares being offered by the
Company hereby sufficient to fund an assumed S corporation distribution of
approximately $714,075 at December 31, 1997 (based on the amount of retained
earnings at December 31, 1997 of $1,286,220, net of notes receivable due
from stockholders of the Company of $572,145). Common Stock equivalents were
determined using the treasury stock method.

(5) Supplemental pro forma diluted net income per common share gives effect to
the elimination of interest expense, net of tax and the additional shares of
Common Stock considered to be outstanding as a result of the repayment of
$2.7 million of indebtedness from the proceeds of the Common Stock offered
by the Company at the assumed initial public offering price of $11.00 per
share.

(6) Gives effect to: (i) an assumed distribution of retained earnings of
$1,286,220 to the Company's stockholders upon the termination of the
Company's S corporation status; (ii) the repayment of notes receivable due
from stockholders of $572,145; and (iii) the recording of a deferred income
tax liability of $596,866 that would be recorded upon termination of the
Company's S corporation status in accordance with SFAS 109. See "S
Corporation Matters" and "Certain Transactions."

(7) As adjusted to reflect the sale of 1,925,000 million shares of Common Stock
offered by the Company hereby at the assumed initial public offering price
of $11.00 per share and the application of the estimated net proceeds
therefrom. See "Use of Proceeds."

4
<PAGE> 8

RISK FACTORS

This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act").
Also, documents subsequently filed by the Company with the Securities and
Exchange Commission (the "Commission") will contain forward-looking statements.
Such forward-looking statements are based on the beliefs of the Company's
management as well as on assumptions made by and information currently available
to the Company at the time such statements were made. When used in this
Prospectus, the words "anticipate," "believe," "estimate," "expect," "intends"
and similar expressions, as they relate to the Company are intended to identify
forward-looking statements. Actual results could differ materially from those
projected in the forward-looking statements as a result of the risk factors set
forth below, the matters set forth or incorporated in the Prospectus generally
and certain economic and business factors, some of which may be beyond the
control of the Company. The Company cautions the reader, however, that the risk
factors described below may not be exhaustive. The safe harbor for
forward-looking statements provided by Section 27A of the Securities Act is not
applicable to limit the Company's liability for sales made in this Offering. In
analyzing an investment in the Common Stock offered hereby, prospective
investors should carefully consider, along with the other matters referred to
herein, the risk factors described below.

RISKS RELATED TO RAPID GROWTH AND LIMITED OPERATING HISTORY

Since its formation in February 1995, the Company has experienced rapid
growth, with net sales increasing from approximately $588,000 for the eleven
month period ended December 1995 to approximately $21.1 million in 1997. The
Company's ability to compete effectively and to manage future growth, if any,
will require the Company to continue to improve its financial and management
controls, reporting systems and procedures on a timely basis and to expand,
train and manage its employee base. It is anticipated that additional
experienced management will need to be added to meet the demands of expanded
operations. There can be no assurance that such additional management will be
attracted and retained, or that the existing and new management will be able to
implement such systems effectively or on a timely basis or to manage future
expansion successfully. The failure or inability to do so could have a material
adverse affect on the Company's business, financial condition and results of
operations.

The Company has a limited operating history. The Company was formed in
February 1995 as the successor to the business founded by the Company's Vice
President of Operations in March 1991. As a result, there is only limited
financial information and operating information available for a potential
investor to evaluate an investment in the Common Stock. As the Company expands
its operations to meet the anticipated demand for its products, there can be no
assurance that the Company will be able to realize or sustain growth in the
future comparable to that it has experienced since its formation or that the
Company will remain profitable in the future.

RISKS RELATED TO THE LACK OF COMPLIANCE WITH CERTAIN STATE LAWS AND REGULATIONS

The Company's operating practice is to attempt to obtain a valid
prescription from each of its customers or his/her eye care practitioner. If the
Company is unable to obtain a copy of or verify the customer's prescription, it
is the Company's practice to ship the lenses to the customer, based on the
information that the customer has provided. In addition, neither the Company nor
any of its employees is a licensed or registered dispenser of contact lenses in
any states other than California and Texas. The Company estimates that
approximately one-third

5
<PAGE> 9

of its net sales in 1997 were made in compliance with applicable state laws and
regulations. Any action brought against the Company based on its failure to
comply with applicable state laws and regulations could result in significant
fines to the Company, the Company being prohibited from making sales in a
particular state and/or the Company being required to comply with such laws.
Such required compliance could result in: (i) increased costs to the Company;
(ii) the loss of a substantial portion of the Company's customers for whom the
Company is unable to obtain or verify their prescription; and (iii) the
inability to sell to customers at all in a particular state if the Company
cannot comply with such state's laws. The occurrence of any of the above results
could have a material adverse effect on the Company's ability to sell contact
lenses and to continue to operate profitably. Furthermore, there can be no
assurance that states will not enact or impose laws or regulations that prohibit
mail order dispensing of contact lenses or otherwise impair the Company's
ability to sell contact lenses and continue to operate profitably.

In June 1997, the Company received notice from the Georgia State Board of
Dispensing Opticians (the "Georgia Board") that the Georgia Board considers
sales by the Company in Georgia to be in violation of Georgia law, which
requires face-to-face delivery of contact lenses. However, the Georgia Board did
not recommend that action be taken at that time, but reserved the right to
pursue future violations by the Company. In November 1997, the Company received
notice from the State of New Mexico Board of Examiners in Optometry (the "New
Mexico Board") that the New Mexico Board considers sales by the Company in New
Mexico to be in violation of New Mexico law and ordering the Company to cease
and desist selling contact lenses in New Mexico. The Company has not taken any
actions in response to such notices. Sales to customers in these two states in
1997 were less than 3% of the Company's net sales for that period. See
"Business -- Government Regulation."

RISKS RELATED TO SUPPLY ARRANGEMENTS

Historically, substantially all of the major manufacturers of contact
lenses have refused to sell lenses directly to direct marketers, including the
Company, and have sought to prohibit their distributors from doing so. As a
result, the Company currently purchases a substantial portion of its products
from unauthorized distributors, such as large optical retail chains with excess
inventory. The Company is aware that at least one large manufacturer of contact
lenses has begun to put tracking codes on its products in an effort to identify
distributors who are selling to direct marketers. The Company is not an
authorized dealer for the majority of the products which it sells. In addition,
the price the Company pays for certain of its products is sometimes higher than
that paid by eye care practitioners, retail chains and mass merchandisers, who
are able to buy directly from the manufacturers. Furthermore, in order to help
ensure adequate supply, the Company generally carries a higher level of
inventory than if it were able to purchase directly from contact lens
manufacturers. There can be no assurance that the Company will be able to obtain
sufficient quantities of contact lenses at competitive prices in the future to
meet the existing or anticipated demand for its products. Any such inability
would have a material adverse effect on the Company's business, financial
condition and results of operations.

The Company purchased from a single distributor approximately 27%, 40% and
21% of its inventory in 1995, 1996 and 1997, respectively, and purchased
approximately 40% of its inventory from another distributor in 1997. The Company
believes that neither of these suppliers is authorized by contact lens
manufacturers to distribute their products. In the event that this supplier
could no longer supply the Company with contact lenses, there can be no
assurance that the Company could secure other adequate sources of supply, or
that such supply could be obtained on terms as favorable to the Company as its
current supply, which could adversely affect the Company by increasing its costs
or, in the event adequate replacement supply can not be secured, reducing its
net sales.

DEPENDENCE ON TELEPHONE AND MANAGEMENT INFORMATION SYSTEMS

The Company's success depends, in part, on its ability to provide prompt,
accurate and complete service to its customers on a competitive basis, and to
purchase and promote products, manage inventory, ship products, manage sales and
marketing and maintain efficient operations through its telephone and
proprietary management information systems. A significant disruption in its
telephone or management information systems could adversely affect the Company's
relations with its customers and its ability to manage its operations. From time
to time, the Company has experienced temporary interruptions in its telephone
service as a result of the technical

6
<PAGE> 10

problems experienced by its long-distance carrier. In 1997, the Company
experienced four interruptions, which lasted on average approximately three
hours each. There can be no assurance that similar interruptions will not occur
in the future or that such interruptions would not have a material adverse
effect on the Company's business, financial condition and results of operations.
Furthermore, there can be no assurance that extended or repeated reliance on the
Company's back-up computer system would not have a material adverse effect on
the Company's business, financial condition and results of operations.

RISKS RELATED TO COMPETITION AND ALTERNATIVE TECHNOLOGIES

The retail sale of contact lenses is a highly competitive and fragmented
industry. The Company's principal competitors include ophthalmologists and
optometrists in private practice and retail chain stores, which the Company
believes collectively accounted for approximately 70% of all contact lens sales
in 1996. The Company also competes with national optical chains, such as Cole
National Corporation, LensCrafters and National Vision Association and mass
merchandisers, such as Wal-Mart, Sam's and Costco, which the Company believes
accounted for approximately 25% of all contact lens sales in 1996. The Company
also competes with other direct marketers of contact lenses, one of which, Lens
Express, Inc., is larger than the Company. The Company may face increased
competition in the future from new entrants in the direct marketing business,
which may include national optical chains and mass merchandisers, some of which
may have significantly greater resources than the Company. In addition, many of
the Company's competitors, including most eye care practitioners, national
optical chains and mass merchandisers, have direct supply arrangements with
contact lens manufacturers, which in some cases affords such competitors with
better pricing terms and access to supply. In light of such intense competition,
there can be no assurance that the Company will be able to maintain its current
market position or realize its anticipated growth.

The Company also encounters competition from manufacturers of eyeglasses
and from alternative technologies, such as surgical refractive procedures
(including new refractive laser procedures such as PRK, or photo refractive
keratectomy, and LASIK, or laser in situ keratomileusis). If surgical refractive
procedures become increasingly accepted as an effective and safe technique for
permanent vision correction, they could substantially reduce the demand for
contact lenses by enabling patients to avoid the ongoing cost and inconvenience
of contact lenses. Accordingly, there can be no assurance that these procedures,
or other alternative technologies that may be developed in the future, will not
cause a substantial decline in the number of contact lens wearers and thus have
a material adverse effect on the Company's business, financial condition and
results of operations.

DEPENDENCE ON KEY EXECUTIVES

The Company is dependent to a large degree on the services of its senior
management team, particularly Jonathan C. Coon and John F. Nichols, the
Company's President and Vice President, Operations, respectively. Prior to the
completion of the Offering, Messrs. Coon and Nichols will enter into employment
agreements with the Company. The loss of any of its key executives could have a
material adverse effect on the Company. The Company's ability to manage its
anticipated growth will depend on its ability to identify, hire and retain
highly skilled management and technical personnel. Competition for such
personnel is intense. As a result, there can be no assurance that the Company
will be successful in attracting and retaining such personnel, and the failure
to attract such personnel could have a material adverse affect on the Company's
business, financial condition and results of operations. See "Management."

CONTROL BY PRINCIPAL STOCKHOLDERS

Upon completion of the Offering, the Existing Stockholders will own
3,941,818 shares of Common Stock and control approximately 64% of the aggregate
voting power of the Company, which will allow such stockholders, in the event
that they act together, to control substantially all actions taken by the
stockholders of the Company, including the election of directors. Such
concentration of ownership could also have the effect of delaying, deterring or
preventing a change in control of the Company that might otherwise be beneficial
to stockholders and may also discourage acquisition bids for the Company and
limit the amount certain investors may be willing to pay for shares of the
Common Stock. See "Management," and "Principal and Selling Stockholders."

7
<PAGE> 11

RISKS RELATED TO TECHNOLOGICAL CHANGES IN DIRECT MARKETING INDUSTRY

The Company expects that the direct marketing industry will be affected by
technological changes in marketing methods, such as on-line catalogs and
Internet shopping. The Company believes its success will depend, in part, on its
ability to adapt to new technologies and to respond to competitors' actions in
these areas. Adapting to new technologies could require significant capital
expenditures by the Company. There can be no assurance that the Company will
remain competitive in response to such technological changes.

INTELLECTUAL PROPERTY MATTERS

The Company believes that a large portion of its success is attributable to
the competitive advantage it enjoys as a result of its toll-free telephone
number (1-800 CONTACTS). Under applicable rules and regulations of the FCC, the
Company does not have and cannot acquire any property rights to this telephone
number. There can be no assurance that the Company will be able to retain the
use of the 1-800 CONTACTS telephone number. The loss of the right to use the
1-800 CONTACTS number would have a material adverse effect on the Company's
business, financial condition and results of operations.

COST OF POSTAGE AND SHIPPING

The Company ships its products to customers by United States mail and other
overnight delivery and surface services. The Company generally invoices the
costs of delivery and parcel shipments directly to customers as separate
shipping and handling charges. Any increases in shipping rates or postal rates
(paid by the Company to deliver its advertising) could have an adverse effect on
the Company's operating results as the Company may not be able to effectively
pass such increases on to its customers. The United States Postal Service has
recently requested approval for an increase in postal rates which would average
4.5% for all domestic services, which, if approved, is expected to be effective
in June 1998. Similarly, strikes or other service interruptions by such shippers
could adversely affect the Company's ability to market or deliver its products
on a timely basis. See "Business--Customers and Marketing."

STATE SALES TAX COLLECTION

At present, the Company does not collect sales or other similar taxes in
respect of sales and shipments of its products. However, various states have
sought to impose state sales tax collection obligations on out-of-state direct
marketing companies such as the Company. A successful assertion by one or more
states that the Company should have collected or be collecting sales taxes on
the sale of its products could result in additional costs and administrative
expenses to the Company and corresponding price increases to its customers,
which could adversely affect the Company's business, financial condition and
results of operations.

PRODUCT LIABILITY EXPOSURE

The Company faces an inherent risk of exposure to product liability claims
in the event that the use of the products it sells results in personal injury.
Although the Company has not experienced any losses due to product liability
claims, there can be no assurance that it will not experience such losses in the
future. The Company maintains insurance against product liability claims, but
there can be no assurance that such coverage will be adequate to cover any
liabilities that the Company may incur, or that such insurance will continue to
be available on terms acceptable to the Company. A successful claim brought
against the Company in excess of available insurance coverage, or any claim that
results in significant adverse publicity against the Company, could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business--Legal Proceedings."

ABSENCE OF PRIOR PUBLIC MARKET; SUBSTANTIAL DILUTION

Prior to the Offering, there has been no public market for the Common
Stock. The initial public offering price of the Common Stock will be determined
by negotiations among the Company and the Representatives (as defined herein)
and may not be indicative of the market price for shares of the Common Stock
after the Offering. For a description of factors considered in determining the
initial public offering price, see "Underwriting." There can be no assurance
that an active trading market for the Common Stock will develop or if developed,
that such

8
<PAGE> 12

market will be sustained. The market price for shares of the Common Stock is
likely to be volatile and may be significantly affected by such factors as
quarter-to-quarter variations in the Company's results of operations, news
announcements, changes in general market conditions for contact lenses,
regulatory actions, adverse publicity regarding the Company or the industry in
general, changes in financial estimates by securities analysts and other
factors. In addition, broad market fluctuation and general economic and
political conditions may adversely affect the market price of the Common Stock,
regardless of the Company's actual performance. There can be no assurance that
the market price of the Common Stock will not decline below the initial public
offering price.

Because the initial public offering price is substantially higher than the
book value per share of Common Stock, purchasers of the Common Stock in the
Offering will be subject to immediate and substantial dilution of $8.32 per
share. In addition, pursuant to certain provisions of the Company's restated
certificate of incorporation (the "Restated Certificate"), the Company has the
authority to issue additional shares of Common Stock and shares of one or more
series of voting Preferred Stock. The issuance of such shares could result in
the dilution of voting power of the shares of Common Stock purchased in the
Offering. See "Dilution" and "Description of Capital Stock."

ABSENCE OF DIVIDENDS

Following the completion of this Offering, the Company intends to retain
all future earnings for use in its business and, therefore, does not anticipate
paying any cash dividends on the Common Stock in the foreseeable future. See
"Dividend Policy."

POTENTIAL ADVERSE IMPACT FROM SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company expects to have 6,141,818
shares of Common Stock outstanding. Of these shares, the 2,200,000 shares of
Common Stock (2,530,000 shares if the Underwriters' overallotment option is
exercised in full) sold in the Offering will be freely tradeable without
restriction under the Securities Act, except any such shares which may be
acquired by an "affiliate" of the Company. Subject to certain 180-day "lock up"
agreements described herein, approximately 3,941,818 shares of Common Stock will
be eligible for sale in the public market, subject to compliance with the resale
volume limitations and other restrictions of Rule 144 under the Securities Act,
beginning 90 days after the date of this Prospectus. Future sales of the shares
of Common Stock held by the Existing Stockholders could have a material adverse
effect on the price of the Common Stock. See "Shares Eligible for Future Sale."

ANTI-TAKEOVER PROVISIONS COULD DELAY OR PREVENT A CHANGE IN CONTROL

Certain provisions of the Restated Certificate and the Company's by-laws
(the "By-laws") may inhibit changes in control of the Company not approved by
the Company's Board of Directors. These provisions include: (i) a classified
Board of Directors; (ii) a prohibition on stockholder action through written
consents; (iii) a requirement that special meetings of stockholders be called
only by the Board of Directors; (iv) advance notice requirements for stockholder
proposals and nominations; (v) limitations on the ability of stockholders to
amend, alter or repeal the By-laws; and (vi) the authority of the Board of
Directors to issue without stockholder approval preferred stock with such terms
as the Board of Directors may determine. The Company will also be afforded the
protections of Section 203 of the Delaware General Corporation Law, which could
have similar effects. See "Description of Capital Stock."

RISKS RELATING TO FORWARD-LOOKING STATEMENTS

This Prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Such forward-looking
statements include statements regarding the Company's marketing plans,
expectations concerning growth in the market, certain financial projections and
the planned use of proceeds. Actual results could differ from those projected in
any forward-looking statements. The forward-looking statements are made as of
the date of this Prospectus and the Company assumes no obligation to update such
forward-looking statements, or to update the reasons why actual results may
differ from those projected in the forward-looking statements. Numerous factors,
including without limitation factors mentioned in this Risk Factors section,
many of which are beyond the control of management of the Company, could cause
future results to differ substantially from those

9
<PAGE> 13

contemplated in such forward-looking statements. The safe harbor for
forward-looking statements provided by Section 27A of the Securities Act and
Section 21E of the Exchange Act is not applicable to limit the Company's
liability for sales made in this Offering.

THE COMPANY

The Company was incorporated under the laws of the State of Utah in
February 1995 and will be reincorporated under the laws of the State of Delaware
prior to completion of the Offering. The Company is the successor to the
business founded by the Company's Vice President of Operations in March 1991.
The Company's principal executive office is located at 13751 South Wadsworth
Park Drive, Suite D-140, Draper, Utah 84020 and its telephone number is (801)
572-8225.

S CORPORATION MATTERS

Since its inception, the Company has been a corporation subject to taxation
under Subchapter S of the Internal Revenue Code of 1986, as amended. As a
result, the taxable income of the Company has been taxed, for Federal (and some
state) income tax purposes, directly to the Company's stockholders rather than
to the Company.

On the closing date of this Offering, the Company will elect to terminate
its S corporation status. As a result, the Company's earnings through the date
of termination of the Company's S corporation status generally will be taxed for
federal and state income tax purposes directly to the Existing Stockholders who
were the only stockholders of the Company prior to the closing of this Offering.
Subsequent to the termination of its S corporation status, the Company will be
subject to federal and state income taxes on its earnings.

Effective the day preceding the closing date of this Offering, the Company
will declare a distribution to the Existing Stockholders in an amount equal to
the Company's retained earnings from its formation through the date immediately
preceding the date of termination of the Company's S corporation status (the "S
Corporation Distribution"). If the Company's S corporation status had terminated
as of December 31, 1997, the amount of the S Corporation Distribution would have
been approximately $714,075 (net of notes receivable due from stockholders of
the Company). The actual amount of the S Corporation Distribution is estimated
to be approximately $0.8 million, reflecting undistributed earnings through the
date preceding the anticipated closing date of this Offering (net of notes
receivable due from stockholders of the Company). It is currently anticipated
that the S Corporation Distribution will be funded out of the net proceeds of
this Offering. See "Use of Proceeds" and "Certain Transactions."

Purchasers of Common Stock in this Offering will not receive any of the S
Corporation Distribution.

Immediately prior to the consummation of the Offering, the Existing
Stockholders and the Company intend to enter into an S corporation termination,
tax allocation and indemnification agreement (the "Agreement for Distribution of
Retained Earnings and Tax Indemnification") relating to the S Corporation
Distribution to such stockholders and indemnification arrangements among such
stockholders and the Company for certain tax liabilities.

Upon termination of its S corporation status, the Company will become
subject to income taxation and in connection therewith, the Company will record
deferred income taxes in accordance with SFAS 109. If the Company's S
corporation status had been terminated at December 31, 1997, the amount of the
charge to earnings would have been approximately $597,000.

USE OF PROCEEDS

The net proceeds to the Company from the Offering (after deducting
applicable underwriting discounts and estimated expenses payable by the Company)
are estimated to be approximately $18.9 million (assuming an initial public
offering price of $11.00 per share). The Company expects to use: (i)
approximately $10.0 million to fund additional sales and marketing activities;
(ii) approximately $3.0 million to increase inventory;

10
<PAGE> 14

(iii) approximately $2.7 million for the repayment of debt; (iv) approximately
$0.8 million to fund the S Corporation Distribution; (v) $1.9 million to
exercise an option to purchase 442,651 shares of Common Stock from an existing
stockholder of the Company; and (vi) any remaining net proceeds for general
corporate purposes, including working capital. The anticipated uses of the net
proceeds are subject to change due to the actual circumstances of operating the
Company's business. Pending such uses, the Company currently plans to invest the
net proceeds in investment grade, short-term, interest-bearing securities. See
"Certain Transactions."

Approximately $1.6 million of the indebtedness expected to be repaid by the
Company out of the net proceeds of the Offering was borrowed from a stockholder
of the Company pursuant to a line of credit and two promissory notes, all of
which bear interest at the prime interest rate plus 2%. The line of credit
provides for maximum borrowings of $250,000 and matures in February 1999.
Initial borrowings under the two promissory notes were $250,000 and $1.1 million
and such promissory notes mature in September 1998 and July 1998, respectively.
The remainder of the indebtedness being repaid was incurred under the Credit
Facility (as defined), which bears interest at the lender's prime interest rate
plus 1.5% and matures on July 31, 1998.

The Company will not receive any of the proceeds from the sale of the
shares by the Selling Stockholder.

DIVIDEND POLICY

The Company anticipates that all of its future earnings will be retained to
finance the expansion of its business and, subsequent to the payment of the S
Corporation Distribution, does not anticipate paying any cash dividends on the
Common Stock in the foreseeable future. Any future determination to pay
dividends will be at the discretion of the Company's Board of Directors and will
depend upon, among other factors, the Company's results of operations, financial
condition, capital requirements and contractual restrictions. In addition, the
Credit Facility (as defined) prohibits the Company from paying any cash
dividends on the Common Stock after the termination of the Company's S
corporation status.

11
<PAGE> 15

CAPITALIZATION

The following table sets forth: (i) the actual capitalization of the
Company as of December 31, 1997; (ii) the pro forma capitalization of the
Company as of such date, giving effect to the payment of the S Corporation
Distribution and the recording of approximately $597,000 of deferred income tax
liabilities resulting from the termination of S corporation status; and (iii)
such pro forma capitalization, as adjusted to give effect to the sale by the
Company of 1,925,000 shares of Common Stock pursuant to the Offering, assuming
an initial public offering price of $11.00 per share and the application of the
net proceeds to the Company therefrom as described under "Use of Proceeds." This
table should be read in conjunction with the financial statements of the Company
and notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
DECEMBER 31, 1997
---------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
---------- ---------- -----------
<S> <C> <C> <C>
Short-term obligations:
Line of credit...................................... $1,055,640 $1,055,640 $ --
Notes payable to stockholders....................... 1,370,000 1,370,000 --
Current portion of capital lease obligation......... 23,532 23,532 23,532
---------- ---------- -----------
Total short-term obligations..................... $2,449,172 $2,449,172 $ 23,532
========== ========== ===========
Long-term obligations:
Notes payable to stockholders....................... $ 243,788 $ 243,788 $ --
Capital lease obligation, less current portion...... 66,877 66,877 66,877
---------- ---------- -----------
Total long-term obligations......................... 310,665 310,665 66,877
========== ========== ===========
Stockholders' equity:
Preferred Stock, $0.01 par value, 1,000,000 shares
authorized, no shares issued or outstanding...... -- -- --
Common Stock, $0.01 par value, 20,000,000 shares
authorized; 4,659,469 shares issued on an actual
and a pro forma basis; and 6,584,469 shares
issued on a pro forma as adjusted basis (1)(2)... 46,595 46,595 65,845
Additional paid-in capital.......................... 93,688 93,688 19,017,188
Retained earnings (deficit)......................... 1,286,220 (596,866) (596,866)
Notes receivable from stockholders.................. (572,145) -- --
Treasury stock, 442,651 shares at cost (3).......... -- -- (1,900,000)
---------- ---------- -----------
Total stockholders' equity (deficit)............. 854,358 (456,583) 16,586,167
---------- ---------- -----------
Total capitalization........................ $1,165,023 $ (145,918) $16,653,044
========== ========== ===========
</TABLE>

- ---------------

(1) Assuming an initial public offering price of $11.00 per share (the mid-point
of the range set forth on the cover page of this Prospectus), less the
Underwriters' discount and the estimated expenses of the Offering.

(2) Does not include 203,140 shares of Common Stock issuable upon the exercise
of outstanding options granted to certain members of management or an
additional 310,000 shares of Common Stock available for future issuance
under the Stock Option Plan (as defined). See "Management -- Incentive Stock
Option Plan."

(3) Reflects the repurchase of an aggregate of 442,651 shares of Common Stock by
the Company from an existing stockholder of the Company for $1.9 million.
See "Certain Transactions."

12
<PAGE> 16

DILUTION

As of December 31, 1997, the pro forma deficit in the Company's net
tangible book value was approximately $559,000, or $0.12 per share after giving
effect to (i) the payment of the S Corporation Distribution and (ii) the
recording of approximately $597,000 of deferred income tax liabilities resulting
from the termination of the S corporation election. After giving effect to the
Offering and the application of the net proceeds therefrom as set forth under
"Use of Proceeds," the pro forma net tangible book value of the Company as of
December 31, 1997, would be $16.5 million or $2.68 per share. This represents an
immediate increase in net tangible book value per share of $2.80 per share to
the Existing Stockholders and an immediate dilution of $8.32 per share to new
investors. The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $11.00
Pro forma net tangible book value per share before the
Offering(1)............................................... $(0.12)
Increase per share attributable to payments by new
investors................................................. 2.80
------
Adjusted pro forma net tangible book value per share after
the Offering.............................................. 2.68
------
Dilution per share to new investors(2)...................... $ 8.32
======
</TABLE>

- ---------------

(1) The Company's pro forma deficit in net tangible book value per share of
Common Stock is determined by dividing the Company's deficit in tangible net
worth at December 31, 1997 of $559,000 by the aggregate number of shares of
Common Stock outstanding. Deferred advertising costs of $1.7 million were
included in the computation of pro forma deficit in net tangible book value.

(2) Dilution is determined by subtracting pro forma, as adjusted, net tangible
book value per share after the Offering from the initial public offering
price per share.

The following table summarizes, on a pro forma basis, as of December 31,
1997, the difference between the Existing Stockholders and the new investors
with respect to the number of shares of Common Stock purchased (or to be
purchased) from the Company, the total consideration paid (or to be paid) and
the average price per share paid (or to be paid) by the Existing Stockholders
and new investors, at an assumed initial public offering price of $11.00 per
share, before deducting the estimated offering expenses and underwriting
discounts and commissions:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------- ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing Stockholders(3)......... 4,216,818 68.7% $ 140,283 0.7% $ 0.03
New investors(4)................. 1,925,000 31.3 21,175,000 99.3 11.00
--------- ----- ------------ -----
Total............................ 6,141,818 100.0% $ 21,315,283 100.0%
========= ===== ============ =====
</TABLE>

- ---------------

(3) Does not include 203,140 shares of Common Stock issuable upon the exercise
of outstanding options granted to certain members of management or an
additional 310,000 shares of Common Stock available for future issuance
under the Stock Option Plan (as defined). See "Management -- Incentive Stock
Option Plan."

(4) Sales of Common Stock by the Selling Stockholder in the Offering will reduce
the number of shares held by the Existing Stockholders to 3,941,818, or
approximately 64% of the outstanding Common Stock after the Offering, and
will increase the number of shares held by new investors to 2,200,000 shares
of Common Stock, or approximately 36% of the outstanding Common Stock after
the Offering.

13
<PAGE> 17

SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA

The financial data as of and for the years ended December 31, 1993 and 1994
and the one month period ended January 1, 1995 are derived from the financial
statements of the Predecessor. The financial data as of and for the eleven month
period ended December 31, 1995 and the years ended December 31, 1996 and 1997
have been derived from the audited financial statements of the Company, which
are included as part of this Prospectus. The selected financial data below
should be read in conjunction with the financial statements and the notes
thereto of the Predecessor and the Company included elsewhere in this Prospectus
and "Management's Discussion and Analysis of Results of Operations and Financial
Condition."

<TABLE>
<CAPTION>
PREDECESSOR(1) COMPANY
----------------------------------------- ------------------------------------------
YEAR YEAR ONE MONTH FEBRUARY 1, YEAR YEAR
ENDED ENDED ENDED 1995 TO ENDED ENDED
DECEMBER 31, DECEMBER 31, JANUARY 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1993 1994 1995 1995 1996 1997
------------ ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales................... $151,026 $212,584 $21,552 $587,918 $3,628,296 $21,115,314
Costs of sales.............. 102,242 117,326 13,069 355,466 2,215,306 14,024,523
-------- -------- ------- -------- ---------- -----------
Gross profit................ 48,784 95,258 8,483 232,452 1,412,990 7,090,791
Selling, general and
administrative expenses... 46,899 78,584 9,369 317,898 1,041,312 5,945,221
-------- -------- ------- -------- ---------- -----------
Income (loss) from
operations................ 1,885 16,674 (886) (85,446) 371,678 1,145,570
Other expenses, net......... -- -- -- (9,105) (23,315) (113,162)
-------- -------- ------- -------- ---------- -----------
Net income (loss)(2)........ $ 1,885 $ 16,674 $ (886) $(94,551) $ 348,363 $ 1,032,408
======== ======== ======= ======== ========== ===========
PRO FORMA STATEMENT OF
OPERATIONS DATA:
Pro forma (provision)
benefit for income
taxes..................... $ 36,402 $ (134,120) $ (397,477)
Pro forma net income
(loss)(3)................. (58,149) 214,243 634,931
======== ========== ===========
Pro forma basic net income
per common share.......... $ 0.14
===========
Pro forma diluted net income
per common share(4)....... $ 0.13
===========
Supplemental pro forma
diluted net income per
common share(5)........... $ 0.15
===========
BALANCE SHEET DATA (AT THE
END OF PERIOD):
Working capital (deficit)... $ 7,476 $ 13,449 $11,762 $(12,093) $ (204,080) $(1,621,522)
Total assets................ 20,651 25,574 23,687 243,845 1,156,646 7,781,064
Total debt (including
current portion).......... -- -- -- 207,864 370,705 2,759,837
Stockholders' equity
(deficit)................. 18,046 22,818 21,032 (28,412) 146,359 854,358
</TABLE>

- ---------------
(1) The historical financial and operating data of the Predecessor was derived
from the historical financial and operating data of the Discount Lens Club.

(2) For all periods indicated, the Company has operated as an S corporation and
has not been subject to federal and certain state income taxes.

(3) Pro forma net income reflects historical net income less pro forma income
taxes. Pro forma income taxes are provided at an assumed 38.5% effective
income tax rate, as if the Company had been a C corporation rather than an S
corporation for the above periods. Prior to the closing of this Offering,
the Company's S corporation status will terminate; at that date, the Company
will record a non-recurring, non-cash charge to earnings to recognize
deferred income taxes in accordance with SFAS 109. See "S Corporation
Matters."

(4) Pro forma diluted net income per share is based on the weighted average
shares of Common Stock and Common Stock equivalents outstanding, including
actual shares outstanding and shares deemed to be outstanding. The shares
deemed to be outstanding represent the number of shares being offered by the
Company hereby sufficient to fund an assumed S corporation distribution of
approximately $714,075 at December 31, 1997 (based on the amount of retained
earnings at December 31, 1997 of $1,286,220, net of notes receivable due
from stockholders of the Company of $572,145). Common Stock equivalents were
determined using the treasury stock method.

14
<PAGE> 18

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

The following discussion and analysis should be read in conjunction with
"Selected Historical and Pro Forma Financial Data" and the Company's financial
statements and notes thereto included elsewhere in this Prospectus.

OVERVIEW

The Company is a leading and rapidly growing direct marketer of replacement
contact lenses. The Company was formed in February 1995 and is the successor to
the mail order business founded by the Company's Vice President of Operations in
March 1991. Since its formation, the Company has experienced significant growth
in revenues and net income. The Company's net sales have grown rapidly, from
approximately $3.6 million in 1996 to approximately $21.1 million in 1997 and
its net income has grown from approximately $348,000 in 1996 to approximately
$1.0 million in 1997.

During 1995, 1996 and 1997, the Company hired additional management
personnel and invested significant resources in infrastructure improvements such
as expanded operating facilities, enhanced telecommunications equipment and
upgrading its proprietary management information system to support its customer
service and marketing programs. Key components of the infrastructure investment
consisted of expanded operating facilities, a new, higher capacity telephone
switch and the purchase of software and corresponding hardware upgrades to the
Company's proprietary management information system.

Quarter-to-quarter comparisons are impacted by the timing of the mailing of
the Company's advertisements. Approximately 40% of the revenue related to a
particular mailing is generated within 60 to 90 days after such mailing. The
Company engages in an ongoing mailing campaign. The volume of mailings may vary
in different quarters and from year-to-year depending on the Company's
assessment of prevailing market opportunities.

The Company has operated as an S corporation and, as a result has not been
subject to federal or certain state income taxes. Prior to the consummation of
this Offering, the Company will become subject to federal and state income taxes
and will recognize an estimated non-recurring, non-cash charge to earnings to
record deferred income taxes for the tax effect of cumulative temporary
differences between financial and tax reporting. If the Company's S corporation
status had been terminated at December 31, 1997, the amount of this charge to
earnings would have been approximately $597,000. See "S Corporation Matters."

The Company sells a variety of brands of contact lenses, all with varying
gross margins. Accordingly, the Company's overall gross margin is affected by
its product mix. Historically, the Company's overall gross margin has been
positively impacted by the sale of manufacturers' promotional products, which
the Company is generally able to sell at higher gross margins than the Company's
other products. The recent rapid growth in the Company's net sales has resulted
in these sales representing a smaller percentage of the Company's overall sales.
As a result, the Company's overall gross margin has decreased in recent periods.
Gross margins on specific products, however, have remained relatively constant
over such periods. The Company's overall gross margin over the last four
quarters has remained relatively constant.

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<PAGE> 19

RESULTS OF OPERATIONS

The following table presents the Company's results of operations expressed
as a percentage of net sales:

<TABLE>
<CAPTION>
COMBINED THE COMPANY
-------- ----------------
YEAR ENDED DECEMBER 31,
----------------------------
1995(1) 1996 1997
-------- ------- -----
<S> <C> <C> <C>
Net sales................................................... 100.0% 100.0% 100.0%
Cost of sales............................................... 60.5 61.1 66.4
----- ----- -----
Gross profit................................................ 39.5 38.9 33.6
Selling, general and administrative expenses................ 53.7 28.7 28.2
----- ----- -----
Income (loss) from operations............................... (14.2) 10.2 5.4
Other (expense) income, net................................. (1.5) (0.6) (0.5)
----- ----- -----
Net income (loss)........................................... (15.7)% 9.6% 4.9%
===== ===== =====
</TABLE>

- ---------------

(1) The combined results of operations for the year ended December 31, 1995 were
prepared based on the combined historical results of (i) the Company for the
eleven month period from February 1,1995 through December 31, 1995 and (ii)
the historical results of operations of the Discount Lens Club for the one
month period ending January 31, 1995. The financial results of the Company
may not be comparable to those of the Predecessor due to changes in the
Company's operations that were implemented by Mr. Coon at the time he joined
the Company.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

Net sales. Net sales for the year ended December 31, 1997 increased $17.5
million, or approximately 482%, to $21.1 million from $3.6 million for the year
ended December 31, 1996. This increase was primarily attributable to higher
sales volumes due to additional sales and marketing activities.

Gross profit. Gross profit for the year ended December 31, 1997 increased
$5.7 million, or approximately 402%, to $7.1 million from $1.4 million in the
comparable 1996 period. Gross profit margin decreased to 33.6% for the year
ended December 31, 1997 from 38.9% in the comparable period. The Company's gross
profit margin for the year ended December 31, 1996 was positively impacted by
the sale of manufacturers' promotional products, which generally have higher
margins.

Selling, general and administrative expenses. Selling, general and
administrative expenses for the year ended December 31, 1997 increased by $4.9
million, or approximately 471%, to $5.9 million from $1.0 million for the year
ended December 31, 1996 due to the increase in sales and marketing activity and
the related increase in expenditures necessary to support the increased sales.
As a percentage of net sales, selling, general and administrative expenses
decreased to 28.2% in the 1997 period from 28.7% in the 1996 period. This
decrease is largely due to the fixed nature of many such expenses, including
rent, salaries, depreciation and certain equipment costs.

Income from operations. Income from operations for the year ended December
31, 1997 increased by $773,892 to $1.1 million from $371,678 for the year ended
December 31, 1996. This increase was primarily attributable to increased product
sales.

Other (expense) income, net. Other (expense) income for the year ended
December 31, 1997 decreased by $89,847 to $(113,162) from $(23,315) for the year
ended December 31, 1996. This decrease was primarily attributable to an increase
in interest expense due to increased borrowings by the Company from one of its
stockholders and under the Credit Facility, offset partially by an increase in
other income primarily due to an increase in interest income from stockholders'
notes receivable.

16
<PAGE> 20

YEAR ENDED DECEMBER 31, 1996 COMPARED TO COMBINED YEAR ENDED DECEMBER 31, 1995

Net sales. Net sales for the year ended December 31, 1996 increased by $3.0
million, or approximately 495%, to $3.6 million from $609,470 for the combined
year ended December 31, 1995. This increase was primarily attributable to higher
sales volumes due to increased sales and marketing activities.

Gross profit. Gross profit in 1996 increased by $1.2 million, or
approximately 486%, to $1.4 million from $240,935 in 1995. Gross profit margin
decreased to 38.9% in 1996 from 39.5% in the prior year. This decrease was
attributable to a change in product mix.

Selling, general and administrative expenses. Selling, general and
administrative expenses for the year ended December 31, 1996 increased by
$714,045, or 218%, to $1.0 million from $327,267 for the comparable period in
1995. This increase was the result of the increase in sales and marketing
activity and the related increase in expenditures necessary to support the
increased sales. As a percentage of net sales, selling, general and
administrative expenses decreased to 28.7% in 1996 from 53.7% in 1995. This
reduction was primarily the result of certain fixed expenses, including rent,
salaries, depreciation and certain equipment costs, being allocated over an
increased sales base.

Income from operations. Income from operations for the year ended December
31, 1996 increased by $458,010 to $371,678 from $(86,332) for the year ended
December 31, 1995. This increase was due to increased product sales.

Other (expense) income, net. Other (expense) income for the year ended
December 31, 1996 decreased by $14,210 to $(23,315) from $(9,105) for the year
ended December 31, 1995. This decrease was primarily attributable to an increase
in interest expense due to increased borrowings by the Company from a
stockholder of the Company.

LIQUIDITY AND CAPITAL RESOURCES

The Company has historically funded its growth through a combination of
funds generated from operations and borrowings. Working capital requirements
generally precede the realization of sales on a monthly basis. The Company uses
funds generated from operations and borrowings to increase inventory levels in
anticipation of future sales realization. The Company's supply arrangements
generally require the Company to pay cash upon delivery of inventory. As a
result, the Company is generally unable to rely on standard trade credit
arrangements in purchasing its inventory, which would ordinarily permit the net
amount due to be paid within 30 days of shipment of ordered merchandise. In
addition, in order to help ensure sufficient supply, the Company generally
carries a higher level of inventory than if it were able to purchase directly
from contact lens manufacturers. See "Risk Factors -- Risks Related to Supply
Arrangements."

Net cash provided by (used in) operating activities was $(91,051), $114,275
and $(1,022,313) in 1995, 1996 and 1997, respectively. In 1996, approximately
$386,000 and $394,000 was used to finance increases in inventories and deferred
advertising costs, respectively, while $476,000 was provided by increases in
accounts payable and accrued liabilities related primarily to inventory
purchases and advertising expenditures. In 1997, approximately $4.3 million and
$1.3 million was used to finance increases in inventories and deferred
advertising costs, respectively, while $3.5 million was provided by increases in
accounts payable and accrued liabilities related primarily to inventory
purchases and advertising expenditures.

Net cash used in investing activities, principally related to capital
expenditures for infrastructure improvements and increases in notes receivable
from stockholders, was approximately, $46,690, $408,584 and $903,078 in 1995,
1996 and 1997, respectively.

Capital expenditures for infrastructure improvements such as expanded
operating facilities, upgrades in telecommunications and management information
systems were $32,546 in 1995, $174,992 in 1996 and $488,244 in 1997. The Company
presently anticipates that capital expenditures in 1998 will be approximately
$300,000.

17
<PAGE> 21

Net cash provided by financing activities for fiscal 1995, 1996 and 1997
was $139,017, $291,384 and $1,925,391, respectively. These amounts primarily
represent borrowings from a stockholder of the Company and borrowings under the
Credit Facility.

Immediately prior to the consummation of the Offering, the Company will
make the S Corporation Distribution to the Existing Stockholders. Based on the
present estimate of the closing date, the Company estimates that the S
Corporation Distribution will be approximately $0.8 million (net of notes
receivable due from stockholders of the Company) and will be paid from a portion
of the net proceeds of the Offering. The Agreement for Distribution of Retained
Earnings and Tax Indemnification will provide for indemnification of the Company
and the Existing Stockholders which could result in payments to or from the
Company following the consummation of this Offering. See "S Corporation
Matters."

In August 1997, the Company established a revolving credit facility to
provide for working capital borrowings and other corporate purposes (the "Credit
Facility"). The Company amended the Credit Facility in January 1998. As a
result, the Credit Facility currently provides for borrowings equal to the
lesser of $3.0 million or 50% of eligible inventory. The maximum borrowings
under the Credit Facility decreases to the lesser of $2.75 million on January
31, 1998, $2.25 million on February 28, 1998, $1.75 million on March 31, 1998
and $1.0 million on April 30, 1998 or 50% of eligible inventory at each of the
respective dates. The Credit Facility permits borrowings of the lesser of $1.5
million or 50% of eligible inventory on April 30, 1998 and thereafter in the
event that the Company receives at least $10.0 million in net proceeds from the
Offering. The Credit Facility has a scheduled maturity on July 31, 1998 and
bears interest at a floating rate equal to the lender's prime interest rate plus
1.5% (10% at December 31, 1997). As of December 31, 1997, outstanding borrowings
under the Credit Facility totaled approximately $1.1 million. The Credit
Facility is secured by substantially all of the Company's assets and contains
financial covenants customary for this type of financing.

The Company believes that its available cash after this Offering, together
with cash flow from operations, will be sufficient to support current operations
and future growth at least through fiscal 1998. The Company may be required to
seek additional sources of funds for accelerated growth or continued growth
after that point, and there can be no assurance that such funds will be
available on satisfactory terms. Failure to obtain such financing could delay or
prevent the Company's planned growth, which could adversely affect the Company's
business, financial condition and results of operations.

As a result of state regulatory requirements, the Company's liquidity,
capital resources and results of operations may be negatively impacted in the
future if the Company incurs increased costs or fines, is prohibited from
selling its products in a particular State(s) or experiences losses of a
substantial portion of the Company's customers for whom the Company is unable to
obtain or verify a prescription due to the enforcement of requirements by state
regulatory agencies. See "Risk Factors -- Risks Related to the Lack of
Compliance with Certain Laws and Regulations."

SEASONALITY

The Company does not believe that seasonality has had a material effect on
the Company's operations for the three years ended December 31, 1997.

INFLATION

The Company does not believe that inflation has had a material effect on
the Company's operations for the three years ended December 31, 1997.

YEAR 2000 ISSUE

The Company has reviewed all of its current computer applications with
respect to the year 2000 issue. The Company believes all of its applications are
substantially year 2000 compliant and that any additional costs with respect to
year 2000 compliance will not be material to the Company. The Company is
currently unable to determine the effects of year 2000 compliance by its
vendors.

18
<PAGE> 22

BUSINESS

OVERVIEW

The Company is a leading and rapidly growing direct marketer of replacement
contact lenses. Through its easy-to-remember, toll-free telephone number, "1-800
CONTACTS" (1-800-266-8228), the Company sells substantially all of the most
popular brands of contact lenses, including those manufactured by Johnson &
Johnson, CIBA Vision, Wesley Jessen/Barnes-Hind, Bausch & Lomb and CooperVision.
The Company's high volume, cost-efficient operations, supported by its
proprietary management information system, enable it to offer its products at
competitive prices while delivering a high level of customer service. As a
result of its extensive inventory, the Company is generally able to ship
approximately 80% of its orders within 24 hours of receipt. The Company believes
that it offers consumers an attractive alternative for obtaining replacement
contact lenses in terms of price, convenience and speed of delivery. The
Company's net sales have grown rapidly, from approximately $3.6 million in 1996
to approximately $21.1 million in 1997 and its net income has grown from
approximately $348,000 in 1996 to approximately $1.0 million in 1997.

The Company's sales and marketing efforts, combined with its focus on
delivering a high level of customer service, have built a loyal customer base.
Historically, each $1.00 of sales to new customers has generated approximately
$0.78 of reorder sales within 12 months. During December 1997, approximately
$1.0 million of the Company's net sales were to repeat customers, compared to
net sales to repeat customers of approximately $123,000 in December 1996. The
Company's proprietary management information system creates a customer profile
containing prescription information, address and payment history, which allows a
repeat sale to the customer to be made in approximately one-third the time of a
sale to a new customer. The ease of placing additional orders is convenient for
the customer and is more profitable to the Company due to the lower costs
associated with repeat sales as compared to initial sales. The Company believes
that as more wearers switch to disposable lenses, its ability to attract and
retain its customers will play an integral role in the Company's continued
growth.

INDUSTRY OVERVIEW

Industry analysts estimate that over 50% of the United States' population
needs some form of corrective eyewear and that there are nearly 154 million
people in the United States who currently use some form of corrective eyewear.
Contact lenses have become a convenient, cost effective alternative to
eyeglasses and the number of contact lens wearers is expected to increase as
technology further improves the convenience, comfort and fit of contact lenses.
As a result, the contact lens market is large and growing. In 1996, sales of
contact lenses in the United States totaled approximately $2.5 billion and,
according to industry analysts, the U.S. market for contact lenses is expected
to grow approximately 10% per year through the year 2000. This growth is due
largely to the shift in the contact lens market away from traditional soft
lenses, which generally are replaced on an annual basis, to disposable lenses,
which are replaced on a daily, weekly, or bi-weekly basis. Since 1991, the
number of contact lens wearers in the United States has increased by 4.2% per
year while expenditures per wearer have increased by 6.5% per year as
conventional users have shifted to more costly specialty and disposable lenses.

19
<PAGE> 23

While the market for hard contact lenses has been relatively flat since 1991
with approximately 6 million U.S. wearers, the number of people wearing soft
contact lenses has grown at a compound annual growth rate of 5.9% since that
time.

Traditionally, contact lenses were almost exclusively sold to consumers by
either ophthalmologists or optometrists (referred to herein collectively as "eye
care practitioners"). Eye care practitioners would typically supply a patient
with his or her initial pair of contact lenses in connection with providing the
patient an eye examination and all replacement lenses, regardless of whether the
patient was given or required another eye examination. Because the initial
fitting of contact lenses requires a prescription written by an eye care
practitioner, the initial sale of contact lenses still takes place primarily in
this manner. Over the last decade, however, a number of alternative sellers of
replacement contact lenses have emerged, including direct marketers. The Company
estimates that direct marketers accounted for approximately 5% of contact lens
sales in the United States during 1996.

The Company believes that increased consumer awareness of the benefits of
the direct marketing of contact lenses will lead to further growth of direct
marketing. Purchasing replacement contact lenses from a direct marketer offers
the convenience of shopping at home, rapid home delivery, quick and easy
telephone ordering and competitive pricing. In addition, the growth in
popularity of disposable contact lenses, which require patients to purchase
replacement lenses more frequently, has contributed to the growth of the direct
marketing channel. The direct marketing industry continues to grow as many
retail customers have migrated towards the convenience and service offered by
home shopping and the Company expects the direct marketing segment of the
contact lens industry to grow in tandem with the growth in the direct marketing
industry as a whole.

Historically, sales of contact lenses by direct marketers have been impeded
by eye care practitioners and contact lens manufacturers. Many eye care
practitioners have been reluctant to provide patients with a copy of their
prescription or to release such information to direct marketers upon request,
thereby prohibiting such patients from purchasing lenses from a direct marketer.
In addition, substantially all of the major manufacturers of contact lenses have
historically refused to sell contact lenses directly to direct marketing
companies and have sought to prohibit their distributors from doing so. These
traditional barriers to the direct marketing of contact lenses may be reduced or
eliminated in the future. The Federal Trade Commission (the "FTC") has recently
solicitated comments regarding whether eye care practitioners should be required
to release contact lens prescriptions to their patients. In addition, the
Attorneys General for 28 states have joined in a lawsuit against the major
contact lens manufacturers and certain eye care practitioners and their trade
associations alleging that the manufacturers' policy not to sell to direct
marketers was adopted in conspiracy with eye care practitioners to eliminate
alternative channels of trade from the contact lens market. See "--Government
Regulation," and "--Purchasing and Principal Suppliers."

COMPETITIVE STRENGTHS

The Company attributes its success in the direct marketing segment of the
contact lens industry and its significant opportunities for growth to several
competitive strengths, including the following:

- 1-800 CONTACTS Telephone Number. The Company believes that its
easy-to-remember, toll-free telephone number, 1-800 CONTACTS, affords it
a significant competitive advantage over other direct marketers of
contact lenses in its ability to generate consumer awareness in a
cost-effective manner. The Company believes, based upon an independent
source, that "vanity" numbers, like 1-800 CONTACTS, generate higher
response rates than traditional 1-800 numbers. After the Company first
began using the 1-800 CONTACTS number in July 1995, net sales per
advertising dollar increased by over 20%. The Company believes that it
enjoys a higher customer retention rate and higher response rate due in
large part to the top-of-the-mind awareness generated by the 1-800
CONTACTS telephone number.

- Proprietary Management Information System. The Company believes that the
operating efficiency resulting from its proprietary management
information system gives it a significant competitive advantage over
other direct marketers. The Company believes this system is largely
responsible for average sales per employee being approximately three to
five times higher than its largest direct marketing competitor. The

20
<PAGE> 24

Company believes that this system is capable of supporting the Company's
anticipated sales growth in the foreseeable future.

- Customer Service. The Company believes that it provides better customer
service to replacement lens purchasers than traditional contact lens
distributors. Delivering high quality, consistent customer service has
been a cornerstone of the Company's strategy since its inception. The
Company's teleservice agents are trained to provide efficient and
accurate order entry and are able to provide each customer with real time
product availability information and the estimated delivery date for
their lenses. In addition, the Company's teleservice agents are trained
and authorized to handle all customer service issues, including accepting
product returns and issuing refunds, if appropriate. The Company believes
that consistently providing every customer with prompt and courteous
service throughout their relationship with the Company increases the
Company's ability to attract and retain customers.

- Extensive Inventory; Convenient, Rapid Delivery. The Company stocks a
large inventory of lenses from which it can ship approximately 80% of its
orders within 24 hours and intends to use a portion of the net proceeds
from the Offering to invest in additional inventory. Customers generally
receive their lenses from the Company in one to five business days after
shipping, depending on whether the customer chooses standard delivery or
pays an additional charge for delivery by an overnight courier. The
Company believes that its extensive inventory allows it to deliver lenses
to a customer quicker, on average, than eye care practitioners or optical
chains, which generally have smaller inventories and place orders for
lenses on a less frequent basis than the Company. In addition, lenses
ordered from the Company are delivered directly to the home or office of
the customer; a service which most eye care practitioners, optical chains
and discount stores do not offer.

- Competitive Pricing. The Company believes that its high volume,
cost-efficient operations allow it to maintain a pricing advantage over
many of the traditional contact lens providers. The Company believes that
its prices are generally 25% lower than prices typically charged by eye
care practitioners and comparable to those charged by large retail
optical chains and mass merchandisers, who generally do not offer the
convenience of telephone ordering and home delivery. Unlike many of its
competitors, the Company does not charge any membership fees for its
services and instead relies upon its customer service and rapid delivery
to retain customers.

GROWTH STRATEGY

The Company believes that it has significant opportunities to attract and
retain new customers and increase sales through several strategic initiatives,
including the following:

- Expand Sales and Marketing Activities. Following the Offering, the
Company plans to significantly expand its sales and marketing activities
to attract new customers and increase sales to existing customers. The
Company has spent approximately $4.8 million (including the capitalized
portion thereof) for advertising in 1997, an increase of approximately
460% from 1996. The Company has traditionally marketed its products
through direct mail, cooperative mailings and free standing inserts in
newspapers. Following the Offering, the Company intends to increase the
frequency of these activities and to begin advertising in media it has
not previously utilized, including magazines, traditional newspaper
advertisements, radio and television. The Company's experience has been
that increases in advertising expenditures have had a direct and
immediate impact on the growth of net sales. Based primarily on response
rates attributable to the 1-800 CONTACTS telephone number, the Company
believes that increasing its sales and marketing activities will allow it
to attract significant numbers of new customers.

- Continue to Deliver High Level of Customer Service. The Company has
built a loyal customer base due largely to its focus on delivering a high
level of customer service. Historically, each $1.00 of sales to new
customers has generated $0.78 of reorder sales within 12 months.
Approximately $1.0 million of the Company's sales in December 1997 were
to repeat customers, compared to sales to repeat customers of
approximately $123,000 in December 1996. The Company expects its sales to
repeat customers to continue to grow as the contact lens market continues
to shift towards disposable lenses, and consumers

21
<PAGE> 25

increase the frequency with which they replace their lenses. The Company
believes that the key to retaining its customers is to provide a competitive
price and convenient delivery while providing superior customer service. The
Company expends significant resources to train its teleservice agents not
only to provide accurate product information and efficient order entry,
but also to handle all customer service issues, including product returns
and refunds, if appropriate. The Company's proprietary management
information system creates a customer profile containing prescription
information, address and payment information which allows a sale to a
repeat customer to be made in approximately one-third the time of a sale
to a new customer. The shorter call duration of a repeat order is more
convenient for the customer and more profitable for the Company.

- Leverage Existing Infrastructure. To support anticipated growth, the
Company has expended considerable resources in establishing its
infrastructure. The Company believes that its current proprietary
management information and telecommunication systems and its operating
and distribution facilities have the capacity to handle the Company's
contemplated sales growth for the foreseeable future with minimal
additional capital expenditures. As a result, the Company believes that
it has the opportunity to improve its operating margins by leveraging its
existing infrastructure through increased sales.

- Capitalize on Favorable Industry Trends. According to industry analysts,
the number of soft contact lens wearers in the United States has
increased from 19 million in 1990 to over 25 million in 1996 and are
projected to increase by approximately 5% annually through the year 2000
as soft contact lenses continue to gain popularity and the number of
14-to-25 year olds (the prime age group for new lens wearers) increases.
Growth in the contact lens industry is also attributable to the ongoing
shift among wearers of conventional lenses to more frequently replaced
disposable lenses. Direct marketing is well suited to provide a cost
effective, convenient way to replace disposable lenses. The Company
believes that sales by direct marketers account for approximately 5% of
all contact lens sales in the United States, but account for
approximately 10% of all disposable contact lens sales in the United
States. The Company believes that it provides the most convenient way for
consumers to replace their lenses and that the Company's business will
continue to grow in tandem with the disposable lens market.

PRODUCT OFFERINGS

Contact lenses can be divided into two categories: soft lenses, which
represent approximately 80% of U.S. wearers, and hard lenses (primarily rigid
gas permeable ("RGP")), which represent approximately 20% of U.S. wearers. There
are three principal wearing regimes for soft contact lenses: conventional,
disposable and planned replacement. Conventional lenses are designed to be worn
indefinitely, but are typically replaced after 12 to 24 months. Disposable soft
contact lenses were introduced in the late 1980s based on the concept that
changing lenses on a more regular basis was important to comfort, convenience,
maintaining healthy eyes and patient compliance. Disposable lenses are changed
as often as daily and up to every two weeks, depending on the product. Planned
replacement lenses are designed to be changed as often as every two weeks and up
to every three months and currently represent a small portion of the overall
soft lens market.

The Company is a direct marketer of replacement contact lenses and does not
manufacture contact lenses nor provide eye examinations or related services to
its customers. The Company offers substantially all of the soft and hard contact
lenses produced by the leading contact lens manufacturers, including Johnson &
Johnson, CIBA Vision, Wesley Jessen/Barnes-Hind, Bausch & Lomb and CooperVision.
The Company stocks a large inventory of lenses from which it can ship
approximately 80% of its orders within 24 hours and intends to use a portion of
the net proceeds of the Offering to invest in additional inventory. The Company
believes that its ability to maintain a large inventory of contact lenses
provides it with a competitive advantage over eye care practitioners, optical
chains and discount stores and serves as an effective barrier of entry to
potential entrants in the direct marketing of contact lenses.

In July 1997, the Company was approved as an authorized distributor of CIBA
Vision. Approximately 23% of the Company's sales in 1997 were derived from the
sales of products manufactured by CIBA Vision. The Company's products are
delivered in the same sterile, safety sealed containers in which the lenses were
packaged by the manufacturer. From time to time, the Company purchases contact
lenses that were labeled as "samples"

22
<PAGE> 26

by the manufacturer. Such lenses are sometimes offered by the Company to
customers as part of promotional programs at reduced prices.

CUSTOMERS AND MARKETING

The Company's customers are located principally throughout the United
States. The percentage of the Company's customers that are located in each state
is approximately equal to the percentage of the United States' population which
resides in such state, with the largest concentration of the Company's customers
residing in California. During 1997, the Company shipped approximately 248,000
orders, as compared to approximately 43,000 orders during 1996, an increase of
approximately 477%. The Company strives to deliver a high level of customer
service in an effort to establish a loyal customer base.

The Company utilizes a focused, closely managed and monitored marketing
strategy. The Company continually researches and analyzes new ways in which to
advertise the Company's products. After identifying an attractive potential new
advertisement or advertising medium, the Company commits to such advertising for
an initial test period. The response generated by such advertising is monitored
and analyzed by the Company, and a decision to commit significant resources to a
particular advertisement or advertising medium is made only if the Company is
satisfied with the response rates it has generated. After the initial testing
period, the Company continues to closely monitor its advertising in order to
identify and react to trends in consumer response patterns and adjust its
marketing strategy accordingly.

The majority of contact lens wearers are between the ages of 18 and 39. In
addition, 65% of all contact lens wearers are women and contact lens wearers
generally have higher incomes than eyeglass wearers. The Company is able to
target its advertising to lens wearers in these key demographic groups, as well
as certain other persons based on other important demographics, through its
national advertising campaign utilizing various types of print media, including
direct and cooperative mailings and free standing inserts.

Direct-Mailing. The Company uses direct-mail to advertise its products to
selected groups of consumers. The Company utilizes mailing lists obtained from
both private and public sources to target its advertisements specifically to
contact lens wearers.

Cooperative Mailings. The Company advertises its products in cooperative
mail programs sponsored by the leading cooperative mail companies in the United
States. This advertising medium permits the Company to target consumers in
specific zip codes according to age, income and other important demographics.

Free Standing Inserts. From time to time, the Company advertises its
products through free standing inserts, which are typically glossy
advertisements included inside the comic section of the Sunday paper. The
Company uses this advertising medium due to its ability to reach a large
audience in a cost-effective manner. The Company utilizes these inserts to
supplement its direct and cooperative mailing programs.

Following the Offering, the Company plans to significantly expand its sales
and marketing activities to attract new customers and increase sales to existing
customers. The Company plans to increase its use of direct mailings, cooperative
mailings and free standing inserts, as well as begin advertising in mediums not
previously utilized, including magazines, traditional newspaper advertisements,
radio and television.

During the first month after the Company acquired and activated the 1-800
CONTACTS telephone number, the Company generated approximately 2,000 calls and
$38,000 in additional sales without advertising the number. As a result of the
proliferation of 1-800 numbers in recent years, the Company believes that it
continues to receive new business from customers who simply call 1-800 CONTACTS
as a result of their expectation that a contact lens seller will use such a
number. In addition, the Company believes that it benefits from the advertising
of other direct marketers as a result of customers forgetting the competitors
telephone number and contacting the Company instead.

The Company also markets its products through its website on the Internet.
Although sales generated by its website have been immaterial to date, the
Company believes that the Internet offers an attractive opportunity to increase
sales in a cost-effective manner. The Company expects to contribute additional
resources to upgrading its

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<PAGE> 27

website in an effort to increase revenues generated from its website. The
Company's website is located at www.1800contacts.com. The Company's website and
the information contained therein shall not be deemed to be a part of this
Prospectus.

MANAGEMENT INFORMATION SYSTEM

The Company has developed a proprietary management information system that
integrates the Company's order entry and order fulfillment operations. The
Company believes that this system enables it to operate efficiently and provide
enhanced customer service. The key features of this management information
system are its ability to: (i) continually monitor and track the Company's
inventory levels; (ii) rapidly process credit card orders; (iii) increase the
speed of the shipping process with integrated and automated shipping functions;
and (iv) increase accuracy through the scanning of each order prior to shipment
to ensure it contains the correct lenses and the correct quantity of lenses.

The management information system provides the Company's teleservice agents
with real-time product availability information through a point-to-point
satellite connection with the Company's shipping facilities, which information
is immediately updated as lenses are shipped. The management information system
also has an integrated direct connection for processing credit card payments
which allows the agent to charge the customer's card and ensure that a valid
card number and authorization have been received in approximately six to fifteen
seconds while the agent is on the phone with the customer. Teleservice agents
also have access to records of all prior contact with a customer, including the
customer's address, prescription information, order history and payment history
and notes of any prior contact with the customer made by phone, fax or mail.
Based on product availability provided by the management information system, the
teleservice agent provides the customer with an estimated date of delivery of
their lenses. If a customer's order will not be shipped by the promised delivery
date, the management information system notifies the agent who entered the
order, and any information explaining the delay, and the agent then contacts the
customer to inform them of the delay.

After an order has been entered into the management information system by a
teleservice agent, it is sent to the Company's shipping facility via a
point-to-point satellite connection. After the shipping facility receives the
order, the invoice for the order is printed. The invoice for each order contains
the type and quantity of the lenses, as well as a shipping label for the order.
Tracking, manifesting, billing and other shipping functions are integrated into
the Company's management information system so that all necessary bar codes and
tracking information for shipment via independent couriers is printed directly
on the Company's shipping label, and separate labeling or a separate computer is
not needed to ship packages via independent couriers.

After the invoice for an order is printed at the Company's shipping
facility, the order is pulled from inventory and scanned to ensure that the
prescription and quantity of each item matches the order in the Company's
management information system. Audible notices inform the shipping agent of any
errors in the order. After the order has been scanned for accuracy, the
management information system updates the Company's inventory level, the order
is placed in a box produced by the Company's automated box folder and is sent to
an automatic sealer. After the package leaves the sealer, another scanner reads
the bar code on the shipping label to determine which method of shipment is
being used, adds the package to the appropriate carrier's manifest and directs
the appropriate hydraulic diverter to push the package into the appropriate
carrier's shipping bin. The Company's automated packaging system is capable of
folding, moving, scanning, sealing and shipping over 10,000 orders during a
twelve hour shift.

The Company has installed a battery powered back-up system capable of
supporting its entire call center, computer room, and phone switch. This system
is further supported by a generator capable of supporting the Company's entire
operation for a period of five days. All critical data is simultaneously written
to a series of back-up drives throughout the day and at the end of the day the
Company's data is transmitted by satellite to an offsite location. There can be
no assurance that the Company's back-up system will sufficient to prevent an
interruption in the Company's operations in the event of disruption in the
Company's management information system and an extended disruption in the
management information system could adversely affect the Company's business,
financial condition and results of operations.

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<PAGE> 28

OPERATIONS

The primary components of the Company's operations include its
teleservices, order entry and customer service and distribution and fulfillment.

Teleservices, Order Entry and Customer Service. The Company provides its
customers with toll-free telephone access to its teleservice agents. The
Company's call center generally operates from 6:00 a.m. to 8:00 p.m. (MST)
Monday through Friday and 8:00 a.m. to 3:30 p.m. (MST) on Saturday. During
non-business hours, a recorded message informs customers of the Company's hours
of operations. The Company's orders are received by phone, mail, facsimile and
electronic mail. Teleservice agents process orders directly into the Company's
proprietary management information system, which provides customer order history
and information, product specifications, product availability, expected shipping
date and order number. Teleservice agents are provided with a sales script and
are trained to provide information about promotional items. Additionally,
teleservice agents are trained to provide customer service and are authorized to
resolve all customer service issues, including accepting returns and issuing
refunds, as appropriate. In 1997, the total of customer returns, exchanges and
customer service credits was approximately 1.8% of gross sales.

The Company believes its customers are particularly sensitive to the way
merchants and salespeople communicate with them. The Company strives to hire
energetic, service-oriented teleservice agents who can understand and relate to
customers. Teleservice agents participate in a training program, which includes
a mentor system for working with more experienced personnel. After training,
teleservice agents are monitored to review performance and are re-trained
periodically.

The Company recently installed a new telephone system. In its current
facility, the Company has the capacity to handle up to 19,000 calls per day. The
Company believes that it processes telephone orders on average in less time than
its competitors, which allows each teleservice agent to handle a greater number
of orders per day.

The laws in most states require that contact lenses be sold pursuant to a
valid prescription. The Company's operating practice is to attempt to obtain a
valid prescription from each of its customers or his/her eyecare practitioner.
Customers may mail a copy of their prescription with their order or send it to
the Company via facsimile. Upon receipt of a prescription from a patient, the
prescription is filed by the Company and the prescription information, including
the expiration date, is entered into the Company's proprietary management
information system. If the Company is unable to obtain a copy of or verify the
customer's prescription, it is the Company's practice to ship the lenses to the
customer, based on the information that the customer has provided. See "Risk
Factors -- Risks Related to the Lack of Compliance with Certain State Laws and
Regulations."

Distribution and Fulfillment. Approximately 80% of the Company's orders
are shipped within 24 hours. Customers generally receive orders within one to
five business days after shipping, depending upon the method of delivery chosen
by the customer. A shipping and handling fee is charged on each customer order,
except those orders received by mail with an enclosed check. Customers have the
option of having their order delivered by overnight courier for an additional
$4.00 charge. The Company's management information system automatically
determines the anticipated delivery date for each order.

The Company uses an integrated packing and shipping system via an on-line
connection to the Company's management information system. This system monitors
the in-stock status of each item ordered, processes the order and generates
warehouse selection tickets and packing slips for order fulfillment operations.
The Company's management information system is specifically designed with a
number of quality control features to help ensure the accuracy of each order.

PURCHASING AND PRINCIPAL SUPPLIERS

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<PAGE> 29

contact lenses has begun to put tracking codes on its products in an effort to
identify distributors who are selling to direct marketers. In June 1994, the
Attorney General for the State of Florida, acting on behalf of disposable
contact lens consumers in that State, filed an anti-trust action against Johnson
& Johnson, CIBA Vision, Bausch & Lomb and certain eye care practitioners and
their trade associations alleging, among other things, that the contact lens
manufacturers' policy not to sell to mail order distributors and others was
adopted in conspiracy with eye care practitioners as the result of pressure by
eye care practitioners in order to eliminate alternative channels of trade from
the disposable lens market (the "Florida Action").

In December 1996, the Attorney General for the State of New York, on behalf
of itself and the Attorney Generals for approximately 21 other States, filed a
substantially similar action naming three major manufacturers of soft contact
lenses as well as several optometrists and their trade associations as
defendants (the "New York Action"). Six additional States have joined the New
York Action since it was filed and the Florida Action and the New York Action
have been consolidated and are currently pending in the United States District
Court for the Eastern District of New York (the "Attorney General Action").
Based upon public filings made in the Attorney General Action, the Company
believes that one defendant, CIBA Vision Corporation, has entered into a
proposed settlement agreement pursuant to which it has agreed to pay $5 million
into a settlement fund, agreed to provide rebates and coupons to consumers and
agreed to begin to sell soft contact lenses to direct marketers. Since this
settlement agreement was announced, the Company has become an authorized
distributor of CIBA Vision's contact lenses and can purchase such lenses at
wholesale level prices.

As a result of the manufacturers' refusal to sell to direct marketers,
other than with respect to CIBA Vision products, the Company is not an
authorized dealer for any of the products which it sells. In addition, the price
which the Company pays for certain of its products is sometimes higher than
those paid by eye care practitioners, retail chains and mass merchandisers, who
are able to buy directly from the manufacturers of such lenses. Although the
Company has been able to obtain most contact lens brands at competitive prices
in sufficient quantities on a regular basis, there can be no assurance that the
Company will not encounter difficulties in the future, particularly in light of
the Company's anticipated growth. The inability of the Company to obtain
sufficient quantities of contact lenses at competitive prices would have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Risk Factors -- Risks Related to Supply
Arrangements."

Although the Company seeks to reduce its reliance on any one supplier by
establishing relationships with a number of distributors and other sources, the
Company purchased from a single distributor approximately 27%, 40% and 21% of
its inventory in 1995, 1996 and 1997, respectively, and purchased approximately
40% of its inventory from another distributor in 1997. The Company believes that
neither of these suppliers is authorized by contact lens manufacturers to
distribute their products. The Company does not have written agreements with any
of its suppliers. The Company continually seeks to establish new relationships
with potential suppliers in order to be able to obtain adequate inventory at
competitive prices.

COMPETITION

The retail sale of contact lenses is a highly competitive and fragmented
industry. Traditionally, contact lenses were almost exclusively sold to
customers by eye care practitioners in connection with providing them an eye
examination. Competition for patients and the revenue related to providing them
contact lenses significantly increased as optical chains and large discount
retailers began providing optical services and has further intensified with the
entry of direct marketers such as the Company. The Company believes that the eye
care profession suffers from a surplus of eye care practitioners, and that the
resulting competitive pressure has been exacerbated by the increased prevalence
of retail optical chains, mass merchandisers and direct marketers. Consequently,
the competition amongst eye care practitioners to acquire customers and the
competition to provide replacement lenses to such customers has intensified.

The Company's principal competitors include ophthalmologists and
optometrists in private practice, which collectively accounted for approximately
70% of all contact lens sales in 1996. The Company also competes with national
optical chains, such as Cole National Corporation, LensCrafters and National
Vision Association and mass merchandisers, such as Wal-Mart, Sam's and Costco,
which accounted for approximately 25% of all contact

26
<PAGE> 30

lens sales in 1996. The Company also competes with other mail-order contact lens
distributors, one of which, Lens Express, Inc., is larger than the Company. The
Company may face increased competition in the future from new entrants in the
direct marketing business, which may include national optical chains and mass
merchandisers, some of which may have significantly greater resources than the
Company.

The Company believes that many of its competitors, including most eye care
practitioners, national optical chains and mass merchandisers, have direct
supply arrangements with contact lens manufacturers, which in some cases affords
such competitors with better pricing terms and access to supply. In addition,
some of the competitors are significantly larger and have significantly greater
resources than the Company. The Company believes that the principal basis of
competition in the industry include price, product availability, customer
service and consumer awareness.

GOVERNMENT REGULATION

Federal Regulation. Contact lenses are regulated by the FDA as "medical
devices." The FDA classifies medical devices as Class I, Class II or Class III
and regulates them to varying degrees, with Class I medical devices subject to
the least amount of regulation and Class III medical devices subject to the most
stringent regulations. RGP and soft contact lenses are classified as Class II
medical devices if intended only for daily wear, and as Class III medical
devices if intended for extended wear. These regulations generally apply only to
manufacturers of contact lenses, and therefore do not directly impact the
Company. Federal regulations also require the labels on "medical devices" to
contain adequate instructions for their safe and proper use. However, there is
an exemption from this requirement for medical devices the use of which is not
safe except under the supervision of a practitioner licensed by law to direct
the use of such device. Devices which fall in this exception must contain as
part of their labeling the statement "Caution: Federal law restricts this device
to sale by or on the order of ," the blank to be filled in with the
word physician or other practitioner authorized by the law of the state in which
the practitioner practices to use or order the use of the device. The Company
believes that this exception is often misconstrued as being a federal
requirement that the device be sold only pursuant to a prescription. The FDA
considers contact lenses to qualify for this labeling exemption, however, there
is no federal law that requires that contact lenses be sold only pursuant to a
prescription.

State Regulation. Because there is no applicable federal law that
regulates the distribution of contact lenses, the sale and delivery of contact
lenses to the consumer is subject to state laws and regulations. The Company
sells to customers in almost all of the 50 states and each sale is likely to be
subject to the laws of the state where the customer is located. The laws and
regulations governing the sale and delivery of contact lenses vary from state to
state, but generally can be classified in five categories: (i) laws that require
contact lenses only be dispensed pursuant to a prescription; (ii) laws that
require the dispenser to be licensed by the state as an optometrist,
ophthalmologist or other professional authorized to dispense lenses; (iii) laws
that require lenses be dispensed only in a face-to-face transaction; (iv) laws
with requirements that are unclear or do not specifically address the sale and
delivery of contact lenses; and (v) laws that the Company believes place no
restrictions on the dispensing of replacement contact lenses. Many of the states
requiring that contacts be dispensed in face-to-face meetings or by a person
licensed by such state to dispense lenses also require that lenses only be
dispensed pursuant to a valid prescription.

The laws and regulations in a significant number of states, including most
of the states wherein a large portion of the Company's sales are concentrated,
require that contact lenses only be sold to a consumer pursuant to a valid
prescription. In some states, satisfying this prescription requirement obligates
the dispenser only to verify the customer's prescription with the customer's
prescriber, while other states specifically require that a written prescription
be obtained before providing the lenses to the customer. The Company's operating
practice is to attempt to obtain a valid prescription from each of its customers
or his/her eyecare practitioner. If the customer does not have a copy of his/her
prescription, the Company attempts to contact the customer's doctor to obtain a
copy of, or verify the customer's prescription. If the Company is unable to
obtain a copy of or verify the customer's prescription, it is the Company's
practice to complete the sale and ship the lenses to the customer based on the
prescription information provided by the customer. The Company retains copies of
the written prescriptions that it receives and maintains records of its
communications with the customer's prescriber.

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<PAGE> 31

The Company's ability to comply with state laws and regulations requiring a
valid prescription is hampered because the Company's customers are often unable
to get a copy of their prescription. The Company believes that optometrists,
ophthalmologists and other contact lens prescribers have historically refused to
release copies of a patient's contact lens prescription to the patient. In
addition, such providers have refused to release or verify prescriptions at the
request of mail order companies. Federal law requires prescribers to release
prescriptions for eyeglasses to a patient, but the issue of whether or not a
prescriber must release a contact lens prescription to the patient, or at the
patients request, is currently governed by state law. There are approximately 22
states that require contact lens prescribers to release the prescriptions for
contact lenses to the patient. However, even in states with a mandatory release
law, the Company believes that many prescribers continue to refuse to release
prescriptions to their patients or to mail order contact lens distributors,
including the Company.

In addition to requiring a valid prescription, a substantial number of
states also require that contact lenses only be dispensed by a person licensed
to do so under that state's laws. A dispenser may be required to be licensed as
an optometrist, ophthalmologist, optician, ophthalmic dispenser or contact lens
dispenser, depending on which state the customer is located in. Neither the
Company nor any of its employees is a licensed or registered dispenser of
contact lenses in any states other than California and Texas. The laws in a
small number of states effectively prohibit the sale of contacts through the
mail by requiring that a person licensed under that state's law to dispense
contacts be in personal attendance at the place of sale. In addition, there are
several states in which the laws and regulations do not specifically address the
issue of who may dispense contact lenses or are unclear with respect to the
requirements for dispensing lenses. Generally, these laws are older and were
written before mail order and other distributors began selling contact lenses.
Lastly, the Company believes that the laws in a small number of states do not
require that replacement contact lenses be dispensed pursuant to a prescription
or only by a professional licensed in such state.

The Company has retained legal counsel to identify and summarize the
applicable laws of each of the states in which the Company generates material
sales. Based upon such summaries, the Company estimates that approximately
one-third of its net sales in 1997 were made in compliance with applicable state
laws and regulations. Any action brought against the Company based on its
failure to comply with applicable state laws and regulations could result in
significant fines to the Company, the Company being prohibited from making sales
in a particular state and/or the Company being required to comply with such
laws. Such required compliance could result in: (i) increased costs to the
Company; (ii) the loss of a substantial portion of the Company's customers for
whom the Company is unable to obtain or verify their prescription; and (iii) the
inability to sell to customers at all in a particular state if the Company
cannot comply with such state's laws. The occurrence of any of the above results
could have a material adverse effect on the Company's ability to sell contact
lenses and to continue to operate profitably. Furthermore, there can be no
assurance that states will not enact or impose laws or regulations that prohibit
mail order dispensing of contact lenses or otherwise impair the Company's
ability to sell contact lenses and continue to operate profitably.

An FTC rule adopted in 1978 requires eye care practitioners to provide
their patients with a copy of their eyeglass prescription (the "Prescription
Release Rule"). The Prescription Release Rule was adopted based on a finding by
the FTC that consumers were being deterred from comparison shopping for
eyeglasses because eye care practitioners refused to release prescriptions. In
April 1997, the FTC published a request for comments regarding the Prescription
Release Rule with respect to whether the rule should be expanded to require the
release of contact lens prescriptions, whether consumers have historically been
able to get their contact lens prescriptions upon request and whether the
refusal to release contact lens prescriptions has benefits justifying such
refusal. The FTC undertook a similar review in 1985 and again in 1995, both
times concluding that the rule should not be expanded to require the release of
contact lens prescriptions. The deadline for submitting comments to the FTC was
September 2, 1997.

In June 1997, the Company received notice from the Georgia Board that the
Georgia Board considers sales by the Company in Georgia to be in violation of
Georgia law, which requires face-to-face delivery of contact lenses. However,
the Georgia Board did not recommend any action be taken at that time, but
reserved the right to pursue future violations by the Company. In November 1997,
the Company received notice from the New Mexico Board that the New Mexico Board
considers sales by the Company in New Mexico to be in violation of New Mexico
law and ordering the Company to cease and desist selling contact lenses in New
Mexico. The Company

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<PAGE> 32

has not taken any actions in response to such notices. Sales to customers in
these two states in 1997 were less than 3% of the Company's net sales for that
period. The Company has never been subject to any proceedings brought by any
state to force the Company to comply with such state's laws or to fine the
Company for failure to comply with such laws.

INTELLECTUAL PROPERTY

The Company conducts its business under the trade name and service marks
"1-800 CONTACTS." The Company has taken steps to register and protect these
marks and believes that such marks have significant value and are an important
factor in the marketing of its products. The Company leases certain assets,
including the right to use the 1-800 CONTACTS telephone number, from an
individual pursuant to a non-cancelable lease. The lease expires in June 2000,
at which time the Company has the option to purchase such assets for $17,500.
However, under applicable FCC rules and regulations, the Company does not have
and cannot acquire any property rights to the telephone number. The Company does
not expect to lose the right to use the 1-800 CONTACTS number, however, there
can be no assurance in this regard. The loss of the right to use the 1-800
CONTACTS number would have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, the Company has
obtained the rights to 1-888 CONTACTS and the cellular and international
equivalents for the 1-800 CONTACTS phone number, however, like the 1-800
CONTACTS number, the Company does not have and cannot acquire any property
rights in these telephone numbers. See "Risk Factors -- Intellectual Property
Matters."

PROPERTIES

All of the Company's management and telephone operations are conducted
through 5,600 square feet of leased space located in Draper, Utah, a suburb of
Salt Lake City. The lease relating to this facility expires in 2002. The Company
intends to relocate to a new and expanded facility located adjacent to its
existing facility in May 1998 and the Company's current landlord has agreed to
release the Company from its current lease without significant penalty. The new
facility is expected to consist of 23,000 square feet. The lease on the new
facility is expected to be for a term of approximately seven years.

As of November 1, 1997, the Company began utilizing approximately 4,500
square feet of leased warehouse space. This warehouse facility is located
approximately two miles from the Company's operations facilities. The lease
relating to this facility expires in January 1998, and is renewable at the
Company's option for two additional six month periods.

LEGAL PROCEEDINGS

The Company is, from time to time, a party to claims and litigation that
arise in the normal course of business. Management believes that the ultimate
outcome of these claims and litigation will not have a material adverse effect
on the financial position or results of operations of the Company.

EMPLOYEES

As of December 31, 1997, the Company employed 57 persons, of which 37 were
engaged in sales related activities, 12 were engaged in distribution related
activities and 8 were engaged in administrative and accounting functions. None
of the Company's employees is covered by a collective bargaining agreement. The
Company believes its relationship with its employees to be good.

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<PAGE> 33

MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES

The following table sets forth certain information with respect to the
Directors, executive officers and certain key employees of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Jonathan C. Coon....................... 27 President and Director
John F. Nichols........................ 37 Vice President, Operations and Director
Scott S. Tanner........................ 37 Chief Financial Officer and Director
Robert G. Hunter....................... 30 Controller
Craig A. Heesch........................ 39 Manager, Network Administration
S. Todd Witzel......................... 26 Manager, Management Information Systems
Donald A. Yacktman..................... 52 Director
Stephen A. Yacktman.................... 27 Director
E. Dean Butler......................... 53 Director
</TABLE>

JONATHAN C. COON is a co-founder of the Company and currently serves as
President of the Company and Director. Mr. Coon received his Bachelor's Degree
from Brigham Young University in 1994 and has substantially completed studies
for an MBA at Brigham Young University. Mr. Coon has five years of experience in
the contact lens industry.

JOHN F. NICHOLS is a co-founder of the Company and currently serves as Vice
President, Operations and Director. Mr. Nichols is a certified optician in the
State of California and was the owner of the Discount Lens Club from 1991 until
February 1995. Mr. Nichols worked with Bausch & Lomb as a Senior Sales
Representative from 1989 to 1991.

SCOTT S. TANNER has served as the Chief Financial Officer and a Director of
the Company since November 1997. Prior to joining the Company, Mr. Tanner served
as the Chief Financial Officer of Country Club Foods, Inc., a Utah-based snack
food manufacturer and distributor, from 1995 to 1997. Prior thereto, Mr. Tanner
served in various management positions at Apple Computer, Inc. from 1988 to 1995
and worked at Peat, Marwick & Mitchell & Co. in San Francisco from 1984 to 1986.
Mr. Tanner received a Bachelor's Degree from Stanford University and a MBA from
Harvard University. Mr. Tanner served as an executive officer of Country Club
Foods, Inc. at the time it filed a voluntary petition under chapter 11 of the
United States Bankruptcy Code in November 1995.

ROBERT G. HUNTER has served as the Controller of the Company since November
1997. Prior to joining the Company, Mr. Hunter served as an auditor with
Hawkins, Cloward & Simister LC from November 1993 to 1997 and with Arthur
Andersen LLP from April 1992 to November 1993. Mr. Hunter is a Certified Public
Accountant. Mr. Hunter graduated summa cum laude with a Bachelor's Degree from
Brigham Young University, where he also earned a Masters of Accountancy Degree.

CRAIG A. HEESCH has served as the Company's Network Administrator since
November 1997. From February 1997 through November 1997, Mr. Heesch was retained
as a consultant to the Company. From 1993 through 1997, Mr. Heesch owned and
operated a computer consulting business, was an authorized Novell reseller and
is a certified Novell technician. Mr. Heesch received a Bachelor's Degree in
Computer Science from the University of Utah.

S. TODD WITZEL has served as the Company's Manager, Management Information
Systems since October 1996. Prior to joining the Company, Mr. Witzel worked for
Access Software as a programmer, where he helped develop Access' management
information systems, from 1994 to 1996.

DONALD A. YACKTMAN has served as a Director of the Company since February
1996. Mr. Yacktman is the President and Chief Investment Officer of Yacktman
Asset Management Co., which manages approximately $1.6

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<PAGE> 34

billion, including more than $1 billion in two equity mutual funds. Prior to
founding his own firm, Mr. Yacktman served as the senior portfolio manager with
Selected Financial Services, Inc. from April 1982 until March 1992 and was a
portfolio manager and a partner with Stein Roe & Farnham from 1974 to 1982. Mr.
Yacktman was named "Portfolio Manager of the Year" by Morningstar in 1991 and
has been featured in articles in several newspapers and magazines and is a
frequent guest on radio and television investment programs. Mr. Yacktman holds a
Bachelor's Degree, magna cum laude in economics from the University of Utah and
an MBA with distinction from Harvard University.

STEPHEN A. YACKTMAN has served as a Director of the Company since February
1996. Mr. Yacktman is currently a Vice President at Yacktman Asset Management
Co. where he has been employed since 1993. Mr. Yacktman's responsibilities
include portfolio management, stock analysis and trading. Mr. Yacktman holds a
Bachelor's Degree in economics and an MBA from Brigham Young University.

E. DEAN BUTLER has served as a Director of the Company since January 1998.
Mr. Butler currently serves as Vice Chairman of Grand Vision, the largest retail
optical group in Europe. In 1988, Mr. Butler founded Vision Express in Europe,
which merged with the French retail group, GPS, to form Grand Vision in late
1997. In 1983, Mr. Butler founded LensCrafters and served as its Chief Executive
Officer until 1988. Prior to 1983, Mr. Butler was employed by Procter & Gamble
in various marketing positions since 1969.

Directors of the Company are currently elected annually by its stockholders
to serve during the ensuing year or until their respective successors are duly
elected and qualified. Executive officers of the Company are duly elected by the
Board of Directors to serve until their respective successors are elected and
qualified. Donald A. Yacktman is Stephen A. Yacktman's father. There are no
other family relationships between any of the Directors or executive officers of
the Company.

The Company anticipates that one additional Director not otherwise
affiliated with the Company or any of its stockholders will be elected by the
Board of Directors following the completion of the Offering. Prior to the
completion of the Offering, the Board of Directors will be divided into three
classes, as nearly equal in number as possible, with each Director serving a
three year term and one class being elected at each year's annual meeting of
stockholders. Mr. Tanner and the additional director anticipated to be appointed
by the Board of Directors will be in the class of directors whose term expires
at the 1998 annual meeting of the Company's stockholders. Mr. Stephen Yacktman
and Mr. Butler will be in the class of directors whose term expires at the 1999
annual meeting of the Company's stockholders. Messrs. Coon, Nichols and Donald
Yacktman will be in the class of directors whose term expires at the 2000 annual
meeting of the Company's stockholders. At each annual meeting of the Company's
stockholders, successors to the class of directors whose term expires at such
meeting will be elected to serve for three year terms and until their respective
successors are elected and qualified.

EXECUTIVE COMPENSATION

The following table sets forth information concerning the compensation paid
or accrued for the years ended December 31, 1996 and 1997, to the Company's
President and Vice President, Operations (the "Named Executives"). None of the
Company's other executive officers earned more than $100,000 in compensation
during the years ended December 31, 1996 and 1997.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------- OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) COMPENSATION($)(B)
--------------------------- ---- --------- ------------------
<S> <C> <C> <C>
Jonathan C. Coon................................. 1997 $105,042 $13,440
President(a) 1996 37,417 --
John F. Nichols
Vice President, Operations..................... 1997 110,625 10,580
</TABLE>

- ---------------

(a) Mr. Coon's salary was increased to $80,000 per annum effective February 1,
1997 and to $120,000 per annum effective June 1, 1997.

(b) Reflects payments made by the Company to such Named Executives for medical
costs and health insurance.

31
<PAGE> 35

EMPLOYMENT AGREEMENTS

Immediately prior to the completion of the Offering, Mr. Coon and Mr.
Nichols will enter into employment agreements with the Company (each, an
"Employment Agreement"), pursuant to which Mr. Coon will agree to serve as the
President of the Company for a period of three years and Mr. Nichols will serve
as Vice President, Operations of the Company for a period of three years.
Pursuant to their respective Employment Agreement, Mr. Coon and Mr. Nichols will
receive: (i) an annual base salary equal to at least $120,000 and $120,000,
respectively, (ii) an annual bonus up to 50% of their annual base salary (upon
the Company achieving certain operating targets) and (iii) certain fringe
benefits. If Mr. Coon's or Mr. Nichols' employment is terminated for any reason
prior to the termination of such agreement other than for Cause (as defined
therein) or their resignation, they will be entitled to receive their base
salary and fringe benefits for 12 months following such termination in addition
to 50% of their bonus for the year in which their employment was terminated if
the termination is during the first six months of the year or 100% if such
termination was during the last six months of the year. Mr. Coon and Mr. Nichols
will agree not to compete with the Company for a period of two years following
their termination of employment with the Company and not to disclose any
confidential information at any time without the prior written consent of the
Company.

The Company will also enter into three-year employment agreements with each
of Messrs. Tanner, Hunter, Heesch and Witzel immediately prior to the completion
of the Offering. Such employment agreements will have terms similar to those of
Messrs. Coon and Nichols described above (other than annual base salary, bonus
levels and severance periods).

DIRECTOR COMPENSATION

Directors of the Company currently do not receive a salary or an annual
retainer for their services. The Company expects, however, that non-employee
directors appointed to the Board after the completion of the Offering and not
otherwise affiliated with the Company or its stockholders will be paid an annual
cash retainer of $10,000 and will be reimbursed for all reasonable expenses
incurred in attending Board meetings.

COMMITTEES OF THE BOARD OF DIRECTORS

The Company currently has no committees of its Board of Directors. Upon the
selection and election of qualified independent directors, the Board of
Directors expects to establish both an audit committee and a compensation
committee, all of which is expected to occur within 90 days from the date of
this Prospectus.

Once created, the audit committee will be responsible for making
recommendations to the Board of Directors regarding the selection of independent
auditors, reviewing the results and scope of the audit and other services
provided by the Company's independent accountants and reviewing and evaluating
the Company's audit and control functions.

The compensation committee will make recommendations regarding the
Company's employee stock option plan and decisions concerning salaries and
incentive compensation for executive officers, key employees and consultants of
the Company.

The Board of Directors may also create other committees, including an
executive committee and a nominating committee.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDE PARTICIPATION

The Company currently does not have a compensation committee. The
compensation arrangements for Mr. Coon and Mr. Nichols were established by Mr.
Donald Yacktman pursuant to arrangements established at the time of Mr.
Yacktman's investment in the Company.

STOCK OPTIONS

As of the date of this Prospectus, the Company has granted options to
purchase an aggregate of 203,140 shares of Common Stock to certain members of
management (including Mr. Butler). Such options vest in three

32
<PAGE> 36

equal installments beginning on the first anniversary of the grant date and have
an average exercise price of $8.59 per share. The options have a term of ten
years. In the event that the optionee ceases to be employed by the Company for
any reason (i) any portion of the option that was not vested at that time will
expire and (ii) any portion of the option that was vested will expire 90 days
after such termination date. Under such option agreements, the Company has the
right to repurchase at fair market value the shares of Common Stock issuable
upon the exercise of such options (the "Option Shares") in the event the
optionee ceases to be employed by the Company. In addition, the option
agreements: (i) restrict the transfer of the Option Shares, subject to certain
exceptions and (ii) require each optionee to consent to a sale of the Company
approved by the holders of a majority of the shares of Common Stock held by the
Existing Stockholders. The repurchase right and foregoing restrictions terminate
upon an initial public offering in which the Company receives net proceeds of at
least $10.0 million.

INCENTIVE STOCK OPTION PLAN

Prior to the completion of this Offering, the Company will establish the
1-800 CONTACTS, INC. Incentive Stock Option Plan (the "Stock Option Plan"). A
maximum of 310,000 shares of Common Stock, subject to adjustment, have been
initially authorized for the granting of stock options under the Stock Option
Plan. To date, no options have been granted pursuant to the Stock Option Plan.
Options granted under the Stock Option Plan may be either "incentive stock
options," which qualify for special tax treatment under the Internal Revenue
Code, or nonqualified stock options. The purposes of the Stock Option Plan are
to advance the interests of the Company and stockholders by providing employees
of the Company with an additional incentive to continue their efforts on behalf
of the Company, as well as to attract to the Company people of experience and
ability. The Stock Option Plan is intended to comply with Rule 16b-3 of the
Exchange Act.

It is expected that all officers, directors and other employees of the
Company or its subsidiaries will be eligible to participate under the Stock
Option Plan, as deemed appropriate by the Compensation Committee of the Board of
Directors. Eligible employees will not pay any cash consideration to the Company
to receive the options. The Stock Option Plan will be administered by the
Compensation Committee of the Board of Directors. The exercise price for
incentive stock options must be no less than the fair market value of the Common
Stock on the date of grant. The exercise price of nonqualified stock options is
not subject to any limitation based upon the then current market value of the
Common Stock. Options will expire no later than the tenth anniversary of the
date of grant. An option holder will be able to exercise options from time to
time, subject to vesting. Options will vest immediately upon death or disability
of a participant and upon certain change of control events. Upon termination for
cause or at will by the Company, the unvested portion of the options will be
forfeited. Subject to the above conditions, the exercise price, duration of the
options and vesting provisions will be set by the Compensation Committee of the
Board of Directors in its discretion.

33
<PAGE> 37

PRINCIPAL AND SELLING STOCKHOLDERS

The table below sets forth certain information regarding the equity
ownership of the Company (a) as of December 31, 1997 and (b) immediately
following the Offering by: (i) each person or entity who beneficially owns five
percent or more of the Common Stock; (ii) each Director and the Named Executive;
(iii) all Directors and executive officers of the Company as a group; and (iv)
Jonathan C. Coon (the "Selling Stockholder"). Unless otherwise stated, each of
the persons named in the table has sole voting and investment power with respect
to the securities beneficially owned by it or him as set forth opposite its or
his name. Beneficial ownership of the Common Stock listed in the table has been
determined in accordance with the applicable rules and regulations promulgated
under the Exchange Act.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO THE OWNED
OFFERING AFTER THE OFFERING(1)
------------------- NUMBER ---------------------
NUMBER OF SHARES NUMBER
NAME AND ADDRESS OF BENEFICIAL OWNER OF SHARES PERCENT OFFERED OF SHARES PERCENT
------------------------------------ --------- ------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Jonathan C. Coon(2)(3)....................... 2,789,469 66.2% 275,000 2,514,469 40.9%
John F. Nichols(2)........................... 931,894 22.1 -- 931,894 15.2
Donald A. Yacktman(4)(5)..................... 256,477 6.1 -- 256,477 4.2
Stephen A. Yacktman(6)....................... 232,766 5.5 -- 232,766 3.8
Scott S. Tanner(7)........................... -- -- -- -- --
E. Dean Butler(8)............................ -- -- -- -- --
All Directors and executive officers as a
group (7 persons).......................... 4,210,606 99.9 275,000 3,935,606 64.1
</TABLE>

- ---------------

* Represents less than one percent.

(1) Assumes no exercise of the Underwriters' over-allotment option and does not
give effect to any purchases, if any, by such persons named in the table in
the Offering.

(2) The address of such person is the executive offices of the Company.

(3) Includes: (i) 931,894 shares of Common Stock that Mr. Coon will acquire from
Mr. Nichols for an aggregate of $1.5 million upon the exercise of a stock
option granted to Mr. Coon from Mr. Nichols in February 1996 and (ii) an
aggregate of 92,775 shares held by Mr. Coon's children.

(4) Reflects the exercise of an option by the Company to repurchase an aggregate
of 442,651 shares of Common Stock held by such stockholder for approximately
$1.9 million. The Company will exercise such option upon completion of the
Offering. See "Use of Proceeds" and "Certain Transactions."

(5) Such shares are held of record by The Yacktman Family Trust, of which Mr.
Yacktman's wife serves as trustee. The address of Mr. Yacktman and such
trust is c/o Yacktman Asset Management Co., 303 West Madison Street,
Chicago, Illinois 60606.

(6) The address of such person is c/o Yacktman Asset Management Co., 303 West
Madison Street, Chicago, Illinois 60606.

(7) Does not include 47,986 shares of Common Stock that can be acquired through
the exercise of stock options, none of which are currently exercisable.

(8) Does not include 71,979 shares of Common Stock that can be acquired through
the exercise of stock options, none of which are currently exercisable.

CERTAIN TRANSACTIONS

LOANS TO EXECUTIVE OFFICERS

As of December 31, 1997, the Company had outstanding loans to Messrs. Coon
and Nichols, each an executive officer of the Company, an aggregate of $340,615
and $231,530, respectively, evidenced by a promissory note due on demand. The
note provides for the payment of interest calculated at a rate equal to the
prime rate (8.5% at December 31, 1997). These loans will be repaid in connection
with the S Corporation Distribution. See "S Corporation Matters."

34
<PAGE> 38

LOANS FROM CERTAIN STOCKHOLDERS

In February 1996, the Company entered into a credit agreement with Mr.
Donald Yacktman, a Director of the Company, that provides for maximum borrowings
of $250,000. This loan bears interest at the prime interest rate plus 2%,
matures in February 1999 and, if not repaid in full by February 1999, may be
converted into 15% of the Company's Common Stock at the option of Mr. Yacktman.

In May 1997, Mr. Yacktman subsequently loaned an additional $250,000 to the
Company, which was repaid prior to September 30, 1997. Also in May 1997, the
Company borrowed $600,000 from Mr. Yacktman under a short-term promissory note
due in November 1997. In July 1997, the Company repaid $100,000 under such note
and refinanced the remaining $500,000 and borrowed an additional $600,000 from
Mr. Yacktman under a new short-term promissory note. The new short-term
unsecured promissory note bears interest at the prime interest rate plus 2% and
matures on July 30, 1998. In consideration for entering into this note, the
Company agreed to modify the option that it holds to repurchase a portion of the
Common Stock held by Mr. Yacktman. Under the revised terms of the option, the
Company has the right to repurchase an aggregate of 442,651 of Mr. Yacktman's
shares for $1.9 million.

In September 1997, the Company borrowed $250,000 from Mr. Yacktman under a
short-term unsecured promissory note. This note accrues interest at the prime
interest rate plus 2% and is due in September 1998. In addition, for every month
that this note remains outstanding a fee of $5,000 is added to the outstanding
balance.

During the years ended December 31, 1997 and 1996, the Company's largest
outstanding indebtedness to Mr. Yacktman was approximately $1.6 million and
$305,000, respectively. All of the Company's outstanding indebtedness to Mr.
Yacktman will be repaid out of the net proceeds of the Offering. See "Use of
Proceeds."

REPURCHASE OF STOCK FROM FORMER DIRECTOR

In February 1996, the Company redeemed all shares of the Company's Common
Stock then held by Mr. Steve Gibson, a former Director of the Company, which
shares represented twenty percent of the Company's Common Stock then
outstanding. The purchase price of such redeemed shares was $240,000 in cash.
Mr. Gibson resigned as a Director of the Company in February 1996.

TAX INDEMNIFICATION AGREEMENT

Prior to completion of the Offering, the Company will enter into the
Agreement for Distribution of Retained Earnings and Tax Indemnification with the
Existing Stockholders. The Agreement for Distribution of Retained Earnings and
Tax Indemnification will provide for, among other things, the indemnification of
the Existing Stockholders for any losses or liabilities with respect to any
additional taxes (including interest, penalties and legal fees) and the
repayment to the Company of amounts received as refunds, resulting from the
Company's operations during the period in which it was an S corporation. No
amounts are currently payable, or anticipated to be payable, or receivable or
anticipated to be receivable under the Agreement for Distribution of Retained
Earnings and Tax Indemnification.

S CORPORATION DISTRIBUTION

Effective February 1, 1995, the Company elected to be treated as an S
corporation for federal income tax purposes. As a result, for the period the
Company was an S corporation, the Company paid no federal income tax. Taxable
income of the Company was taxable to its Existing Stockholders. The Company will
terminate its S corporation status prior to the closing of the sale of shares
offered hereby and will distribute to the Existing Stockholders the balance of
its previously undistributed earnings through that date. The purchasers of
shares in this Offering will not receive any of these distributions. See "S
Corporation Matters."

STOCK REPURCHASE OPTION

In connection with Mr. Donald Yacktman's investment in the Company in
February 1996, the Company was granted an option, exercisable at any time prior
to February 1, 2001, to repurchase an aggregate of 465,947 shares of Common
Stock held by Mr. Donald Yacktman (10% percent of the Company's outstanding
Common Stock prior to the Offering), at an aggregate purchase price of $2.0
million. In connection with entering in to a promissory note with Mr. Donald
Yacktman in July 1997, the Company canceled a portion of this option and the
35
<PAGE> 39

number of shares now subject to repurchase by the Company pursuant to the option
is 442,651 (9.5% of the Company's outstanding Common Stock prior to the
Offering), at an aggregate purchase price of $1.9 million. The Company expects
to exercise this option concurrently with the completion of the Offering. See
"Use of Proceeds."

DESCRIPTION OF CAPITAL STOCK

GENERAL MATTERS

At the time of the Offering, the total amount of authorized capital stock
of the Company will consist of 20,000,000 shares of Common Stock, par value
$0.01 per share, and 1,000,000 shares of preferred stock, par value $0.01 per
share (the "Serial Preferred Stock"). Upon completion of the Offering, 6,141,818
shares of Common Stock will be issued and outstanding (6,471,818 shares if the
Underwriters' over-allotment is exercised in full) and no shares of Serial
Preferred Stock will be issued and outstanding. The discussion herein describes
the Company's capital stock, the Restated Certificate and By-laws as anticipated
to be in effect upon consummation of the Offering. The following summary of
certain provisions of the Company's capital stock describes all material
provisions of, but does not purport to be complete and is subject to, and
qualified in its entirety by, the Restated Certificate and the By-laws of the
Company that are included as exhibits to the Registration Statement of which
this Prospectus forms a part and by the provisions of applicable law.

The Restated Certificate and By-laws will contain certain provisions that
are intended to enhance the likelihood of continuity and stability in the
composition of the Board of Directors and which may have the effect of delaying,
deferring or preventing a future takeover or change in control of the Company
unless such takeover or change in control is approved by the Board of Directors.

COMMON STOCK

The issued and outstanding shares of Common Stock are, and the shares of
Common Stock being offered by the Company will be upon payment therefor, validly
issued, fully paid and nonassessable. Subject to the prior rights of the holders
of any Serial Preferred Stock, the holders of outstanding shares of Common Stock
are entitled to receive dividends out of assets legally available therefor at
such time and in such amounts as the Board of Directors may from time to time
determine. See "Dividend Policy." The shares of Common Stock are not convertible
and the holders thereof have no preemptive or subscription rights to purchase
any securities of the Company. Upon liquidation, dissolution or winding up of
the Company, the holders of Common Stock are entitled to receive pro rata the
assets of the Company which are legally available for distribution, after
payment of all debts and other liabilities and subject to the prior rights of
any holders of Serial Preferred Stock then outstanding. Each outstanding share
of Common Stock is entitled to one vote on all matters submitted to a vote of
stockholders. There is no cumulative voting.

The Company's Common Stock has been approved for inclusion on the Nasdaq
National Market under the symbol "CTAC."

SERIAL PREFERRED STOCK

The Company's Board of Directors may, without further action by the
Company's stockholders, from time to time, direct the issuance of shares of
Serial Preferred Stock in series and may, at the time of issuance, determine the
rights, preferences and limitations of each series. Satisfaction of any dividend
preferences of outstanding shares of Serial Preferred Stock would reduce the
amount of funds available for the payment of dividends on shares of Common
Stock. Holders of shares of Serial Preferred Stock may be entitled to receive a
preference payment in the event of any liquidation, dissolution or winding-up of
the Company before any payment is made to the holders of shares of Common Stock.
Under certain circumstances, the issuance of shares of Serial Preferred Stock
may render more difficult or tend to discourage a merger, tender offer or proxy
contest, the assumption of control by a holder of a large block of the Company's
securities or the removal of incumbent management. Upon the affirmative vote of
a majority of the total number of directors then in office, the Board of
Directors of the Company, without stockholder approval, may issue shares of
Serial Preferred Stock with voting and conversion rights which could adversely
affect the holders of shares of Common Stock. Upon consummation of the Offering,
there will be no shares of Serial Preferred Stock outstanding, and the Company
has no present intention to issue any shares of Serial Preferred Stock.
36
<PAGE> 40

CERTAIN PROVISIONS OF THE RESTATED CERTIFICATE OF INCORPORATION AND BY-LAWS

The Restated Certificate provides for the Board of Directors to be divided
into three classes, as nearly equal in number as possible, serving staggered
terms. Approximately one-third of the Board of Directors will be elected each
year. See "Management." Under the Delaware General Corporation Law, directors
serving on a classified board can only be removed for cause. The provision for a
classified board could prevent a party who acquires control of a majority of the
outstanding voting stock from obtaining control of the Board of Directors until
the second annual stockholders meeting following the date the acquiror obtains
the controlling stock interest. The classified board provision could have the
effect of discouraging a potential acquiror from making a tender offer or
otherwise attempting to obtain control of the Company and could increase the
likelihood that incumbent directors will retain their positions.

The Restated Certificate provides that stockholder action can be taken only
at an annual or special meeting of stockholders and cannot be taken by written
consent in lieu of a meeting. The Restated Certificate and the By-laws provides
that, except as otherwise required by law, special meetings of the stockholders
can only be called pursuant to a resolution adopted by a majority of the Board
of Directors or by the Chief Executive Officer of the Company. Stockholders will
not be permitted to call a special meeting or to require the Board of Directors
to call a special meeting.

The By-laws establish an advance notice procedure for stockholder proposals
to be brought before an annual meeting of stockholders of the Company, including
proposed nominations of persons for election to the Board of Directors.

Stockholders at an annual meeting may only consider proposals or
nominations specified in the notice of meeting or brought before the meeting by
or at the direction of the Board of Directors or by a stockholder who was a
stockholder of record on the record date for the meeting, who is entitled to
vote at the meeting and who has given to the Company's Secretary timely written
notice, in proper form, of the stockholder's intention to bring that business
before the meeting. Although the By-laws do not give the Board of Directors the
power to approve or disapprove stockholder nominations of candidates or
proposals regarding other business to be conducted at a special or annual
meeting, the By-laws may have the effect of precluding the conduct of certain
business at a meeting if the proper procedures are not followed or may
discourage or defer a potential acquiror from conducting a solicitation of
proxies to elect its own slate of directors or otherwise attempting to obtain
control of the Company.

The Restated Certificate and By-laws provide that the affirmative vote of
holders of at least 66 2/3% of the total votes eligible to be cast in the
election of directors is required to amend, alter, change or repeal certain of
their provisions. This requirement of a super-majority vote to approve
amendments to the Restated Certificate and By-laws could enable a minority of
the Company's stockholders to exercise veto power over any such amendments.

CERTAIN PROVISIONS OF DELAWARE LAW

Following the consummation of the Offering, the Company will be subject to
the "Business Combination" provisions of the Delaware General Corporation Law.
In general, such provisions prohibit a publicly held Delaware corporation from
engaging in various "business combination" transactions with any "interested
stockholder" for a period of three years after the date of the transaction which
the person became an "interested stockholder," unless (i) the transaction is
approved by the Board of Directors prior to the date the "interested
stockholder" obtained such status; (ii) upon consummation of the transaction
which resulted in the stockholder becoming an "interested stockholder," the
"interested stockholder," owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced, excluding for
purposes of determining the number of shares outstanding those shares owned by
(a) persons who are directors and also officers and (b) employee stock plans in
which employee participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender or exchange
offer; or (iii) on or subsequent to such date the "business combination" is
approved by the Board of Directors and authorized at an annual or special
meeting of stockholders by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the "interested stockholder." A
"business combination" is defined to include mergers, asset sales

37
<PAGE> 41

and other transactions resulting in financial benefit to a stockholder. In
general, an "interested stockholder" is a Person who, together with affiliates
and associates, owns (or within three years, did own) 15% or more of a
corporation's voting stock. The statute could prohibit or delay mergers or other
takeover or change in control attempts with respect to the Company and,
accordingly, may discourage attempts to acquire the Company.

LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS

The Restated Certificate limits the liability of Directors to the fullest
extent permitted by the Delaware General Corporation Law. In addition, the
Restated Certificate will provide that the Company shall indemnify Directors and
officers of the Company to the fullest extent permitted by such law. The Company
anticipates entering into indemnification agreements with its current Directors
and executive officers prior to the completion of the Offering and any new
Directors or executive officers following such time.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is American Stock
Transfer & Trust Company.

SHARES ELIGIBLE FOR FUTURE SALE

Prior to the Offering there has been no market for the Common Stock of the
Company. The Company can make no predictions as to the effect, if any, that
sales of shares or the availability of shares for sale will have on the market
price prevailing from time to time. Nevertheless, sales of significant amounts
of the Common Stock in the public market, or the perception that such sales may
occur, could adversely affect prevailing market prices. See "Risk
Factors--Shares Eligible for Future Sale."

Upon completion of the Offering, the Company expects to have 6,141,818
shares of Common Stock outstanding. Of the shares outstanding after the
Offering, the 2,200,000 shares of Common Stock (2,530,000 shares if the
Underwriters' over-allotment is exercised in full) sold in the Offering will be
freely tradeable without restriction under the Securities Act, except for any
such shares which may be acquired by an "affiliate" of the Company (an
"Affiliate"), as that term is defined in Rule 144 promulgated under the
Securities Act ("Rule 144"), which shares will be subject to the volume
limitations and other restrictions of Rule 144 described below. An aggregate of
3,941,818 shares of Common Stock held by Existing Stockholders of the Company
upon completion of the Offering will be "restricted securities" (as that phrase
is defined in Rule 144) and may not be resold in the absence of registration
under the Securities Act or pursuant to an exemption from such registration,
including among others, the exemption provided by Rule 144 under the Securities
Act.

In general, under Rule 144 as currently in effect, beginning ninety days
after the date of this Prospectus, if a period of at least one year has elapsed
since the later of the date the "restricted securities" were acquired from the
Company or the date they were acquired from an Affiliate, then the holder of
such restricted securities (including an Affiliate) is entitled to sell in the
public market a number of shares within any three-month period that does not
exceed the greater of 1% of the then outstanding shares of the Common Stock
(approximately 61,418 shares immediately after the Offering) or the average
weekly reported volume of trading of the Common Stock on the Nasdaq National
Market during the four calendar weeks preceding such sale. Under Rule 144, the
holder may only sell such shares through "brokers' transactions" or in
transactions directly with a "market maker" (as such terms are defined in Rule
144). Sales under Rule 144 are also subject to certain requirements regarding
providing notice of such sales and the availability of current public
information concerning the Company. Affiliates may sell shares not constituting
restricted shares in accordance with the foregoing volume limitations and other
requirements but without regard to the one-year holding period. Under Rule
144(k), if a period of at least two years has elapsed between the later of the
date restricted securities were acquired from the Company or the date they were
acquired from an Affiliate, as applicable, a holder of such restricted
securities who is not an Affiliate at the time of the sale and has not been an
Affiliate for at least three months prior to the sale would be entitled to sell
the shares in the public market without regard to the volume limitations and
other restrictions described above. Beginning 90 days after the date of this
Prospectus, approximately 3,941,818 shares of Common Stock will be eligible for
sale in the public market pursuant to Rule 144, subject to the volume
limitations and other restrictions described above.

38
<PAGE> 42

Notwithstanding the foregoing, the Company's executive officers, Directors
and the Existing Stockholders, who own in aggregate approximately 3,941,818
shares of Common Stock have agreed that, without the prior consent of the
Representatives (as defined), they will not (i) directly or indirectly, sell,
offer to sell, grant any option for the sale of or otherwise dispose of any
shares of Common Stock or securities or rights convertible into or exercisable
or exchangeable for Common Stock (except through gifts to persons who agree in
writing to be bound by such restrictions) or (ii) make any demand for or
exercise any right with respect to the registration of any Common Stock or other
such securities, for a period of 180 days after the date of this Prospectus,
other than (i) the sale to the Underwriters of the shares of Common Stock under
the Underwriting Agreement (as defined) or (ii) the issuance by the Company of
shares of Common Stock upon the exercise of an options sold or granted pursuant
to an existing benefit plan of the Company and outstanding on the date of this
Prospectus.

39
<PAGE> 43

UNDERWRITING

Subject to the terms and conditions contained in the Underwriting Agreement
(the "Underwriting Agreement") among the Company and the Selling Stockholder and
each of the Underwriters named below, the Company and the Selling Stockholder
have agreed to sell to the Underwriters, and each of the Underwriters severally
and not jointly has agreed to purchase from the Company and the Selling
Stockholder, the number of shares of Common Stock set forth opposite its name
below.

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
- ----------- ----------------
<S> <C>
McDonald & Company Securities, Inc..........................
Morgan Keegan & Company, Inc................................
---------
Total............................................. 2,200,000
=========
</TABLE>

McDonald & Company Securities, Inc. and Morgan Keegan & Company, Inc. are
acting as representatives (the "Representatives") of the several Underwriters.

The Underwriting Agreement provides that the obligation of the several
Underwriters to pay for and accept delivery of the shares of Common Stock are
subject to the approval of certain legal matters by counsel and to certain other
conditions. The Underwriters are obligated to take and pay for all shares of the
Common Stock offered hereby (other than those covered by the over-allotment
option described below) if any such shares are taken.

The Underwriters propose initially to offer the shares of Common Stock
directly to the public at the initial public offering price set forth on the
cover page hereof and to certain dealers at a price that represents a concession
not in excess of $ per share of Common Stock under the public offering
price. The Underwriters may allow, and such dealers may reallow, a concession
not in excess of $ per share of Common Stock to the other Underwriters
or to certain other dealers. The public offering price and the other selling
terms may be changed by the Representatives of the initial public offering.

The Company has granted to the Underwriters an option, exercisable at any
time during the 30-day period from the date of this Prospectus, to purchase up
to an aggregate of 330,000 additional shares of Common Stock at the public
offering price set forth on the cover page hereof less underwriting discount.
The Underwriters may exercise such option to purchase additional shares solely
for the purpose of covering over-allotments, if any, incurred in connection with
the sale of the Common Stock offered hereby. To the extent such option is
exercised, each Underwriter will become obligated, subject to certain
conditions, to purchase a number of additional shares proportionate to such
Underwriter's initial amount reflected in the preceding table.

Prior to this Offering, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock has been
determined by negotiation between the Company and the Representatives. Among the
factors considered in determining the public offering price were the history of,
and the prospects for, the Company's business and the industry in which it
competes, an assessment of the Company's management, its past and present
operations, its past and present earnings and the trend of such earnings, the
prospects for earnings of the Company, the present state of the Company's
development, the general condition of the securities markets at the time of the
Offering and the price-earnings ratios and market price of securities of
comparable companies at the time of the Offering. There can be no assurance that
an active trading market will develop for the Common Stock or that the Common
Stock will trade in the public market subsequent to the Offering at or above the
initial public offering price.

The Company and the Selling Stockholder have agreed to indemnify the
several Underwriters against certain liabilities, including certain liabilities
under the Securities Act, or to contribute to payments the Underwriters may be
required to make in respect thereof.

The Underwriters have informed the Company that they do not expect to
confirm sales of any accounts over which they exercise discretionary authority.

40
<PAGE> 44

At the request of the Company, the Underwriters have reserved up to 110,000
shares of Common Stock for sale at the initial public offering price to
Directors, officers, certain employees and business associates of the Company.
The number of shares of Common Stock available to the general public will be
reduced to the extent these persons purchase the reserved shares. Any reserved
shares of Common Stock that are not so purchased by such employees at the
closing of the Offering will be offered by the Underwriters to the general
public on the same term as the other shares in the Offering.

The Underwriters may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation M
under the Exchange Act. Over-allotment involves syndicate sales in excess of the
offering size, which creates a syndicate short position. Stabilizing
transactions permit bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the securities in the open market after the
distribution has been completed in order to cover syndicate short positions.
Penalty bids permit the Underwriters to reclaim a selling concession from a
syndicate member when the securities originally sold by such syndicate member
are purchased in a syndicate covering transaction to cover syndicate short
positions. Such stabilizing transactions, syndicate covering transactions and
penalty bids may cause the price of the securities to be higher than it would
otherwise be in the absence of such transactions.

Neither the Company nor the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Stock. In addition, neither
the Company nor any of the Underwriters makes any representation that the
Underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.

The Company and its executive officers, Directors and the Existing
Stockholders have agreed that, without the prior consent of the Representatives,
they will not (i) directly or indirectly, sell, offer to sell, grant any option
for the sale of or otherwise dispose of any shares of Common Stock or securities
or rights convertible into or exercisable or exchangeable for Common Stock
(except through gifts to persons who agree in writing to be bound by such
restrictions) or (ii) make any demand for or exercise any right with respect to
the registration of any Common Stock or other such securities, for a period of
180 days after the date of this Prospectus, other than (a) the sale to the
Underwriters of the shares of Common Stock under the Underwriting Agreement or
(b) the issuance by the Company of shares of Common Stock upon the exercise of
an options sold or granted pursuant to an existing benefit plan of the Company
and outstanding on the date of this Prospectus.

EXPERTS

The financial statements of the Company and the Predecessor included in
this Prospectus and elsewhere in the Registration Statement to the extent and
for the periods indicated in their reports, have been audited by Arthur Andersen
LLP, independent public accountants, and are included herein in reliance upon
the authority of said firm as experts in giving said reports.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Kirkland & Ellis, Chicago, Illinois (a partnership which includes
professional corporations). Certain legal matters will be passed upon for the
Underwriters by Squire, Sanders & Dempsey L.L.P., Cleveland, Ohio.

41
<PAGE> 45

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement (of
which this Prospectus is a part and which term shall encompass any amendments
thereto) on Form S-1 pursuant to the Securities Act with respect to the Common
Stock being offered in the Offering. This Prospectus does not contain all the
information set forth in the Registration Statement and the exhibits and
schedules thereto, certain portions of which are omitted as permitted by the
rules and regulations of the Commission. Statements made in this Prospectus as
to the contents of any contract, agreement or other document referred to are not
necessarily complete; with respect to any such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is made to
the exhibit for a more complete description of the matter involved, and each
such statement shall be deemed qualified in its entirety by such reference. For
further information about the Company and the securities offered hereby,
reference is made to the Registration Statement and to the financial statements,
schedules and exhibits filed as a part thereof.

Upon completion of the Offering, the Company will be subject to the
informational requirements of the Exchange Act, and, in accordance therewith,
will file reports and other information with the Commission. The Registration
Statement, the exhibits and schedules forming a part thereof and the reports and
other information filed by the Company with the Commission in accordance with
the Exchange Act may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the following regional offices of the
Commission: Seven World Trade Center, 13th Floor, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material or any part thereof may also be obtained by
mail from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates or accessed electronically by
means of the Commission's home page on the Internet at http://www.sec.gov.

The Company intends to furnish its stockholders with annual reports
containing audited financial statements and to make available quarterly reports
containing unaudited summary financial information for the first three fiscal
quarters of each fiscal year.

42
<PAGE> 46

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE COMPANY
Report of Independent Public Accountants.............................................. F-2
Balance Sheets as of December 31, 1996 and 1997....................................... F-3
Statements of Operations for the eleven months ended December 31, 1995 and the years
ended December 31, 1996 and 1997.................................................... F-5
Statements of Stockholders' Equity (Deficit) for the eleven months ended December 31,
1995 and the years ended December 31, 1996 and 1997................................. F-6
Statements of Cash Flows for the eleven months ended December 31, 1995 and the years
ended December 31, 1996 and 1997.................................................... F-7
Notes to Financial Statements......................................................... F-9

PREDECESSOR
Report of Independent Public Accountants.............................................. F-18
Statements of Operations and Owner's Capital for the year ended
December 31, 1994 and the one month period ended January 31, 1995................... F-19
Statements of Cash Flows for the year ended December 31, 1994 and
the one month period ended January 31, 1995......................................... F-20
Notes to Financial Statements......................................................... F-21
</TABLE>

F-1
<PAGE> 47

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

TO 1-800 CONTACTS, INC.:

We have audited the accompanying balance sheets of 1-800 CONTACTS, INC. (a
Utah S Corporation) as of December 31, 1996 and 1997 and the related statements
of operations, stockholders' equity (deficit) and cash flows for the period from
inception (February 1, 1995) to December 31, 1995 and for the years ended
December 31, 1996 and 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of 1-800 CONTACTS, INC. as of
December 31, 1996 and 1997, and the results of its operations and its cash flows
for the period from inception (February 1, 1995) to December 31, 1995, and for
the years ended December 31, 1996 and 1997 in conformity with generally accepted
accounting principles.

ARTHUR ANDERSEN LLP

Salt Lake City, Utah

January 14, 1998

F-2
<PAGE> 48

1-800 CONTACTS, INC.

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31, PRO FORMA
------------------------- DECEMBER 31,
1996 1997 1997
---------- ---------- ------------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash................................................ $ -- $ -- $ --
Inventories......................................... 475,410 4,811,855 4,811,855
Prepaid expenses and other.......................... 9,023 182,664 182,664
---------- ---------- ----------
Total current assets............................. 484,433 4,994,519 4,994,519
---------- ---------- ----------
DEFERRED ADVERTISING COSTS............................ 394,297 1,705,695 1,705,695
---------- ---------- ----------
PROPERTY AND EQUIPMENT, at cost:
Office and computer equipment....................... 217,212 630,186 630,186
Leasehold improvements.............................. -- 75,270 75,270
---------- ---------- ----------
217,212 705,456 705,456
Less -- accumulated depreciation and amortization... (25,617) (142,953) (142,953)
---------- ---------- ----------
Net property and equipment....................... 191,595 562,503 562,503
---------- ---------- ----------
OTHER ASSETS.......................................... 86,321 518,347 518,347
---------- ---------- ----------
Total assets..................................... $1,156,646 $7,781,064 $7,781,064
========== ========== ==========
</TABLE>

The accompanying notes to financial statements
are an integral part of these balance sheets.

F-3
<PAGE> 49

1-800 CONTACTS, INC.

BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
DECEMBER 31, PRO FORMA
------------------------- DECEMBER 31,
1996 1997 1997
---------- ---------- ------------
<S> <C> <C> <C>
CURRENT LIABILITIES:
Line of credit...................................... $ -- $1,055,640 $1,055,640
Current portion of capital lease obligation......... 17,731 23,532 23,532
Current portion of long-term debt................... 31,200 -- --
Notes payable to stockholders....................... -- 1,370,000 1,370,000
Accounts payable.................................... 471,294 3,762,158 3,762,158
Accrued liabilities................................. 63,800 300,439 300,439
Unearned revenue.................................... 35,945 104,272 104,272
Bank overdraft...................................... 68,543 -- --
Distributions payable to stockholders............... -- -- 714,075
---------- ---------- ----------
Total current liabilities........................ 688,513 6,616,041 7,330,116
---------- ---------- ----------
LONG-TERM LIABILITIES:
Notes payable to stockholders....................... 205,000 243,788 243,788
Long-term debt, less current portion................ 24,671 -- --
Capital lease obligation, less current portion...... 92,103 66,877 66,877
Deferred income taxes............................... -- -- 596,866
---------- ---------- ----------
Total long-term liabilities...................... 321,774 310,665 907,531
---------- ---------- ----------
COMMITMENTS AND CONTINGENCIES (Notes 1 and 5)

STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, $0.01 par value, 20,000,000 shares
authorized, 4,659,469 shares issued and
outstanding...................................... 46,595 46,595 46,595
Additional paid-in capital.......................... 93,688 93,688 93,688
Retained earnings (deficit)......................... 253,812 1,286,220 (596,866)
Notes receivable from stockholders.................. (247,736) (572,145) --
---------- ---------- ----------
Total stockholders' equity (deficit)............. 146,359 854,358 (456,583)
---------- ---------- ----------
Total liabilities and stockholders' equity....... $1,156,646 $7,781,064 $7,781,064
========== ========== ==========
</TABLE>

The accompanying notes to financial statements
are an integral part of these balance sheets.

F-4
<PAGE> 50

1-800 CONTACTS, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FEBRUARY 1,
1995 TO YEAR ENDED DECEMBER 31,
DECEMBER 31, --------------------------
1995 1996 1997
------------ ---------- -----------
<S> <C> <C> <C>
NET SALES............................................ $ 587,918 $3,628,296 $21,115,314
COST OF GOODS SOLD................................... 355,466 2,215,306 14,024,523
-------- ---------- ----------
Gross profit.................................... 232,452 1,412,990 7,090,791
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES......... 317,898 1,041,312 5,945,221
-------- ---------- ----------
INCOME (LOSS) FROM OPERATIONS........................ (85,446) 371,678 1,145,570
-------- ---------- ----------
OTHER (EXPENSE) INCOME:
Interest expense................................... (9,105) (26,175) (161,520)
Other, net......................................... -- 2,860 48,358
-------- ---------- ----------
Total other, net................................ (9,105) (23,315) (113,162)
-------- ---------- ----------
NET INCOME (LOSS).................................... $ (94,551) $ 348,363 $ 1,032,408
======== ========== ==========
PRO FORMA INFORMATION (unaudited)
Income before pro forma (provision) benefit for
income taxes.................................... $ (94,551) $ 348,363 $ 1,032,408
(Provision) benefit for income taxes............... 36,402 (134,120) (397,477)
-------- ---------- ----------
PRO FORMA NET INCOME (LOSS).......................... $ (58,149) $ 214,243 $ 634,931
======== ========== ==========
PRO FORMA PER SHARE INFORMATION:
Basic net income per common share.................. $ 0.14
==========
Diluted net income per common share................ $ 0.13
==========
</TABLE>

The accompanying notes to financial statements
are an integral part of these statements.

F-5
<PAGE> 51

1-800 CONTACTS, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
NOTES
COMMON STOCK ADDITIONAL RETAINED RECEIVABLE
--------------------- PAID-IN EARNINGS FROM
SHARES AMOUNT CAPITAL (DEFICIT) STOCKHOLDERS TOTAL
---------- ------- ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Initial capitalization........... 4,141,750 $41,418 $ 11,365 $ -- $ -- $ 52,783
Sale of common stock............. 517,719 5,177 22,323 -- -- 27,500
Advances to stockholders......... -- -- -- -- (14,144) (14,144)
Net loss......................... -- -- -- (94,551) -- (94,551)
--------- -------- --------- ---------- --------- --------
BALANCE, December 31, 1995......... 4,659,469 46,595 33,688 (94,551) (14,144) (28,412)
Repurchase of common stock....... (931,894) (9,319) (230,681) -- -- (240,000)
Sale of common stock............. 931,894 9,319 290,681 -- -- 300,000
Advances to stockholders......... -- -- -- -- (233,592) (233,592)
Net income....................... -- -- -- 348,363 -- 348,363
--------- -------- --------- ---------- --------- --------
BALANCE, December 31, 1996......... 4,659,469 46,595 93,688 253,812 (247,736) 146,359
Advances to stockholders......... -- -- -- -- (324,409) (324,409)
Net income....................... -- -- -- 1,032,408 -- 1,032,408
--------- -------- --------- ---------- --------- --------
BALANCE, December 31, 1997......... 4,659,469 $46,595 $ 93,688 $1,286,220 $ (572,145) $ 854,358
========= ======== ========= ========== ========= ========
</TABLE>

The accompanying notes to financial statements
are an integral part of these statements.

F-6
<PAGE> 52

1-800 CONTACTS, INC.

STATEMENTS OF CASH FLOWS

INCREASE (DECREASE) IN CASH

<TABLE>
<CAPTION>
FEBRUARY 1,
1995 TO YEAR ENDED DECEMBER 31,
DECEMBER 31, -------------------------
1995 1996 1997
------------ ---------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).................................. $ (94,551) $ 348,363 $ 1,032,408
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization...................... 16,811 46,044 150,933
Other.............................................. -- -- 20,000
Loss on retirement of fixed assets................. -- 1,834 --
Changes in operating assets and liabilities:
Inventories..................................... (78,455) (385,892) (4,336,445)
Prepaid expenses and other...................... 1,500 (8,423) (173,641)
Deferred advertising costs...................... -- (394,297) (1,311,398)
Accounts payable................................ 50,066 421,228 3,290,864
Accrued liabilities............................. 9,368 54,432 236,639
Unearned revenue................................ 4,959 30,986 68,327
--------- ---------- -----------
Net cash provided by (used in) operating
activities................................. (90,302) 114,275 (1,022,313)
--------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in notes receivable from
stockholders.................................... (14,144) (233,592) (324,409)
Purchase of property and equipment................. (32,546) (174,992) (488,244)
Deposits on equipment.............................. -- -- (40,425)
Purchase of intangible assets...................... -- -- (50,000)
--------- ---------- -----------
Net cash used in investing activities......... (46,690) (408,584) (903,078)
--------- ---------- -----------
</TABLE>

The accompanying notes to financial statements
are an integral part of these statements.

F-7
<PAGE> 53

1-800 CONTACTS, INC.

STATEMENTS OF CASH FLOWS

INCREASE (DECREASE) IN CASH

<TABLE>
<CAPTION>
FEBRUARY 1,
1995 TO YEAR ENDED DECEMBER 31,
DECEMBER 31, -------------------------
1995 1996 1997
------------ ---------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock............................... $ 52,500 $ 300,000 $ --
Stock repurchase................................... -- (240,000) --
Stock offering costs............................... -- -- (375,198)
Net borrowings on line of credit................... -- -- 1,055,640
Borrowings from stockholders....................... 25,000 365,000 1,800,000
Payments on notes payable to stockholders.......... (5,000) (180,000) (411,212)
Proceeds from issuance of long-term debt........... 86,000 -- --
Principal payments on long-term debt............... (8,412) (21,717) (55,871)
Principal payments on capital lease obligation..... (10,171) (442) (19,425)
Bank overdraft..................................... -- 68,543 (68,543)
--------- ---------- -----------
Net cash provided by financing activities....... 139,917 291,384 1,925,391
--------- ---------- -----------
NET INCREASE (DECREASE) IN CASH...................... 2,925 (2,925) --
CASH AT BEGINNING OF PERIOD.......................... -- 2,925 --
--------- ---------- -----------
CASH AT END OF PERIOD................................ $ 2,925 $ -- $ --
========= ========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest............................. $ 4,276 $ 18,984 $ 42,699
</TABLE>

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:

During the period ended December 31, 1995, the Company entered into a capital
lease for a toll-free telephone number totaling $120,447.

Upon inception of the Company, the stockholders contributed furniture and
equipment, inventory and supplies totaling $14,620, $11,063 and $2,100,
respectively.

The accompanying notes to financial statements
are an integral part of these statements.

F-8
<PAGE> 54

1-800 CONTACTS, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1. NATURE OF OPERATIONS AND ORGANIZATION OF BUSINESS

1-800 CONTACTS, INC., (the "Company") was incorporated in the state of Utah
in February 1995. The Company is a direct marketer of replacement contact lenses
in the United States. The Company sells contact lenses primarily through its
toll-free telephone number.

REGULATORY COMPLIANCE

The sale and delivery of contact lenses is generally governed by state laws
and regulations. The Company sells to customers in nearly all 50 states and each
sale is likely to be subject to the laws of the state where the customer is
located. The laws and regulations relating to the delivery and sale of contact
lenses vary from state to state, but can generally be classified into five
categories: (i) laws that require contact lenses only be dispensed pursuant to a
valid prescription, (ii) laws that require the dispenser to be licensed by the
state as an optometrist, ophthalmologist or other professional authorized to
dispense lenses, (iii) laws that require lenses be dispensed only in a
face-to-face transaction, (iv) laws with requirements that are unclear or do not
specifically address the sale and delivery of contact lenses; and (v) laws that
the Company believes place no restrictions on the dispensing of replacement
contact lenses. The Company's operating practice is to attempt to obtain a
prescription from its customers or his/her eye care practitioner. If the
customer does not have a copy of his/her prescription, the Company attempts to
contact the customer's doctor to obtain a copy of, or verify the customer's
prescription. If the Company is unable to obtain a copy of, or verify the
customer's prescription, it is the Company's practice to complete the sale and
ship the lenses to the customer, based on the prescription information provided
by the customer. As a result, certain sales made by the Company violate the
applicable statute or regulation in the state in which the customer is located.
Any action brought against the Company based on its violation of such state laws
and regulations could result in fines to the Company and/or the required
compliance with such laws. Such required compliance could result in (i)
increased costs to the Company, (ii) the loss of a substantial portion of the
Company's customers for whom the Company is unable to obtain or verify their
prescription and (iii) the inability to sell to customers at all in a particular
state if the Company cannot comply with such state's laws. The occurrence of any
of the above results could have a material adverse effect on the Company's
ability to sell contact lenses and continue to operate profitably. Furthermore,
there can be no assurance that states will not enact or impose laws or
regulations that prohibit mail order dispensing of contact lenses or otherwise
impair the Company's ability to sell contact lenses and continue to operate
profitably.

In June 1997, the Company received notice from the Georgia State Board of
Dispensing Opticians (the "Georgia Board") that the Georgia Board considers
sales by the Company in Georgia to be in violation of Georgia law, which
requires face-to-face delivery of contact lenses. However, the Georgia Board did
not recommend any action be taken at that time, but reserved the right to pursue
future violations by the Company. In November 1997, the Company received notice
from the State of New Mexico Board of Examiners in Optometry (the "New Mexico
Board") that the New Mexico Board considers sales by the Company in New Mexico
to be in violation of New Mexico law and ordering the Company to cease and
desist selling contact lenses in New Mexico. The Company has not taken any
actions in response to such notices. Sales to customers in these two states in
1997 were less than 3% of the Company's net sales for that period.

SOURCES OF SUPPLY

F-9
<PAGE> 55

1-800 CONTACTS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

practitioners, retail chains and mass merchandisers, who are able to buy
directly from the manufacturers. There can be no assurance that the Company will
be able to obtain sufficient quantities of contact lenses at competitive prices
in the future to meet the existing or anticipated demand for its products. Any
such inability would have a material adverse effect on the Company's business,
financial position and results of operations.

Although the Company seeks to reduce its reliance on any one supplier by
establishing relationships with a number of distributors and other sources, the
Company purchased from a single distributor approximately 40 percent and 21
percent of its contact lens inventory in 1996 and 1997, respectively. The
Company also purchased from another distributor 40 percent of its contact lens
inventory in 1997. The Company continually seeks to establish new relationships
with potential suppliers in order to be able to obtain adequate inventory at
competitive prices. In the event that this supplier could no longer supply the
Company with contact lenses, there can be no assurance that the Company could
secure other adequate sources of supply, or that such supply could be obtained
on terms no less favorable to the Company than its current supply, which could
adversely affect the Company by increasing its costs or, in the event adequate
replacement supply cannot be secured, reducing its net sales.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION

Sales are recognized at the time of shipment to the customer. Payment for
the product is generally received prior to shipment. As a result, unearned
revenue represents amounts received from customers for which shipment has not
occurred. Shipping and handling fees are included as part of net sales. The
related freight costs associated with shipping products to customers are
included as a component of cost of goods sold.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

INVENTORIES

Inventories consist of contact lenses and are recorded at the lower of cost
(using the first-in, first-out method) or market.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and depreciated using the
straight-line method over their estimated useful lives ranging from three to
seven years. Leasehold improvements are amortized over the term of the lease.
Major additions and improvements are capitalized, while costs for minor
replacements, maintenance and repairs that do not increase the useful life of an
asset are expensed as incurred. Upon retirement or other disposition of property
and equipment, the cost and related accumulated depreciation or amortization are
removed from the accounts. The resulting gain or loss is reflected in income.

ADVERTISING COSTS

The Company capitalizes certain direct-mail advertising costs and amortizes
those costs over the period for which the revenues are generated in accordance
with Statement of Position ("SOP") 93-7. Based upon the Company's past
direct-response information, the Company capitalizes direct-mail advertising
costs on a cost-pool-by-cost-pool approach and amortizes those costs over a 12
month period, which is the period during which the future benefits are expected
to be received. Approximately 73 percent of capitalized costs are amortized over

F-10
<PAGE> 56

1-800 CONTACTS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

the first six months after the advertisement. The Company recorded
direct-response advertising expense of approximately $420,300 and $3,411,000 for
the years ended December 31, 1996 and 1997, respectively.

At each balance sheet date, the Company evaluates the realizability of
amounts reported as assets by comparing the carrying amounts of such assets to
the estimated remaining future net revenues (revenues less direct costs)
expected to result from the advertisement. To the extent the carrying amounts
exceed the remaining future net revenues, the excess is recorded as advertising
expense in the current period.

Revenue patterns in the future may be significantly different than those
currently estimated based upon factors such as regulatory action, economic
changes in customers, demographics, an inability to obtain supply adequate to
fulfill orders and other factors which could result in the impairment of
capitalized costs. In that event, the Company may be required to write off some
or all of the capitalized costs and or revise its amortization practices.

The Company expenses all other advertising costs when the advertising takes
place. These advertising costs totalled approximately $106,339, $47,800 and
$75,093 for the periods ended December 31, 1995, 1996 and 1997, respectively.

OTHER ASSETS

Other assets consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1997
-------- --------
<S> <C> <C>
Intangible assets........................................... $120,447 $170,447
Deferred offering costs..................................... -- 375,198
Deposits.................................................... -- 40,425
-------- --------
120,447 586,070
Accumulated amortization.................................... (34,126) (67,723)
-------- --------
$ 86,321 $518,347
======== ========
</TABLE>

Intangible assets consist of amounts paid to secure the rights to the
Company's telephone number and internet address. These costs are amortized over
an estimated life of 5 years. The Company has contractual rights customary to
the industry to use its telephone and internet address. However, under
applicable rules and regulations of the Federal Communications Commission, the
Company does not have and cannot acquire any property rights to the telephone
number. The Company does not expect to lose the right to use the number,
however, there can be no assurance in this regard and such loss would have a
material adverse effect on the Company's results of operations.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments consist mainly of cash, short-term
payables, borrowings under a credit line and notes payable. The Company believes
that the carrying amounts approximate fair value.

LONG-LIVED ASSETS

The Company accounts for the impairment of long-lived assets in accordance
with Statement of Financial Accounting Standard ("SFAS") No. 121. This statement
requires that long-lived assets and certain identifiable intangibles be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If

F-11
<PAGE> 57

1-800 CONTACTS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

such assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets exceeds the
fair value of the assets.

INCOME TAXES

The Company has elected, for federal and state income tax purposes, to
include their taxable income with that of its shareholders (an S Corporation
election). Accordingly, the Company makes no provision for income taxes.

The S Corporation status of the Company will terminate upon consummation of
the offering and the Company will become subject to corporate income taxes (see
Note 9). Upon termination of the Company's S Corporation status, the Company
will recognize deferred income tax assets and liabilities in accordance with
SFAS No. 109, "Accounting for Income Taxes." The resulting adjustment will be
recorded as a deferred income tax provision or benefit for the period in which
the change in status is effective. Had the Company become a C corporation as of
December 31, 1997, a provision for deferred income taxes of approximately
$596,866 would have been recorded, arising from the following temporary
differences:

<TABLE>
<S> <C>
Deferred advertising costs.................................. $636,224
Other....................................................... (39,358)
--------
$596,866
========
</TABLE>

STOCK-BASED COMPENSATION

The Company accounts for its stock option grants to employees under
Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued
to Employees" and provides the pro forma footnote disclosures required by SFAS
No. 123, "Accounting for Stock Based Compensation."

NOTE 3. LINE OF CREDIT AND LONG-TERM DEBT

LINE OF CREDIT

In August 1997 (subsequently amended on October 1, 1997 and January 5,
1998), the Company entered into a line of credit agreement with a bank providing
for borrowings equal to the lesser of $3,000,000 or 50 percent of eligible
inventory. The maximum borrowings under the amended agreement decrease to the
lesser of $2,750,000 on January 31, 1998, $2,225,000 on February 28, 1998,
$1,750,000 on March 31, 1998, and $1,000,000 on April 30, 1998 or 50 percent of
eligible inventory at each of the respective dates. The agreement allows for the
borrowings to remain at the lesser of $1,500,000 or 50 percent of eligible
inventory on April 30, 1998 and thereafter, in the event the Company raises at
least $10,000,000 from an initial public offering. Borrowings under the
agreement bear interest at the bank's prime rate plus 1.5 percent (10 percent at
December 31, 1997) and are secured by substantially all assets of the Company
and guaranteed by two stockholders of the Company. The agreement expires on July
31, 1998. As of December 31, 1997, outstanding borrowings under the agreement
totalled $1,055,640, which includes checks that had been disbursed to vendors
but not presented to the bank for clearance. Upon presentment to the bank, the
outstanding checks will be funded by the line of credit. At January 5, 1998, the
Company had approximately $1.4 million available under the line of credit.

The agreement contains various affirmative and negative covenants which
require, among other things, restrictions on capital expenditures, restrictions
on additional debt, quarterly pre-tax income, maintenance of working capital and
restrictions on distributions and changes in ownership. As of December 31, 1997,
the Company was not in compliance with the covenants restricting capital
expenditures and additional debt. The bank waived these covenants for the year
ended December 31, 1997 and agreed to allow the terms of the agreement to
continue through the original maturity.

F-12
<PAGE> 58

1-800 CONTACTS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

LONG-TERM DEBT

As of December 31, 1996, the Company's long-term debt consisted of two
notes payable with outstanding principal balances totaling $55,871 which were
paid in full as of December 31, 1997.

NOTE 4. NOTES PAYABLE TO STOCKHOLDERS

LONG TERM

In February 1996, the Company entered into a credit agreement with a
stockholder that provides for maximum borrowings of $250,000. The borrowings
accrue interest at the prime rate plus 2 percent (10.5 percent at December 31,
1997). As of December 31, 1996 and 1997, outstanding borrowings totalled
$205,000 and $243,788, respectively. The agreement matures in February 1999 at
which time all unpaid principal and interest is due. In the event of default by
the Company, the stockholder has the right to convert the $250,000 into 698,920
shares of common stock or the applicable proportionate number of shares for
unpaid amounts outstanding less than $250,000.

SHORT TERM

In May 1997, the Company borrowed $250,000 from a stockholder that was
repaid prior to December 31, 1997.

In May 1997, the Company borrowed $600,000 from a stockholder under a
short-term promissory note. The note accrued interest at the prime rate plus 2
percent and was due in November 1997. In July 1997, the Company repaid $100,000
on the note and refinanced the remaining $500,000 plus borrowed an additional
$600,000 from the stockholder under a new short-term promissory note. The total
$1,100,000 unsecured note payable accrues interest at prime plus 2 percent (10.5
percent at December 31, 1997) and is due July 30, 1998. As consideration for
entering into this note, the Company agreed to modify the option it holds to
repurchase the stockholder's common stock. Under the revised terms of the
option, the Company has the right to repurchase 442,651 shares of the
stockholder's common stock for $1,900,000.

In September 1997, the Company borrowed $250,000 from a stockholder under a
short-term, unsecured promissory note. The note accrues interest at prime plus 2
percent (10.5 percent at December 31, 1997) and is due in September 1998. In
addition, for every month the note is outstanding a fee of $5,000 is added to
the outstanding balance and expensed as additional interest. As of December 31,
1997, $20,000 has been added to the balance of the note.

In October 1995, the Company borrowed $25,000 from a stockholder, which
bore interest at 10.75 percent and was repaid in full in February 1996.

As of December 31, 1997, accrued interest on stockholder notes payable
totalled $98,315 and is included in the caption "accrued liabilities" in the
accompanying balance sheet.

NOTE 5. COMMITMENTS AND CONTINGENCIES

LEGAL AND REGULATORY MATTERS

From time to time the Company is involved in legal matters generally
incidental to its business. It is the opinion of management, after discussions
with legal counsel, that the ultimate dispositions of these matters will not
have a material impact on the financial condition, liquidity or results of
operations of the Company.

See Note 1 for a discussion of regulatory matters.

F-13
<PAGE> 59

1-800 CONTACTS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

CAPITAL LEASE OBLIGATION

The Company leases the rights to use its telephone number from an
individual under a capital lease arrangement. At the end of the lease, the
Company has the option to purchase the interest in the telephone number for
$17,500. The minimum future lease payments under the capital lease as of
December 31, 1997 are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
------------------------ --------
<S> <C>
1998................................ $ 32,000
1999................................ 42,000
2000................................ 31,500
--------
Total minimum lease payments.................... 105,500
Less amount representing interest............... (15,091)
--------
Present value of minimum lease payments......... 90,409
Less current portion............................ (23,532)
--------
Capital lease obligations, excluding current
portion....................................... $ 66,877
========
</TABLE>

OPERATING LEASES

The Company leases office and warehouse facilities and certain equipment
under noncancelable operating leases. Lease expense for the periods ended
December 31, 1995, 1996 and 1997 totalled approximately $14,500, $30,900 and
$88,000, respectively. In November 1997, the Company agreed to occupy office
space in a facility currently under construction. The owner of the new facility
is the same as the lessor on the existing facility and has agreed to allow the
Company to cancel its existing lease by paying a fee estimated to be no greater
than $39,000. The new lease commitment is estimated to commence in May, 1998.
Future minimum lease payments under noncancelable operating leases are as
follows (including expense under the new lease):

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
------------------------ ----------
<S> <C>
1998........................ $ 269,204
1999........................ 391,942
2000........................ 405,742
2001........................ 419,542
2002........................ 430,048
Thereafter.................. 1,091,925
----------
$3,008,403
==========
</TABLE>

SALES TAX

The Company's direct mail business is located, and all of its operations
are conducted, in the state of Utah. At present, the Company does not collect
sales or other similar taxes. However, various states have sought to impose
state sales tax collection obligations on out-of-state mail-order companies,
such as the Company. The U.S. Supreme Court has held that the various states,
absent Congressional legislation, may not impose tax collection obligations on
an out-of-state mail order company whose only contacts with the taxing state are
the distribution of advertising materials through the mail, and whose subsequent
delivery of purchased goods is by mail or interstate common carriers. The
Company has not received an assessment from any state. The Company anticipates
that any legislative changes, if adopted, would be applied on a prospective
basis.

F-14
<PAGE> 60

1-800 CONTACTS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

ADVERTISING COMMITMENTS

The Company has entered into certain noncancelable commitments with
cooperative mail companies that will require the Company to pay approximately
$3,375,000 for direct mail services through December 31, 1998.

NOTE 6. COMMON STOCK TRANSACTIONS

The Company was organized in February 1995 and 4,141,750 shares of common
stock were issued for consideration of $25,000 in cash and contributed assets of
$27,783. During 1995, the Company issued 517,719 shares of common stock to an
existing stockholder for $27,500 in cash.

In February 1996, the Company repurchased 931,894 shares of its outstanding
common stock for $240,000 in cash. Concurrently with the purchase, the Company
sold these shares to new stockholders for $300,000 in cash. The Company has the
right to repurchase 442,651 of these shares for $1,900,000 prior to February 1,
2001 (see Note 4).

NOTE 7. STOCK OPTIONS AND STOCK OPTION PLAN

The Company will establish a nonqualified and incentive stock option plan
in connection with the filing of a Form S-1 Registration Statement. The plan
provides for the issuance of a maximum of 310,000 shares of common stock to
officers, directors and consultants and other key employees. Incentive stock
options and nonqualified options are granted at not less than 100 percent of the
fair market value of the underlying common stock on the date of grant.

Prior to the establishment of the stock option plan, the Company issued
nonqualified stock options to an employee in October 1996 to purchase 47,986
shares of common stock at an exercise price of $3.22. In addition, during the
year ended December 31, 1997, the Company issued nonqualified stock options to
an employee to purchase 4,799 shares of common stock at an exercise price of
$8.16 and nonqualified options to two employees to purchase 67,181 shares at $11
per share. The Company also issued stock options to a consultant in February
1997 to purchase 19,195 shares of common stock at an exercise price of $4.70. As
of December 31, 1997, 15,995 options were vested and exercisable with an
exercise price of $3.22 per share. All options vest equally over a three year
period.

The Company applies APB No. 25 and related interpretations in accounting
for its stock option grants to employees. Accordingly, no compensation expense
has been recognized for these stock option grants. Had compensation expense for
the Company's employee stock option grants been determined in accordance with
SFAS No. 123, the Company's net income and diluted net income per common share
for the year ended December 31, 1997 would have been reduced to the pro forma
amounts indicated below:

<TABLE>
<S> <C>
Net income:
As reported (1)........................................... $634,931
Pro forma................................................. $617,785
Diluted net income per common share:
As reported (1)........................................... $ 0.13
Pro forma................................................. $ 0.13
</TABLE>

- ---------------

(1) Includes the effect of the pro forma adjustments as described in Note 10.

The fair value of each option grant has been estimated on the grant date
using the Black-Scholes option-pricing model with the following assumptions used
for all grants; risk-free interest rate of 6.5 percent, expected stock price
volatility of 0 percent, and an expected life of five years. The weighted
average fair value of options granted in 1996 and 1997 was $0.89 per share and
$2.64 per share, respectively. The weighted average remaining contractual life
of options outstanding as of December 31, 1997 was 9.5 years.

F-15
<PAGE> 61

1-800 CONTACTS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 8. RELATED PARTY TRANSACTIONS

During 1995, 1996 and 1997, the Company made aggregate loans to two
stockholders totaling $14,144, $226,331 and $289,473, respectively. The loans
are unsecured, bear interest at the prime rate (8.5 percent at December 31,
1997) and are due on demand. Interest income on the loans totalled $7,261 and
$34,936 for the years ended December 31, 1996 and 1997, respectively and is
included in the outstanding balance of the notes receivable. As of December 31,
1996 and 1997, notes receivable from stockholders totalled $247,736 and
$572,145, respectively. The Company anticipates making equity distributions to
the stockholders sufficient to allow for their repayment on these notes. As a
result, these notes have been classified as a reduction in stockholders' equity
in the accompanying financial statements.

See note 4 for a discussion of other related party transactions.

NOTE 9. SUBSEQUENT EVENTS

STOCK SPLIT AND CHANGE IN AUTHORIZED COMMON STOCK

In connection with the filing of an effective Form S-1 Registration
Statement and a reincorporation in the state of Delaware, the Board of Directors
and stockholders will approve a 414.175 for 1 stock split and a change in the
authorized common stock to 20,000,000 shares at $0.01 par value per share. This
stock split and change in authorized common stock have been retroactively
reflected in the accompanying financial statements.

STOCK OPTIONS

In January 1998, the Company granted nonqualified stock options to purchase
71,979 shares of common stock at $11 per share to a director of the Company. The
options vest over a three year period and expire in ten years.

DISTRIBUTIONS TO STOCKHOLDERS

Prior to the consummation of the offering, the Company will enter into an
agreement for distribution of retained earnings and tax indemnification with the
existing stockholders. Pursuant to the agreement, an S Corporation distribution
estimated to be approximately $800,000 (net of notes receivable due from
stockholders of the Company) will be distributed in the form of a promissory
note issued by the Company. The note will be paid in full promptly after the
closing of the offering. The agreement will provide for, among other things, the
indemnification of the existing stockholders for any losses or liabilities with
respect to any additional taxes (including interest, penalties and legal fees)
and the repayment to the Company of amounts received as refunds, resulting from
the Company's operations during the period in which is was an S Corporation. No
amounts are currently payable, or anticipated to be payable, or receivable, or
anticipated to be receivable under the agreement. that the existing stockholders
will be indemnified by the Company with respect to federal and state income tax
liabilities as result of an adjustment to the Company's taxable income which
increases the tax liability to the existing stockholders for taxable periods
ending prior to the termination of the S corporation status. In addition, the
existing stockholders will indemnify the Company with respect to any federal and
state tax liabilities as a result of an adjustment which decreases the existing
stockholders' tax liability for taxable periods ending prior to the termination
of the Company's S corporation status and correspondingly increases the tax
liability of the Company for a taxable period commencing on or after the
termination of the Company's S corporation status.

NOTE 10. UNAUDITED PRO FORMA INFORMATION

BALANCE SHEET

The following unaudited pro forma balance sheet gives effect as of December
31, 1997, to a distribution of $1,286,220, which represents the retained
earnings at that date, the repayment of notes receivable due from

F-16
<PAGE> 62

1-800 CONTACTS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

stockholders of $572,145 as of December 31, 1997, and the recording of an
estimated deferred income tax liability of $596,866 that would be recorded if
the Company terminated its S corporation status at that date.

PRO FORMA PROVISION FOR INCOME TAXES

The unaudited pro forma net income presents the pro forma effects on
historical net income adjusted for a pro forma provision for income taxes. The
pro forma provision for income taxes has been determined assuming the Company
had been taxed as a C corporation for federal and state income tax purposes
using an effective income tax rate of 38.5 percent for all periods.

PRO FORMA PER SHARE INFORMATION

In accordance with SFAS No. 128 "Earnings per Share," which became
effective December 15, 1997, basic net income per common share was computed by
dividing net income by the weighted average number of common shares outstanding
during the year. Diluted net income per common share takes into consideration
the effects of stock options and the shares deemed to be outstanding which are
being offered by the Company, at an expected initial public offering price of
$11 per share, sufficient to fund an assumed S corporation distribution of
approximately $714,075 at December 31, 1997 (based on the amount of retained
earnings net of notes receivable due from stockholders). For the year ended
December 31, 1997, the components of the weighted average number of common
shares outstanding is as follows:

<TABLE>
<S> <C>
Weighted average number of shares for basic net income per
common shares............................................. 4,659,469
Stock options............................................. 28,626
Assumed shares outstanding from expected stockholder
distribution........................................... 64,916
---------
Weighted average number of shares for diluted net income per
common share.............................................. 4,753,011
=========
</TABLE>

F-17
<PAGE> 63

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Discount Lens Club:

We have audited the accompanying statements of operations and owner's
capital and cash flows of Discount Lens Club (a California sole proprietorship)
for the year ended December 31, 1994 and the one month ended January 31, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and the related cash flows
of Discount Lens Club for the year ended December 31, 1994 and the one month
ended January 31, 1995, in conformity with generally accepted accounting
principles.

ARTHUR ANDERSEN LLP

Salt Lake City, Utah
August 13, 1997

F-18
<PAGE> 64

DISCOUNT LENS CLUB

STATEMENTS OF OPERATIONS AND OWNER'S CAPITAL

<TABLE>
<CAPTION>
ONE-MONTH
YEAR ENDED ENDED
DECEMBER 31, JANUARY 31,
1994 1995
------------ -----------
<S> <C> <C>
NET SALES............................................................ $212,584 $21,552
COST OF GOODS SOLD................................................... 117,326 13,069
-------- -------
Gross profit....................................................... 95,258 8,483
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES......................... 78,584 9,369
-------- -------
NET INCOME (LOSS).................................................... 16,674 (886)
OWNER'S CAPITAL, beginning of period................................. 18,046 22,818
DISTRIBUTIONS........................................................ (11,902) (900)
-------- -------
OWNER'S CAPITAL, end of period....................................... $ 22,818 $21,032
======== =======
</TABLE>

The accompanying notes to financial statements
are an integral part of these balance sheets.

F-19
<PAGE> 65

DISCOUNT LENS CLUB

STATEMENTS OF CASH FLOWS

INCREASE (DECREASE) IN CASH

<TABLE>
<CAPTION>
ONE MONTH
YEAR ENDED ENDED
DECEMBER 31, JANUARY 31,
1994 1995
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).................................................. $ 16,674 $ (886)
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
Depreciation.................................................... 1,200 100
Changes in operating assets and liabilities:
Inventories..................................................... (200) 137
Accrued liabilities............................................. 150 (100)
-------- -------
Net cash provided by (used in) operating activities............. 17,824 (749)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to sole proprietor................................... (11,902) (900)
-------- -------
NET INCREASE (DECREASE) IN CASH...................................... 5,922 (1,649)
CASH AT BEGINNING OF PERIOD.......................................... 81 6,003
-------- -------
CASH AT END OF PERIOD................................................ $ 6,003 $ 4,354
======== =======
</TABLE>

The accompanying notes to financial statements
are an integral part of these balance sheets.

F-20
<PAGE> 66

DISCOUNT LENS CLUB

NOTES TO FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS AND ORGANIZATION OF BUSINESS

Discount Lens Club ("DLC"), was formed in the State of California on March
1, 1991. The Company was a direct marketer of replacement contact lenses in the
United States. DLC sold contact lenses primarily by telephone. In February 1995,
DLC ceased operations and contributed certain assets, including mailings lists,
to form 1-800 CONTACTS, Inc.

REVENUE RECOGNITION

Sales were recognized at the time of shipment to the customer.

USE OF ESTIMATES

INCOME TAXES

DLC was formed as a sole proprietorship and includes its income with that
of its sole proprietor. Accordingly, DLC made no provision for income taxes.

F-21
<PAGE> 67

[Graphic illustrating a representative sample of the contact lenses sold by the
Company and a hypothetical comparison of lenses distrubited by the Company and
an eyecare practioner.]
<PAGE> 68

======================================================

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING STOCKHOLDER OR THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY, THE
COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THE PROSPECTUS OR
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.

------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................... 1
Risk Factors............................... 5
The Company................................ 10
S Corporation Matters...................... 10
Use of Proceeds............................ 10
Dividend Policy............................ 11
Capitalization............................. 12
Dilution................................... 13
Selected Historical and Pro Forma Financial
Data..................................... 14
Management's Discussion and Analysis Of
Financial Condition and Results of
Operations............................... 15
Business................................... 19
Management................................. 30
Principal and Selling Stockholders......... 34
Certain Transactions....................... 34
Description of Capital Stock............... 36
Shares Eligible for Future Sale............ 38
Underwriting............................... 40
Experts.................................... 41
Legal Matters.............................. 41
Additional Information..................... 42
Index to Financial Statements.............. F-1
</TABLE>

UNTIL , 1998 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING),
ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.

======================================================
======================================================

2,200,000 SHARES

1-800 CONTACTS LOGO

COMMON STOCK

---------------------

PROSPECTUS

---------------------

MCDONALD & COMPANY
SECURITIES, INC.

MORGAN KEEGAN & COMPANY, INC.

, 1998

======================================================
<PAGE> 69

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the estimated expenses, to be paid solely by
the Company, of the issuance and distribution of the securities being registered
hereby:

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... 9,200
NASD filing fee............................................. *
Nasdaq National Market original listing fee................. *
Blue Sky fees and expenses (including attorneys' fees and
expenses)................................................. *
Printing expenses........................................... *
Accounting fees and expenses................................ *
Transfer agent's and Registrar's fees and expenses.......... *
Legal fees and expenses..................................... *
Miscellaneous expenses...................................... *
----------
Total..................................................... *
==========
</TABLE>

- ---------------

* To be provided by Amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company is incorporated under the laws of the State of Delaware.
Section 145 of the General Corporation Law of the State of Delaware ("Section
145") provides that a Delaware corporation may indemnify any persons who are, or
are threatened to be made, parties to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation), by
reason of the fact that such person was an officer, director, employee or agent
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such person acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was illegal. A
Delaware corporation may indemnify any persons who are, or are threatened to be
made, a party to any threatened, pending or completed action or suit by or in
the right of the corporation by reason of the fact that such person was a
director, officer, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit, provided such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the corporation's best interests except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer or
director has actually and reasonably incurred.

The Company's Certificate of Incorporation and By-laws provide for the
indemnification of Directors and officers of the Company to the fullest extent
permitted by Section 145.

In that regard, the By-laws provide that the Company shall indemnify any
person whom it has the power to indemnify by Section 145 from or against any and
all of the expenses, liabilities or other matters referred to or covered in
Section 145, and such indemnification is not exclusive of other rights to which
such person shall be

II-1
<PAGE> 70

entitled under any By-law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in such person's official capacity for
or in behalf of the Company and/or any subsidiary of the Company and as to
action in another capacity while holding such office and shall continue as to
such person who has ceased to be a director, officer, employee, or agent of the
Company and/or subsidiary of the Company and shall inure to the benefit of the
heirs, executors, and administrators of such person.

The Company expects to enter into indemnification agreements with each of
its executive officers and Directors prior to the completion of the Offering.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Since its incorporation on February 1, 1995, the Company has issued the
following securities without registration under the Securities Act of 1933, as
amended:

In February 1995, 4,500 shares of Common Stock were issued to Jonathan Coon
for consideration of $5,050, 4,500 shares of Common Stock were issued to John
Nichols for consideration of $22,733 and 1,000 shares of Common Stock were
issued to Steve Gibson for consideration of $25,000. In August 1995, the Company
issued 1,250 shares of Common Stock to Steve Gibson for consideration of $27,500
in cash. In February 1996, the Company repurchased 2,250 shares of its
outstanding Common Stock and subsequently resold 2,250 shares of Common Stock to
Donald and Stephen Yacktman for $300,000 in cash.

The above-described transactions were exempt from registration under the
Securities Act pursuant to Section 4(2) of the Securities Act as transactions
not involving any public offering.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits.

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
----------- -----------
<C> <S>
*1.1 Form of Underwriting Agreement.
3.1(i) Form of Restated Certificate of Incorporation of the
Company.
3.1(ii) Form of By-laws of the Company.
*4.1 Form of certificate representing shares of Common Stock,
$0.01 par value per share.
5.1 Opinion of Kirkland & Ellis.
10.1 Form of Employment Agreement between the Company and
Jonathan C. Coon.
10.2 Form of Employment Agreement between the Company and John F.
Nichols.
10.3 Form of Employment Agreement between the Company and Scott
S. Tanner.
10.4 Form of Employment Agreement between the Company and Robert
G. Hunter.
10.5 Form of 1-800 CONTACTS, INC Incentive Stock Option Plan.
*10.6 Lease between the Company and Draper Land Partnership II,
dated September 4, 1996, with respect to the Company's
current facilities.
*10.7 Lease between the Company and Draper Land Partnership II,
dated November 3, 1997, with respect to the Company's new
facility.
*10.8 Lease between the Company and Ron Knight & Co., dated July
14, 1997, with respect to the Company's warehouse.
*10.9 Revolving Credit Agreement between the Company and Zions
First National Bank.
*10.10 Form of Indemnification Agreement between the Company and
its officers and directors.
10.11 Form of Agreement for Distribution of Retained Earnings and
Tax Indemnification between the Company and the Existing
Stockholders.
</TABLE>

II-2
<PAGE> 71

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
----------- -----------
<C> <S>
*10.12 Lease between the Company and Larry T. Short, dated June 27,
1995, with respect to the 1-800 CONTACTS telephone number.
10.13 Form of Stock Option Agreement.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Kirkland & Ellis (included in Exhibit 5.1).
**24.1 Power of Attorney (included in signature page).
**27.1 Financial Data Schedule for the year ended December 31,
1996.
**27.2 Financial Data Schedule for the nine months ended September
30, 1997.
27.3 Financial Data Schedule for the year ended December 31,
1997.
</TABLE>

- ---------------

* To be filed by amendment.

** Previously filed.

(b) Financial Statement Schedules.

All schedules for which provision is made in the applicable accounting
regulations of the Commission are not required under the related
instructions, are inapplicable or not material, or the information called
for thereby is otherwise included in the financial statements and therefore
have been omitted.

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes to provide to the Underwriters
at the closing specified in the underwriting agreement certificates in such
denominations and registered in such names as requested by the underwriter to
permit prompt delivery to each purchaser.

The undersigned registrant hereby undertakes:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

II-3
<PAGE> 72

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS PRE-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION STATEMENT TO
BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF DRAPER, STATE OF UTAH, ON JANUARY 16, 1998.

1-800 CONTACTS, INC.

BY: /s/ JONATHAN C. COON
------------------------------------
JONATHAN C. COON
President

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jonathan Coon and John Nichols, and each of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement (and any registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the
Offering which this Registration Statement relates), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

* * * *

II-4
<PAGE> 73

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
PRE-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION STATEMENT AND POWER OF ATTORNEY
HAVE BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES
INDICATED:

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* President and Director
- ------------------------------------------------ (principal executive
JONATHAN C. COON officer) January 16, 1998

* Director
- ------------------------------------------------
JOHN F. NICHOLS January 16, 1998

* Chief Financial Officer and
- ------------------------------------------------ Director (principal
SCOTT S. TANNER financial officer) January 16, 1998

* Controller (principal
- ------------------------------------------------ accounting officer)
ROBERT G. HUNTER January 16, 1998

* Director
- ------------------------------------------------
DONALD A. YACKTMAN January 16, 1998

* Director
- ------------------------------------------------
STEPHEN A. YACKTMAN January 16, 1998

Director
- ------------------------------------------------
E. DEAN BUTLER January 16, 1998

* The undersigned, by signing his name hereto, does hereby execute this Pre-Effective Amendment No. 1 to
Registration Statement on behalf of the officers and directors of the Registrant listed above pursuant
to the Powers of Attorneys previously filed with the Commission.

/s/ JONATHAN C. COON
- ------------------------------------------------
JONATHAN C. COON, ATTORNEY-IN-FACT
</TABLE>

II-5

<PAGE> 1
Exhibit 3.1(i)

Draft of January 15, 1998

RESTATED CERTIFICATE OF INCORPORATION

1-800 CONTACTS, INC.

ARTICLE I - Name

The name of the corporation is 1-800 CONTACTS, INC. (hereinafter
referred to as the "Corporation").

ARTICLE II - Registered Office

The address of the registered office of the Corporation in the
State of Delaware is 1013 Centre Road, in the City of Wilmington, County of New
Castle 19805. The name of the registered agent of the Corporation at that
address is Corporation Service Company.

ARTICLE III - Purpose

The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "Delaware General Corporation Law").

ARTICLE IV - Capital Stock

Part A. General. The maximum number of shares of capital stock
that the Corporation is authorized to have outstanding at any one time is
21,000,000 shares, consisting of: (i) 1,000,000 shares of Preferred Stock, par
value $0.01 per share (the "Preferred Stock") and (ii) 20,000,000 shares of
Common Stock, par value $0.01 per share (the "Common Stock").

Part B. Preferred Stock. Authority is hereby expressly vested in
the Board of Directors of the Corporation, subject to the provisions of this
ARTICLE IV and to the limitations prescribed by law, to authorize the issuance
from time to time of one or more series of Preferred Stock. The authority of the
Board of Directors with respect to each series shall include, but not be

<PAGE> 2

limited to, the determination or fixing of the following by resolution or
resolutions adopted by the affirmative vote of a majority of the total number of
the Directors then in office:

(1) The designation of such series;

(2) The dividend rate of such series, the conditions and dates
upon which such dividends shall be payable, the relation which such dividends
shall bear to the dividends payable on any other class or classes or series of
the Corporation's capital stock and whether such dividends shall be cumulative
or non-cumulative;

(3) Whether the shares of such series shall be subject to
redemption for cash, property or rights, including securities of any other
corporation, by the Corporation or upon the happening of a specified event and,
if made subject to any such redemption, the times or events, prices, rates,
adjustments and other terms and conditions of such redemptions;

(4) The terms and amount of any sinking fund provided for the
purchase or redemption of the shares of such series;

(5) Whether or not the shares of such series shall be convertible
into, or exchangeable for, at the option of either the holder or the Corporation
or upon the happening of a specified event, shares of any other class or classes
or of any other series of the same class of the Corporation's capital stock and,
if provision be made for conversion or exchange, the times or events, prices,
rates, adjustments and other terms and conditions of such conversions or
exchanges;

(6) The restrictions, if any, on the issue or reissue of any
additional Preferred Stock;

(7) The rights of the holders of the shares of such series upon
the voluntary or involuntary liquidation, dissolution or winding up of the
Corporation; and

(8) The provisions as to voting, optional and/or other special
rights and preferences, if any, including, without limitation, the right to
elect one or more Directors.

Part C. Common Stock. Except as otherwise provided by the Delaware
General Corporation Law or this Restated Certificate of Incorporation (the
"Restated Certificate"), the holders of Common Stock (i) subject to the rights
of holders of any series of Preferred Stock, shall share ratably in all
dividends payable in cash, stock or otherwise and other distributions, whether
in respect of liquidation or dissolution (voluntary or involuntary) or otherwise
and (ii) are subject to all the powers, rights, privileges, preferences and
priorities of any series of Preferred Stock as provided herein or in any
resolution or resolutions adopted by the Board of Directors pursuant to
authority expressly vested in it by the provisions of Part B of this ARTICLE IV.

(1) The Common Stock shall not be convertible into, or
exchangeable for, shares of any other class or classes or of any other series of
the same class of the Corporation's capital stock.

- 2 -

<PAGE> 3

(2) No holder of Common Stock shall have any preemptive,
subscription, redemption, conversion or sinking fund rights with respect to the
Common Stock, or to any obligations convertible (directly or indirectly) into
stock of the Corporation whether now or hereafter authorized.

(3) Except as otherwise provided by the Delaware General
Corporation Law, or the Restated Certificate and subject to the rights of
holders of any series of Preferred Stock, all of the voting power of the
stockholders of the Corporation shall be vested in the holders of the Common
Stock, and each holder of Common Stock shall have one vote for each share held
by such holder on all matters voted upon by the stockholders of the Corporation.

ARTICLE V - Existence

The Corporation is to have perpetual existence.

ARTICLE VI - By-laws

In furtherance and not in limitation of the powers conferred by
the Delaware General Corporation Law, the Board of Directors of the Corporation
is expressly authorized to make, alter, amend, change, add to or repeal the
By-laws of the Corporation by the affirmative vote of a majority of the total
number of Directors then in office. Any alteration or repeal of the By-laws of
the Corporation by the stockholders of the Corporation shall require the
affirmative vote of at least a majority of the voting power of the then
outstanding shares of capital stock of the Corporation entitled to vote on such
alteration or repeal, subject to ARTICLE IX hereof and ARTICLE VII of the
Corporation's By-laws.

ARTICLE VII - Stockholders and Directors

Part A. Stockholder Action. Election of Directors need not be by
written ballot unless the By-laws of the Corporation so provide. Subject to any
rights of holders of any series of Preferred Stock, from and after the date on
which the Common Stock of the Corporation is registered pursuant to the Exchange
Act, (i) any action required or permitted to be taken by the stockholders of the
Corporation must be effected at an annual or special meeting of stockholders of
the Corporation and may not be effected in lieu thereof by any consent in
writing by such stockholders, (ii) special meetings of stockholders of the
Corporation may be called only by either the Board of Directors pursuant to a
resolution adopted by the affirmative vote of the majority of the total number
of Directors then in office or by the chief executive officer of the Corporation
and (iii) advance notice of stockholder nominations of persons for election to
the Board of Directors of the Corporation and of business to be brought before
any annual meeting of the stockholders by the stockholders of the Corporation
shall be given in the manner provided in the By-laws of the Corporation.

- 3 -

<PAGE> 4

Part B. Number of Directors and Term of Office. Subject to any
rights of holders of any series of Preferred Stock to elect additional Directors
under specified circumstances, the number of Directors which shall constitute
the Board of Directors of the Corporation shall be fixed from time to time in
the manner set forth in the By-laws of the Corporation. The Directors of the
Corporation shall be divided into three classes: Class I, Class II and Class
III. Membership in each class shall be as nearly equal in number as possible.
The term of office of the initial Class I Directors shall expire at the annual
election of Directors by the stockholders of the Corporation in 1998, the term
of office of the initial Class II Directors shall expire at the annual election
of Directors by the stockholders of the Corporation in 1999 and the term of
office of the initial Class III Directors shall expire at the annual election of
Directors by the stockholders of the Corporation in 2000, or thereafter when
their respective successors in each case are elected by the stockholders and
qualified, subject however, to prior death, resignation, retirement,
disqualification or removal from office for cause. At each succeeding annual
election of Directors by the stockholders of the Corporation beginning in 1998,
the Directors chosen to succeed those whose terms then expire shall be
identified as being of the same class as the Directors they succeed and shall be
elected for a term expiring at the third succeeding annual election of Directors
by the stockholders of the Corporation, or thereafter when their respective
successors in each case are elected by the stockholders and qualified. If the
number of Directors is changed, any increase or decrease shall be apportioned
among the classes so as to maintain the number of Directors in each class as
nearly equal as possible, and any additional Director of any class elected to
fill a vacancy resulting from an increase in such class shall hold office for a
term that shall coincide with the remaining term of that class, but in no case
shall a decrease in the number of Directors shorten the term of any incumbent
Director.

Part C. Removal and Resignation. No Director may be removed from
office without cause and without the affirmative vote of the holders of a
majority of the voting power of the then outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of Directors voting
together as a single class; provided, however, that if the holders of any class
or series of capital stock are entitled by the provisions of this Restated
Certificate (it being understood that any references to this Restated
Certificate shall include any duly authorized certificate of designation) to
elect one or more Directors, such Director or Directors so elected may be
removed without cause only by the vote of the holders of a majority of the
outstanding shares of that class or series entitled to vote. Any Director may
resign at any time upon written notice to the Corporation.

Part D. Vacancies and Newly Created Directorships. Subject to any
rights of holders of any series of Preferred Stock to fill such newly created
Directorships or vacancies, any newly created Directorships resulting from any
increase in the authorized number of Directors and any vacancies in the Board of
Directors resulting from death, resignation, disqualification or removal from
office for cause shall, unless otherwise provided by law or by resolution
approved by the affirmative vote of a majority of the total number of Directors
then in office, be filled only by resolution approved by the affirmative vote of
a majority of the total number of Directors then in office. Any Director so
chosen shall hold office until the next election of the class for which such
Director shall have been chosen, and until his successor shall have been duly
elected and qualified, unless he shall resign, die, become disqualified or be
removed for cause.

- 4 -

<PAGE> 5

ARTICLE VIII - General Provisions

Part A. Dividends. The Board of Directors shall have authority
from time to time to set apart out of any assets of the Corporation otherwise
available for dividends a reserve or reserves as working capital or for any
other purpose or purposes, and to abolish or add to any such reserve or reserves
from time to time as said Board may deem to be in the interest of the
Corporation; and said Board shall likewise have power to determine in its
discretion, except as herein otherwise provided, what part of the assets of the
Corporation available for dividends in excess of such reserve or reserves shall
be declared in dividends and paid to the stockholders of the Corporation.

Part B. Issuance of Stock. The shares of all classes of stock of
the Corporation may be issued by the Corporation from time to time for such
consideration as from time to time may be fixed by the Board of Directors of the
Corporation, provided that shares of stock having a par value shall not be
issued for a consideration less than such par value, as determined by the Board.
At any time, or from time to time, the Corporation may grant rights or options
to purchase from the Corporation any shares of its stock of any class or classes
to run for such period of time, for such consideration, upon such terms and
conditions, and in such form as the Board of Directors may determine. The Board
of Directors shall have authority, as provided by law, to determine that only a
part of the consideration which shall be received by the Corporation for the
shares of its stock which it shall issue from time to time, shall be capital;
provided, however, that, if all the shares issued shall be shares having a par
value, the amount of the part of such consideration so determined to be capital
shall be equal to the aggregate par value of such shares. The excess, if any, at
any time, of the total net assets of the Corporation over the amount so
determined to be capital, as aforesaid, shall be surplus. All classes of stock
of the Corporation shall be and remain at all times nonassessable.

The Board of Directors is hereby expressly authorized, in its
discretion, in connection with the issuance of any obligations or stock of the
Corporation (but without intending hereby to limit its general power so to do in
other cases), to grant rights or options to purchase stock of the Corporation of
any class upon such terms and during such period as the Board of Directors shall
determine, and to cause such rights to be evidenced by such warrants or other
instruments as it may deem advisable.

Part C. Inspection of Books and Records. The Board of Directors
shall have power from time to time to determine to what extent and at what times
and places and under what conditions and regulations the accounts and books of
the Corporation, or any of them, shall be open to the inspection of the
stockholders; and no stockholder shall have any right to inspect any account or
book or document of the Corporation, except as conferred by the laws of the
State of Delaware, unless and until authorized so to do by resolution of the
Board of Directors or of the stockholders of the Corporation.

- 5 -

<PAGE> 6

Part D. Location of Meetings, Books and Records. Except as
otherwise provided in the By-laws, the stockholders of the Corporation and the
Board of Directors may hold their meetings and have an office or offices outside
of the State of Delaware and, subject to the provisions of the laws of said
State, may keep the books of the Corporation outside of said State at such
places as may, from time to time, be designated by the Board of Directors.

ARTICLE IX - Amendments

The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Restated Certificate in the manner now or
hereinafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation. Notwithstanding anything contained in this Restated Certificate to
the contrary, Parts A, B and C of ARTICLE IV, ARTICLE VII, ARTICLE X, and this
ARTICLE IX of this Restated Certificate shall not be altered, amended or
repealed and no provision inconsistent therewith shall be adopted without the
affirmative vote of the holders of at least 66 2/3% of the voting power of the
then outstanding shares of capital stock of the Corporation entitled to vote on
such alteration, amendment or repeal, voting together as a single class (other
than any alteration or amendment to Part A of ARTICLE IV that increases the
authorized number of shares of Preferred Stock, or Common Stock).

ARTICLE X - Liability

Part A. Limitation of Liability.

(1) To the fullest extent permitted by the Delaware General
Corporation Law as it now exists or may hereafter be amended (but, in the case
of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than permitted prior
thereto), and except as otherwise provided in the Corporation's By-laws, no
Director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages arising from a breach of fiduciary duty owed
to the Corporation or its stockholders.

(2) Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a Director of the Corporation existing at the time of such repeal
or modification.

Part B. Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved (including
involvement as a witness) in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "proceeding"), by reason of the
fact that he or she is or was a Director or officer of the Corporation or, while
a Director or officer of the Corporation, is or was serving at the request of
the Corporation as a Director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, including service
with respect to an employee benefit plan (an

- 6 -

<PAGE> 7

"indemnitee"), whether the basis of such proceeding is alleged action in an
official capacity as a Director or officer or in any other capacity while
serving as a Director or officer, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Delaware General Corporation
Law, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than permitted prior thereto), against
all expense, liability and loss (including attorneys' fees, judgments, fines,
excise taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by such indemnitee in connection therewith and such indemnification
shall continue as to an indemnitee who has ceased to be a Director, officer,
employee or agent and shall inure to the benefit of the indemnitee's heirs,
executors and administrators; provided, however, that, except as provided in
Part C of this ARTICLE X with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation. The right to indemnification conferred in this Part B of this
ARTICLE X shall be a contract right and shall include the obligation of the
Corporation to pay the expenses incurred in defending any such proceeding in
advance of its final disposition (an "advance of expenses"); provided, however,
that, if and to the extent that the Delaware General Corporation Law requires,
an advance of expenses incurred by an indemnitee in his or her capacity as a
Director or officer (and not in any other capacity in which service was or is
rendered by such indemnitee, including, without limitation, service to an
employee benefit plan) shall be made only upon delivery to the Corporation of an
undertaking (an "undertaking"), by or on behalf of such indemnitee, to repay all
amounts so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal (a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Part B or otherwise. The Corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of the Corporation
with the same or lesser scope and effect as the foregoing indemnification of
Directors and officers.

Part C. Procedure for Indemnification. Any indemnification of a
Director or officer of the Corporation or advance of expenses under Part B of
this ARTICLE X shall be made promptly, and in any event within forty-five days
(or, in the case of an advance of expenses, twenty days), upon the written
request of the Director or officer. If a determination by the Corporation that
the Director or officer is entitled to indemnification pursuant to this ARTICLE
X is required, and the Corporation fails to respond within sixty days to a
written request for indemnity, the Corporation shall be deemed to have approved
the request. If the Corporation denies a written request for indemnification or
advance of expenses, in whole or in part, or if payment in full pursuant to such
request is not made within forty-five days (or, in the case of an advance of
expenses, twenty days), the right to indemnification or advances as granted by
this ARTICLE X shall be enforceable by the Director or officer in any court of
competent jurisdiction. Such person's costs and expenses incurred in connection
with successfully establishing his or her right to indemnification, in whole or
in part, in any such action shall also be indemnified by the Corporation. It
shall be a defense to any such action (other than an action brought to enforce a
claim for the advance of expenses where the undertaking required pursuant to
Part B of this ARTICLE X, if any, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under

- 7 -

<PAGE> 8

the Delaware General Corporation Law for the Corporation to indemnify the
claimant for the amount claimed, but the burden of such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct. The procedure for indemnification of other employees and agents for
whom indemnification is provided pursuant to Part B of this ARTICLE X shall be
the same procedure set forth in this Part C for Directors or officers, unless
otherwise set forth in the action of the Board of Directors providing
indemnification for such employee or agent.

Part D. Insurance. The Corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
Director, officer, employee or agent of the Corporation or was serving at the
request of the Corporation as a Director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss asserted against him or her and incurred by him or
her in any such capacity, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under the Delaware
General Corporation Law.

Part E. Service for Subsidiaries. Any person serving as a
Director, officer, employee or agent of another corporation, partnership,
limited liability company, joint venture or other enterprise, at least 50% of
whose equity interests are owned by the Corporation (a "subsidiary" for this
ARTICLE X) shall be conclusively presumed to be serving in such capacity at the
request of the Corporation.

Part F. Reliance. Persons who after the date of the adoption of
this provision become or remain Directors or officers of the Corporation or who,
while a Director or officer of the Corporation, become or remain a Director,
officer, employee or agent of a subsidiary, shall be conclusively presumed to
have relied on the rights to indemnity, advance of expenses and other rights
contained in this ARTICLE X in entering into or continuing such service. The
rights to indemnification and to the advance of expenses conferred in this
ARTICLE X shall apply to claims made against an indemnitee arising out of acts
or omissions which occurred or occur both prior and subsequent to the adoption
hereof.

Part G. Non-Exclusivity of Rights. The rights to indemnification
and to the advance of expenses conferred in this ARTICLE X shall not be
exclusive of any other right which any person may have or hereafter acquire
under this Restated Certificate or under any statute, by-law, agreement, vote of
stockholders or disinterested Directors or otherwise.

Part H. Merger or Consolidation. For purposes of this ARTICLE X,
references to the "Corporation" shall include, in addition to the resulting
Corporation, any constituent Corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which,

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<PAGE> 9

if its separate existence had continued, would have had power and authority to
indemnify its Directors, officers and employees or agents, so that any person
who is or was a Director, officer, employee or agent of such constituent
Corporation, or is or was serving at the request of such constituent
Corporation as a Director, officer, employee or agent of another Corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this ARTICLE X with respect to the resulting or surviving
Corporation as he or she would have with respect to such constituent
Corporation if its separate existence had continued.

ARTICLE XI - Business Combinations

The Corporation expressly elects to be governed by Section 203 of
the Delaware General Corporation Law.

* * * * *

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<PAGE> 1
EXHIBIT 3.1(II)

Draft of January 15, 1998

BY-LAWS

1-800 CONTACTS, INC.

A Delaware Corporation

(Adopted as of ____________ __, 1998)

ARTICLE I

OFFICES

Section 1. Registered Office. The registered office of 1-800 CONTACTS,
INC. (the "Corporation") in the State of Delaware shall be located at 1013
Centre Road, in the City of Wilmington, Delaware, County of New Castle 19805.
The name of the Corporation's registered agent at such address shall be
Corporation Service Company. The registered office and/or registered agent of
the Corporation may be changed from time to time by action of the Board of
Directors.

Section 2. Other Offices. The Corporation may also have offices at such
other places, both within and without the State of Delaware, as the Board of
Directors may from time to time determine or the business of the Corporation may
require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 1. Annual Meeting. An annual meeting of the stockholders shall
be held each year within 150 days after the close of the immediately preceding
fiscal year of the Corporation or at such other time specified by the Board of
Directors for the purpose of electing Directors and conducting such other proper
business as may come before the annual meeting. At the annual meeting,
stockholders shall elect Directors and transact such other business as properly
may be brought before the annual meeting pursuant to Section 11 of ARTICLE II
hereof.

Section 2. Special Meetings. Special meetings of the stockholders may
only be called in the manner provided in the Restated Certificate of
Incorporation.

<PAGE> 2
Section 3. Place of Meetings. The Board of Directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting. If no designation is made, or
if a special meeting be otherwise called, the place of meeting shall be the
principal executive office of the Corporation. If for any reason any annual
meeting shall not be held during any year, the business thereof may be
transacted at any special meeting of the stockholders.

Section 4. Notice. Whenever stockholders are required or permitted to
take action at a meeting, written or printed notice stating the place, date,
time and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder entitled to vote at such meeting not
less than 10 nor more than 60 days before the date of the meeting. All such
notices shall be delivered, either personally or by mail, by or at the direction
of the Board of Directors, the chairman of the board, the president or the
secretary, and if mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, postage prepaid, addressed to the
stockholder at his, her or its address as the same appears on the records of the
Corporation. Attendance of a person at a meeting shall constitute a waiver of
notice of such meeting, except when the person attends for the express purpose
of objecting at the beginning of the meeting to the transaction of any business
because the meeting is not lawfully called or convened.

Section 5. Stockholders List. The officer having charge of the stock
ledger of the Corporation shall make, at least 10 days before every meeting of
the stockholders, a complete list of the stockholders entitled to vote at such
meeting arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.

Section 6. Quorum. The holders of a majority of the outstanding shares
of capital stock entitled to vote, present in person or represented by proxy,
shall constitute a quorum at all meetings of the stockholders, except as
otherwise provided by the General Corporation Law of the State of Delaware or by
the Restated Certificate of Incorporation. If a quorum is not present, the
holders of a majority of the shares present in person or represented by proxy at
the meeting, and entitled to vote at the meeting, may adjourn the meeting to
another time and/or place. When a specified item of business requires a vote by
a class or series (if the Corporation shall then have outstanding shares of more
than one class or series) voting as a class or series, the holders of a majority
of the shares of such class or series shall constitute a quorum (as to such
class or series) for the transaction of such item of business.

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Section 7. Adjourned Meetings. When a meeting is adjourned to another
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than 30 days, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.

Section 8. Vote Required. When a quorum is present, the affirmative
vote of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless (i) by express provisions of an applicable law or of the
Restated Certificate of Incorporation a different vote is required, in which
case such express provision shall govern and control the decision of such
question, or (ii) the subject matter is the election of Directors, in which case
Section 2 of ARTICLE III hereof shall govern and control the approval of such
subject matter.

Section 9. Voting Rights. Except as otherwise provided by the General
Corporation Law of the State of Delaware, the Restated Certificate of
Incorporation of the Corporation or any amendments thereto or these By-laws,
every stockholder shall at every meeting of the stockholders be entitled to (i)
one vote in person or by proxy for each share of common stock held by such
stockholder.

Section 10. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period. A duly executed proxy
shall be irrevocable if it states that it is irrevocable and if, and only as
long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the Corporation generally. Any proxy is suspended when the person
executing the proxy is present at a meeting of stockholders and elects to vote,
except that when such proxy is coupled with an interest and the fact of the
interest appears on the face of the proxy, the agent named in the proxy shall
have all voting and other rights referred to in the proxy, notwithstanding the
presence of the person executing the proxy. At each meeting of the stockholders,
and before any voting commences, all proxies filed at or before the meeting
shall be submitted to and examined by the secretary or a person designated by
the secretary, and no shares may be represented or voted under a proxy that has
been found to be invalid or irregular.

Section 11. Business Brought Before an Annual Meeting. At an annual
meeting of the stockholders, only such business shall be conducted as shall
have been properly brought before the meeting. To be properly brought before an
annual meeting, business must be (i) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors,

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(ii) brought before the meeting by or at the direction of the Board of
Directors or (iii) otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the secretary of the Corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation, not less than 60 days nor more than 90 days prior to the meeting;
provided, however, that in the event that less than 70 days' notice or prior
public announcement of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be so received not later than the
close of business on the 10th day following the date on which such notice of the
date of the annual meeting was mailed or such public announcement was made. A
stockholder's notice to the secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the annual meeting, (ii) the name
and address, as they appear on the Corporation's books, of the stockholder
proposing such business, (iii) the class and number of shares of the Corporation
which are beneficially owned by the stockholder and (iv) any material interest
of the stockholder in such business. Notwithstanding anything in these By-laws
to the contrary, no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this section. The presiding officer
of an annual meeting shall, if the facts warrant, determine and declare to the
meeting that business was not properly brought before the meeting and in
accordance with the provisions of this section; if he should so determine, he
shall so declare to the meeting and any such business not properly brought
before the meeting shall not be transacted. For purposes of this section,
"public announcement" shall mean disclosure in a press release reported by Dow
Jones News Service, Associated Press or a comparable national news service.
Nothing in this section shall be deemed to affect any rights of stockholders to
request inclusion of proposals in the Corporation's proxy statement pursuant to
Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").

ARTICLE III

Directors

Section 1. General Powers. The business and affairs of the Corporation
shall be managed by or under the direction of the Board of Directors. In
addition to such powers as are herein and in the Restated Certificate of
Incorporation expressly conferred upon it, the Board of Directors shall have and
may exercise all the powers of the Corporation, subject to the provisions of the
laws of Delaware, the Restated Certificate of Incorporation and these By-laws.

Section 2. Number, Election and Term of Office. Subject to any rights
of the holders of any series of Preferred Stock to elect additional Directors
under specified circumstances, the number of Directors which shall constitute
the Board of Directors shall be fixed from time to time by resolution adopted
by the affirmative vote of a majority of the total number of Directors then in
office. The Directors shall be elected by a plurality of the votes of the
shares present in person or represented

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by proxy at the meeting and entitled to vote in the election of Directors;
provided that, whenever the holders of any class or series of capital stock of
the Corporation are entitled to elect one or more Directors pursuant to the
provisions of the Restated Certificate of Incorporation of the Corporation
(including, but not limited to, for purposes of these By-laws, pursuant to any
duly authorized certificate of designation), such Directors shall be elected by
a plurality of the votes of such class or series present in person or
represented by proxy at the meeting and entitled to vote in the election of such
Directors. The Directors shall be elected and shall hold office only in the
manner provided in the Restated Certificate of Incorporation.

Section 3. Removal and Resignation. No Director may be removed from
office without cause and without the affirmative vote of the holders of a
majority of the voting power of the then outstanding shares of capital stock
entitled to vote generally in the election of Directors voting together as a
single class; provided, however, that if the holders of any class or series of
capital stock are entitled by the provisions of the Restated Certificate of
Incorporation (it being understood that any references to the Restated
Certificate of Incorporation shall include any duly authorized certificate of
designation) to elect one or more Directors, such Director or Directors so
elected may be removed without cause only by the vote of the holders of a
majority of the outstanding shares of that class or series entitled to vote. Any
Director may resign at any time upon written notice to the Corporation.

Section 4. Vacancies. Vacancies and newly created directorships
resulting from any increase in the total number of Directors may be filled only
in the manner provided in the Restated Certificate of Incorporation.

Section 5. Nominations.

(a) Only persons who are nominated in accordance with the
procedures set forth in these By-laws shall be eligible to serve as Directors.
Nominations of persons for election to the Board of Directors of the Corporation
may be made at a meeting of stockholders (i) by or at the direction of the Board
of Directors or (ii) by any stockholder of the Corporation who was a stockholder
of record at the time of giving of notice provided for in this By-law, who is
entitled to vote generally in the election of Directors at the meeting and who
shall have complied with the notice procedures set forth below in Section 5(b).

(b) In order for a stockholder to nominate a person for
election to the Board of Directors of the Corporation at a meeting of
stockholders, such stockholder shall have delivered timely notice of such
stockholder's intent to make such nomination in writing to the secretary of the
Corporation. To be timely, a stockholder's notice shall be delivered to or
mailed and received at the principal executive offices of the Corporation (i) in
the case of an annual meeting, not less than 60 nor more than 90 days prior to
the first anniversary of the preceding year's annual meeting; provided, however,
that in the event that the date of the annual meeting is changed by more than 30
days from such anniversary date, notice by the stockholder to be timely must be
so received not later than the

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close of business on the 10th day following the earlier of the day on which
notice of the date of the meeting was mailed or public disclosure of the meeting
was made, and (ii) in the case of a special meeting at which Directors are to be
elected, not later than the close of business on the 10th day following the
earlier of the day on which notice of the date of the meeting was mailed or
public disclosure of the meeting was made. Such stockholder's notice shall set
forth (i) as to each person whom the stockholder proposes to nominate for
election as a Director at such meeting all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
Directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Exchange Act (including such person's written consent to being named
in the proxy statement as a nominee and to serving as a Director if elected);
(ii) as to the stockholder giving the notice (A) the name and address, as they
appear on the Corporation's books, of such stockholder and (B) the class and
number of shares of the Corporation which are beneficially owned by such
stockholder and also which are owned of record by such stockholder; and (iii) as
to the beneficial owner, if any, on whose behalf the nomination is made, (A) the
name and address of such person and (B) the class and number of shares of the
Corporation which are beneficially owned by such person. At the request of the
Board of Directors, any person nominated by the Board of Directors for election
as a Director shall furnish to the secretary of the Corporation that information
required to be set forth in a stockholder's notice of nomination which pertains
to the nominee.

(c) No person shall be eligible to serve as a Director of the
Corporation unless nominated in accordance with the procedures set forth in this
section. The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
procedures prescribed by this section, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be disregarded. A
stockholder seeking to nominate a person to serve as a Director must also comply
with all applicable requirements of the Exchange Act, and the rules and
regulations thereunder with respect to the matters set forth in this section.

Section 6. Annual Meetings. The annual meeting of the Board of
Directors shall be held without other notice than this By-law immediately after,
and at the same place as, the annual meeting of stockholders.

Section 7. Other Meetings and Notice. Regular meetings, other than the
annual meeting, of the Board of Directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the Board of Directors. Special meetings of the Board of Directors may be called
by the chairman of the board, the president (if the president is a Director) or,
upon the written request of at least a majority of the Directors then in office,
the secretary of the Corporation on at least 24 hours notice to each Director,
either personally, by telephone, by mail or by telecopy.

Section 8. Chairman of the Board, Quorum, Required Vote and
Adjournment. The Board of Directors shall elect, by the affirmative vote of a
majority of the total number of Directors then

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in office, a chairman of the board, who shall preside at all meetings of the
stockholders and Board of Directors at which he or she is present and shall have
such powers and perform such duties as the Board of Directors may from time to
time prescribe. If the chairman of the board is not present at a meeting of the
stockholders or the Board of Directors, the president (if the president is a
Director and is not also the chairman of the board) shall preside at such
meeting, and, if the president is not present at such meeting, a majority of the
Directors present at such meeting shall elect one of their members to so
preside. A majority of the total number of Directors then in office shall
constitute a quorum for the transaction of business. Unless by express provision
of an applicable law, the Restated Certificate of Incorporation or these By-laws
a different vote is required, the vote of a majority of Directors present at a
meeting at which a quorum is present shall be the act of the Board of Directors.
If a quorum shall not be present at any meeting of the Board of Directors, the
Directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.

Section 9. Committees. The Board of Directors may, by resolution passed
by a majority of the total number of Directors then in office, designate one or
more committees, each committee to consist of one or more of the Directors of
the Corporation, which to the extent provided in such resolution or these
By-laws shall have, and may exercise, the powers of the Board of Directors in
the management and affairs of the Corporation, except as otherwise limited by
law. The Board of Directors may designate one or more Directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. Such committee or committees shall have such name
or names as may be determined from time to time by resolution adopted by the
Board of Directors. Each committee shall keep regular minutes of its meetings
and report the same to the Board of Directors upon request.

Section 10. Committee Rules. Each committee of the Board of Directors
may fix its own rules of procedure and shall hold its meetings as provided by
such rules, except as may otherwise be provided by a resolution of the Board of
Directors designating such committee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the committee
shall be necessary to constitute a quorum. Unless otherwise provided in such a
resolution, in the event that a member and that member's alternate, if
alternates are designated by the Board of Directors, of such committee is or are
absent or disqualified, the member or members thereof present at any meeting and
not disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in place of any such absent or disqualified member.

Section 11. Communications Equipment. Members of the Board of Directors
or any committee thereof may participate in and act at any meeting of such board
or committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
and speak with each other, and participation in the meeting pursuant to this
section shall constitute presence in person at the meeting.

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Section 12. Waiver of Notice and Presumption of Assent. Any member of
the Board of Directors or any committee thereof who is present at a meeting
shall be conclusively presumed to have waived notice of such meeting except when
such member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.

Section 13. Action by Written Consent. Unless otherwise restricted by
the Restated Certificate of Incorporation, any action required or permitted to
be taken at any meeting of the Board of Directors, or of any committee thereof,
may be taken without a meeting if all members of such board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the board or committee.

ARTICLE IV

OFFICERS

Section 1. Number. The officers of the Corporation shall be elected by
the Board of Directors and shall consist of a chairman of the board, a chief
executive officer, a president, one or more vice-presidents, a secretary, a
chief financial officer and such other officers and assistant officers as may be
deemed necessary or desirable by the Board of Directors. Any number of offices
may be held by the same person, except that neither the chief executive officer
nor the president shall also hold the office of secretary. In its discretion,
the Board of Directors may choose not to fill any office for any period as it
may deem advisable, except that the offices of president and secretary shall be
filled as expeditiously as possible.

Section 2. Election and Term of Office. The officers of the Corporation
shall be elected annually by the Board of Directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as convenient.
Vacancies may be filled or new offices created and filled at any meeting of the
Board of Directors. Each officer shall hold office until a successor is duly
elected and qualified or until his or her earlier death, resignation or removal
as hereinafter provided.

Section 3. Removal. Any officer or agent elected by the Board of
Directors may be removed by the Board of Directors at its discretion, but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed.

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Section 4. Vacancies. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise may be filled by the
Board of Directors.

Section 5. Compensation. Compensation of all executive officers shall
be approved by the Board of Directors, and no officer shall be prevented from
receiving such compensation by virtue of his or her also being a Director of the
Corporation; provided however, that compensation of all executive officers may
be determined by a committee established for that purpose if so authorized by
the unanimous vote of the Board of Directors.

Section 6. Chairman of the Board. The chairman of the board shall
preside at all meetings of the stockholders and of the Board of Directors and
shall have such other powers and perform such other duties as may be prescribed
to him or her by the Board of Directors or provided in these By-laws.

Section 7. Vice-Chairman of the Board. Whenever the chairman of the
board in unable to serve, by reason of sickness, absence, or otherwise, the
vice-chairman shall have the powers and perform the duties of the chairman of
the board. The vice-chairman shall have such other powers and perform such other
duties as may be prescribed by the chairman of the board, the board of directors
or these By-laws.

Section 8. Chief Executive Officer. The chief executive officer shall
have the powers and perform the duties incident to that position. Subject to the
powers of the Board of Directors and the chairman of the board, the chief
executive officer shall be in the general and active charge of the entire
business and affairs of the Corporation, and shall be its chief policy making
officer. The chief executive officer shall have such other powers and perform
such other duties as may be prescribed by the Board of Directors or provided in
these By-laws. The chief executive officer is authorized to execute bonds,
mortgages and other contracts requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation. Whenever the president is unable to serve, by reason of
sickness, absence or otherwise, the chief executive officer shall perform all
the duties and responsibilities and exercise all the powers of the president.

Section 9. The President. The president of the Corporation shall,
subject to the powers of the Board of Directors, the chairman of the board and
the chief executive officer, have general charge of the business, affairs and
property of the Corporation, and control over its officers, agents and
employees. The president shall see that all orders and resolutions of the Board
of Directors are carried into effect. The president is authorized to execute
bonds, mortgages and other contracts requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation. The president shall have such other powers and perform such
other duties as may be prescribed by the chairman

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of the board, the chief executive officer, the Board of Directors or as may be
provided in these By-laws.

Section 10. Vice-Presidents. The vice-president, or if there shall be
more than one, the vice-presidents in the order determined by the Board of
Directors or the chairman of the board, shall, in the absence or disability of
the president, act with all of the powers and be subject to all the restrictions
of the president. The vice-presidents shall also perform such other duties and
have such other powers as the Board of Directors, the chairman of the board, the
chief executive officer, the president or these By-laws may, from time to time,
prescribe. The vice-presidents may also be designated as executive
vice-presidents or senior vice-presidents, as the Board of Directors may from
time to time prescribe.

Section 11. The Secretary and Assistant Secretaries. The secretary
shall attend all meetings of the Board of Directors, all meetings of the
committees thereof and all meetings of the stockholders and record all the
proceedings of the meetings in a book or books to be kept for that purpose or
shall ensure that his or her designee attends each such meeting to act in such
capacity. Under the chairman of the board's supervision, the secretary shall
give, or cause to be given, all notices required to be given by these By-laws or
by law; shall have such powers and perform such duties as the Board of
Directors, the chairman of the board, the chief executive officer, the president
or these By-laws may, from time to time, prescribe; and shall have custody of
the corporate seal of the Corporation. The secretary, or an assistant secretary,
shall have authority to affix the corporate seal to any instrument requiring it
and when so affixed, it may be attested by his or her signature or by the
signature of such assistant secretary. The Board of Directors may give general
authority to any other officer to affix the seal of the Corporation and to
attest the affixing by his or her signature. The assistant secretary, or if
there be more than one, any of the assistant secretaries, shall in the absence
or disability of the secretary, perform the duties and exercise the powers of
the secretary and shall perform such other duties and have such other powers as
the Board of Directors, the chairman of the board, the chief executive officer,
the president, or secretary may, from time to time, prescribe.

Section 12. The Chief Financial Officer. The chief financial officer
shall have the custody of the corporate funds and securities; shall keep full
and accurate all books and accounts of the Corporation as shall be necessary or
desirable in accordance with applicable law or generally accepted accounting
principles; shall deposit all monies and other valuable effects in the name and
to the credit of the Corporation as may be ordered by the chairman of the board
or the Board of Directors; shall cause the funds of the Corporation to be
disbursed when such disbursements have been duly authorized, taking proper
vouchers for such disbursements; and shall render to the Board of Directors, at
its regular meeting or when the Board of Directors so requires, an account of
the Corporation; shall have such powers and perform such duties as the Board of
Directors, the chairman of the board, the chief executive officer, the president
or these By-laws may, from time to time, prescribe. If required by the Board of
Directors, the chief financial officer shall give the Corporation a bond (which
shall be rendered every six years) in such sums and with such surety or sureties
as shall be satisfactory to the Board of Directors for the faithful performance
of the duties of the office

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of chief financial officer and for the restoration to the Corporation, in case
of death, resignation, retirement or removal from office of all books, papers,
vouchers, money and other property of whatever kind in the possession or under
the control of the chief financial officer belonging to the Corporation.

Section 13. Other Officers, Assistant Officers and Agents. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these By-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the Board of Directors.

Section 14. Absence or Disability of Officers. In the case of the
absence or disability of any officer of the Corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the Board of Directors may by resolution delegate the powers and
duties of such officer to any other officer or to any Director, or to any other
person selected by it.

ARTICLE V

CERTIFICATES OF STOCK

Section 1. Form. Every holder of stock in the Corporation shall be
entitled to have a certificate, signed by, or in the name of the Corporation by
the chairman of the board, the chief executive officer or the president and the
secretary or an assistant secretary of the Corporation, certifying the number of
shares owned by such holder in the Corporation. If such a certificate is
countersigned (i) by a transfer agent or an assistant transfer agent other than
the Corporation or its employee or (ii) by a registrar, other than the
Corporation or its employee, the signature of any such chairman of the board,
chief executive officer, president, secretary or assistant secretary may be
facsimiles. In case any officer or officers who have signed, or whose facsimile
signature or signatures have been used on, any such certificate or certificates
shall cease to be such officer or officers of the Corporation whether because of
death, resignation or otherwise before such certificate or certificates have
been delivered by the Corporation, such certificate or certificates may
nevertheless be issued and delivered as though the person or persons who
signed such certificate or certificates or whose facsimile signature or
signatures have been used thereon had not ceased to be such officer or officers
of the Corporation. All certificates for shares shall be consecutively numbered
or otherwise identified. The name of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the books of the Corporation. Shares of stock of the Corporation
shall only be transferred on the books of the Corporation by the holder of
record thereof or by such holder's attorney duly authorized in writing, upon
surrender to the Corporation of the certificate or certificates for such shares
endorsed by the appropriate person or persons, with such evidence of the
authenticity of such endorsement, transfer, authorization and other matters as
the Corporation may reasonably require, and accompanied by all necessary stock
transfer stamps. In that event, it shall be the duty of the Corporation to issue
a new

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<PAGE> 12
certificate to the person entitled thereto, cancel the old certificate or
certificates and record the transaction on its books. The Board of Directors may
appoint a bank or trust company organized under the laws of the United States or
any state thereof to act as its transfer agent or registrar, or both in
connection with the transfer of any class or series of securities of the
Corporation.

Section 2. Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Corporation
may, in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed certificate or certificates,
or his or her legal representative, to give the Corporation a bond sufficient to
indemnify the Corporation against any claim that may be made against the
Corporation on account of the loss, theft or destruction of any such certificate
or the issuance of such new certificate.

Section 3. Fixing a Record Date for Stockholder Meetings. In order that
the Corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than 60 nor less than 10 days
before the date of such meeting. If no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be the close of business on the next
day preceding the day on which notice is first given. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.

Section 4. Fixing a Record Date for Other Purposes. In order that the
Corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action, the Board of Directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted, and which record date shall be
not more than 60 days prior to such action. If no record date is fixed, the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the Board of Directors adopts the
resolution relating thereto.

Section 5. Registered Stockholders. Prior to the surrender to the
Corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the Corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications and otherwise to exercise all the rights and
powers of an owner. The Corporation shall not be bound to recognize any
equitable or other claim to or interest

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<PAGE> 13
in such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof.

Section 6. Subscriptions for Stock. Unless otherwise provided for in
the subscription agreement, subscriptions for shares shall be paid in full at
such time, or in such installments and at such times, as shall be determined by
the Board of Directors. Any call made by the Board of Directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the Corporation may proceed to collect the
amount due in the same manner as any debt due the Corporation.

ARTICLE VI

GENERAL PROVISIONS

Section 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Restated Certificate of
Incorporation, if any, may be declared by the Board of Directors at any regular
or special meeting, in accordance with applicable law. Dividends may be paid in
cash, in property or in shares of the capital stock, subject to the provisions
of the Restated Certificate of Incorporation. Before payment of any dividend,
there may be set aside out of any funds of the Corporation available for
dividends such sum or sums as the Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or any other purpose and the Directors may modify or abolish any
such reserve in the manner in which it was created.

Section 2. Checks, Drafts or Orders. All checks, drafts or other orders
for the payment of money by or to the Corporation and all notes and other
evidences of indebtedness issued in the name of the Corporation shall be signed
by such officer or officers, agent or agents of the Corporation, and in such
manner, as shall be determined by resolution of the Board of Directors or a duly
authorized committee thereof.

Section 3. Contracts. In addition to the powers otherwise granted to
officers pursuant to ARTICLE IV hereof, the Board of Directors may authorize any
officer or officers, or any agent or agents, of the Corporation to enter into
any contract or to execute and deliver any instrument in the name of and on
behalf of the Corporation, and such authority may be general or confined to
specific instances.

Section 4. Loans. The Corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
Corporation or of its subsidiaries, including any officer or employee who is a
Director of the Corporation or its subsidiaries, whenever, in the

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<PAGE> 14
judgment of the Directors, such loan, guaranty or assistance may reasonably be
expected to benefit the Corporation. The loan, guaranty or other assistance may
be with or without interest, and may be unsecured, or secured in such manner as
the Board of Directors shall approve, including, without limitation, a pledge of
shares of stock of the Corporation. Nothing in this section shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the Corporation at
common law or under any statute.

Section 5. Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.

Section 6. Corporate Seal. The Board of Directors may provide a
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the Corporation and the words "Corporate Seal, Delaware."
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.

Section 7. Voting Securities Owned By Corporation. Voting securities in
any other Corporation held by the Corporation shall be voted by the chief
executive officer, the president or a vice-president, unless the Board of
Directors specifically confers authority to vote with respect thereto, which
authority may be general or confined to specific instances, upon some other
person or officer. Any person authorized to vote securities shall have the power
to appoint proxies, with general power of substitution.

Section 8. Inspection of Books and Records. The Board of Directors
shall have power from time to time to determine to what extent and at what times
and places and under what conditions and regulations the accounts and books of
the Corporation, or any of them, shall be open to the inspection of the
stockholders; and no stockholder shall have any right to inspect any account or
book or document of the Corporation, except as conferred by the laws of the
State of Delaware, unless and until authorized so to do by resolution of the
Board of Directors or of the stockholders of the Corporation.

Section 9. Section Headings. Section headings in these By-laws are for
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.

Section 10. Inconsistent Provisions. In the event that any provision of
these By-laws is or becomes inconsistent with any provision of the Restated
Certificate of Incorporation, the General Corporation Law of the State of
Delaware or any other applicable law, the provision of these By-laws shall
not be given any effect to the extent of such inconsistency but shall
otherwise be given full force and effect.

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<PAGE> 15
ARTICLE VII

AMENDMENTS

In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors of the Corporation is expressly authorized to
make, alter, amend, change, add to or repeal these By-laws by the affirmative
vote of a majority of the total number of Directors then in office. Any
alteration or repeal of these By-laws by the stockholders of the Corporation
shall require the affirma tive vote of a majority of the outstanding shares of
the Corporation entitled to vote on such alteration or repeal; provided,
however, that Section 11 of ARTICLE II and Sections 2, 3, 4 and 5 of ARTICLE III
and this ARTICLE VII of these By-laws shall not be altered, amended or repealed
and no provision inconsistent therewith shall be adopted without the affirmative
vote of the holders of at least 662/3% of the outstanding shares of the
Corporation entitled to vote on such alteration or repeal.

-15-

<PAGE> 1
[KIRKLAND & ELLIS LETTERHEAD]

January 15, 1998

1-800 CONTACTS, INC.
13751 South Wadsworth Park Drive
Suite D-140
Draper, Utah 84020

Re: 1-800 CONTACTS, INC.
Registration Statement on Form S-1
Registration No. 333-41055
------------------------------------

Ladies and Gentlemen:

We are acting as special counsel to 1-800 CONTACTS, INC., a
Delaware corporation (the "Company"), in connection with the proposed
registration by the Company of 1,925,000 shares (the "Primary Shares") of its
Common Stock, par value $.01 per share (the "Common Stock"), to be issued and
sold by the Company and 275,000 shares of Common Stock to be sold by the Selling
Stockholder named therein (the "Secondary Shares" and together with the Primary
Shares, the "Shares") pursuant to a Registration Statement on Form S-1
(Registration No. 333-41055), filed with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the "Act")
(such Registration Statement, as amended or supplemented, is hereinafter
referred to as the "Registration Statement"). The Shares are to be sold pursuant
to an underwriting agreement (the "Underwriting Agreement") between the Company,
the Selling Securityholder, McDonald & Company Securities, Inc. and Morgan
Keegan & Company, Inc., as representatives of the several Underwriters.

In that connection, we have examined such corporate
proceedings, documents, records and matters of law as we have deemed necessary
to enable us to render this opinion.

<PAGE> 2
[KIRKLAND & ELLIS LOGO]

1-800 CONTACTS, INC.
January 15, 1998
Page 2

For purposes of this opinion, we have assumed the authenticity
of all documents submitted to us as originals, the conformity to the originals
of all documents submitted to us as copies and the authenticity of the originals
of all documents submitted to us as copies. We have also assumed the legal
capacity of all natural persons, the genuineness of the signatures of persons
signing all documents in connection with which this opinion is rendered, the
authority of such persons signing on behalf of the parties thereto other than
the Company and the due authorization, execution and delivery of all documents
by the parties thereto other than the Company. As to any facts material to the
opinions expressed herein, we have relied upon the statements and
representations of officers and other representations of the Company and others.
For purposes of numbered paragraph 1, we have relied exclusively upon
certificates issued by governmental authorities in the relevant jurisdictions
and such opinion is not intended to provide any conclusion or assurance beyond
that conveyed by such certificates.

Our opinion expressed below is subject to the qualifications
that we express no opinion as to the applicability of, compliance with, or
effect of any laws except the internal laws of the State of New York, the
General Corporation Law of the State of Delaware (the "DGCL") and the federal
law of the United States of America.

Based upon and subject to the foregoing qualifications,
assumptions and limitations and the further limitations set forth below, we
hereby advise you that in our opinion:

(1) The Company is a corporation existing and in good standing
under the laws of the State of Delaware.

(2) Upon the effectiveness of the Restated Certificate of
Incorporation of the Company (the "Restated Certificate"), the Primary Shares
will be duly authorized, and, when (i) the Registration Statement becomes
effective under the Act, (ii) the Board of Directors of the Company has taken
all necessary action to approve the issuance and sale of the Primary Shares,
(iii) the Primary Shares have been duly executed and delivered on behalf of the
Company countersigned by the Company's transfer agent/registrar and (iv) the
Primary Shares are issued in accordance with the terms of the Underwriting
Agreement upon receipt of the consideration to be paid therefor, the Primary
Shares will be validly issued, fully paid and nonassessable.

(3) Upon the effectiveness under the DGCL of the merger
between the Company and 1-800 CONTACTS, INC., a Utah corporation, and the
adoption of the Restated Certificate in
<PAGE> 3
[KIRKLAND & ELLIS LOGO]

1-800 CONTACTS, INC.
January 15, 1998
Page 3

connection therewith, the Secondary Shares will be duly authorized, validly
issued, fully paid and nonassessable.

We hereby consent to the filing of this opinion with the
Commission as Exhibit 5.1 to the Registration Statement. We also consent to the
reference to our firm under the heading "Legal Matters" in the Registration
Statement. In giving this consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Commission. This opinion and consent may be
incorporated by reference in a subsequent registration statement on Form S-1
filed pursuant to Rule 462(b) under the Act with respect to the registration of
additional securities for sale in the offering contemplated by the Registration
Statement.

We do not find it necessary for the purposes of this opinion,
and accordingly we do not purport to cover herein, the application of the
securities or "Blue Sky" laws of the various states to the issuance and sale of
the Shares.

This opinion is limited to the specific issues addressed
herein, and no opinion may be inferred or implied beyond that expressly stated
herein. We assume no obligation to revise or supplement this opinion should the
present laws of the State of New York, the DGCL or the federal law of the United
States be changed by legislative action, judicial decision or otherwise.

This opinion is furnished to you pursuant to the applicable
rules and regulations promulgated under the Act in connection with the filing of
the Registration Statement.

Very truly yours,

/s/ Kirkland & Ellis

KIRKLAND & ELLIS

<PAGE> 1
EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of February
___, 1998, between 1-800 CONTACTS, INC., a Delaware corporation (the
"Company"), and Jonathan C. Coon (the "Executive"). This Agreement shall be
deemed to be effective as of the date hereof (the "Effective Date").

In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

1. Employment. The Company shall employ Executive, and Executive
hereby accepts employment with the Company, upon the terms and conditions set
forth in this Agreement, for the period beginning on the Effective Date and
ending as provided in paragraph 4 hereof (the "Employment Period").

2. Position and Duties.

(a) During the Employment Period, Executive shall serve as the
President of the Company and shall have the normal duties, responsibilities and
authority of such office.

(b) Executive shall report to the Company's board of directors (the
"Board"), and Executive shall devote his best efforts and his full business
time and attention (except for permitted vacation periods and reasonable
periods of illness or other incapacity) to the business and affairs of the
Company and its Subsidiaries. Executive shall perform his duties and
responsibilities to the best of his abilities in a diligent, trustworthy,
businesslike and efficient manner.

(c) For purposes of this Agreement, "Subsidiaries" shall mean any
corporation of which the securities having a majority of the voting power in
electing directors are, at the time of determination, owned by the Company,
directly or through one of more Subsidiaries.

3. Base Salary and Benefits.

(a) During the first year of the Employment Period, Executive's base
salary shall be $120,000 per annum (the "Base Salary"), which salary shall be
payable in regular installments in accordance with the Company's general
payroll practices and shall be subject to customary withholding. Thereafter,
the Base Salary shall be such higher rate as the Board may designate from time
to time. As used in this Agreement, the term "Base Salary" shall be deemed to
include any such increases as may be designated from time to time by the Board.
During the Employment Period, Executive shall be entitled to participate in all
of the Company's employee benefit programs for which senior executive employees
of the Company and its Subsidiaries are generally eligible (including the
Company's stock option program).

<PAGE> 2

(b) In addition to the Base Salary, the Board will award an annual
bonus of up to 50% of the Executive's Base Salary to Executive following the
end of each fiscal year during the Employment Period upon the Company achieving
certain operating targets as determined by the Board at the beginning of each
fiscal year during the Employment Period. In addition to the Base Salary and
any bonuses payable to Executive pursuant to this paragraph, Executive shall be
entitled to the following benefits during the Employment Period:

(i) reimbursement for the cost of an annual physical examination
by a physician of Executive's choice;

(ii) a maximum of four weeks vacation each year with salary,
subject to additional weeks upon Board approval;

(iii) reimbursement for travel, entertainment and other business
expenses reasonably incurred by Executive (including costs associated
with the use of a mobile telephone); and

(iv) reimbursement for the reasonable expenses of preparation of
Executive's annual tax returns.

4. Termination. (a) The Employment Period shall continue until earlier
of (i) the third anniversary of the Effective Date (the "Expiration Date") or
(ii) Executive's resignation, death or disability or other incapacity (as
determined by the Board in its good faith judgment) or until the Board
determines in its good faith judgment that termination of Executive's
employment is in the best interests of the Company. Notwithstanding the
foregoing, the Employment Period shall be automatically extended for an
additional year unless either the Company or the Executive delivers written
notice to the other within 60 days of the Expiration Date of its or his
intention not to extend the Employment Period. In the event of Executive's
resignation (other than due to a breach by the Company of paragraph 2(a)) or
termination for Cause (as defined herein), Executive shall not be entitled to
receive his Base Salary or any fringe benefits or bonuses for periods after the
termination of the Employment Period. Upon any other termination of the
Employment Period, Executive shall be entitled to receive (i) his Base Salary
and the health and disability benefits described in paragraph 3(a) for a period
of 12 months thereafter, and (ii) following the end of the fiscal year in which
Executive's employment is terminated and the determination of the amount of
bonus which Executive would have been entitled if he remained employed by the
Company or its Subsidiaries for the entire fiscal year (the "Bonus Amount"),
(A) 50% of the Bonus Amount if such termination occurs in the first six months
of such fiscal year, or (B) 100% of the Bonus Amount if such termination occurs
in the second six months of such fiscal year.

(b) For purposes of this Agreement, "Cause" shall mean (i) the willful
and continued failure by Executive to perform his duties of the position set
forth herein or his continued failure to

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<PAGE> 3

perform duties reasonably requested or reasonably prescribed by the Board
(other than as a result of Executive's death or disability), (ii) the engaging
by Executive in conduct which is materially monetarily injurious to the Company
or any of its Subsidiaries, (iii) gross negligence or willful misconduct by
Executive in the performance of his duties which results in, or causes,
material monetary harm to the Company or any of its Subsidiaries, or (iv)
Executive's commission of a felony or other civil or criminal offense involving
moral turpitude. In the case of (i), (ii) and (iii) above, finding of Cause
for termination shall be made only after reasonable notice to Executive and an
opportunity for Executive, together with counsel, to be heard before the Board.
A determination of Cause by the Board shall be effective only if agreed upon by
a majority of the directors, which shall include at least one director who is
not an employee of the Company or its Subsidiaries.

5. Confidential Information. Executive acknowledges that the
information, observations and data obtained by him while employed by the
Company and its Subsidiaries concerning the business or affairs of the Company
or any other Subsidiary ("Confidential Information") are the property of the
Company or such Subsidiary. Therefore, Executive agrees that he shall not
disclose to any unauthorized person or use for his own purposes any
Confidential Information without the prior written consent of the Board, unless
and to the extent that the aforementioned matters become generally known to and
available for use by the public other than as a result of Executive's acts or
omissions. Executive shall deliver to the Company at the termination of the
Employment Period, or at any other time the Company may request, all memoranda,
notes, plans, records, reports, computer tapes, printouts and software and
other documents and data (and copies thereof) relating to the Confidential
Information, Work Product (as defined below) or the business of the Company or
any Subsidiary which he may then possess or have under his control.

6. Inventions and Patents. Executive acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable)
which relate to the Company's or any of its Subsidiaries' actual or anticipated
business, research and development or existing or future products or services
and which are conceived, developed or made by Executive while employed by the
Company and its Subsidiaries ("Work Product") belong to the Company or such
Subsidiary. Executive shall promptly disclose such Work Product to the Board
and perform all actions reasonably requested by the Board (whether during or
after the Employment Period) to establish and confirm such ownership
(including, without limitation, assignments, consents, powers of attorney and
other instruments).

7. Non-Compete, Non-Solicitation.

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<PAGE> 4

participate in, consult with, render services for, or in any manner engage in
any business competing with the businesses of the Company or its Subsidiaries,
as such businesses exist or are in process on the date of the termination of
Executive's employment, within any geographical area in which the Company or
its Subsidiaries engage or plan to engage in such businesses. Nothing herein
shall prohibit Executive from being a passive owner of not more than 2% of the
outstanding stock of any class of a corporation which is publicly traded, so
long as Executive has no active participation in the business of such
corporation.

(b) During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) hire any person who was an employee of
the Company or any Subsidiary at any time during the three-month period prior
to the expiration of the Employment Period or (ii) induce or attempt to induce
any customer, supplier, licensee, licensor, franchisee or other business
relation of the Company or any Subsidiary to cease doing business with the
Company or such Subsidiary, or in any way interfere with the relationship
between any such customer, supplier, licensee or business relation and the
Company or any Subsidiary (including, without limitation, making any negative
statements or communications about the Company or its Subsidiaries) which
interference causes material monetary damage to the Company or its
Subsidiaries.

8. Enforcement. If, at the time of enforcement of paragraph 5, 6, 7 or
8 of this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area.
Because Executive's services are unique and because Executive has access to
Confidential Information and Work Product, the parties hereto agree that money
damages would not be an adequate remedy for any breach of this Agreement.
Therefore, in the event a breach or threatened breach of this Agreement, the
Company or its successors or assigns may, in addition to other rights and
remedies existing in their favor, apply to any court of competent jurisdiction
for specific performance and/or injunctive or other relief in order to enforce,
or prevent any violations of, the provisions hereof (without posting a bond or
other security). In addition, in the event of an alleged breach or violation
by Executive of paragraph 7, the Noncompete Period shall be tolled until such
breach or violation has been duly cured. Executive agrees that the
restrictions contained in paragraph 7 are reasonable.

9. Other Businesses. As long as Executive is employed by the Company
or any of its Subsidiaries, Executive agrees that he will not, except with the
express written consent of the Board, become engaged in, or render services
for, any business other than the business of the Company, any of its
Subsidiaries or any corporation or partnership in which the Company or any of
its Subsidiaries have an equity interest; provided, that Executive may devote a
de minimis portion of his time to engaging in, or rendering services for, any
such business if such activities do not in any material way interfere with the
performance by Executive of his obligations hereunder and such activities do
not in any way materially and adversely affect the Company. Executive shall
notify the Company prior to engaging in any such activities. Nothing contained
in this paragraph 9 shall limit the provisions of paragraph 7 above.

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<PAGE> 5

10. Executive's Representations. Executive hereby represents and
warrants to the Company that (i) the execution, delivery and performance of
this Agreement by Executive do not and shall not conflict with, breach, violate
or cause a default under any contract, agreement, instrument, order, judgment
or decree to which Executive is a party or by which he is bound, (ii) Executive
is not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall
be the valid and binding obligation of Executive, enforceable in accordance
with its terms. Executive hereby acknowledges and represents that he fully
understands the terms and conditions contained herein.

11. Survival. Paragraphs 5, 6, and 7 and paragraphs 11 through 19
shall survive and continue in full force in accordance with their terms
notwithstanding any termination of the Employment Period.

12. Notices. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or mailed by first class
mail, return receipt requested, to the recipient at the address below
indicated:

Notices to Executive:

Jonathan C. Coon
14185 South Orgil Band Road
Draper, Utah 84020

Notices to the Company:

1-800 CONTACTS, INC.
13751 Wadsworth Park Drive, Suite D-140
Draper, Utah 84020
Attn: Board of Directors

with a copy to:

Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attn: Dennis M. Myers

or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so
delivered or mailed.

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<PAGE> 6

13. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

14. Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof
in any way.

15. No Strict Construction. The language used in this Agreement shall
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
party.

16. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

17. Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive, the Company and their
respective heirs, successors and assigns, except that Executive may not assign
his rights or delegate his obligations hereunder without the prior written
consent of the Company.

18. CHOICE OF LAW. ALL ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT AND
THE EXHIBITS AND SCHEDULES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO
ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE
OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.

19. Amendment and Waiver. The provisions of this Agreement may be
amended or waived only with the prior written consent of the Company and
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.

* * * * *

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<PAGE> 7

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

1-800 CONTACTS, INC.

By:___________________________
Name: John Nichols
Its: Vice President, Operations

______________________________
Jonathan C. Coon

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<PAGE> 1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of February
___, 1998, between 1-800 CONTACTS, INC., a Delaware corporation (the
"Company"), and John F. Nichols (the "Executive"). This Agreement shall be
deemed to be effective as of the date hereof (the "Effective Date").

In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

2. Position and Duties.

(a) During the Employment Period, Executive shall serve as Vice
President, Operations of the Company and shall have the normal duties,
responsibilities and authority of such office.

3. Base Salary and Benefits.

<PAGE> 2

(i) reimbursement for the cost of an annual physical examination
by a physician of Executive's choice;

(ii) a maximum of four weeks vacation each year with salary,
subject to additional weeks upon Board approval;

(iii) reimbursement for travel, entertainment and other business
expenses reasonably incurred by Executive (including costs associated
with the use of a mobile telephone); and

(iv) reimbursement for the reasonable expenses of preparation of
Executive's annual tax returns.

(b) For purposes of this Agreement, "Cause" shall mean (i) the willful
and continued failure by Executive to perform his duties of the position set
forth herein or his continued failure to

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<PAGE> 3

perform duties reasonably requested or reasonably prescribed by the Board
(other than as a result of Executive's death or disability), (ii) the engaging
by Executive in conduct which is materially monetarily injurious to the Company
or any of its Subsidiaries, (iii) gross negligence or willful misconduct by
Executive in the performance of his duties which results in, or causes,
material monetary harm to the Company or any of its Subsidiaries, or (iv)
Executive's commission of a felony or other civil or criminal offense involving
moral turpitude. In the case of (i), (ii) and (iii) above, finding of Cause for
termination shall be made only after reasonable notice to Executive and an
opportunity for Executive, together with counsel, to be heard before the Board.
A determination of Cause by the Board shall be effective only if agreed upon by
a majority of the directors, which shall include at least one director who is
not an employee of the Company or its Subsidiaries.

7. Non-Compete, Non-Solicitation.

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<PAGE> 4

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<PAGE> 5

11. Survival. Paragraphs 5, 6, and 7 and paragraphs 11 through 19
shall survive and continue in full force in accordance with their terms
notwithstanding any termination of the Employment Period.

Notices to Executive:

John F. Nichols
929 East Rocky Mouth Lane
Draper, Utah 84020

Notices to the Company:

1-800 CONTACTS, INC.
13751 Wadsworth Park Drive, Suite D-140
Draper, Utah 84020
Attn: Board of Directors

with a copy to:

Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attn: Dennis M. Myers

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<PAGE> 6

16. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

* * * * *

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<PAGE> 7

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

1-800 CONTACTS, INC.

By:___________________________
Name: Jonathan Coon
Its: President

______________________________
John F. Nichols

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<PAGE> 1
EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of February
___, 1998, between 1-800 CONTACTS, INC., a Delaware corporation (the
"Company"), and Scott S. Tanner (the "Executive"). This Agreement shall be
deemed to be effective as of the date hereof (the "Effective Date").

In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

2. Position and Duties.

(a) During the Employment Period, Executive shall serve as the Chief
Financial Officer of the Company and shall have the normal duties,
responsibilities and authority of such office.

3. Base Salary and Benefits.

(a) During the first year of the Employment Period, Executive's base
salary shall be $110,000 per annum (the "Base Salary"), which salary shall be
payable in regular installments in accordance with the Company's general
payroll practices and shall be subject to customary withholding. Thereafter,
the Base Salary shall be such higher rate as the Board may designate from time
to time. As used in this Agreement, the term "Base Salary" shall be deemed to
include any such increases as may be designated from time to time by the Board.
During the Employment Period, Executive shall be entitled to participate in all
of the Company's employee benefit programs for which senior executive employees
of the Company and its Subsidiaries are generally eligible (including the
Company's stock option program).

<PAGE> 2

(i) reimbursement for the cost of an annual physical examination
by a physician of Executive's choice;

(ii) a maximum of three weeks vacation each year with salary,
subject to additional weeks upon Board approval;

(iii) reimbursement for travel, entertainment and other business
expenses reasonably incurred by Executive (including costs associated
with the use of a mobile telephone);

(iv) a $500.00 per month automobile allowance; and

(v) reimbursement for the reasonable expenses of preparation of
Executive's annual tax returns.

(b) For purposes of this Agreement, "Cause" shall mean (i) the willful
and continued failure by Executive to perform his duties of the position set
forth herein or his continued failure to

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<PAGE> 3

perform duties reasonably requested or reasonably prescribed by the Board
(other than as a result of Executive's death or disability), (ii) the engaging
by Executive in conduct which is materially monetarily injurious to the Company
or any of its Subsidiaries, (iii) gross negligence or willful misconduct by
Executive in the performance of his duties which results in, or causes,
material monetary harm to the Company or any of its Subsidiaries, or (iv)
Executive's commission of a felony or other civil or criminal offense involving
moral turpitude. In the case of (i), (ii) and (iii) above, finding of Cause for
termination shall be made only after reasonable notice to Executive and an
opportunity for Executive, together with counsel, to be heard before the Board.
A determination of Cause by the Board shall be effective only if agreed upon by
a majority of the directors, which shall include at least one director who is
not an employee of the Company or its Subsidiaries.

7. Non-Compete, Non-Solicitation.

- 3 -
<PAGE> 4

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<PAGE> 5

11. Survival. Paragraphs 5, 6, and 7 and paragraphs 11 through 19
shall survive and continue in full force in accordance with their terms
notwithstanding any termination of the Employment Period.

Notices to Executive:

Scott S. Tanner
717 S. Old Lake Lane
Fruit Heights, Utah 84037

Notices to the Company:

1-800 CONTACTS, INC.
13751 Wadsworth Park Drive, Suite D-140
Draper, Utah 84020
Attn: Board of Directors

with a copy to:

Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attn: Dennis M. Myers

- 5 -
<PAGE> 6

16. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

* * * * *

- 6 -
<PAGE> 7

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

1-800 CONTACTS, INC.

By:___________________________
Name: Jonathan Coon
Its: President

______________________________
Scott S. Tanner

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<PAGE> 1
EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of February
___, 1998, between 1-800 CONTACTS, INC., a Delaware corporation (the
"Company"), and Robert G. Hunter (the "Executive"). This Agreement shall be
deemed to be effective as of the date hereof (the "Effective Date").

In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

2. Position and Duties.

(a) During the Employment Period, Executive shall serve as the
Corporate Controller of the Company and shall have the normal duties,
responsibilities and authority of such position.

(b) Executive shall report to the Company's senior executive officers
and such other persons as the board of directors (the "Board") may direct from
time to time, and Executive shall devote his best efforts and his full business
time and attention (except for permitted vacation periods and reasonable
periods of illness or other incapacity) to the business and affairs of the
Company and its Subsidiaries. Executive shall perform his duties and
responsibilities to the best of his abilities in a diligent, trustworthy,
businesslike and efficient manner.

3. Base Salary and Benefits.

(a) During the first year of the Employment Period, Executive's base
salary shall be $60,000 per annum (the "Base Salary"), which salary shall be
payable in regular installments in accordance with the Company's general
payroll practices and shall be subject to customary withholding. Thereafter,
the Base Salary shall be such higher rate as the Board may designate from time
to time. As used in this Agreement, the term "Base Salary" shall be deemed to
include any such increases as may be designated from time to time by the Board.
During the Employment Period, Executive shall be entitled to participate in all
of the Company's employee benefit programs for which management employees of
the Company and its Subsidiaries are generally eligible (including the
Company's stock option program).

<PAGE> 2

(b) In addition to the Base Salary, the Board will award an annual
bonus of up to 25% of the Executive's Base Salary to Executive following the
end of each fiscal year during the Employment Period upon the Company achieving
certain operating targets as determined by the Board at the beginning of each
fiscal year during the Employment Period. In addition to the Base Salary and
any bonuses payable to Executive pursuant to this paragraph, Executive shall be
entitled to the following benefits during the Employment Period:

(i) reimbursement for the cost of an annual physical examination
by a physician of Executive's choice;

(ii) a maximum of two weeks vacation each year with salary,
subject to additional weeks upon Board approval; and

(iii) reimbursement for travel, entertainment and other business
expenses reasonably incurred by Executive (including costs associated
with the use of a mobile telephone).

(b) For purposes of this Agreement, "Cause" shall mean (i) the willful
and continued failure by Executive to perform his duties of the position set
forth herein or his continued failure to perform duties reasonably requested or
reasonably prescribed by the Board (other than as a result of Executive's death
or disability), (ii) the engaging by Executive in conduct which is materially
monetarily injurious to the Company or any of its Subsidiaries, (iii) gross
negligence or willful misconduct by Executive in the performance of his duties
which results in, or causes, material monetary harm to the Company or any of
its Subsidiaries, or (iv) Executive's commission of a felony

- 2 -
<PAGE> 3

or other civil or criminal offense involving moral turpitude. In the case of
(i), (ii) and (iii) above, finding of Cause for termination shall be made only
after reasonable notice to Executive and an opportunity for Executive, together
with counsel, to be heard before the Board. A determination of Cause by the
Board shall be effective only if agreed upon by a majority of the directors,
which shall include at least one director who is not an employee of the Company
or its Subsidiaries.

7. Non-Compete, Non-Solicitation.

(a) In further consideration of the compensation to be paid to
Executive hereunder, Executive acknowledges that in the course of his
employment with the Company he shall become familiar with the Company's trade
secrets and with other Confidential Information concerning the Company and its
Subsidiaries and that his services shall be of special, unique and
extraordinary value to the Company and its Subsidiaries. Therefore, Executive
agrees that, during the Employment Period and for two years thereafter (the
"Noncompete Period"), he shall not, without the express written consent of the
Company, directly or indirectly own any interest in, manage, control,
participate in, consult with, render services for, or in any manner engage in
any business competing with the businesses of the Company or its Subsidiaries,
as such businesses exist or are in process on the date of the termination of
Executive's employment, within any geographical area in which the Company or
its Subsidiaries engage or plan to engage in such businesses. Nothing herein
shall prohibit Executive from being a passive owner of not more than 2% of the
outstanding stock of any

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<PAGE> 4

class of a corporation which is publicly traded, so long as Executive has no
active participation in the business of such corporation.

(b) During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) hire any person who was an employee
of the Company or any Subsidiary at any time during the three-month period
prior to the expiration of the Employment Period or (ii) induce or attempt to
induce any customer, supplier, licensee, licensor, franchisee or other business
relation of the Company or any Subsidiary to cease doing business with the
Company or such Subsidiary, or in any way interfere with the relationship
between any such customer, supplier, licensee or business relation and the
Company or any Subsidiary (including, without limitation, making any negative
statements or communications about the Company or its Subsidiaries) which
interference causes material monetary damage to the Company or its
Subsidiaries.

- 4 -
<PAGE> 5

confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall
be the valid and binding obligation of Executive, enforceable in accordance
with its terms. Executive hereby acknowledges and represents that he fully
understands the terms and conditions contained herein.

11. Survival. Paragraphs 5, 6, and 7 and paragraphs 11 through 19
shall survive and continue in full force in accordance with their terms
notwithstanding any termination of the Employment Period.

Notices to Executive:

Robert G. Hunter
1049 S. 1040 East
Springville, Utah 84663

Notices to the Company:

1-800 CONTACTS, INC.
13751 Wadsworth Park Drive, Suite D-140
Draper, Utah 84020
Attn: Board of Directors

with a copy to:

Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attn: Dennis M. Myers

- 5 -
<PAGE> 6

in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.

16. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

* * * * *

- 6 -

<PAGE> 7

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

1-800 CONTACTS, INC.

By:___________________________
Name: Jonathan Coon
Its: President

______________________________
Robert G. Hunter

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<PAGE> 1

1-800 CONTACTS, INC.

1998 INCENTIVE STOCK OPTION PLAN

ARTICLE 1

IDENTIFICATION OF THE PLAN

1.1 Title. The plan described herein shall be known as the 1-800
CONTACTS, INC. 1998 Incentive Stock Option Plan (the "Plan").

1.2 Purpose. The purpose of this Plan is (i) to compensate certain
directors, officers and employees of 1-800 CONTACTS, INC., a Delaware
corporation (the "Company") and its Subsidiaries for services rendered by such
persons after the date of adoption of this Plan to the Company or any
Subsidiary; (ii) to provide certain directors, officers and employees of the
Company and its Subsidiaries with significant additional incentive to promote
the financial success of the Company; and (iii) to provide an incentive which
may be used to induce able persons to serve or remain on the Board of Directors
of the Company or to enter into or remain in the employment of the Company or
any Subsidiary.

1.3 Effective Date. The Plan shall become effective upon its approval
by the Board of Directors and the stockholders of the Company (the "Effective
Date").

1.4 Defined Terms. Certain capitalized terms used herein have the
meanings as set forth in Section 10.1 of the Plan.

ARTICLE 2

ADMINISTRATION OF THE PLAN

2.1 Initial Administration. This Plan shall initially be
administered by the Board of Directors. The Board of Directors shall delegate
the administration of the Plan to a Compensation Committee (the "Committee") in
the event that such a committee is established by the Board of Directors and is
comprised of persons appointed by the Board of Directors of the Company in
accordance with the provisions of Section 2.3. The Board shall exercise full
power and authority regarding the administration of the Plan until such
administration is delegated to the Committee. Unless the context otherwise
requires, references herein to the Committee

<PAGE> 2

shall be deemed to refer to the Board of Directors until the administration of
the Plan has been delegated to the Committee.

2.2 Committee's Powers. The Committee shall have full power and
authority to prescribe, amend and rescind rules and procedures governing
administration of this Plan. The Committee shall have full power and authority
(i) to interpret the terms of this Plan, the terms of the Options and the rules
and procedures established by the Committee and (ii) to determine the meaning
of or requirements imposed by or rights of any person under this Plan, any
Option or any rule or procedure established by the Committee. Each action of
the Committee which is within the scope of the authority delegated to the
Committee by this Plan or by the Board shall be binding on all persons.

2.3 Committee Membership. The Committee shall be composed of two or
more members of the Board, each of whom is an "outside director" as defined in
Section 162(m) of the Code and a "Non-Employee Director," as defined in
Securities and Exchange Commission Rule 16b-3, as amended ("Rule 16b-3"), or
any successor rules or government pronouncements. The Board shall have the
power to determine the number of members which the Committee shall have and to
change the number of membership positions on the Committee from time to time.
The Board shall appoint all members of the Committee. The Board may from time
to time appoint members to the Committee in substitution for, or in addition
to, members previously appointed and may fill vacancies, however caused, on the
Committee. Any member of the Committee may be removed from the Committee by
the Board at any time with or without cause.

2.4 Committee Procedures. The Committee shall hold its meetings at
such times and places as it may determine. The Committee may make such rules
and regulations for the conduct of its business as it shall deem advisable.
Unless the Board or the Committee expressly decides to the contrary, a majority
of the members of the Committee shall constitute a quorum and any action taken
by a majority of the Committee members in attendance at a meeting at which a
quorum of Committee members are present shall be deemed an act of the
Committee.

2.5 Indemnification. No member of the Committee shall be liable, in
the absence of bad faith, for any act or omission with respect to his or her
service on the Committee under this Plan. Service on the Committee shall
constitute service as a director of the Company so that the members of the
Committee shall be entitled to indemnification and reimbursement as directors
of the Company for any action or any failure to act in connection with service
on the Committee to the full extent provided for at any time in the Company's
Certificate of Incorporation and By-Laws, or in any insurance policy or other
agreement intended for the benefit of the Company's directors.

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<PAGE> 3

ARTICLE 3

PERSONS ELIGIBLE TO RECEIVE OPTIONS

A person shall be eligible to be granted an Option only if on the
proposed Granting Date for such Option such person is a full-time, salaried
employee of the Company or any Subsidiary, is currently serving as a member of
the Board of Directors of the Company, or has rendered or is expected to render
advisory or consulting services to the Company or any Subsidiary within a
twelve-month period of the Granting Date. A person eligible to be granted an
Option is herein called a "Grantee."

ARTICLE 4

GRANT OF OPTIONS

4.1 Power to Grant Options. The Committee shall have the right and
the power to grant at any time to any Grantee an option entitling such person
to purchase Common Stock (the "Common Stock") from the Company in such
quantity, at such price, on such terms and subject to such conditions
consistent with the provisions of this Plan as may be established by the
Committee on or prior to the Granting Date for such option. Each option to
purchase Common Stock which shall be granted by the Committee pursuant to the
provisions of this Plan is herein called an "Option."

4.2 Granting Date. An Option shall be deemed to have been granted
under this Plan on the date (the "Granting Date") which the Committee
designates as the Granting Date at the time it approves such Option, provided
that the Committee may not designate a Granting Date with respect to any Option
which is earlier than the date on which the granting of such Option is approved
by the Committee.

4.3 Option Terms Which The Committee May Determine. The Committee
shall have the power to determine the Grantee to whom Options are granted, the
number of Shares subject to each Option, the number of Options granted to each
Grantee and the time at which each Option is granted. Except as otherwise
expressly provided in this Plan, the Committee shall also have the power to
determine, at the time of the grant of each Option, all terms and conditions
governing the rights and obligations of the holder with respect to such Option.
With respect to any Option, the Committee shall have the power to determine:
(a) the purchase price per Share or the method by which the purchase price per
Share will be determined; (b) the length of the period during which the Option
may be

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<PAGE> 4

exercised and any limitations on the number of Shares purchasable with the
Option at any given time during such period; (c) the times at which the Option
may be exercised; (d) any conditions precedent to be satisfied before the
Option may be exercised, such as vesting period; (e) any restrictions on resale
of any Shares purchased upon exercise of the Option; (f) the extent to which
the Option may be transferable; and (g) whether the Option will constitute an
Incentive Stock Option.

4.4 Option Agreement. No person shall have any rights under any
Option unless and until the Company and the person to whom such Option is
granted have executed and delivered an agreement expressly granting the Option
to such person and containing provisions setting forth the terms of the Option
(an "Option Agreement"). Unless otherwise provided by the Committee, the form
of Stock Option Agreement attached to this Plan as Exhibit A shall be used by
the Committee in granting nonqualified Options under the Plan.

4.5 Limitation on Shares Issuable to any Grantee. The aggregate
number of Shares that may relate to Options granted to a Grantee during any
calendar year (including those already exercised by the Grantee) shall not
exceed 50,000 shares, as adjusted pursuant to Article 8 of this Plan.

ARTICLE 5

OPTION TERMS

5.1 Plan Provisions Control Terms. The terms of this Plan shall
govern all Options. In the event any provision of any Option Agreement
conflicts with any term in this Plan as constituted on the Granting Date of
such Option, the term in this Plan as constituted on the Granting Date of the
Option shall control. Except as provided in Article 8, the terms of any Option
may not be changed after the Granting Date of such Option without the express
approval of the Company and the Option Holder.

5.2 Term Limitation. No Incentive Stock Option may be granted under
this Plan which is exercisable more than ten years after its Granting Date.
This Section 5.2 shall not be deemed to limit the term which the Committee may
specify for any Options (including Options) granted under the Plan which are
not intended to be Incentive Stock Options.

5.3 Transfer of Options. An Option granted pursuant to this Plan may
be transferable as provided in the Option Agreement. It shall be a condition
precedent to any transfer of any Option that the transferee executes and
delivers an agreement acknowledging such Option has been acquired for
investment and not

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<PAGE> 5

for distribution and is and shall remain subject to this Plan and the Option
Agreement. The "Holder" of any Option shall mean (i) the initial grantee of
such Option or (ii) any permitted transferee.

5.4 $100,000 Per Year Limit on Incentive Stock Options. No Grantee
may be granted Incentive Stock Options if the value of the Shares subject to
those options which first become exercisable in any given calendar year (and
the value of the Shares subject to any other Incentive Stock Options issued to
the Grantee under the Plan or any other plan of the Company or its Subsidiaries
which first become exercisable in such year) exceeds $100,000. For this
purpose, the value of Shares shall be determined on the Granting Date. Any
Incentive Stock Options issued in excess of the $100,000 limit shall be treated
as Options that are not Incentive Stock Options. Incentive Stock Options shall
be taken into account in the order in which they were granted.

5.5 No Right to Employment Conferred. Nothing in this Plan or (in
the absence of an express provision to the contrary) in any Option Agreement
(i) confers any right or obligation on any person to continue in the employ of
the Company or any Subsidiary or (ii) affects or shall affect in any way any
person's right or the right of the Company or any Subsidiary to terminate such
person's employment with the Company or any Subsidiary at any time, for any
reason, with or without cause.

ARTICLE 6

REGULATORY COMPLIANCE

6.1 Taxes. The Company or any Subsidiary shall be entitled, if the
Committee deems it necessary or desirable, to withhold from an Option Holder's
salary or other compensation (or to secure payment from the Option Holder in
lieu of withholding) all or any portion of any withholding or other tax due
from the Company or any Subsidiary with respect to any Shares deliverable under
such Holder's Option or the Committee may (but need not) permit payment of such
withholding by the Company's retention of Shares which would otherwise be
transferred to the Option Holder upon exercise of the Option. In the event any
Common Stock is retained by the Company to satisfy all or any part of the
withholding, the part of the withholding deemed to have been satisfied by such
Common Stock shall be equal to the product derived by multiplying the Per Share
Market Value as of the date of exercise by the number of Shares retained by the
Company. The number of Shares retained by the Company in satisfaction of
withholding shall not be a number which when multiplied by the Per Share Market
Value as of the date of exercise would result in a product greater than the
withholding amount. No fractional Shares

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<PAGE> 6

shall be retained by the Company in satisfaction of withholding.
Notwithstanding Article 7, unless the Board shall otherwise determine, for each
Share retained by the Company in satisfaction of all or any part of the
withholding amount, the aggregate number of Shares subject to this Plan shall
be increased by one Share. The Company may defer delivery under a Holder's
Option until indemnified to its satisfaction with respect to such withholding
or other taxes.

6.2 Securities Law Compliance. Each Option shall be subject to the
condition that such Option may not be exercised if and to the extent the
Committee determines that the sale of securities upon exercise of the Option
may violate the Securities Act or any other law or requirement of any
governmental authority. The Company shall not be deemed by any reason of the
granting of any Option to have any obligation to register the Shares subject to
such Option under the Securities Act or to maintain in effect any registration
of such Shares which may be made at any time under the Securities Act. An
Option shall not be exercisable if the Committee or the Board determines there
is non-public information material to the decision of the Holder to exercise
such Option which the Company cannot for any reason communicate to such Holder.

ARTICLE 7

SHARES SUBJECT TO THE PLAN

Except as provided in Section 6.1 and Article 8, an aggregate of
310,000 Shares of Common Stock shall be subject to this Plan. Except as
provided in Section 6.1 and Article 8, the Options shall be limited so that the
sum of the following shall not as of any given time exceed 310,000 Shares: (i)
all Shares subject to Options outstanding under this Plan at the given time and
(ii) all Shares which shall have been issued by the Company by reason of the
exercise at or prior to the given time of any of the Options. The Common Stock
issued under the Plan may be either authorized and unissued shares, shares
reacquired and held in the treasury of the Company, or both, all as from time
to time determined by the Board. In the event any Option shall expire or be
terminated before it is fully exercised, then all Shares formerly subject to
such Option as to which such Option was not exercised shall be available for
any Option subsequently granted in accordance with the provisions of this Plan.
No fractional Shares will be eligible to be issued under the Plan.

In the event of a change in the Shares as presently constituted, which
is limited to a change of all of its authorized shares with par value into the
same number of shares with a different par value or without par value, the
shares resulting from

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<PAGE> 7

any such change shall be deemed to be the Shares within the meaning of the
Plan.

ARTICLE 8

ADJUSTMENTS TO REFLECT ORGANIC CHANGES

The Board shall appropriately and proportionately adjust the number and
kind of Shares subject to outstanding Options, the price for which Shares may
be purchased upon the exercise of outstanding Options, and the number and kind
of Shares available for Options subsequently granted under this Plan to reflect
any stock dividend, stock split, combination or exchange of shares, merger,
consolidation or other change in the capitalization of the Company which the
Board determines to be similar, in its substantive effect upon this Plan or the
Options, to any of the changes expressly indicated in this sentence. The Board
may (but shall not be required to) make any appropriate adjustment to the
number and kind of Shares subject to outstanding Options, the price for which
Shares may be purchased upon the exercise of outstanding Options, and the
number and kind of Shares available for Options subsequently granted under this
Plan to reflect any spin-off, spin-out or other distribution of assets to
stockholders or any acquisition of the Company's stock or assets or other
change which the Board determines to be similar, in its substantive effect upon
this Plan or the Options, to any of the changes expressly indicated in this
sentence. The Committee shall have the power to determine the amount of the
adjustment to be made in each case described in the preceding two sentences,
but no adjustment approved by the Committee shall be effective until and unless
it is approved by the Board. In the event of any reorganization,
reclassification, consolidation, merger or sale of all or substantially all of
the Company's assets which is effected in such a way that holders of Common
Stock are entitled to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange for Common Stock,
the Board may (but shall not be required to) substitute the per share amount of
such stock, securities or assets for Shares upon any subsequent exercise of any
Option.

ARTICLE 9

AMENDMENT AND TERMINATION OF THE PLAN

9.1 Amendment. Except as provided in the following two sentences,
the Board shall have complete power and authority to amend this Plan at any
time and no approval by the Company's stockholders or by any other person,
committee or other entity of any kind shall be required to make any amendment
approved by the

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<PAGE> 8

Board effective. So long as the Common Stock is eligible for trading on the
Nasdaq National Market, the Board shall obtain stockholder approval for those
amendments of the Plan required to be so approved pursuant to the By-laws of
the National Association of Securities Dealers. The Board shall not, without
the affirmative approval of the Company's stockholders, amend the Plan in any
manner which would cause any outstanding Incentive Stock Options to no longer
qualify as Incentive Stock Options. No termination or amendment of this Plan
may, without the consent of the Holder of any Option prior to termination or
the adoption of such amendment, materially and adversely affect the rights of
such Holder under such Option.

9.2 Termination. The Board shall have the right and the power to
terminate this Plan at any time, provided that no Incentive Stock Options may
be granted after the tenth anniversary of the adoption of this Plan. No Option
shall be granted under this Plan after the termination of this Plan, but the
termination of this Plan shall not have any other effect. Any Option
outstanding at the time of the termination of this Plan may be exercised after
termination of this Plan at any time prior to the Expiration Date of such
Option to the same extent such Option would have been exercisable had this Plan
not terminated.

ARTICLE 10

DEFINITIONS AND OTHER PROVISIONS OF THE PLAN

10.1 Definitions. Each term defined in this Section 10.1 has the
meaning indicated in this Section 10.1 whenever such term is used in this Plan:

"Board of Directors" and "Board" both mean the Board of Directors of
the Company as constituted at the time the term is applied.

"Code" means the Internal Revenue Code of 1986, as amended.

"Committee" has the meaning such term is given in Section 2.1 of this
Plan.

"Common Stock" means the issued or issuable Common Stock, par value
$.01 per share, of the Company.

"Company" as applied as of any given time shall mean 1-800 CONTACTS,
INC., a Delaware corporation, except that if prior to the given time any
corporation or other entity has acquired all or a substantial part of the
assets of the Company (as herein defined) and has agreed to assume the
obligations of the Company

-8-

<PAGE> 9

under this Plan, or is the survivor in a merger or consolidation to which the
Company was a party, such corporation or other entity shall be deemed to be the
Company at the given time.

"Expiration Date" as applied to any Option means the date specified in
the Option Agreement between the Company and the Holder as the expiration date
of such Option. If no expiration date is specified in the Option Agreement
relating to any Option, then the Expiration Date of such Option shall be the
day prior to the tenth anniversary of the Granting Date of such Option.
Notwithstanding the preceding sentences, if the person to whom any Incentive
Stock Option is granted owns, on the Granting Date of such Option, stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company (or of any parent or Subsidiary of the Company
in existence on the Granting Date of such Option), and if no expiration date is
specified in the Option Agreement relating to such Option, then the Expiration
Date of such Option shall be the day prior to the fifth anniversary of the
Granting Date of such Option.

"Grantee" has the meaning such term is given in Article 3 of this Plan.

"Granting Date" has the meaning such term is given in Section 4.2 of
this Plan.

"Holder" has the meaning such term is given in Section 5.3 of this
Plan.

"Incentive Stock Option" means an incentive stock option, as defined in
Code Section 422, which is granted pursuant to this Plan.

"Option" has the meaning such term is given in Section 4.1 of this
Plan.

"Option Agreement" has the meaning such term is given in Section 4.4 of
this Plan.

"Per Share Market Value" on any given date shall be the fair market
value of one Share as of the close of business on the given date determined in
such manner as shall be prescribed in good faith by the Committee; provided,
that as long as the Shares are traded on a national securities exchange or
national automated quotation system (such as the Nasdaq National Market), the
Per Share Market Value shall be the reported closing price of the Shares on
such date.

"Plan" has the meaning such term is given in Section 1.1 of this Plan.

-9-

<PAGE> 10

"Securities Act" at any given time shall consist of: (i) the
Securities Act of 1933 as constituted at the given time; (ii) any other law or
laws promulgated prior to the given time by the United States Government which
are in effect at the given time and which regulate or govern any matters at any
time regulated or governed by the Securities Act of 1933; (iii) all
regulations, rules, registration forms and other governmental pronouncements
issued under the laws specified in clauses (i) and (ii) of this sentence which
are in effect at the given time; and (iv) all interpretations by any
governmental agency or authority of the things specified in clause (i), (ii) or
(iii) of this sentence which are in effect at the given time. Whenever any
provision of this Plan requires that any action be taken in compliance with any
provision of the Securities Act, such provision shall be deemed to require
compliance with the Securities Act as constituted at the time such action takes
place.

"Share" means a share of Common Stock.

"Subsidiary" means any corporation in which the Company owns, directly
or indirectly, 50% or more of the total combined voting power of all classes of
securities of such corporation.

10.2 Headings. Section headings used in this Plan are for convenience
only, do not constitute a part of this Plan and shall not be deemed to limit,
characterize or affect in any way any provisions of this Plan. All provisions
in this Plan shall be construed as if no headings had been used in this Plan.

10.3 Severability.

(a) General. Whenever possible, each provision in this Plan and in
every Option at any time granted under this Plan shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Plan or any Option at any time granted under this Plan is held to be
prohibited by or invalid under applicable law, then (i) such provision shall be
deemed amended to accomplish the objectives of the provision as originally
written to the fullest extent permitted by law and (ii) all other provisions of
this Plan and every Option at any time granted under this Plan shall remain in
full force and effect.

(b) Incentive Stock Options. Whenever possible, each provision in
this Plan and in every Option at any time granted under this Plan which is
evidenced by an Option Agreement which expressly states such Option is intended
to constitute an Incentive Stock Option under Code Section 422 (an "intended
ISO") shall be interpreted in such manner as to entitle such intended ISO to
the tax treatment afforded by the Code to Options which do constitute Incentive
Stock Options under Code Section 422, but if any provision of this Plan or any
intended ISO at any time granted

-10-

<PAGE> 11

under this Plan is held to be contrary to the requirements necessary to entitle
such intended ISO to the tax treatment afforded by the Code to Options which do
constitute Incentive Stock Options under Code Section 422, then (i) such
provision shall be deemed to have contained from the outset such language as
shall be necessary to entitle such intended ISO to the tax treatment afforded
by the Code to Options which do constitute Incentive Stock Options under Code
Section 422, and (ii) all other provisions of this Plan and such intended ISO
shall remain in full force and effect. If any Option Agreement covering an
intended ISO granted under this Plan does not explicitly include any terms
required to entitle such intended ISO to the tax treatment afforded by the Code
to Options which do constitute Incentive Stock Options under Code Section 422,
then all such terms shall be deemed implicit in the intention to afford such
treatment to such Option and such Option shall be deemed to have been granted
subject to all such terms.

10.4 No Strict Construction. No rule of strict construction shall be
applied against the Company, the Committee or any other person in the
interpretation of any of the terms of this Plan, any Option or any rule or
procedure established by the Committee.

10.5 Choice of Law. This Plan and all documents contemplated hereby,
and all remedies in connection therewith and all questions or transactions
relating thereto, shall be construed in accordance with and governed by the
internal laws of the State of Delaware.

10.6 Tax Consequences. Tax consequences from the purchase and sale of
Shares may differ among grantees under the Plan. Each grantee of an Option
should discuss specific tax questions regarding participation in the Plan with
his or her own tax advisor.

-11-

<PAGE> 1
Draft of 12/15/97

AGREEMENT FOR DISTRIBUTION OF RETAINED
EARNINGS AND TAX INDEMNIFICATION

This AGREEMENT FOR DISTRIBUTION OF RETAINED EARNINGS AND TAX
INDEMNIFICATION (the "Agreement") is entered into effective the ____ day of
____________, 1998, between 1-800 CONTACTS, INC., a Utah corporation (the
"Company"), and the stockholders of the Company listed on the signature page
hereto (the "Stockholders").

WHEREAS, the Company is undertaking a public offering of its common
stock in order to raise additional equity (the "Public Offering");

WHEREAS, the Company and the Stockholders have entered into this
Agreement in connection with the Public Offering;

WHEREAS, the Company will be classified as an S corporation until
immediately prior to the Public Offering, after which it will be classified as
a C corporation;

WHEREAS, the Stockholders are all of the existing stockholders of the
Company;

WHEREAS, the Company wishes to make a distribution to the Stockholders
of all of its retained earnings prior to the termination of its status as an S
corporation; and

WHEREAS, the Company and the Stockholders wish to provide for tax
indemnification arrangements in connection with the Company's termination as an
S corporation.

NOW, THEREFORE, the parties agree as follows:

ARTICLE I

DISTRIBUTION OF RETAINED EARNINGS

The Company hereby agrees to distribute to the Stockholders the amount
of the Company's retained earnings, as determined for financial accounting
purposes under generally accepted accounting principles, as of the Termination
Date (as defined below). The Company currently estimates that its retained
earnings as of the Termination Date will be approximately $______ million. The
distribution shall be effected by the issuance of a promissory notes of the
Company to the Stockholders prior to the Termination Date. The promissory
notes shall provide for upward or downward adjustments based on a final
determination of such retained earnings. The promissory notes shall be repaid
by the Company using a portion of the net proceeds of the Public Offering.

<PAGE> 2

ARTICLE II

TERMINATION OF S CORPORATION STATUS

The Company's status as an S corporation under Section 1362 of the
Internal Revenue Code of 1986, as amended (the "Code"), will be terminated as
of the earlier of (i) the date of the closing of the Public Offering or (ii)
the date specified in a revocation of S corporation status duly filed by the
Company (such date being referred to hereinafter as the "Termination Date").
The Company's status as an S corporation under pertinent state tax laws will
also be terminated on the Termination Date. The Company shall use the pro rata
allocation method prescribed in Section 1362(e)(2) of the Code in order to
allocate its taxable income between the short S corporation taxable year ending
the day prior to the Termination Date and the C corporation short taxable year
commencing on the Termination Date; provided that, if the Company has revoked
its S corporation status prior to the date of the Public Offering, it shall use
the "closing-of-the-books" method prescribed in Section 1362(e)(3) of the Code.

ARTICLE III

TAXES

3.1 FILING OF TAX RETURNS. The Company covenants and agrees that:
(a) the Company shall be responsible for and shall effect the filing of all
federal, state, foreign and local returns for the Company with respect to any
and all taxable periods; and (b) the Company shall pay any and all taxes
required to be paid by the Company for all periods covered by the returns as
required by applicable law, subject to reimbursement by the Stockholders to the
extent prescribed herein.

3.2 COMPANY'S INDEMNIFICATION OF THE STOCKHOLDERS FOR ADDITIONAL
PRE-OFFERING TAXES. The Company hereby indemnifies and agrees to hold the
Stockholders harmless from, against and in respect of any federal and state
income tax liability (including penalties, interest and any taxes resulting
from the payments under this section) incurred by the Stockholders as a result
of a final determination of an adjustment (by reason of an amended return,
claim for refund, audit or otherwise) to the Company's tax returns which
increases the tax liability of the Stockholders for taxable periods ending
prior to the Termination Date (including the short taxable period ending the
day before the Termination Date).

3.3 STOCKHOLDERS' INDEMNIFICATION OF THE COMPANY. The Stockholders
hereby indemnify and agree to hold the Company harmless from, against and in
respect of any federal and state income tax liability (including penalties,
interest and any taxes resulting from the payments under this sentence)
incurred by the Company as a result of a final determination that the Company
was not an S corporation for federal or state income tax purposes for any
taxable period ending prior to the Termination Date (including a short taxable
period ending the day before the Termination Date); provided that in no event
shall the Stockholders' aggregate liability under this sentence exceed any
refund of taxes and interest received by the Stockholders as a result of such
final determination and/or any ensuing claim for refund. The Stockholders
further hereby indemnify and

-2-
<PAGE> 3

agree to hold the Company harmless from, against and in respect of any federal
and state income tax liability (including penalties, interest and any taxes
resulting from the payments under this sentence) incurred by the Company as a
result of final determination of an adjustment (by reason of an amended return,
claim for refund, audit or otherwise) to the Company's or the Stockholders' tax
returns which decreases the Stockholders' tax liability for a taxable period
ending prior to the Termination Date (including the short taxable period ending
the day before the Termination Date) and correspondingly increases the tax
liability of the Company (or its consolidated subsidiaries) for a taxable
period ending after the Termination Date; provided that in no event shall the
Stockholders' aggregate liability under this sentence exceed any refund of
taxes and interest received by the Stockholders as a result of such final
determination and/or ensuing claim for refund.

3.4 PAYMENTS. The Stockholders or the Company, as the case may be,
shall make any payment required under this Agreement within seven days after
receipt of notice from the other party that a payment is due by such party to
the appropriate taxing authority, which notice shall be accompanied by
appropriate documentation demonstrating that such payment is due.

3.5 COOPERATION. The parties shall cooperate with each other in
connection with the contest of any additional tax liability asserted by any
taxing authority. The parties shall also cooperate with each other in securing
a refund of federal and state income tax for the Stockholders as a result of
any final determinations described in Section 3.3.

3.6 RESPECTIVE LIABILITY. Each of the Stockholders shall be liable to
the Company for his or her allocable share of the total liabilities of the
Stockholders under this Agreement. Such allocable share shall be based on the
Stockholders' relative percentage interests in the Company as of the day before
the Termination Date.

ARTICLE IV

MISCELLANEOUS

4.1 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
counterparts collectively shall constitute an instrument representing the
Agreement between the parties hereto.

4.2 CONSTRUCTION OF TERMS. Nothing herein expressed or implied is
intended, or shall be construed, to confer upon or give any person, firm or
corporation, other than the parties hereto or their respective successors and
assigns, any rights or remedies under or by reason of this Agreement.

4.3 GOVERNING LAW. This Agreement and the legal relations between the
parties hereto shall be governed by and construed in accordance with the
substantive laws of the State of Utah without regard to Utah choice of law
rules.

4.4 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by a written agreement executed by the parties.

-3-
<PAGE> 4

4.5 ASSIGNMENT. This Assignment and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties, nor
is this Agreement intended to confer upon any other person except the parties
any rights or remedies hereunder. This Agreement will be assumed by 1-800
CONTACTS, INC., a Delaware corporation (the "Surviving Corporation"), upon
completion of the merger between the Company and the Surviving Corporation
immediately prior to the completion of the Public Offering.

4.6 INTERPRETATION. The title, article and section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.

4.7 SEVERABILITY. In the event that any one or more of the provisions
of this Agreement shall be held to be illegal, invalid or unenforceable in any
respect, the same shall not in any respect affect the validity, legality or
enforceability of the remainder of this Agreement, and the parties shall use
their best efforts to replace such illegal, invalid or unenforceable provisions
with an enforceable provision approximating, to the extent possible, the
original intent of the parties.

4.8 ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. There are no representations, promises, warranties, covenants, or
undertakings, other than those expressly set forth or referred to herein. This
Agreement supersedes all prior agreements and the understandings between the
parties with respect to such subject matter.

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

1-800 CONTACTS, INC.

By:_________________________________
Name:
Title:

STOCKHOLDERS:

____________________________________
Jonathan C. Coon

____________________________________
John F. Nichols

____________________________________

-4-
<PAGE> 5

Stephen Yacktman

___________________________________________
Jonathan C. Coon, as custodian under the
Uniform Gift to Minors Act for and on
behalf of Hannah K. Coon

___________________________________________
Jonathan C. Coon, as custodian under the
Uniform Gift to Minors Act for and on
behalf of Abigail I. Coon

___________________________________________
Carolyn Z. Yacktman, as trustee of the
Carolyn Z. Yacktman 1997 QTIP Trust

___________________________________________
Carolyn Z. Yacktman, as co-trustee of the
Yacktman Family Trust

___________________________________________
Gregory Jackson, as co-trustee of the
Yacktman Family Trust

Citicorp Trust South Dakota,
as co-trustee of the Yacktman Family Trust

By:________________________________________
Name:
Title:

___________________________________________
Alphonso Zepf

___________________________________________
April Zepf

-5-

<PAGE> 1
1-800 CONTACTS, INC.

STOCK OPTION AGREEMENT

(Nonqualified Stock Option)

THIS STOCK OPTION AGREEMENT (this "Agreement") is made and
entered into as of __________ __, 1997, by and between 1-800 CONTACTS, INC., a
Utah corporation (the "Company"), and the employee of the Company listed on the
signature page hereto ("Optionee").

The Company and the Optionee desire to enter into an agreement
to evidence the grant by the Company to the Optionee of an option (the "Option")
to acquire that number of shares of the Company's Common Stock, par value $.01
per share (the "Common Stock") listed on the signature page hereto (the "Option
Shares"). The Option evidenced hereby was granted by the Company to the Optionee
on the Grant Date. Capitalized terms used herein and not otherwise defined are
defined in Section 10 hereof.

The parties hereto agree as follows:

1. Option Terms. The Option granted by the Company to the
Optionee to purchase the Option Shares shall be at a price per share equal to
that amount listed on the signature page hereto (the "Exercise Price"). The
Exercise Price and the number and type of Option Shares will be equitably
adjusted for any stock split, stock dividend, reclassification or
recapitalization of the Company which occurs subsequent to the Grant Date as
provided in Section 9 hereof. The Options are not intended to be "incentive
stock options" within the meaning of Section 422A of the Code.

2. Exercisability of Option.

(a) Normal Vesting. The Option granted hereunder may be
exercised only to the extent it has become vested. The Option shall vest and
become exercisable with respect to the following number of Option Shares (set
forth on a cumulative basis): (i) 33 1/3% of the Option Shares on the first
anniversary of the Grant Date; (ii) 66 2/3% of the Option Shares on the second
anniversary of the Grant Date; and (iii) 100% of the Option Shares on the third
anniversary of the Grant Date (each a "Vesting Date"), if and only if the
Optionee is, and has been, continuously employed by the Company from the Grant
Date through the applicable Vesting Date.

(b) Sale of the Company. In the event of a Sale of the
Company, the Option shall be vested and become fully exercisable as to all of
the Option Shares.

(c) No Vesting After Termination Date. Notwithstanding any
provision of subsection 2(b) to the contrary, the Option shall cease to vest
after the Termination Date. Any portion of the Option which has vested and
become exercisable prior to the Termination Date shall remain exercisable for
the period set forth in Section 3.

- 1 -

<PAGE> 2

3. Expiration of Option.

(a) Normal Expiration. In no event shall any part of the
Option be exercisable after the Expiration Date.

(b) Expiration Upon Termination of Employment. Any portion of
the Option that was not vested and exercisable on the Termination Date shall
expire on such date and may not be exercised thereafter under any circumstance.
Any portion of the Option that was vested and exercisable on the Termination
Date shall expire on the earlier of (i) 90 days after the Termination Date and
(ii) the Expiration Date and may not be exercised thereafter under any
circumstance.

(c) Procedure for Exercise. At any time prior to the
Expiration Date, Optionee may exercise all or a portion of the Option (to the
extent vested), which has not expired pursuant to subsection 3(b) above, by
delivering written notice of exercise to the Company, together with (i) a
written acknowledgment that Optionee has read and has been afforded an
opportunity to ask questions of members of the Company's management regarding
all financial and other information provided to Optionee regarding the Company
and (ii) a certified check or wire transfer of funds in an amount equal to the
Exercise Price multiplied by the number of Option Shares being purchased. As a
condition to any exercise of the Options, Optionee will permit the Company to
deliver to him all financial and other information regarding the Company and its
Subsidiaries which it believes necessary to enable Optionee to make an informed
investment decision.

(d) Non-Transferability of Options. The Options are personal
to Optionee and are not transferable by Optionee except pursuant to the laws of
descent or distribution. Only Optionee or his or her legal guardian or
representative may exercise the Options.

4. Repurchase Option.

(a) Repurchase Option. If the Termination Date occurs, the
Option Shares, whether held by Optionee or one or more transferees, will be
subject to repurchase by the Company (solely at its option) pursuant to the
terms and conditions set forth in, and to the extent described in, this Section
4 (the "Repurchase Option").

(b) Repurchase Price. In the event the Termination Date
occurs, the outstanding Option Shares will be subject to the Repurchase Option
at a price per share equal to the Fair Market Value thereof as of the
Termination Date.

(c) Repurchase Procedures. The Repurchase Option is
exercisable by the Company delivering written notice (the "Repurchase Notice")
to the holder or holders of the Option Shares within 180 days after the
Termination Date. The Repurchase Notice will set forth the number of Option
Shares to be acquired from such holder(s), the aggregate consideration to be
paid for such holder's Option Shares and the time and place for the closing of
the transaction. If any Option Shares are held by any transferees of Optionee,
the Company will purchase the Option Shares elected to be purchased from such
holder(s), pro rata according to the number of Option Shares held by such

- 2 -

<PAGE> 3

holder(s) at the time of delivery of such Repurchase Notice (determined as
nearly as practicable to the nearest share).

(d) Closing. The closing of the transactions contemplated by
this Section 4 will take place on the date designated by the Company in the
Repurchase Notice, which date will not be more than 90 days after the delivery
of such notice. The Company will pay for any Option Shares to be purchased by
the Company pursuant to the Repurchase Option (if any) by delivery of (i) a
check payable to the holder of such Option Shares or (ii) a note or notes
payable in three equal annual installments beginning on the first anniversary of
the closing of such purchase and bearing interest at a rate per annum equal to
the prime rate (as published in the Wall Street Journal on the business day
immediately preceding the closing of such purchase), or (iii) a combination of
(i) and (ii). Any notes issued by the Company pursuant to this subsection 4(d)
will be subject to any restrictive covenants to which the Company is subject at
the time of such purchase. Notwithstanding anything to the contrary contained in
this Agreement, all repurchases of the Option Shares by the Company will be
subject to applicable restrictions contained in the applicable state corporate
law and in the Company's and its Subsidiaries' debt and equity financing
agreements. If any such restrictions prohibit the repurchase of the Option
Shares hereunder which the Company is otherwise entitled to make, the Company
may make such repurchases as soon as it is permitted to do so under such
restrictions; provided, however, that in such circumstances any such repurchases
for Fair Market Value shall be for the greater of (i) the Fair Market Value on
the date such restrictions lapse and (ii) the Fair Market Value on the
Termination Date. The Company will receive customary representations and
warranties from each seller regarding the sale of the Option Shares, including,
but not limited to, the representation that such seller has good and marketable
title to such Option Shares to be transferred free and clear of all liens,
claims and other encumbrances.

(e) Termination of Repurchase Option. The provisions of this
Section 4 will terminate upon the earlier of (i) a Sale of the Company or (ii) a
Qualified Public Offering.

5. Restrictions on Transfer of Option Shares.

(a) Transfer of Option Shares. The Optionee will not sell,
pledge, transfer or otherwise dispose of (a "Transfer") any interest in any
Option Shares, except pursuant to the provisions of Sections 4, 5, 6 and 7
hereof.

(b) Certain Permitted Transfers. The restrictions contained in
this Section 5 will not apply with respect to Transfers of the Option Shares (i)
pursuant to applicable laws of descent and distribution or (ii) among Optionee's
Family Group; provided that the restrictions contained in this Section 5 will
continue to be applicable to the Option Shares after any Transfer of the type
referred to in clause (i) or (ii) and the transferees of such Option Shares will
agree in writing to be bound by the provisions of this Agreement. Any transferee
of Option Shares pursuant to a transfer in accordance with the provisions of
this Section 5(b) is herein referred to as a "Permitted Transferee." Upon the
transfer of Option Shares pursuant to this Section 5(b), Optionee will deliver a
written notice (a "Transfer Notice") to the Company. In the case of a Transfer
pursuant to clause (i) or (ii) hereof, the Transfer Notice will disclose in
reasonable detail the identity of the Permitted Transferee(s).

- 3 -

<PAGE> 4

(c) Termination of Transfer Restrictions. The provisions of
this Section 5 will terminate upon the earlier of (i) a Sale of the Company and
(ii) a Qualified Public Offering.

6. Additional Restrictions on Transfer.

(a) Unless the Option Shares are covered by an effective
registration statement under the 1933 Act, the certificates representing the
Option Shares will bear the following legend:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN
EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND
CERTAIN OTHER AGREEMENTS SET FORTH IN A STOCK OPTION AGREEMENT
BETWEEN THE ISSUER (THE "COMPANY") AND AN EMPLOYEE OF THE
COMPANY DATED AS OF DECEMBER __, 1997, A COPY OF WHICH MAY BE
OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE
OF BUSINESS WITHOUT CHARGE."

(b) No holder of Option Shares may Transfer any Option Shares
(except pursuant to an effective registration statement under the 1933 Act)
without first delivering to the Company an opinion of counsel reasonably
acceptable in form and substance to the Company (which counsel will be
reasonably acceptable to the Company) that registration under the 1933 Act is
not required in connection with such Transfer.

7. Definition of Option Shares. For all purposes of this
Agreement, Option Shares will continue to be Option Shares in the hands of any
holder other than Optionee (except for the Company and purchasers pursuant to an
offering registered under the 1933 Act or purchasers pursuant to a Rule 144
transaction (other than a Rule 144(k) transaction occurring prior to the time
the Company is a Public Company) and subsequent transferees), and each such
other holder of Option Shares will succeed to all rights and obligations
attributable to Optionee as a holder of Option Shares hereunder. Option Shares
will also include shares of the Company's capital stock issued with respect to
Option Shares by way of a stock split, stock dividend or other recapitalization.

8. Sale of the Company.

(a) If the holders of a majority of the shares of Common Stock
held by the Stockholder Group approve a sale of all or substantially all of the
Company's assets determined on a consolidated basis or a sale of all (or, for
accounting, tax or other reasons, substantially all) of the

- 4 -

<PAGE> 5

Company's outstanding capital stock (whether by merger, recapitalization,
consolidation, reorganization, combination or otherwise) to an Independent Third
Party or group of Independent Third Parties (each such sale, an "Approved
Sale"), each holder of Option Shares will vote for, consent to and raise no
objections against such Approved Sale. If the Approved Sale is structured as (i)
a merger or consolidation, each holder of Option Shares will waive any
dissenters' rights, appraisal rights or similar rights in connection with such
merger or consolidation or (ii) sale of stock, each holder of Option Shares will
agree to sell all of his or her shares of Option Shares and rights to acquire
shares of Option Shares on the terms and conditions approved by the Board and
the holders of a majority of the Common Stock then outstanding. Each holder of
Option Shares will take all necessary or desirable actions in connection with
the consummation of the Approved Sale as requested by the Company.

(b) The obligations of the holders of Common Stock with
respect to an Approved Sale of the Company are subject to the satisfaction of
the following conditions: (i) upon the consummation of such Approved Sale, each
holder of Common Stock will receive the same form of consideration and the same
portion of the aggregate consideration that such holders of Common Stock would
have received if such aggregate consideration had been distributed by the
Company in complete liquidation pursuant to the rights and preferences set forth
in the Company's Certificate of Incorporation as in effect immediately prior to
such Approved Sale; (ii) if any holders of a class of Common Stock are given an
option as to the form and amount of consideration to be received, each holder of
such class of Common Stock will be given the same option; and (iii) each holder
of then currently exercisable rights to acquire shares of a class of Common
Stock will be given an opportunity to exercise such rights prior to the
consummation of such Approved Sale and participate in such Approved Sale as
holders of such class of Common Stock.

(c) If the Company or the holders of the Company's securities
enter into any negotiation or transaction for which Rule 506 (or any similar
rule then in effect) promulgated by the Securities and Exchange Commission may
be available with respect to such negotiation or transaction (including a
merger, consolidation or other reorganization), the holders of Option Shares
will, at the request of the Company, appoint a purchaser representative (as such
term is defined in Rule 501) reasonably acceptable to the Company. If any holder
of Option Shares appoints a purchaser representative designated by the Company,
the Company will pay the fees of such purchaser representative, but if any
holder of Option Shares declines to appoint the purchaser representative
designated by the Company, such holder will appoint another purchaser
representative, and such holder will be responsible for the fees of the
purchaser representative so appointed.

(d) Optionee and the other holders of Option Shares (if any)
will bear their pro rata share (based upon the number of shares sold) of the
costs of any sale of Option Shares pursuant to an Approved Sale to the extent
such costs are incurred for the benefit of all holders of Common Stock and are
not otherwise paid by the Company or the acquiring party. Costs incurred by
Optionee and the other holders of Option Shares on their own behalf will not be
considered costs of the transaction hereunder.

- 5 -

<PAGE> 6

(e) The provisions of this Section 8 will terminate upon the
consummation of a Qualified Public Offering.

9. Certain Adjustments. The Exercise Price and the number or
kind of shares of Common Stock or other securities covered by the Option shall
be equitably adjusted in order to prevent a dilution or enlargement of the
rights of the Optionee that otherwise would result from (i) any increase or
decrease in the number or change in the kind of shares of capital stock of the
Company by reason of a stock dividend, stock split, reverse stock split,
recapitalization, or other such increase or decrease or change effected without
the receipt of consideration by the Company, or (ii) any consolidation or merger
or other reorganization, or (iii) any distribution of rights or warrants to
purchase stock to all holders of the Company's common stock, or (iv) any other
corporate transaction or event having an effect similar to any of the foregoing.

DEFINITIONS

10. Definitions. The following terms are defined as
follows:

"1933 Act" means the Securities Act of 1933, as amended from
time to time.

"Affiliate" means, with respect to any Person, any other
Person who is controlling, controlled by, or under common control with such
Person and, in the case of a Person which is a partnership, any partner of such
Person.

"Board" means the Company's Board of Directors.

"Code" means the Internal Revenue Code of 1986, as amended
from time to time.

"Committee" shall mean the Compensation Committee of the Board
of Directors, or such other committee of the Board which may be designated by
the Board to administer employee compensation matters. Any reference herein to
the Committee shall be deemed to refer to the Board in the event that the Board
has not delegated the administration of such matters to the Committee.

"Common Stock" means the Company's Common Stock, par value
$.01 per share, or as such stock may be reconstituted from time to time.

"Company" means 1-800 CONTACTS, INC. and any successor or
assign.

"Expiration Date" means, with respect to any Option, the date
which is the tenth anniversary of the Grant Date.

"Fair Market Value" of each share of Common Stock means the
fair value of such security as determined in good faith by the Board, which
determination shall be reasonably acceptable to the Optionee. In the event that
the Board determination of Fair Market Value is not reasonably acceptable to the
Optionee, then such value will be determined by an independent appraiser
reasonably acceptable to the Board and the Optionee, which appraiser will submit
to the

- 6 -

<PAGE> 7

Board and the Optionee a written report setting forth such determination. If the
Board and the Optionee are unable to agree on an appraiser, each of the Board
and the Optionee will select an independent appraiser and the two appraisers so
selected will select a third independent appraiser to determine the Fair Market
Value of the Common Stock. The appraiser appointed hereunder will allocate its
costs and expenses incurred in determining the Fair Market Value based upon the
relative differences between the Board's and the Optionee's respective
determinations of Fair Market Value and such appraiser's determination of Fair
Market Value.

"Family Group" means Optionee's spouse and descendants
(whether natural or adopted) and any trust solely for the benefit of Optionee
and/or Optionee's spouse and/or descendants.

"Grant Date" means the date identified as the grant date on
the signature page hereto.

"Independent Third Party" means any Person who, immediately
prior to the contemplated transaction, does not own in excess of 5% of the
Common Stock on a fully diluted basis, who is not controlling, controlled by or
under common control with any such 5% owner of the Common Stock and who is not
the spouse or descendant (by birth or adoption) of any such 5% owner of the
Common Stock.

"Option Shares" means (i) all shares of Common Stock purchased
pursuant to the Options granted pursuant to this Agreement and (ii) all shares
of Common Stock issued with respect to Common Stock referred to in clause (i) by
way of stock dividend or stock split or in connection with a recapitalization or
other reorganization affecting the Common Stock.

"Person" means an individual, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.

"Public Company" means a company any of whose securities are
registered pursuant to Section 12(b) or 12(g) of the Securities Exchange Act.

"Public Sale" means any sale of Common Stock to the public
pursuant to an offering registered under the Securities Act or to the public
through a broker, dealer or market maker pursuant to the provisions of Rule 144
(other than Rule 144(k) prior to the time the Company is a Public Company)
adopted under the 1933 Act.

"Qualified Public Offering" means an initial public offering
and sale of the Common Stock pursuant to an effective registration statement
under the 1933 Act resulting in net proceeds to the Company of at least $10.0
million.

"Sale of the Company" means any transaction involving the
Company and an Independent Third Party or affiliated group of Independent Third
Parties pursuant to which such party or parties acquire (i) a majority of the
outstanding shares of capital stock of the Company entitled to vote generally in
the election of the Board (whether by merger, consolidation or sale or

- 7 -

<PAGE> 8

Transfer of the Company's capital stock) or (ii) all or substantially all of the
Company's assets determined on a consolidated basis.

"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time.

"Stockholder Group" means the existing stockholders of the
Company as of the date hereof.

"Subsidiary" means any corporation of which shares of stock
having a majority of the general voting power in electing the board of directors
are, at the time as of which any determination is being made, owned by the
Company either directly or through its Subsidiaries.

"Termination Date" means the date that Optionee ceases to be
employed by the Company or any of its Subsidiaries for any reason.

MISCELLANEOUS

11. Notices. Any notice provided for in this Agreement must be
in writing and must be personally delivered, received by certified mail, return
receipt requested, or sent by guaranteed overnight delivery service, to the
members of the Stockholder Group at the addresses indicated in the Company's
records, to the Optionee at the address appearing on the signature page hereto
and to the other recipients at the address indicated below:

To the Company:

1-800 CONTACTS, INC.
13751 South Wadsworth Park Drive, Suite D-140
Draper, Utah 84020
Attn: President

With a copy to:

Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: Dennis M. Myers

or such other address or to the attention of such other person as the recipient
party will have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or mailed.

12. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law

- 8 -

<PAGE> 9

or rule in any jurisdiction, such invalidity, illegality or unenforceability
will not affect any other provision or the effectiveness or validity of any
provision in any other jurisdiction, and this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.

13. Complete Agreement. This Agreement embodies the complete
agreement and understanding among the parties and supersedes and preempts any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.

14. Counterparts. This Agreement may be executed in separate
counterparts, each of which will be deemed to be an original and all of which
taken together will constitute one and the same agreement.

15. Successors and Assigns; Transfer. This Agreement is
intended to bind and inure to the benefit of and be enforceable by Optionee and
the Company and their respective successors and assigns, provided that Optionee
may not assign any of his or her rights or obligations, except as expressly
provided by the terms of this Agreement. Prior to Transferring any Option Shares
(other than in a Public Sale or any Approved Sale) to any person or entity,
Optionee will cause the prospective transferee to execute and deliver to the
Company an agreement containing the rights and restrictions set forth herein
with respect to such Option Shares.

16. GOVERNING LAW. THE CORPORATE LAW OF THE STATE UNDER WHICH
THE COMPANY IS INCORPORATED WILL GOVERN ALL QUESTIONS CONCERNING THE RELATIVE
RIGHTS OF THE COMPANY AND ITS STOCKHOLDERS. ALL OTHER ISSUES CONCERNING THE
ENFORCEABILITY, VALIDITY AND BINDING EFFECT OF THIS AGREEMENT WILL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF UTAH, WITHOUT
GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER
OF THE STATE OF UTAH OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION
OF THE LAW OF ANY JURISDICTION OTHER THAN THE STATE OF UTAH.

17. Remedies. The parties hereto acknowledge and agree that
money damages may not be an adequate remedy for any breach of the provisions of
this Agreement and that any party hereto will have the right to injunctive
relief, in addition to all of its other rights and remedies at law or in equity,
to enforce the provisions of this Agreement.

18. Arbitration.

(a) Arbitration. In the event of disputes between the parties
with respect to the terms and conditions of this Agreement, such disputes will
be resolved by and through an arbitration proceeding to be conducted under the
auspices of the American Arbitration Association (or any like organization
successor thereto) at Salt Lake City, Utah. Such arbitration proceeding will be
conducted in as expedited a manner as is then permitted by the commercial
arbitration rules (formal or informal) of the American Arbitration Association,
and the arbitrator or arbitrators in any such arbitration will be persons who
are expert in the subject matter of the dispute. Both the foregoing agreement of
the parties to arbitrate any and all such claims, and the results,
determination, finding,

- 9 -

<PAGE> 10

judgment and/or award rendered through such arbitration, will be final and
binding on the parties hereto and may be specifically enforced by legal
proceedings. The parties agree and acknowledge that money damages may not be an
adequate remedy for any breach of the provisions of this Agreement and that any
party may, in his or her or its sole discretion, ask for specific performance
and/or injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.

(b) Procedure. Such arbitration may be initiated by written
notice from either party to the other which will be a compulsory and binding
proceeding on each party. The arbitration will be conducted before a panel of
arbitrators selected in accordance with the rules of the American Arbitration
Association. The costs of said arbitrators and the arbitration will be borne
equally by the parties to the arbitration. Each party will bear separately the
cost of their respective attorneys, witnesses and experts in connection with
such arbitration. Time is of the essence of this arbitration procedure, and the
arbitrators will be instructed and required to render their decision within ten
(10) days following completion of the arbitration.

19. Effect of Transfers in Violation of Agreement. The Company
will not be required (a) to transfer on its books any Option Shares which have
been sold or transferred in violation of any of the provisions set forth in this
Agreement or (b) to treat as owner of such Option Shares, to accord the right to
vote as such owner or to pay dividends to any transferee to whom such Option
Shares have been transferred in violation of this Agreement.

20. Amendments and Waivers. Any provision of this Agreement
may be amended or waived only with the prior written consent of the Company and
the Optionee, and, in the case of Section 8, the members of the Stockholder
Group who hold 80% of the Common Stock held by the Stockholder Group as of the
date hereof.

21. Third Party Beneficiaries. The parties hereto acknowledge
and agree that the members of the Stockholder Group are third party
beneficiaries of Section 8 of this Agreement. Section 8 of this Agreement will
inure to the benefit of and be enforceable by any member and their respective
successors and assigns.

* * * * *

- 10 -

<PAGE> 11

IN WITNESS WHEREOF, the parties have executed this Agreement
on the day and year first above written.

1-800 CONTACTS, INC.

_____________________________________
By:

Its:

OPTIONEE:

_____________________________________
Name:

Address (please print):

_____________________________________

Grant Date:__________________________

Number of Option Shares:_____________

Exercise Price:______________________

- 11 -

<PAGE> 12

SCHEDULE TO STOCK OPTION AGREEMENT

Name Grant Date Exercise Price Number of Shares
- ---- ---------- -------------- ----------------
<S> <C> <C> <C>

Scott S. Tanner November 20, 1997 $4,555.925 115.8599
Robert G. Hunter November 17, 1997 $4,555.925 46.3440
E. Dean Butler January 2, 1998 $4,555.925 173.7899
</TABLE>

- 12 -

<PAGE> 1

Exhibit 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of this
registration statement.

ARTHUR ANDERSEN LLP

Salt Lake City
January 16, 1998

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 4,811,855
<CURRENT-ASSETS> 4,994,519
<PP&E> 705,456
<DEPRECIATION> 142,953
<TOTAL-ASSETS> 7,781,064
<CURRENT-LIABILITIES> 6,616,041
<BONDS> 310,665
0
0
<COMMON> 46,595
<OTHER-SE> 807,763
<TOTAL-LIABILITY-AND-EQUITY> 7,781,064
<SALES> 21,115,314
<TOTAL-REVENUES> 21,115,314
<CGS> 14,024,523
<TOTAL-COSTS> 19,969,744
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 161,520
<INCOME-PRETAX> 1,032,408
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,032,408
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,032,408
<EPS-PRIMARY> 0
<EPS-DILUTED> 0

</TABLE>