OPTICARE HEALTH SYSTEMS INC, S-1/A, 2000-01-19

OPTICARE HEALTH SYSTEMS INC
S-1/A, 2000-01-19
OFFICES & CLINICS OF DOCTORS OF MEDICINE

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 18, 2000
REGISTRATION NO. 333-93043
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
AMENDMENT NO. 1
TO
FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
OPTICARE HEALTH SYSTEMS, INC.
(Exact name of registrant as specified in its charter)

DELAWARE 8099 76-0453392
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)

87 GRANDVIEW AVENUE
WATERBURY, CONNECTICUT 06708
(860) 596-2236
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

STEVEN L. DITMAN
CHIEF FINANCIAL OFFICER
OPTICARE HEALTH SYSTEMS, INC.
87 GRANDVIEW AVENUE
WATERBURY, CONNECTICUT 06708
(203) 596-2236
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

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

COPY TO:

ROBERT L. LAWRENCE, ESQ.
KANE KESSLER, P.C.
1350 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
(212) 541-6222
-------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
-------------------
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, as amended, 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, 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 statement 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
under the Securities Act, 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 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE>

THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO BUY
THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION
DATED JANUARY 18, 2000

PROSPECTUS

UP TO 4,000,000 SHARES

[OPTICARE HEALTH SYSTEMS, INC. LOGO]

OPTICARE HEALTH SYSTEMS, INC.

COMMON STOCK

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

OptiCare Health Systems, Inc., is offering up to 4,000,000 shares of common
stock in this offering and will receive all of the net proceeds from this
offering. See "Price Range of Common Stock."

Our common stock is listed on the American Stock Exchange under the symbol
"OPT." The last reported sale price of our common stock on the American Stock
Exchange on January 14 , 2000 was $3.50 per share. We will offer our common
stock's at its market value based upon our common stock's trading price on the
American Stock Exchange.

INVESTING IN THE SHARES OF OUR COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE 6.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
PRICE TO PROCEEDS TO
PUBLIC OPTICARE
--------------- ---------------
<S> <C> <C>
Per Share ......... $ $
Total ............. $ $
</TABLE>

January , 2000

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OPTICARE HEALTH SYSTEMS, INC.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary .......................... 1
Risk Factors ................................ 6
Forward-Looking Statements .................. 12
Use of Proceeds ............................. 13
Price Range of Common Stock ................. 14
Dividend Policy ............................. 15
Capitalization .............................. 16
Selected Historical Consolidated and Pro
Forma Combined Financial Data ............ 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations ............................... 19
Business .................................... 25
Certain Indebtedness ........................ 42
Management .................................. 43
Certain Relationships and Related
Transactions ............................. 54
Principal Stockholders ...................... 59
Description of Capital Stock ................ 61
Shares Eligible for Future Sale ............. 63
Plan of Distribution ........................ 64
Legal Matters ............................... 65
Experts ..................................... 65
Changes of Independent Accountants .......... 65
Additional Information ...................... 65
Index to Financial Statements ............... F-1
</TABLE>

We own the following U.S. trademark registrations: OPTICARE (Registered
Trademark) , EYECARE FOR A LIFETIME (Registered Trademark) , EYEWEAR AND
EYECARE FOR A LIFETIME (Registered Trademark) , CONNECTICUT VISION CORRECTION
(Registered Trademark) , and THE DIFFERENCE IS CLEAR (Registered Trademark) .
Other trademarks for which applications for U.S. registration are pending are:
RBNI (Trade Mark) , KEEPING YOU AHEAD OF THE CURVE (Trade Mark) and curve
design, DOCTOR'S EXPRESS (Trade Mark) , DOCTORSXPRESS.COM (Trade Mark) and
OPTICARE LASER ADVANTAGE (Trade Mark) . We also own the following domain names:
opticare.com; opticare.net; opticarenas.net; doctorsxpress.com; and
opticareonline.com.

i
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PROSPECTUS SUMMARY

This summary highlights certain information contained elsewhere in this
prospectus. To understand this offering fully, you should read the entire
prospectus carefully, including the risk factors and our consolidated financial
statements.

OPTICARE HEALTH SYSTEMS, INC.

Our Business. We are an integrated eye care services company focused on
providing laser vision correction, managed care and professional eye care
services. We currently own, operate and develop laser vision correction and
ambulatory surgery centers and provide systems, including Internet-based
software solutions, to eye care professionals. We also provide managed eye care
services to health plans and operate integrated eye health centers and retail
optical stores.

While we believe that all of our businesses have solid same-store growth
prospects, we expect our laser correction and professional services division as
well as our managed care business to have the potential for significant
near-term and long-term growth. In order to focus our resources accordingly, we
have recently reorganized our operations, creating three operating divisions
versus only two previously. These three divisions are:

o Laser Correction and Professional Services. We develop laser vision
correction centers and provide marketing, systems, software and other
services to eye care professionals.

o Managed Care Services. We contract with managed care plans to manage
the eye health portion of their benefits.

o Other Integrated Services. We own and operate fully integrated eye
health centers, retail optical stores and a buying group program.

To realize the growth potential in these businesses:

o We intend to expand our laser vision correction services at our
existing owned and operated laser vision correction and ambulatory
surgery centers.

o We have developed a program called the OptiCare Laser Advantage (Trade
Mark) to participate in the rapid growth of laser vision correction.
In this arrangement, we intend to enter into laser vision correction
development agreements with ophthalmology practices that already
perform laser vision correction surgery at a third-party laser site,
but which desire to open their own laser center.

o We will emphasize our professional services offerings, in which we
sell a broad range of management services and eye care systems and
software to eye health professionals.

o We intend to aggressively promote and grow our Managed Care Services
division by leveraging our large customer base and favorable market
trends.

o We intend to further leverage and link our service offerings across
the spectrum of eye care. We believe that having multiple businesses
within the eye care services marketplace provides us with numerous
advantages.

Our History. Our present form is the result of two mergers completed on
August 13, 1999 among Saratoga Resources, Inc., a Delaware corporation,
OptiCare Eye Health Centers, Inc., and PrimeVision Health, Inc. At the time of
the mergers, PrimeVision Health and OptiCare Eye Health Centers was each an
integrated vision services company. Saratoga, the surviving parent of the
mergers, was renamed "OptiCare Health Systems, Inc." at the time the mergers
were closed. For accounting purposes, PrimeVision Health was deemed the
acquirer of Saratoga and OptiCare. Throughout this prospectus:

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o when we use the words "we," "our," "us" or "company" for periods prior
to August 13, 1999, we are referring to PrimeVision Health or to
OptiCare Eye Health Centers, or to both of them on a combined pro
forma basis as the context requires, and not to Saratoga;

o when we use the word "Saratoga", we are referring to Saratoga
Resources, Inc., a Delaware corporation, and its oil business for
periods prior to August 13, 1999.

Our executive offices are located at 87 Grandview Avenue, Waterbury,
Connecticut 06708, and our telephone number is 203-596-2236.

2
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THE OFFERING

Common Stock Offered........ Up to 4,000,000 shares

Common Stock Outstanding
after the Offering.......... 12,972,128 shares, assuming we sell all
4,000,000 shares we are offering.

Use of Proceeds............. We intend to use our net proceeds from this
offering to reduce the outstanding balance of our
term loan under our credit facility, to repay
indebtedness under subordinated notes, and to
expand our laser correction and professional
services division, and general corporate
purposes; prior to applying the net proceeds to
expand, we will temporarily reduce the
outstanding balance of our revolving debt under
our credit facility. See "Use of Proceeds."

American Stock
Exchange Symbol............. "OPT"

Risk Factors................ You should carefully consider the information
set forth in "Risk Factors" and all other
information set forth in this prospectus before
investing in our common stock.

Dividend Policy............. We intend to retain our earnings for working
capital and do not anticipate paying cash
dividends in the foreseeable future. See
"Dividend Policy."

Unless otherwise indicated, references to numbers and percentages of
shares of common stock are based upon 8,972,128 shares of our common stock
outstanding on January 14, 2000. This number excludes 1,316,778 shares of
common stock issuable upon the exercise of stock options under our Performance
Stock Program. For more information about our Performance Stock Program, see
"Performance Stock Program."

3
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SUMMARY HISTORICAL CONSOLIDATED AND PRO FORMA COMBINED FINANCIAL DATA

The following summary historical consolidated financial data has been
derived from PrimeVision Health's audited consolidated financial statements for
the years ended December 31, 1998, 1997, 1996 and 1995, and the unaudited
consolidated financial statements as of and for the nine month periods ended
September 30, 1999 and 1998. Prior to 1995, PrimeVision Health did not exist.
Our present form is the result of the mergers completed on August 13, 1999
among Saratoga, PrimeVision Health and OptiCare Eye Health Centers. For
accounting purposes, PrimeVision Health is treated as the accounting acquirer
and, therefore, the predecessor business for historical financial statement
reporting purposes. For more detailed financial data, see "Selected
Consolidated Historical and Pro Forma Combined Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the financial statements which begin on page F-1.

The pro forma combined financial data has been derived from the unaudited
pro forma financial data appearing elsewhere in this prospectus. The pro forma
statement of operations data gives effect to each of the following transactions
as if each had occurred at the beginning of the respective period:

o the reverse acquisition by PrimeVision Health of Saratoga;

o the acquisition by PrimeVision Health of OptiCare Eye Health Centers
under the purchase method of accounting; and

o the issuance and sale of our common stock in this offering at an
offering price of $3.50 per share, which is the closing price of our
common stock on the American Stock Exchange on January 14, 2000, and
the application of the net proceeds therefrom as described in "Use of
Proceeds."

The as adjusted combined balance sheet data gives effect to the issuance
and sale of our common stock in this offering at an offering price of $3.50 per
share, which is the closing price of our common stock on the American Stock
Exchange on January 14, 2000, and the application of the net proceeds therefrom
as if each of these transactions had occurred on September 30, 1999.

The information set forth below should be read in conjunction with our
consolidated financial statements and unaudited pro forma combined financial
statements and notes thereto, and the "Capitalization" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this prospectus. The financial information presented
below for the nine-month periods ended September 30, 1999 and 1998 reflects all
normal and recurring adjustments which, in the opinion of management, are
necessary for a fair presentation of our consolidated results of operations and
financial position for such periods. The information shown for the nine-month
periods is not necessarily indicative of the results that may be expected for
the full year.

4
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<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
(UNAUDITED) FOR THE YEARS ENDED DECEMBER 31,
---------------------------------- -------------------------------------------------------
PRO FORMA HISTORICAL PRO FORMA HISTORICAL
----------- ---------------------- ----------- -------------------------------------------
1999 1999(1) 1998 1998 1998 1997 1996 1995
----------- ----------- ---------- ----------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Total net revenues ............... $96,398 $62,895 $ 50,164 $103,982 $ 64,612 $ 58,346 $52,157 $38,523
Income (loss) from continuing
operations ...................... (403) 212 (1,285) (1,538) (3,239) (2,034) (767) (391)
Weighted average shares
outstanding(3) .................. 12,862 3,415 2,241 12,862 2,256 1,856 693 --
Income (loss) from continuing
operations per share(2) ......... $ (0.03) $ (0.11) $ (0.84) $ (0.12) $ (2.54) $ (1.10) $ (1.11) $ --
</TABLE>

- ----------
(1) On August 13, 1999, OptiCare Eye Health Centers was acquired in a
transaction accounted for as a purchase. Accordingly, the results of
operations for OptiCare Eye Health Centers are included in the historical
results of operations since September 1, 1999, the deemed effective date
of the acquisition for accounting purposes.

(2) Income (loss) from continuing operations per share for the historical
1999 and 1998 periods are calculated after giving effect to preferred
stock dividends.

(3) The weighted average common shares outstanding have been adjusted to
reflect the conversion associated with the reverse merger with Saratoga.

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999
---------------------------
AS ADJUSTED HISTORICAL
------------- -----------
<S> <C> <C>
Balance Sheet Data:
Total current assets ........................... $25,395 $25,395
Total assets ................................... 68,308 68,444
Total current liabilities ...................... 25,327 25,327
Total debt (including current portion) ......... 27,782 41,382
Total stockholders' equity ..................... 17,800 4,336
</TABLE>

5
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RISK FACTORS

You should carefully consider each of the risks and uncertainties
described below, and all the other information contained in this prospectus
before deciding to invest in shares of our common stock. The trading price of
our common stock could decline if any of the following risks and uncertainties
develop into actual events, and you may lose part or all of the money you paid
to buy our common stock.

COMPANY RISKS

IF WE FAIL TO EXECUTE OUR GROWTH STRATEGY, WE MAY NOT BECOME PROFITABLE OR
SUSTAIN OUR PROFITABILITY.

Our growth strategy depends in part on our ability to expand and
successfully implement our laser vision correction business, including
implementation of the OptiCare Laser Advantage (Trade Mark) program. Our
growth strategy also requires successful sales results and operational
execution in our managed care business. Our growth strategy has resulted in,
and will continue to result in, new and increased responsibilities for
management and additional demands on management, operating and financial
systems and resources. Our ability to continue to expand will also depend upon
our ability to hire and train new staff and managerial personnel, and adapt our
structure to comply with present or future legal requirements affecting our
arrangements with ophthalmologists and optometrists. If we are unable to
implement these and other requirements, our business, financial condition,
results of operations and ability to achieve and sustain profitability could be
materially adversely affected. For more information, see "Business -- Our
Growth Strategy."

IF WE ARE UNABLE TO OBTAIN ADDITIONAL CAPITAL, OUR GROWTH COULD BE LIMITED.

If we do not generate sufficient cash from our operations we may need to
obtain additional capital in order to successfully implement our growth
strategy. Additional capital may not be available to us and if it is, it may
not be on terms that are favorable to us or sufficient for our needs.

WE HAVE A HISTORY OF LOSSES AND MAY INCUR FURTHER LOSSES IN THE FUTURE.

On a pro forma basis giving effect to the mergers of PrimeVision Health
and OptiCare Eye Health Centers and related transactions, we had losses from
continuing operations for the year ended December 31, 1998 of approximately
$2.2 million. On the same pro forma basis, we had losses from continuing
operations of approximately $0.9 million for the nine months ended September
30, 1999. We cannot assure that we will not incur further losses.

IF WE DEFAULT ON OUR DEBT, OUR CREDITORS COULD FORECLOSE ON OUR ASSETS.

Our outstanding indebtedness under our credit facility as of December 1,
1999 was approximately $32.7 million. Substantially all of our assets are
pledged to secure this indebtedness. In addition, we have approximately $10.1
million of unsecured subordinated debt. If we default on the financial
covenants in our credit facility, our lender could foreclose on its security
interest in our assets, which would have a material adverse effect on our
business, financial condition and results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Certain Indebtedness."

WE MAY HAVE DIFFICULTY INTEGRATING THE OPERATIONS AND REALIZING BENEFITS FROM
THE MERGERS OF PRIMEVISION HEALTH AND OPTICARE EYE HEALTH CENTERS.

We may not be able to successfully integrate the operations of PrimeVision
Health and OptiCare Eye Health Centers without encountering difficulties or
experiencing the loss of key employees, potential customers or suppliers. If we
do not successfully complete the integration of the two

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companies, or if the effort requires greater time or resources than we have
anticipated, we may not realize the expected benefits from the mergers, and
this could have a material adverse effect on our business, financial condition,
and results of operations. See "Business -- Our Formation."

WE MAY NOT COMPETE EFFECTIVELY WITH OTHER EYE CARE SERVICES COMPANIES THAT HAVE
MORE RESOURCES AND EXPERIENCE THAN US.

Some of our competitors have substantially greater financial, technical,
managerial, marketing and other resources and experience than us and, as a
result, may compete more effectively than us. We compete with other businesses,
including other eye care services companies, hospitals, individual
ophthalmology and optometry practices, other ambulatory surgery and laser
vision correction centers, managed care companies, eye care clinics and
providers of retail optical products. Companies in other health care industry
segments, including managers of hospital-based medical specialties or large
group medical practices, may become competitors in providing surgery and laser
centers as well as competitive eye care-related services. Our failure to
compete effectively with these and other competitors, could have a material
adverse effect on our business, financial condition and results of operations.
See "Business -- Competition."

LOSS OF THE SERVICES OF KEY MANAGEMENT PERSONNEL COULD ADVERSELY AFFECT OUR
BUSINESS.

Our success, in part, depends upon the continued services of Dean J.
Yimoyines, M.D., who is our chairman, president and chief executive officer. We
believe that the loss of the services of Dr. Yimoyines could have a material
adverse effect on our business, financial condition and results of operations.
We have an employment agreement with Dr. Yimoyines having a three year term,
subject to certain early termination provisions, which is renewable for
subsequent terms. For more information on this agreement, see "Management --
Employment Agreements."

LASER VISION CORRECTION MAY NOT ACHIEVE BROAD MARKET ACCEPTANCE.

The profitability and expansion of our Laser Correction and Professional
Services division may be materially adversely affected if laser vision
correction is not accepted by consumers. We cannot be certain that laser vision
correction will become more widely accepted by the general public as an
alternative to existing methods of treating refractive vision disorders, i.e.,
principally nearsightedness, farsightedness and astigmatism. Several factors
may inhibit laser vision correction from achieving broad market acceptance,
including:

o the cost, particularly since laser vision correction patients are
generally billed directly and not reimbursed by third party payors;

o the effectiveness of alternative methods of correcting refractive
vision disorders, including contact lenses and eye glasses;

o concerns about safety and effectiveness, including uncertainty about
long-term side-effects;

o general resistance to surgery; and

o unfavorable publicity involving laser vision correction procedures.
For more information, see "Business -- Our Industry."

NEW TECHNOLOGICAL ADVANCES MAY MATERIALLY ADVERSELY AFFECT OUR GROWTH STRATEGY.

New technological advances in the treatment of vision disorders that are
comparable or superior to laser vision correction could materially harm our
growth strategy. If such advances become readily available and accepted, we may
have to quickly make adjustments to the OptiCare Laser Advantage (Trade Mark)
program in order to remain competitive. We may not be able to make all
necessary adjustments, and the adjustments could also require additional
capital expenditures, which could have a material adverse effect on our
business, financial condition and results of operations. See "Business -- Our
Growth Strategy."

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WE DEPEND ON LIMITED SOURCES OF EXCIMER LASERS AND RELATED PRODUCTS AND
EQUIPMENT, SHORTAGES OF THESE PRODUCTS COULD HINDER OUR ABILITY TO INCREASE OUR
PROCEDURE VOLUME.

We currently use one laser supplier, Summit Technologies, Inc., for
excimer lasers and related refractive-surgery equipment on the OptiCare Laser
Advantage (Trade Mark) program. We plan to utilize other laser manufacturers
for the program, but we have not yet executed any agreements with other
manufacturers. If Summit became unable or unwilling to supply us with excimer
lasers and the related equipment, to repair parts or to provide services, our
business could be materially adversely affected. To our knowledge, only a few
companies have been approved by the United States Food and Drug Administration
for commercial sale of excimer lasers in the U.S. If any of these manufacturers
were for any reason to discontinue commercial sale of ophthalmic lasers, or be
unwilling or unable to meet our needs, we may not be able to equip our centers
with the appropriate technology or operate the OptiCare Laser Advantage (Trade
Mark) program. For more information, see "Business -- Our Business
Operations."

IF WE FAIL TO NEGOTIATE PROFITABLE CAPITATED FEE ARRANGEMENTS, THAT COULD HAVE
A MATERIAL ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

Under some managed care contracts, known as "capitation" contracts, we or
any other health care providers accept a fixed payment per member per month,
whether or not a person covered by a managed care plan receives any services,
but we are obligated to provide all necessary covered services to the patients
covered under the agreement. Many of these contracts pass part of the financial
risk of providing care from the payor, i.e., an HMO, health insurer, employee
welfare plan or self-insured employer, to the provider. The growth of
capitation contracts in markets which we serve could result in less certainty
with respect to profitability and requires a higher level of actuarial acumen
in evaluating such contracts. We do not know whether we will be able to
continue to negotiate profitable arrangements on a capitated or other
risk-sharing basis, or to pass the financial risks of providing care to other
parties, or to accurately predict utilization or the costs of rendering
services. In addition, changes in federal or state regulations of these
contracts may limit our ability to transfer financial risks away from us. Any
such developments could have a material adverse effect on our business,
financial condition and results of operations. For more information, see
"Business -- Managed Care Division."

YEAR 2000 COMPLIANCE ISSUES MAY EXPOSE US TO LIABILITY, INTERRUPT OUR ABILITY
TO CONDUCT BUSINESS OR IMPAIR OUR CASH FLOW IF THEY CAUSE DELAYED PAYMENTS ON
OUR ACCOUNTS RECEIVABLE.

The year 2000 issue relates to computer programs that have time sensitive
hardware and software unable to recognize or to interpret dates beyond the year
1999. This could result in a system failure or miscalculations causing
disruptions of operations, including a temporary inability to process
transactions, bill and collect fees or engage in other business activities.

We have undertaken an assessment of our state of readiness and the
potential impact of any year 2000 risks. We have designed our efforts to assess
the year 2000 readiness of our significant third party payors, physical
facility systems, product and equipment manufacturers and suppliers to
determine whether we are vulnerable to the failure of these parties to
remediate their own year 2000 issues. To date, we have spent immaterial amounts
to address year 2000 concerns. However:

o our assessment that we will not incur material year 2000 compliance
costs may prove inaccurate;

o precautions that we have taken to protect our business from, or
minimize the impact of, the year 2000 issue may not adequately address
this issue; and

o the systems of other companies, on which our operations rely,
including third party payors, may not adequately address the year 2000
issue.

Although not applicable to laser vision correction and other refractive
procedures, the patients of our eye surgery and laser centers and affiliated
eye care providers pay a portion of the charges for eye

8
<PAGE>

care services with Medicare or third party payor reimbursements. Some private
insurance companies also provide partial or full coverage for elective
procedures. If Medicare or private insurance companies have difficulty
processing and paying claims because of year 2000 issues, this could cause our
accounts receivable to increase, which could impair our cash flow from
operations, causing us to increase our bank borrowings to compensate for the
reduction in cash flow and resulting in higher interest expense. For more
information, see "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Year 2000."

WE MAY HAVE POTENTIAL CONFLICTS OF INTERESTS FROM RELATED PARTY TRANSACTIONS
WHICH COULD RESULT IN CERTAIN OF OUR OFFICERS, DIRECTORS AND KEY EMPLOYEES
HAVING INTERESTS THAT DIFFER FROM US AND OUR STOCKHOLDERS.

There are contractual agreements between us and entities owned or
controlled by several of our officers, directors and key employees, which
agreements could create the potential for possible conflicts of interests for
such individuals. For a discussion of those agreements, see "Certain
Relationships and Related Transactions."

A WRITE-OFF OF INTANGIBLE ASSETS WOULD ADVERSELY AFFECT OUR RESULTS OF
OPERATIONS.

At September 30, 1999, intangible assets represented approximately 44% of
total assets. The intangible asset value represents the excess of cost over the
fair value of the separate tangible net assets acquired in various
transactions. If, in the future, we determine that our unamortized intangible
assets have suffered an impairment which requires us to write off a large
portion of unamortized intangible assets due to a change in events or
circumstances, this write-off would significantly reduce our total assets, may
place us in default under the terms of our credit facility, and we would incur
a substantial charge to earnings.

INDUSTRY RISKS

HEALTH CARE COST CONTAINMENT AND LOWER REIMBURSEMENT TRENDS MAY IMPAIR PROFITS.

A portion of the revenues received by our eye care and retail optical
providers are derived from government-sponsored health care programs and
private third-party payors. The health care industry has experienced a trend
toward cost containment as government and private third-party payors seek to
impose lower reimbursement and utilization rates and negotiate reduced payment
schedules with service providers. We believe that these trends may result in a
reduction from historical levels in per patient revenue received by the eye
care providers. For more information regarding health care cost containment,
see "Business -- Government Regulation."

HEALTH CARE REGULATIONS OR HEALTH CARE REFORM INITIATIVES COULD MATERIALLY
ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

We are subject to extensive federal and state governmental regulation and
supervision, including:

o anti-kickback statutes;
o self-referral laws;
o insurance and licensure requirements associated with our managed care
business;
o civil false claims acts;
o corporate practice of medicine restrictions;
o fee-splitting laws;
o facility license requirements and certificates of need;
o regulation of medical devices, including laser vision correction and
other refractive surgery procedures.
o FTC guidelines for marketing laser vision correction.

We cannot assure you that these laws and regulations will not change or be
interpreted in the future either to restrict or adversely affect our business
activities or relationships without eye care providers. In addition, federal
and state governments are currently considering various types of health

9
<PAGE>

care initiatives and comprehensive revisions to the health care and health
insurance systems. Some of the proposals under consideration, or others that
may be introduced, could, if adopted, have a material adverse effect on our
business, financial condition and results of operations. For more information
regarding health care regulations and reform initiatives, see "Business --
Government Regulations."

THE NATURE OF OUR BUSINESS COULD SUBJECT US TO POTENTIAL MALPRACTICE, PRODUCT
LIABILITY AND OTHER CLAIMS.

The provision of eye care services entails the potentially significant
risk of physical injury to patients and an inherent risk of potential
malpractice, product liability and other similar claims. Our insurance may not
be adequate to satisfy claims or protect us or our affiliated eye care
providers, and this coverage may not continue to be available at acceptable
costs. A partially or completely uninsured claim against us could have a
material adverse effect on our business, financial condition and results of
operations.

MANAGED CARE COMPANIES FACE INCREASING THREATS OF PRIVATE-PARTY LITIGATION,
INCLUDING CLASS ACTIONS, OVER THE SCOPE OF CARE THAT THE MANAGED CARE COMPANIES
MUST PAY FOR.

Recently, several large national managed care companies have been the
target of class action lawsuits alleging fraudulent practices in the
determination of health care coverage policies for their beneficiaries. Such
lawsuits have, thus far, been aimed solely at full service managed care plans
and not companies that specialize in specific segments, such as eye care. We
cannot assure that private party litigation, including class action suits, will
not target us in the future, or that we will not otherwise be affected by such
litigation.

LITIGATION IN THE MEDICAL DEVICE INDUSTRY MAY IMPAIR OUR ABILITY TO PROVIDE EYE
CARE PROFESSIONALS WITH NECESSARY EQUIPMENT.

The medical device industry, including the eye-related laser equipment
sector, has experienced significant litigation in the U.S. regarding patents
and proprietary rights. Any future litigation that relates to equipment we use
at our ambulatory surgical centers and eye care centers may impair our ability
to obtain and provide access to this equipment.

On December 7, 1999, the U.S. International Trade Commission issued a
preliminary ruling that patents for vision correction lasers sold by Nidek, a
manufacturer of excimer lasers, do not infringe upon certain commercial rights
of VISX, Inc., a manufacturer of laser machines. This ruling, if it becomes
final and is upheld, may result in downward pressure on prices of excimer
lasers, which may lower the cost of laser equipment after we have invested in
it at higher prices. This in turn may enable our competitors to compete with us
on the basis of price and may reduce or eliminate our gross margins.

OFFERING RISKS

YOU MAY BE DILUTED IN THE FUTURE IF WE ISSUE STOCK TO FINANCE WORKING CAPITAL,
ACQUISITIONS OR OTHER NEEDS.

We may in the future determine that we need additional funding for
expansion of our laser correction surgery business, for general working
capital, or for other needs for capital. We may in the future want to issue
common stock to raise cash needed for working capital or to make acquisitions.
However, we would not pass up an appropriate opportunity if we are presented
with such opportunity in the future.

THE PRICE OF OUR COMMON STOCK MAY BE VOLATILE, WHICH COULD EFFECT THE
STOCKHOLDERS' RETURN ON INVESTMENT.

The market price of our common stock has been subject to significant
fluctuations, and we expect it to continue to be subject to such fluctuations.
We believe the reasons for these fluctuations include the relatively thin level
of trading in our stock, and the relatively low public float. Therefore,

10
<PAGE>

variations in financial results, announcements of material events by us or our
competitors which could affect the price of our common stock, our quarterly
operating results, changes in general conditions in the economy or the health
care industry, or other developments affecting us or our competitors, could
cause the market price of the common stock to fluctuate substantially. The
equity markets have on occasion experienced significant price and volume
fluctuations that have affected the market prices for many companies'
securities, and sometimes such fluctuations have been unrelated to the
operating performance of these companies. See "Price Range of Common Stock."

OUR BOARD OF DIRECTORS HAS THE AUTHORITY TO ISSUE PREFERRED STOCK, WHICH COULD
DETER TAKEOVER BIDS EVEN IF THOSE BIDS ARE IN THE STOCKHOLDERS' BEST INTERESTS.

We have 5,000,000 shares of authorized and unissued preferred stock, of
which 418,803 shares of non-voting convertible preferred stock have been issued
to Bank Austria AG or its affiliate in connection with the credit facility. The
balance of approximately 4,500,000 authorized shares of preferred stock could
be issued to third parties selected by management or used as the basis for a
stockholders' rights plan, which could have the effect of deterring potential
acquirers. The ability of the Board of Directors to establish the terms and
provisions of different series of preferred stock could discourage unsolicited
takeover bids from third parties even if those bids are in the stockholders'
best interests.

WE ARE RESTRICTED BY CONTRACT FROM PAYING DIVIDENDS AND, AS SUCH, YOUR RETURN
ON INVESTMENT ON OUR COMMON STOCK WILL MOST LIKELY DEPEND ONLY UPON THE
APPRECIATION IN THE PRICE OF THE COMMON STOCK.

Our credit facility places certain restrictions on the future payment of
dividends. Furthermore, we currently intend to retain all future earnings for
the operation and expansion of our business, and, accordingly, we do not
anticipate that any dividends will be declared or paid for the foreseeable
future. Therefore, any return earned on an investment in our common stock in
the foreseeable future, if any, will most likely depend upon the appreciation
in the price of the common stock. See "Divided Policy" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity."

WE MAY NOT BE ABLE TO MAINTAIN THE LISTING OF OUR COMMON STOCK ON THE AMERICAN
STOCK EXCHANGE, AND PENNY STOCK RULES MAY APPLY TO THE SALE OF OUR COMMON
STOCK, WHICH, IN EACH CASE, WOULD MAKE IT MORE DIFFICULT FOR STOCKHOLDERS TO
DISPOSE OF OUR COMMON STOCK.

Our common stock is listed on the American Stock Exchange. We cannot
guarantee that it will always be listed. The American Stock Exchange rules for
continual listing include stockholders' equity requirements, which we may not
meet if we experience losses, and market value requirements, which we may not
meet if the price of the common stock declines.

If our common stock is delisted from the American Stock Exchange, trading
in our common stock would be conducted, if at all, in the over-the-counter
market. This would make it more difficult for stockholders to dispose of their
common stock and more difficult to obtain accurate quotations on our common
stock. This could have an adverse effect on the price of the common stock.
There are separate rules regulating broker-dealers who trade on behalf of
customers in unlisted stocks. These rules require broker-dealers to sell common
stock only to established customers and accredited investors (generally defined
as investors with a net worth in excess of $1,000,000 or annual income
exceeding $200,000, or $300,000 together with a spouse), to make special
suitability determinations about the purchasers, and to receive the purchaser's
written consent to the transaction prior to sale. The effect of these
requirements may be to limit the ability or incentive of broker-dealers to sell
our common stock.

The Securities and Exchange Commission has adopted regulations that define
"penny stock" to include common stock that has a market price of less than
$5.00 per share, subject to certain exceptions. These rules include the
following requirements:

o Broker-dealers must deliver, prior to the transaction, a disclosure
schedule prepared by the SEC relating to the penny stock market.

11
<PAGE>

o Broker-dealers must disclose the commissions payable to the
broker-dealer and its registered representative.

o Broker-dealers must disclose current quotations for the securities.

o If a broker-dealer is the sole market-maker, the broker-dealer must
disclose this fact and the broker-dealer's presumed control over the
market.

o A broker-dealer must furnish its customers with monthly statements
disclosing recent price information for all penny stocks held in the
customer's account and information on the limited market in penny
stocks.

Many securities listed on the American Stock Exchange would be covered by
the definition of penny stock, but transactions in a security listed on the
American Stock Exchange are exempt from such rules (except the "sole
market-maker" provision mentioned in point (d) above) if:

o the issuer has $2,000,000 in tangible assets,

o the customer is an institutional accredited investor, and

o the transaction is not recommended by the broker-dealer.

These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for a stock that becomes subject to
the penny stock rules.

FORWARD-LOOKING STATEMENTS

We believe that it is important to communicate our expectations to our
investors. Accordingly, this prospectus contains discussion of events or
results that have not yet occurred or been realized. Certain of the matters
discussed concerning our operations, economic performance, financial condition,
including in particular statements regarding our financial prospects, our
ability to manage and grow our business, our ability to expand our laser vision
correction business, statements regarding industry trends, financing plans,
growth and operating strategies, our ability to recruit and retain eye care
providers, our ability to expand our managed care business, and the impact of
government regulations, are areas, among others, which include forward-looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. Statements that are predictive in nature, that depend
upon or refer to future events or conditions, or that include words such as,
"expects", "anticipates", "intends", "plans", "believes", "estimates" and
similar expressions are forward-looking statements. You should read
forward-looking statements carefully because they discuss our future
expectations, contain projections of our future results of operations or of our
financial position, or state other expectations of future performance.

Please do not place unjustified or excessive reliance on any forward
looking statements. The actions of current and potential new competitors,
changes in technology, seasonality, business cycles and new regulatory or
licensing requirements are factors that impact greatly upon strategies and
expectations and are outside our direct control. There may be events in the
future that we are not able to anticipate or accurately predict or control. The
factors listed in the section captioned "Risk Factors", as well as any
cautionary language in this prospectus, provide examples of risks,
uncertainties and events that may cause our actual results to differ from the
expectations we express in our forward-looking statements. Before you invest in
our common stock, you should be aware that the occurrence of the events
described in the section caption "Risk Factors" and elsewhere in this
prospectus could materially adversely affect our business, financial condition
and results of operations.

12
<PAGE>

USE OF PROCEEDS

Assuming that the offering price is $3.50 per share, which is the closing
price on the American Stock Exchange on January 14, 2000, and assuming we sell
all the shares we are offering, we will receive approximately $13.6 million
from the sale of the common stock in this offering. These amounts are net of
the estimated offering expenses of $.4 million.

We currently intend to use the net proceeds of this offering as follows:

o $3.0 million to reduce the outstanding balance of the term loan under
our credit facility which currently bears interest at the rate of
8.39% per annum. The term loan facility is repayable in fifteen
quarterly principal installments, with the first fourteen installments
repayable in accordance with the amortization schedule set forth in
the credit facility, and the final payment of all principal amounts
outstanding, due and payable on June 1, 2004.

o $4.0 million to pay in full the $4.0 million 9% subordinated
convertible note held by Marlin Capital, L.P. which is due and payable
on August 13, 2002. See "Certain Relationships and Related
Transactions."

o the $2.0 million 8% subordinated note held by Marlin Capital, L.P.,
which is due and payable on August 13, 2002, will be cancelled upon
the exchange of the note for shares of common stock offered in this
offering, as further described below. See "Certain Relationships and
Related Transactons."

o $4.6 million for the expansion of our laser correction and
professional services division, additional e-commerce applications and
for working capital and general corporate purposes. Until we apply the
net proceeds for those purposes, we will apply the net proceeds to
temporarily reduce the outstanding balance of the revolving portion of
debt under our credit facility, which currently bears interest at the
rate of 8.39% per annum. The revolving portion of the credit facility
is due in full on June 1, 2004.

If we sell less than all the shares we are offering, the proceeds will be
applied in the priority indicated above.

The first $3,000,000 of net proceeds from the sale of common stock is
required to be paid to the lenders pursuant to the terms of our credit
facility. We are required to redeem the $4,000,000 note issued to Marlin
Capital (if not converted) at the redemption price, to the extent that we raise
net proceeds from this offering in an amount in excess of $3,000,000. Marlin
Capital intends to purchase approximately $2.0 million of the common stock in
this offering through the exchange of a $2.0 million subordinated note issued
by us at an exchange rate equal to the price of common stock offered in this
offering. See "Certain Relationships and Related Transactions."

The proceeds of our credit facility were used to pay indebtedness of
PrimeVision Health and OptiCare Eye Health Centers and to fund our business
operations. The proceeds of the subordinated notes issued to Marlin Capital,
L.P. were used in connection with the mergers among PrimeVision Health,
OptiCare Eye Health Centers and Saratoga. See "Certain Indebtedness."

Subject to the terms of our credit facility, we are permitted to
"re-borrow" the amount that we apply to reduction of the revolving portion of
debt under our credit facility until June 1, 2004.

We regularly review opportunities to further our business strategy through
strategic acquisitions of businesses that we believe are complementary to our
current and planned operations. See "Business -- Growth Strategy."

The foregoing information represents our best belief of our use of the
proceeds of this offering based upon our current plans. Actual expenditures may
vary substantially from the intended uses described above. We may find it
necessary or advisable to use portions of the proceeds of this offering for
other purposes.

13
<PAGE>

PRICE RANGE OF COMMON STOCK

You should evaluate the following information about the market prices of
our common stock in light of the material and substantial qualitative changes
in our business that became effective upon the closing of the mergers of the
company with PrimeVision Health and OptiCare Eye Health Centers, on August 13,
1999. Among other changes, (i) Saratoga effected a 0.06493-for-1 reverse stock
split on August 13, 1999, (ii) Saratoga spun off to its stockholders of record
prior to the mergers, the capital stock of certain subsidiaries, and (iii) we
issued approximately 8.7 million shares of post-reverse-split common stock to
effectuate the mergers. The prices reported below for periods ending on or
before August 13, 1999, have been adjusted to reflect the reverse stock split.

Commencing August 16, 1999, our common stock has been listed on the
American Stock Exchange and is traded under the symbol "OPT" (or, from August
16 through September 20, 1999, under the symbol "OPTWI"). Prior to August 16,
1999, our common stock was not listed on any stock exchange, but quotations
from time to time were reported by the NASD on the OTC Bulletin Board under the
symbol "SRIK."

The high and low prices for the period from August 16, 1999, through
January 14, 2000, are based on trades effected on the American Stock Exchange.
The range of high and low bid information for the shares of our common stock
for the last two complete fiscal years, and for January 1 through August 13,
1999, as set forth below, was reported by the National Quotation Bureau. Such
quotations represent prices between dealers, do not include retail markup,
markdown or commission, and may not represent actual transactions.

<TABLE>
<CAPTION>
2000 HIGH LOW
- ------------------------------------------ ---- ---
<S> <C> <C>
1st Quarter (through January 14) ......... $ 3.75 $ 3.00

1999 HIGH LOW
- ---- ---- ---
4th Quarter .............................. $ 5.00 $ 2.75
3rd Quarter*:
August 16 -- September 30* .............. 12.50 5.00
July 1 -- August 13** ................... 0.106 0.037
2nd Quarter .............................. 0.067 0.004
1st Quarter .............................. 0.004 0.004

1998
- ----
4th Quarter .............................. 0.016 0.004
3rd Quarter .............................. 0.016 0.016
2nd Quarter .............................. 0.073 0.012
1st Quarter .............................. 0.012 0.012

1997
- ----
4th Quarter .............................. 0.073 0.004
3rd Quarter .............................. 0.014 0.006
2nd Quarter .............................. 0.014 0.006
1st Quarter .............................. 0.018 0.006
</TABLE>

* The range of prices and quotations in the 3rd Quarter of 1999 is reported
separately for periods ending on or before August 13, 1999, which is the
last trading day before the reverse stock split and the mergers of
OptiCare Health Centers and Prime Vision Health became effective.
** Quotations for all periods ending on or before August 13, 1999, have
been adjusted to give effect to a 1-for-0.06493 reverse stock split that
became effective at the close of business on August 13, 1999.

On January 14, 2000, the last reported sale price of the common stock on
the American Stock Exchange was $3.50 per share. As of January 14, 2000, we had
approximately 161 stockholders of record.

14
<PAGE>

DIVIDEND POLICY

The holders of our common stock are entitled to share ratably in any
dividends we declare on the common stock. We have never paid any cash dividends
on our common stock and do not intend to pay any cash dividends for the
foreseeable future. We expect to continue to retain any earnings for repayment
of indebtedness, working capital, capital expenditures and general corporate
purposes. Our credit facility restricts us from declaring or paying any cash
dividends or making any other payment or distribution on account of our capital
stock. For information about restrictions on our payment of dividends, see
"Certain Indebtedness," and "Description of Capital Stock."

15
<PAGE>

CAPITALIZATION

The following table sets forth our capitalization as of September 30, 1999
actual and as adjusted to reflect the issuance and sale of the shares of our
common stock in this offering at an offering price of $3.50 per share, which is
the closing price of our common stock on the American Stock Exchange on January
14, 2000, and application of the estimated net proceeds from the offering. This
table should be read in conjunction with our consolidated financial statements
and notes thereto appearing elsewhere in this prospectus.

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999
---------------------------
ACTUAL AS ADJUSTED
------------ ------------
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Long-term debt, (including current portion):
Credit facility ............................................ $ 29,900 $ 22,300
8% subordinated note due 2002 .............................. 2,000 --
9% convertible subordinated note due 2002 .................. 4,000 --
Other subordinated debt .................................... 5,482 5,482
--------- ---------
Total long-term debt (including current portion) ......... 41,382 27,782
========= =========
Stockholders' equity:
Series A convertible preferred stock, $.001 par value, 1 1
550,000 shares authorized; 418,803 shares issued and
outstanding; ...............................................
Common stock, $.001 par value; 50,000,000 shares 9 13
authorized; 8,862,128 shares issued and outstanding
(actual) and 12,862,128 shares (as adjusted) ...............
Additional paid-in-capital ................................. 46,994 60,590
Accumulated deficit(1) ..................................... (42,668) (42,804)
--------- ---------
Total stockholders' equity ............................... 4,336 17,800
--------- ---------
Total capitalization ........................................ $ 45,718 $ 45,582
========= =========
</TABLE>

- ----------
1. Accumulated deficit adjusted for the offering has been increased by $136 to
write off deferred financing costs (net of tax) associated with the credit
facility.

16
<PAGE>

SELECTED HISTORICAL CONSOLIDATED
AND PRO FORMA COMBINED FINANCIAL DATA

The following selected historical consolidated financial data has been
derived from PrimeVision Health's audited consolidated financial statements as
of and for the years ended December 31, 1998, 1997, 1996 and 1995, and the
unaudited consolidated financial statements as of and for the nine month
periods ended September 30, 1999 and 1998. Prior to 1995, PrimeVision Health
did not exist. Our present form is the result of the mergers completed on
August 13, 1999 among Saratoga, PrimeVision Health and OptiCare Eye Health
Centers. For accounting purposes, PrimeVision Health was treated as the
accounting acquirer and, therefore, the predecessor business for historical
financial statement reporting purposes.

o the reverse acquisition by PrimeVision Health of Saratoga;

o the acquisition by PrimeVision Health of OptiCare Eye Health Centers
under the purchase method of accounting; and

The information set forth below should be read in conjunction with our
consolidated financial statements and unaudited pro forma combined financial
statements and notes thereto, and "Capitalization" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included
elsewhere in this prospectus. The financial information presented below for the
nine-month periods ended September 30, 1999 and 1998, reflects all normal and
recurring adjustments which, in the opinion of management, are necessary for a
fair presentation of our consolidated results of operations and financial
position for such periods. The information shown for the nine-month periods is
not necessarily indicative of the results that may be expected for the full
year.

17
<PAGE>

<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
(UNAUDITED) FOR THE YEARS ENDED DECEMBER 31,
---------------------------------- -------------------------------------------------------
PRO FORMA HISTORICAL PRO FORMA HISTORICAL
----------- ---------------------- ----------- -------------------------------------------
1999 1999(1) 1998 1998 1998 1997 1996 1995
----------- ----------- ---------- ----------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Total net revenues ......... $96,398 $62,895 $ 50,164 $103,982 $ 64,612 $ 58,346 $52,157 $38,523
Income (loss)
from continuing
operations ............... (403) 212 (1,285) (1,538) (3,239) (2,034) (767) (391)
Weighted average shares
outstanding (3) .......... 12,862 3,415 2,241 12,862 2,256 1,856 693 --
Income (loss) from
continuing operations
per share (2) ............ $ (0.03) $ (0.11) $ (0.84) $ (0.12) $ (2.54) $ (1.10) $ (1.11) $ --
</TABLE>

- ----------
(1) On August 13, 1999, OptiCare Eye Health Centers was acquired in a
transaction accounted for a purchase. Accordingly, the results of
operations for OptiCare Eye Health Centers are included in the historical
results of operations since September 1, 1999, the deemed effective date
of the acquisition for accounting purposes.

(2) Income (loss) from continuing operations per share for the historical
1999 and 1998 periods are calculated after giving effect to preferred
stock dividends.

(3) The weighted average common shares outstanding have been adjusted to
reflect the conversion associated with the reverse merger with Saratoga.

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
(UNAUDITED) AS OF DECEMBER 31,
---------------------------- --------------------------------------------------
AS ADJUSTED HISTORICAL HISTORICAL
------------- ------------ --------------------------------------------------
1999 1999 1998 1997 1996 1995
------------- ------------ ------------ ---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Net assets of discontinued operations ..... -- -- $ 5,582 $69,473 $13,845 --
Total current assets ...................... $25,395 $25,395 20,237 18,274 20,306 $ 5,315
Total assets .............................. 68,308 68,444 26,557 86,397 26,296 11,873
Total current liabilities ................. 25,327 25,327 51,198 8,289 4,138 2,941
Total debt (including current portion)..... 27,782 41,382 40,722 46,536 22,273 6,895
Mandatorily redeemable preferred
stock .................................... -- -- 9,200 -- -- 40
Total stockholders' equity
(deficit) ................................ 17,800 4,336 (34,690) 4,546 4,683 23,036
</TABLE>

18
<PAGE>

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

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

The following discussion should be read in conjunction with the financial
statements and notes thereto of OptiCare Health Systems Inc., included
elsewhere in this prospectus. See the Index to Financial Statements, beginning
at page F-1.

Overview. OptiCare Health Systems, Inc. is an integrated eye care services
company that delivers a range of services and systems for eye health
professionals, consumers, including laser vision correction, and managed care
plans. On August 13, 1999 Saratoga Resources, Inc. ("Saratoga"), a Delaware
corporation, PrimeVision Health, Inc. and OptiCare Eye Health Centers, Inc.
merged (the "Mergers") pursuant to the terms of an Agreement and plan of Merger
dated as of April 12, 1999. In this transaction PrimeVision Health merged with
Saratoga through a reverse acquisition by PrimeVision Health of Saratoga at
book value with no adjustments reflected to historical values. Immediately
following the PrimeVision Health merger, OptiCare Eye Health Centers was
acquired by Saratoga, which was accounted for under the purchase method of
accounting with the excess of purchase price over the estimated fair value of
net assets acquired recorded as goodwill. In reporting financial results for
the nine months ended September 30, 1999, the month of September is based upon
consolidated operating results reported by the company and its subsidiaries,
including OptiCare Eye Health Centers, and the months prior to that are based
solely upon the results reported by Prime and its subsidiaries.

Our shareholders approved an amendment to our Articles of Incorporation
changing, among other things, our name to OptiCare Health Systems, Inc.,
effective August 13, 1999.

For accounting purposes, PrimeVision Health was the accounting acquirer
and the surviving accounting entity. Accordingly, the operating results of
OptiCare Eye Health Centers have been included in the accompanying consolidated
financial statements since September 1, 1999, the deemed effective date of the
acquisition for accounting purposes. The impact of results from August 13, 1999
through August 31, 1999 are deemed immaterial to the consolidated financial
statements. The excess of the aggregate purchase price of $26.9 million over
the estimated fair value of the net assets acquired, based on a preliminary
allocation, was approximately $21.7 million. Of this excess $17.7 million has
been recorded as goodwill and is being amortized on a straight-line basis over
25 years and $4.0 million has been used to eliminate the valuation allowance
related to Prime's deferred tax assets. In addition, the company recorded an
intangible asset of $7.1 million in connection with a new administrative
services agreement that is being amortized over 25 years.

The company executes its business through two business segments: (1)
integrated services and product sales and (2) managed care services. The
integrated services and product sales segment includes a range of services
rendered to licensed practitioners of ophthalmology and optometry, including
the development and marketing of laser vision correction centers, selling of
eye health systems and software, and a buying group program for optical
products. In addition, this segment operates integrated eye health centers in
Connecticut and owns and operates retail optical stores in Connecticut and
North Carolina. The managed care segment provides a range of administrative,
network management and related services to health maintenance organizations and
other health care entities.

RESULTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1998

Integrated services and product sales net revenue. Integrated services and
product sales revenue increased to $46.8 million for the nine months ended
September 30, 1999 from $39.0 million for the nine months ended September 30,
1998, an increase of $7.8 million or 20.0%. Of this increase $3.1 million
represents optometry and ophthalmology revenue of OptiCare Eye Health Centers
for

19
<PAGE>

the month of September 1999 which, in connection with the merger with OptiCare
Eye Health Centers in August 1999, have been included in the revenue of the
company in 1999. In addition, the company recorded approximately $0.9 million
of revenue in 1999 from HSO service agreements. No HSO revenue was recorded in
1998. The increase is also a result of growth in revenue from the buying group
that increased from $23.7 million for the nine months ended September 30, 1998
to $25.0 million for the nine months ended September 30, 1999. The remaining
increase is attributable to growth in the optometry and retail areas, partially
offset by reductions in the rate of reimbursement from governmental and
commercial payors.

Managed care net revenue. Managed care net revenue increased to $16.1
million for the nine months ended September 30, 1999 from $11.2 million for the
nine months ended September 30, 1998, an increase of $4.9 million or 43.8%. Of
this increase, $1.0 million represents managed care revenue of OptiCare Eye
Health Centers for the month of September 1999. The remaining increase is due
to new managed care contracts and growth in existing member lives.

Cost of product sales. Cost of Sales increased to $31.4 million for the
nine months ended September 30, 1999 from $27.6 million for the nine months
ended September 30, 1998, an increase of $3.8 million or 13.8 % This increase
is primarily due to growth in the buying group and is consistent with the
increase in net revenues for integrated services and product sales.

Medical claims. Medical claims increased to $12.9 million for the nine
months ended September 30, 1999 from $8.2 million for the nine months ended
September 30, 1998, an increase of $4.7 million or 57.3%. This increase is
primarily due to new managed care contracts and growth in existing member lives
and is consistent with the increase in managed care revenues. The remaining
increase of $0.7 million represents managed care claims expenses of OptiCare
Eye Health Centers for the month of September 1999.

Salaries wages & benefits. Salaries, wages and benefits increased to $10.1
million for the nine months ended September 30, 1999 from $7.2 million for the
nine months ended September 30, 1998, an increase of $2.9 million or 40.3%. Of
this increase $2.0 million represents compensation expenses of OptiCare Eye
Health Centers for the month of September. The remaining increase represents
increased employee costs associated with servicing increased managed care
contracts.

Selling, general and administrative expenses remained relatively unchanged
at $4.4 million for the nine months ended September 30, 1999 as compared to
$4.3 million for the same period in 1998.

Depreciation and amortization. Depreciation and amortization increased to
$1.1 million for the nine months ended September 30, 1999 compared to $1.0
million for the nine months ended September 30, 1998, an increase of $0.1
million or 10.0%. This increase is the result of the merger and related
goodwill amortization.

Interest Expense. Interest expense decreased to $2.6 million for the nine
months ended September 30, 1999 from $3.4 million for the nine months ended
September 30, 1998, a decrease of $0.8 million or 23.5%. Interest expense
primarily relates to our bank indebtedness and notes payable to sellers in
connection with acquisition activities. The decrease in interest expense is
primarily due to the reduction in our outstanding bank debt and reduced
interest rates associated with the mergers in August 1999 and the reduction in
the seller notes payable in connection with the disposal of PrimeVision
Health's ophthalmology division in December 1998.

Income (loss) from continuing operations before income taxes. Income from
continuing operations before income taxes increased to $0.3 million for the
nine months ended September 30, 1999 from a loss of $(1.5) million for the nine
months ended September 30, 1998, an increase of $1.9 million or 126.7%. This
increase was primarily attributed to revenue growth and the reduction of
interest expense as described above.

Income from discontinued operations, net of tax. Discontinued operations
represent the income from Prime's ophthalmology division. Income from
discontinued operations for the nine months ended September 30, 1998 was $0.9
million. Discontinued operations for the nine months ended September 30, 1999
includes an additional loss on disposal of $2.3 million that represents our
revised estimate of loss.

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Net Income (loss). The company had a net loss of $(2.1) million for the
nine months ended September 30, 1999 compared to a net loss of $(0.4) for the
nine months ended September 30, 1998, an increase in loss of $1.7 million. This
change was the result of an increase in continuing operations of $1.8 million
and was offset by an increase in income tax expense of $0.4 million and an
increase in loss from discontinued operations of $3.1 million.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

For the year ended December 31, 1998, the company recorded a net loss of
approximately $38.1 million, was highly leveraged and was not in compliance
with its bank debt covenants. Accordingly, all bank debt was classified in
current liabilities at December 31, 1998. Management determined that the
ophthalmology segment was the main contributing factor to the company's
liquidity problems, due to lower than anticipated cash flows from the
ophthalmology practices, as evidenced by the historical operating losses
experienced by the ophthalmology segment.

On December 15, 1998, in recognition of the significant losses and the
fact that the physician practice management business model as operated by the
company was largely unsuccessful, the company determined that the business
should be disposed of and that a combination should be sought with a related
business with a stronger infrastructure. Subsequent to such decision by the
board, the merger among Saratoga, PrimeVision Health and OptiCare Eye Health
Centers was approved.

Results of continuing operations:

Revenues. Revenues for the year ended December 31, 1998 were $64.6
million, a $6.3 million or 10.8% increase from prior year's $58.3 million
primarily due to 101.3% growth in the company's managed care division of its
eye care services business segment. Also within the eye care services business
segment, revenues in the buying group division decreased slightly offset by a
small increase in the optometry division.

Cost of sales. Cost of sales in 1998 was $46.2 million compared to $42.0
million in 1997. The 10.0% increase was in line with the related increase in
revenues.

General and administrative expenses. General and administrative expenses
increased from $5.2 million in 1997 to $6.0 million in 1998 primarily due to
additional costs to support revenue growth in the managed care division.

Interest expense. Interest expense for the year ended December 31, 1998
was $4.5 million versus $3.9 million for the year ended December 31, 1997. This
increase is due to increased borrowings on PrimeVision Health's bank credit
facility resulting from acquisitions and lower than expected cash generation in
the discontinued ophthalmology business.

Income taxes. The effective tax rate for the year ended December 31, 1998
of (15.5%) represents the tax benefit expected on the significant tax losses
during 1998. The book basis loss before income taxes is significantly more than
the tax basis loss. Accordingly, the effective tax rate is significantly lower
than the statutory rate. Prime's effective tax rate in 1997 was 33.7%.

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

Revenue. Revenue increased 11.7% to $58.3 million for the year ended
December 31, 1997 from $52.2 million for the year ended December 31, 1996.

Cost of sales. Cost of sales for the year ended December 31, 1997 was
$42.0 million compared to 37.4 million for the year ended December 31, 1996 but
remained constant as a percentage of revenues, which is consistent with the
growth across all divisions.

General and administrative. General and administrative expenses decreased
from $5.5 million in 1996 to $5.2 million in 1997 due to cost savings achieved
within the continuing operations.

Interest expense. Interest expense increased from $1.0 million in 1996 to
$3.9 million in 1997 largely due to the increased debt as a result of the
significant acquisitions completed during 1996 and 1997 by the ophthalmology
division.

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Income taxes. The effective tax rate for the year ended December 31, 1997
was 33.7% compared to an effective rate of 21.6% in 1996.

LIQUIDITY AND CAPITAL RESOURCES

The company's principal sources of liquidity are from cash flows generated
from operations and from borrowing under the company's credit facility. The
company's principal uses of liquidity are to provide working capital, meet debt
service requirements and finance the company's strategic plans. As of September
30, 1999, the company had cash and cash equivalents of approximately $3.2
million and $4.3 million of additional borrowing capacity available under its
revolving credit facility.

In August 1999, in connection with the mergers, the company entered into a
loan agreement (the "Credit Facility") with Bank Austria. Proceeds from the
credit facility were used to pay certain indebtedness of PrimeVision Health and
OptiCare Eye Health Centers and to fund the company's business operations. The
credit facility provides the company with a $21.5 million term loan and up to a
$12.7 million revolving credit facility and is secured by a security interest
in substantially all of the assets of the company. We are required to maintain
certain financial ratios, which are to be calculated on a quarterly and annual
basis beginning on December 31, 1999. In the event of default of the financial
covenants, the bank could foreclose on its security interest in the company's
assets, which could have a material adverse effect on the results and financial
position of the company. The first principal payment on the term loan is April
1, 2000 and the credit facility terminates and all amounts outstanding
thereunder are due and payable on June 1, 2004. At September 30, 1999, the
company had advances outstanding of $29.9 million under the credit facility.

The interest rate applicable to the credit facility will equal the base
rate or the Eurodollar rate (each, as defined in the loan agreement with Bank
Austria ("Loan Agreement")), as the Company may from time to time elect, in
accordance with the provisions of the Loan Agreement. The base rate will
generally be the higher of (a) the prime rate of Bank Austria for domestic
commercial loans in effect on such applicable day or (b) the federal funds rate
in effect on such applicable day plus one-half of one percent (1/2 of 1%),
which generally equals LIBOR plus 2.25%. The Eurodollar rate will generally
equal the offered rate quoted by Bank Austria in the inter-bank Eurodollar
market for U.S. dollar deposits of an aggregate amount comparable to the
principal amount of the Eurodollar loan to which the quoted rate is to be
applicable.

For the nine months ended September 30, 1999 the company used $0.9 million
in operating activities and $5.0 million in investing activities while
financing activities provided cash of $3.2 million. Cash used in operating
activities included $1.5 million of discontinued operations partially offset by
a non-cash charge of $1.1 million of depreciation and amortization. Cash used
in investing activities consisted of $4.7 million of merger related
transactions. Net cash provided from financing activities primarily consisted
of $3.3 million of borrowings under the company's revolving credit facility.

For the nine months ended September 30, 1998 the company generated $0.3
million in operating activities and $1.9 million in financing activities while
investing activities used cash of $0.4 million. Cash from operating activities
represents a $1.3 million net loss from continuing operations, a non-cash
charge of $1.0 million of depreciation and amortization, an increase in
accounts receivable and decreases in inventory, accounts payable and accrued
expenses. Net cash provided from financing activities consisted of $8.0 million
from the issuance of mandatorily redeemable preferred stock that is partially
offset by the repayment of $6.0 million of bank indebtedness. Cash used in
investing activities consisted of $0.4 million of capital expenditures.

The company raised $8 million of capital in the year ended December 31,
1998 by the issuance of mandatorily redeemable preferred stock. This cash and
cash from operations was primarily used to fund the $.6 million of capital
expenditures and the repayment of $6 million of bank indebtedness. For the
years ended December 31, 1997 and 1996, proceeds from the issuance of long-term
debt totaled $28.8 million and $11.0 million, respectively, which was primarily
used in the discontinued operations of the Company.

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Under agreements with the North Carolina and Texas Departments of
Insurance, we are required to maintain restricted investments of $25,000 and
$500,000 on behalf of these respective regulatory bodies. In addition, we are
not to declare or pay dividends or otherwise transfer any funds from its
limited purpose health maintenance organization in Texas without prior approval
from the Department of Insurance. The North Carolina Department of Insurance
also places restrictions on dividends. The company does not believe these
requirements will have a material impact on liquidity.

Management believes that the combination of funds expected to be provided
by its operations and credit facility will be sufficient to meet is current and
anticipated funding needs for the next twelve months. The company may incur
additional indebtedness and may issue notes or equity securities, in public or
private transactions, in order to fund future acquisitions, capital expenditure
and working capital requirements.

IMPACT OF INFLATION AND CHANGING PRICES

We are subject to pre-determined Medicare reimbursement rates which, for
certain products and services, have decreased over the past three years. A
decrease in Medicare reimbursement rates could have an adverse effect on the
company's results of operations if it can not manage these reductions through
increases in revenues or decreases in operating costs. To some degree, prices
for health care are driven by Medicare reimbursement rates, so that the
company's non-Medicare business is also affected by changes in Medicare
reimbursement rates.

Management believes that inflation has not had a material effect on the
company's revenues for the past three years.

YEAR 2000

The company has taken steps to ensure that all of its computer systems are
Year 2000 compliant. Management has developed a plan and arranged for the
required resources to complete the necessary remediation efforts for both
information technology ("IT") and non-information technology systems. These
systems include those used in practice management, managed care administration
and corporate functions, as well as any "imbedded systems" in medical equipment
or leased office space. We are devoting the necessary internal and external
resources to replace, upgrade or modify any significant systems that do not
correctly identify the Year 2000. Substantially all necessary modifications and
testing of the Company's significant systems have been completed.

All of the company's critical and non-critical systems are anticipated to
be Year 2000 compliant by the end of December 1999, and to date, management
believes substantially all of the critical systems are compliant. Contingency
plans are in place to address unexpected Year 2000 issues that include manual
processing of data or seeking alternative processing sites while awaiting
remediation of existing software or hardware from its vendors under existing
maintenance contracts.

We are also considering the potential impact of Year 2000 problems with
other entities with which the company has business relationships that impact
its operation. All key vendors, service providers, and customers have been
contacted to obtain written and verbal verification as to their Year 2000
readiness.

The company believes its greatest risk related to the Year 2000 involves
the potential inability of external entities, with which the company transacts
business, to be Year 2000 compliant. Since the company relies on certain
external entities, in particular, third party commercial and governmental
payors, for a considerable portion of its revenues, a significant failure of
these parties in maintaining payments could materially adverse impact on the
company's operations.

As of September 30, 1999, the Company has not incurred any external cost
related to the Year 2000 since any system upgrades related to Year 2000
compliance were made under existing maintenance contracts with vendors or were
made under scheduled system upgrades as part of the company's aggressive
strategy to maintain state of the art technology. The cost to bring internal
systems and equipment into compliance has not been and is not expected to be
material to the

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company's combined financial statements and the company does not expect Year
2000 issues to have a material adverse effect on its results of operations,
liquidity or financial condition.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to market risk from exposure to changes in interest rates
based on our financing activities under our credit facility. The nature and
amount of the company's indebtedness may vary as a result of future business
requirements, market conditions and other factors. The extent of the company's
interest rate risk is not quantifiable or predictable due to the variability of
future interest rates and financing needs. The company does not expect changes
in interest rates to have a material effect on income or cash flows in 1999,
although there can be no assurances that interest rates will not significantly
change. An increase of 10% in the interest rate payable by the company would
increase the annual interest expense by $3.0 million, assuming that the
company's borrowing level is unchanged. The company did not use derivative
instruments to adjust the company's interest rate risk profile during the nine
months ended September 30, 1999.

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BUSINESS

OUR BUSINESS

We are an integrated eye care services company focused on providing laser
vision correction, managed care and professional eye care services. We
currently own, operate and develop laser and ambulatory surgery centers and
provide systems, including Internet-based software solutions, to eye care
professionals. We also provide managed eye care services to health plans and
operate integrated eye health centers and retail optical stores.

In the fourth quarter of 1999, our board of directors approved a new
corporate strategy to focus on the growth of laser vision correction in the eye
care industry. As part of our new growth strategy, described below, we
reorganized our operations from two into the following three divisions: Laser
Correction and Professional Services, Managed Care Services, and Other
Integrated Services.

OUR GROWTH STRATEGY

Overall

Our goal is to become a leading integrated eye care services company.
Although our businesses have solid same-store growth potential, we believe our
laser correction and professional services division and our managed care
business have the potential for very significant near-term and long-term
growth. We have tailored our business model to focus on further developing our
laser vision correction and managed care businesses.

Expand Laser Vision Correction Services

The market for laser vision correction services is less than three years
old and is growing dramatically. Laser In-Situ Keratomileusis, or LASIK,
surgical procedures, commonly called laser vision correction surgery, offers
patients in need of vision correction an alternative to eye glasses or contact
lenses. (See "Industry" below). As a result of the rapidly growing popularity
of the procedure, ophthalmologists are exploring ways to offer laser vision
correction services to meet this consumer demand. We intend to expand laser
vision correction services at our existing owned and operated laser vision and
ambulatory surgery centers in those markets where we have an existing eye care
market presence.

We have also developed a strategy called the OptiCare Laser Advantage
(Trade Mark) to participate in the rapid growth of laser vision correction. In
this arrangement, we intend to execute laser development agreements with
ophthalmology practices that already perform laser vision correction surgery at
third-party laser sites, but which desire to open their own laser center. We
secure the laser and associated peripheral equipment and supplies at preferred
rates, based on agreements with manufacturers, facilitate the development of
the center, and perform marketing services for the center, utilizing our in
house marketing experience and resources. We also offer these practices access
to our buying group program and other services at preferred rates. We believe
the combination of all of these value-added features distinguishes this program
from our competitors. We intend to be paid by each practice on a multi-year,
fixed fee-per-procedure basis, with guaranteed minimum procedure volumes. We
have already executed our first installation and are investing resources to
rapidly expand the OptiCare Laser Advantage (Trade Mark) program throughout
the United States. We believe this service-oriented model will appeal to
independent ophthalmologists who are eager to participate in the growth of
laser vision correction. We believe that this initiative will be a source of
our growth.

Leverage our managed care expertise

In our managed care division, we provide management services to health
plans that contract with us to handle the eye health portion of the benefits
provided to their enrolled participants. We currently provide managed eye care
services for 30 contracts, with 27 managed care plans. We coordinate eye care
services for 5.8 million lives, 3.2 million of which are in capitated programs,
1.2 million lives in plans in which we are paid on a fee-for-service basis, and
1.4 million lives in industrial

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programs. This division has experienced 83% and 113% revenue growth each of the
last two years, and over 60% growth through the 9 months ended September 30,
1999, versus the same period in the prior year. We believe that managed care
plans increasingly realize that assigning responsibility for management of eye
care benefits to a company that specializes in such services produces
significant added value. We believe this trend is evidenced by our history of
strong year-to-year revenue growth.

We believe our strategy and internal capabilities permit us to continue to
materially grow this business. First, by combining the existing managed care
businesses of OptiCare Eye Health Centers, Inc. and PrimeVision Health, we have
improved the efficiencies of our operations. Second, we believe our current and
ongoing investment in systems infrastructure, including electronic
authorization and claim payment capabilities, permits us to provide a high
degree of service at an affordable and competitive price to our customers.
These systems also permit us to understand cost and value drivers for our
customers and modify our services and products quickly and effectively. In
addition, we believe we have market-leading quality evaluation tools, including
retrospective outcome studies, which will permit our managed care customers to
improve the quality of care provided to their members.

Also, we believe that our growth will be enhanced because we can provide a
comprehensive set of managed care services for our customers. This means that
we can offer integrated eye care management, which covers not only vision
benefits (such as reimbursement for exams, frames and lenses), but also
management of medical/surgical treatment of eye disease. We have experience
coordinating care for all types of covered populations, including traditional
or "commercial" managed care members, Medicare beneficiaries, and enrollees in
Medicaid programs. We can address all of these benefit options in an integrated
fashion or only specific segments depending on the needs of the customer.

Link our service offerings

We leverage eye care services and link service offerings across the
spectrum of eye care. We believe that having operating units within the eye
care services marketplace provides us with several advantages:

o Patients who use one of our integrated eye health centers or retail
optical locations may utilize one of our surgery centers. Procedures
may include laser vision correction surgery or other eye surgery.

o Eye care professionals that utilize our health services organization
program, buying group program or eye care systems and software may be
interested in developing laser vision correction services with us.

o Our managed care business may increase patient visits in our eye
health centers and retail optical locations.

o Our expertise in managed care enables us to provide advisory services
to our eye care professionals.

o Patients using medical services as our integrated eye health centers
purchase glasses or contact lenses at our eye health centers or retail
optical stores.

o Eye care professionals who develop laser vision correction services
through our OptiCare Laser Advantage (Trade Mark) program will be
strong candidates for our other professional service offerings.

We believe our integrated services have several advantages over our
competitors in the eye care services market.

OUR INDUSTRY

Overview

The eye care market includes both eye care services and optical products.
In the eye care services market, eye health professionals, including
ophthalmologists and optometrists, provide diagnostic eye

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examinations and treatment interventions to address complex eye and vision
conditions. The most common conditions addressed by eye care professionals are
nearsightedness, farsightedness and astigmatism. These eye and vision
conditions have historically been treated with pharmaceuticals, prescription
glasses, contact lenses or some combination of these treatments. With the
introduction of LASIK in 1996, eye care professionals are beginning to use
laser vision correction as an additional treatment alternative for these three
conditions. The optical products portion of the eye care market consists of the
manufacture, distribution and sale of optical goods, including corrective
lenses, eyeglasses, frames, contact lenses and other related optical products.

In the U.S., eye care services have traditionally been delivered by
ophthalmologists and optometrists. Ophthalmologists are specifically trained
physicians who have completed four years of medical school, obtained a medical
degree and have received specialty training in ophthalmology. In addition to
diagnostic examinations, ophthalmologists are licensed to perform ophthalmic
surgery. Optometrists complete four years of optometry school and are generally
licensed to perform routine eye exams and prescribe corrective optical goods.
Optometrists do not perform surgery, but often provide pre- and post-operative
care. There are approximately 32,000 practicing optometrists and 22,000
practicing ophthalmologists in the U.S.

According to the Vision Council of America, 163 million people, or
approximately 60% of the U.S. population, utilized eye care services in 1998,
and 60% of those eye care consumers purchased eye wear products. 1998 spending
for both services and products is estimated to be over $55 billion, increasing
at approximately 6% per year.

Laser Vision Correction

Recently, new surgical technologies and procedures have been introduced
for surgical correction of common vision conditions. Within the eye care
industry, one sector that is experiencing rapid growth is laser vision
correction. Although earlier applications for laser based surgical treatment of
eye disorders, such as photorefractive keratotomy, or PRK, were introduced in
the late 1980's, widespread interest in laser vision correction did not occur
until the introduction and approval of LASIK. Introduced in 1996 in the U.S.,
LASIK has led to a dramatic increase in the popularity of laser vision
correction surgery.

The three most common conditions which are candidates for laser vision
correction are:

o nearsightedness, which is caused by a steepening of the cornea,
resulting in the blurring of distant objects;

o farsightedness, which is caused by a flattening of the cornea,
resulting in the blurring of close objects; and

o astigmatism, in which images are not focused on any point due to the
varying curvature of the eye along different axes, which results in a
distorted view of images.

In the LASIK procedure, an ophthalmologist uses an automated microsurgical
instrument to peel back a thin layer of corneal tissue which remains hinged to
the eye. A number of laser pulses are then applied to the cornea to remove
tissue and thereby correct the patient's vision by reshaping the patients
cornea. After the surgeon replaces the layer of corneal tissue, no bandages are
required and most patients experience no discomfort. A LASIK procedure
typically takes 10 to 15 minutes from set-up to completion and is performed in
an outpatient setting. At this time, only ophthalmologists are licensed to
perform LASIK, although optometrists are often involved in providing pre- and
post-operative care.

Because of the effectiveness and convenience of LASIK, laser vision
correction has grown from approximately 430,000 procedures to be performed in
1998 to industry estimates of 980,000 procedures to be performed in 1999.
Despite this rapid growth, the number of laser vision correction patients in
1998 represented less than 0.3% of the 163 million people with refractive
vision conditions in the U.S. Further, unlike most other eye-related surgical
procedures, laser vision correction is an elective procedure for which patients
pay and are generally not reimbursed by third party payors.

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Laser vision correction has been practiced in the United States only since
1996, and so there is only minimal information available for medical and
scientific study of its long-term effects. Long-term follow-up data may reveal
additional complications that may have a material adverse effect on acceptance
of laser vision correction. Concern over the safety of laser vision correction
procedures could adversely affect market acceptance of laser vision correction
or result in adverse regulatory action, including product recalls. Any of these
factors could have a material adverse effect on our business, financial
condition and results of operations.

Concerns about the safety and effectiveness of laser vision correction
include predictability and stability of results. Potential complications and
side effects include:

o post-operative discomfort;

o an increase in the light-scattering properties of the cornea during
healing (corneal hazing);

o glare/halos (undesirable visual sensations produced by bright lights);

o decreases in contrast sensitivity;

o temporary increases in pressure within the eye in reaction to
medication;

o modest fluctuations in focusing capabilities during healing;

o modest decreases in best corrected vision (i.e., with corrective
lenses);

o unintended over- or under-corrections;

o decline in corrective effect;

o disorders in corneal healing, corneal scars and corneal ulcers;

o induced astigmatism.

Managed care

According to InterStudy, a health care research firm, total 1998 U.S.
enrollment in health maintenance organizations, the most common type of managed
care plan, was 76.6 million. This represents a 14% increase in membership
versus 1997. Almost all managed care plans cover medical/ surgical treatment of
eye disorders and many also provide vision care benefits, including routine eye
exams or optical products. According to the 1999 U.S. Optical Industry
Handbook, 66% of consumers seeking eye care services received either full or
partial reimbursement from a third-party insurance or managed care plan.

We believe that enrollment in managed care plans and, therefore, the
population with coverage of eye care services will continue to grow. We believe
this trend will be supported by managed care plans offering enhanced vision and
eye care benefits in order to more aggressively compete for potential
membership. We also believe that the management of eye care services and
products is specialized and best provided by companies that focus on these
services. Given our success in both acquiring new customers and retaining
existing customers, we believe this market segment has significant growth
potential. For more information regarding our managed care customer growth, see
"-- Our Growth Strategy -- Leverage our managed care expertise".

Other eye care products and services

Although vision correction techniques and technologies are growing
dramatically, the demand for basic optical goods, including corrective lenses,
eyeglass frames and other optical products, and eye health surgery, remains
significant. Of the $55 billion eye care market, consumers spend approximately
$16.3 billion on retail optical products. Approximately 83%, or $13.5 billion,
is spent on lenses and frames, while approximately 12%, or $2 billion, is spent
on contact lenses.

We also expect the demand for eye surgery other than vision to show steady
growth. Common eye disorders include glaucoma, macular degeneration, diabetic
retinopathy and cataracts. We believe that the aging of the population,
including the "baby boom" generation, will increase the demand for

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medical and surgical treatment of these disorders. Glaucoma affects
approximately 3 million people in the U.S. and is projected by industry sources
to double by 2030. Cataract surgery, the most widely performed eye care
surgical procedure in the U.S., is typically performed on an outpatient basis
using local anesthesia, and the procedure time is typically less than 30
minutes. In 1997, over 2.3 million cataract procedures were performed in the
U.S. Since the preponderance of these other eye disorders affect patients over
the age of 65, the Medicare program is the primary payor for treatment of these
disorders, including surgery.

Industry growth

We believe that the eye care services market will continue to grow for
several reasons:

o Demographics. The nation's median age in 1998 was 35.2 years and is
projected to be 36 in 2000 and over 37 in 2010. With age, the
prevalence of eye disease increases, requiring professional eye health
services and corrective interventions. The aging of the "baby boom"
population and increases in life expectancy are expected to
dramatically increase the number of adults over age 45, already over
91 million Americans. According to the 1999 US Optical Industry
Handbook, 94% of people over age 45 require some form of vision
correction.

o New technologies. Technological advancements in the diagnosis and
treatment of eye disease continue to arrive on the market. Additional
applications for the excimer laser, for example, were approved in
1999. New technologies are in development that are expected to expand
the access to, and the effectiveness of, treatments, particularly the
treatment of refractive and cataract conditions.

o High potential of growth for laser vision correction. Although the
number of laser vision correction procedures performed in the U.S. is
growing dramatically, the market penetration of laser vision
correction is very small. In 1998, approximately 0.3% of the U.S.
population that received treatment for eye disease received this
procedure. Given the simplicity, convenience and high success rate of
laser vision correction, this segment is likely to experience very
dramatic growth in the years ahead.

o Improved patient awareness. With the increased amount of medical
information that has become available, patients have and continue to
become increasingly educated and aware of the different types of eye
and vision conditions and how they can be treated. Word of mouth among
the growing number of successful patients, feature articles in major
publications plus endorsements of numerous celebrities and sports
figures, has added to the interest in laser vision correction. The
widespread availability of the Internet has made both communication
and commercial transactions, including eye care services and optical
goods and products simpler, cheaper and faster.

Challenges faced by eye care professionals

Eye care professionals face challenges in laser vision correction surgery
adapting to: rapid changes in medical treatments, including the technology,
scientific sophistication and cost of equipment used in providing medical
treatments, and rapid changes in business practices and communications. We
believe that we can address both challenges.

Recent advances in the treatment for vision correction have significantly
increased consumer demand for laser vision correction surgery. Eye care
professionals, and ophthalmologists in particular, face a number of significant
challenges in addressing this demand, including:

o maintaining their existing patient base while developing laser vision
correction surgery capability;

o developing marketing expertise to promote laser vision correction
surgery to existing and potential patients;

o purchasing, or otherwise gaining access to, expensive laser vision
correction surgery equipment; and

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o adapting to the latest advances in laser vision correction technology
and procedures, as well as establishing and maintaining a level of
expertise with new technologies and procedures.

The challenges posed by business practices and communications are equally
significant to eye care professionals. We believe these challenges arise
because future health care cost management is increasingly dependent upon
compliance with benefit plan guidelines from payors designed to promote the
appropriate use of health care resources and adherence to the best clinical
practices to improve the quality of care and control patient care costs. We
expect third-party payors to require ophthalmologists to have efficient,
real-time information systems, to enable the third-party payors to control
costs, utilization and quality of care. Today, electronic communication among
the physician, payor, and supplier is typically limited to administrative
transactions. These communications typically occur at specified times of day,
usually several hours after medical care has been given or treatment has been
prescribed. We believe that compliance with benefit guidelines can be better
achieved through Internet-based health care e-commerce systems that enable real
time communication at the point of care of clinical information as well as
basic administrative and financial information.

The dramatic growth of the Internet as an important new medium to collect
and distribute information, communicate, interact and engage in commerce has
emerged as a way to overcome the historical technical barriers for connecting
the participants in the fragmented health care industry. These technical
barriers are diminishing as:

o universal, low cost Internet access is replacing private networks;

o common navigation via browser technology is replacing proprietary
desktop client software; and

o the Internet's open architecture is providing a solution for
integrating existing computer systems.

We believe our service offerings address each one of these eye care
industry trends and opportunities. For more information, see "Business -- Our
Growth Strategy."

OUR BUSINESS OPERATIONS

We are an integrated eye care services company that delivers a range of
services and products to eye care professionals, managed care plans and
consumers. As a result of our expectations for the growth of laser vision
correction, we have reorganized our operations from two business divisions to
three:

o Laser Correction and Professional Services. We develop laser vision
correction centers and provide marketing, systems, software and other
services to eye care professionals.

o Managed Care Services. We contract with managed care plans to manage
the eye health portion of managed care plans.

o Other Integrated Services. We own and operate fully integrated eye
health centers, retail optical stores and a buying group program.

Laser Correction and Professional Services Division

Laser Correction. We have two business models for providing laser vision
correction and ambulatory surgery services. The first model involves ownership
and operation of laser vision correction and ambulatory surgical centers. In
the second model, we operate the OptiCare Laser Advantage (Trade Mark)
program, in which we develop laser vision correction centers for independent
ophthalmologists, and we participate on a fee-per-procedure basis in the growth
of that center.

We own and operate four surgery centers in Connecticut. In our ambulatory
surgery centers, ophthalmic surgeons perform a range of eye care surgical
procedures, including cataract surgery, and surgical treatment of glaucoma,
macular degeneration and diabetic retinopathy. One of the ambulatory surgery
centers is being converted from an eye-care-only center to a multi-specialty
facility, permitting

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ophthalmic surgery and other types of non-eye care surgery to be performed
there. In these centers, we bill patients (or their insurers, HMO's, Medicare,
Medicaid or other responsible third-party payors) for use of the surgery center
facility, and the surgeons bill the patients separately for their services. For
laser vision correction, patients are billed directly and we generally are not
reimbursed by third party payers. Our ambulatory facility in Waterbury,
Connecticut is approved for the payment of facility fees by most health plans.
Our other surgery facilities are Medicare approved. We have contracted with
OptiCare P.C. to provide surgical and other services to patients at the
ambulatory surgical centers. OptiCare P.C., is wholly owned by Dean J.
Yimoyines, M.D., our Chairman of the Board, President and Chief Executive
Officer and a beneficial holder of 4.4% of our common stock. For more
information about this, see "Management" and "Certain Relationships and Related
Transactions -- OptiCare P.C. Administrative Services Agreement" below.

In the OptiCare Laser Advantage (Trade Mark) program, we use our
marketplace position to identify, screen and negotiate agreements with
prospective ophthalmology practices which already perform laser vision
correction surgery at separate surgery centers, but have no ownership position
in the center. Working with these physicians and the laser manufacturer, we
will participate in developing, equipping, training and implementing a new
laser vision correction center to be owned by the practice. We will also
provide a laser vision correction marketing program and ongoing marketing
support for the center. We intend to enter into agreements which provide that
we are paid by each practice on a multi-year, fixed-price-per procedure basis,
with guaranteed minimum procedure volume. As the laser vision correction volume
of the center grows, we receive increasing revenues. To support the program, we
have executed a strategic partnership agreement with Summit Technology, an
excimer laser manufacturer and anticipate agreements with other laser
manufacturers. We have opened our first center under this business model in
Rocky Mount, N.C.

Professional Services. Beyond establishing laser vision correction
centers, we sell a broad range of other management services and eye care
systems to eye care professionals, principally ophthalmologists and
optometrists.

As a result of our acquisition on October 1, 1999, of Cohen Systems, Inc.,
we provide eye care systems and software, in which we sell Internet based and
point-of-sale systems solutions for optometry practices, retail optical
locations and manufacturing laboratories. These products support eye health
practice management, point-of-sale, and inventory control applications. As of
December 14, 1999 we have approximately 150 retail customers and 100 lens
manufacturing customers for various eye care systems and software services
throughout the United States and Canada. In addition to these products, we have
developed and sell Internet based order entry software systems that captures
and links all eye health patient data, including providing such data to a
remote manufacturing location for immediate processing of patient optical goods
orders.

In our Health service organization ("HSO") operations, we provide
marketing, managed care and other administrative services to individual
ophthalmology and optometry practices. As of December 14, 1999, we have HSO
agreements in place with 31 ophthalmology and optometry practices having in the
aggregate 56 facilities. We have entered into HSO agreements with 31
ophthalmology and optometry practices pursuant to which we offer core and
supplemental services. These agreements generally run for a fifteen-year term.
Under these agreements we receive a percentage of the revenues earned by these
practices beginning at 3% of revenues and diminishing to 1% if annual revenue
increase above pre-determined thresholds. In addition to these services, the
practices may obtain from us various supplemental services at agreed upon
rates, which are purchased on a menu basis. In our HSO arrangements, we offer
core services including access to our buying group program and marketing
assistance.

We also allow our HSO customers access to supplemental services including
certain laser vision correction programs, systems administration and human
resources services.

We believe that there will be increasing demand for management and
information systems solutions for independent practitioners who are not
interested in a traditional physician practice

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management model. We believe that these independent practitioners, which make
up approximately 95% of practicing ophthalmologists, still require assistance
in a range of administrative, marketing and information systems and software
services. We believe these doctors have the potential to benefit from our
services in this area.

Managed Care Services Division

We have significant expertise in providing managed care services for
insurance companies, HMO's and other third-party payors. We have leveraged our
leadership position in key markets to build a strong provider base of eye care
professionals. We believe that we are well-positioned to compete for all types
of eye care contracts because of our managed care expertise, sophisticated
information systems and operating history.

As of September 30, 1999, we administer eye care benefits for
approximately 5.8 million lives, delivered through networks of over 5,000 eye
care professionals nationwide. Over 2.7 million of these lives are in
medical/surgical plans, which we believe, makes us one of the largest
specialized managers of eye care medical/surgical benefits in the country.

Under each managed care contract, we credential eye care professionals who
provide the eye care services specified under the contract to the third-party
payor's members. We also perform other services, including quality assurance
and utilization review. We are compensated on either a capitated or
fee-for-service basis. As of September 30, 1999, we were compensated by
third-party payors on a capitated basis for approximately 3.2 million lives. We
were also paid on a fee-for-service basis for 1.2 million lives and administer
industrial eyewear programs for an additional 1.4 million lives. Most contracts
have a term of three years and contain an automatic renewal provision for
additional one-year periods and grant either party the right to terminate the
contract upon 120 days notice.

Upon obtaining a managed care contract, we develop a network of eye care
professionals to provide the eye care services required under the contract.
Generally, we attempt to contract first with eye care professionals with whom
we have a business relationship. Additionally, we seek to enter into contracts
with independent eye care professionals. We undertake a thorough credential
review process on each prospective eye care professional, which includes
obtaining a copy of the state license and Drug Enforcement Agency number,
verifying hospital privileges, liability insurance and board certification, and
reviewing work history for each provider. Eye care professionals who are on one
of our panels are recredentialed every two years. All credentialed eye care
professionals must meet the guidelines of the National Committee for Quality
Assurance a leading quality assurance expert.

We believe that our managed care services provide significant value to
third-party payors by delivering high quality, cost-effective managed eye care
to plan members and comprehensive administrative services to the third-party
payor. Some of the services that we provide include:

Plan Member Relations. Our service representative staff is available to
answer questions on members' benefits, the status of claims and to
resolve complaints about the service rendered.

Simplified Pre-Authorization Process. Our network eye care
professionals, with the assistance of our staff, obtain any required
authorizations for the plan members prior to performing an eye care
procedure. We believe that this approach simplifies the process for the
plan member and thereby increases the plan members' overall satisfaction
with their eye care benefits. We utilize proprietary systems to
effectively administer eye health claims submitted to us, including
Internet-based electronic authorization and claim protocols, to lower
cost, reduce cycle time and improve the effectiveness of the
administrative process.

Quality Assurance Program. We solicit patient comments through monthly
patient satisfaction surveys sent to a sample of members of our managed
care customers. In addition, we track unsolicited comments that
typically are in the nature of telephone complaints. If a plan member is
dissatisfied with the service received, our service representative staff
can quickly resolve routine complaints relating to matters such as
eyeglasses, contact lenses and the quality of the eye examination. We
believe that our

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issue-resolution structure is unique to the industry and increases plan
members' satisfaction with their eye care benefits. In addition, we
perform prospective-outcome studies and other quality assessment studies
on the care rendered by our networks of providers.

Utilization Review Services. We periodically monitor every eye care
professional in our networks to verify that the eye care professionals
are properly coding the medical services and treatment provided. Using
proprietary clinical criteria for eye care procedures that are based on
the American Academy of Ophthalmology's own guidelines, we work with eye
care professionals regarding the appropriate eye care treatment of
members.

Credentialing. We provide credentialing services according to national
standards set forth by the National Committee of Quality Assurance by
which health plans are measured for compliance with quality assurance
initiatives. The credentialing process includes collection of data from
applications prepared by physicians, verification of licenses, insurance
and education, and review of the physician's file in the National
Practitioner Data Bank.

Periodic Cost Reports. We prepare periodic analytical reports on costs
for each of our health plans and the application of the funds of the
health plans for the benefit of the participants. We utilize our systems
technology to regularly and carefully monitor the economic and
qualitative performance of the networks, individual providers and health
plan customers.

Licensing requirements. Our managed care division provides services to
customers in 8 states. Texas requires us to be licensed, and we have a
subsidiary, AECC Total Vision of Texas, which is licensed as single-purpose HMO
in Texas. Our managed care division also has a single service license in North
Carolina, but because of regulatory changes, we plan not to renew the North
Carolina license when it expires in 2000. We expect to seek a utilization
review license in Georgia in the next 12 months for our Georgia managed care
operations. We hold licenses as a third-party administrator in Florida and
Rhode Island, but we have not commenced business in either state at the present
time. See, also, "Government Regulation."

Other Integrated Services Division

The Other Integrated Services division provides eye care services and
products to consumers and also provides wholesale distribution of eye health
products. We provide these diversified eye care services to our customers at
our fully integrated eye health centers and retail optical stores.

Fully integrated eye health centers. Our fully integrated eye health
centers provide comprehensive eye care services to consumers, including medical
and surgical treatment by ophthalmologists of eye diseases and disorders, and
vision measuring and non-surgical correction services for patients by
optometrists. We operate 17 centers in Connecticut and provide all management,
billing, systems and related services for the operation of these centers.

Retail optical stores. Our retail optical stores, both owned and
franchised, provide vision correction services through optometrists, and/or
sell eye glasses and other optical products. Our optical locations are either
free-standing or co-located with our fully integrated eye health centers. In
our retail optical stores, we provide all the customary optical goods and
provide all the billing, collection, and information systems to support our
optical operations. We own 46 retail optical locations as well as 8 optical
dispensaries in Connecticut and North Carolina. In Connecticut, we also have a
complete manufacturing facility in which lenses are manufactured, surfaced and
ground to specifications and supplied to all of our Connecticut locations.

For both our fully integrated eye health centers and our retail optical
stores, we contract with professional corporations -- OptiCare, P.C., and
Optometric Eye Care Center, P.A. -- which employ ophthalmologists and
optometrists to provide surgical, medical and other professional services to
consumers. We provide management services to OptiCare P.C. under a renewable
5-year professional services and support agreement, and to Optometric Eye Care
Center, P.A. under a 15-year

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professional administrative services and support agreement. For further
information about these agreements and OptiCare, P.C. and Optometric Eye Care
Center, P.A., see "Government Regulation -- Corporate Practice of Optometry and
Ophthalmology," and "Certain Relationships and Related Transactions."

In addition to our owned and operated locations, we have entered into
license agreements regarding our franchise of 32 retail optical locations in
North Carolina and South Carolina. Pursuant to these license agreements, we
permit these establishments to utilize our proprietary trademarks and trade
names, including "Optometric Eye Care Center," and we offer specific marketing
programs and group purchasing services. These agreements are generally for five
year terms, however, we generally grant the licensee the right to terminate the
agreement upon 90 days notice. The licensees pay us a fee based on a percentage
of their gross revenue and have the option of requesting additional services
from us on a separate fee basis.

Optical Supplies. We purchase most of our eyeglasses, contact lenses and
other optical goods and devices through our Buying Group. See -- "Buying Group
Program" below.

Buying Group Program. We also operate one of the largest U.S. wholesale
optical goods distribution or "buying group" programs, which supplies both our
fully integrated eye health centers and retail optical operations, as well as
independent ophthalmology and optometric practices with optical and ophthalmic
goods and medical supplies, i.e., eyeglass frames and lenses, contact lenses,
clinical equipment and other supplies. Over 4,000 eye care professionals
nationwide participate in our Buying Group. This purchasing program leverages
the purchasing strength of the large number of participating optometrists and
buys from a national panel of approximately 175 vendors. We enter into a
non-exclusive account relationship with the buying ophthalmologists and
optometrists who place "bill to -- ship to" orders directly with our contracted
vendors. The vendors are contractually obligated to furnish a discount to the
purchasers, ship the product directly to the practice and bill us at the
predetermined price. We in turn then bill the participating practices and bear
the credit risk. We achieve earnings from the buying group based upon the
spread between the merchandise cost and the prices paid for the merchandise by
the group members.

COMPETITION

The market for eye care services is highly competitive in each segment of
our business. In our Laser Correction and Professional Services division, we
compete with:

o Refractive laser surgery companies;

o Stand-alone laser surgery operators;

o Hospitals; and

o Physician practice management companies, among others.

While some of the competition in this segment is local and regional, we do
have national competitors. For laser vision correction, these include
Lasersight, TLC The Laser Center, Inc., Laser Vision Centers, Inc., ClearVision
Laser Centers, Ltd., LCA-Vision Inc. and Novamed. Laser vision correction
companies primarily compete on the basis of quality of service, reputation,
price and convenience. With respect to professional services, we generally
compete with a range of services specific operators providing services to eye
health professionals, such as marketing companies, systems and software
vendors. We have identified few, if any, integrated providers of eye health
services other than physician practice management companies, which, under a
substantially different business model, require substantial capital investment
by the practice management company and equity participation by ophthalmologists
and optometrists.

Our managed care division competes with several regional and national eye
health companies which provide services to managed care plans. These include
Vision Twenty-one and Vision Service Plan of America. We also compete with
HMO's, PPO's and private insurers, for managed care contracts, and many HMO's,
PPO's and insurers have larger provider networks and greater financial

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and other resources than us. Managed care organizations compete on the basis of
administrative strength, size, quality and geographic coverage of their
provider networks, marketing abilities, informational systems, the strategy of
their managed care contracts, operating efficiencies and price.

For our Other Integrated Services division, the most direct form of
competition is with independent ophthalmologists and optometrists, as well as
regional operators of retail optical locations. On a national basis, companies
that compete in this sector include retail optical operators, such as
Lenscrafters, Cole National, Sight Resources, Eye Care Centers of America, and
Sterling Vision. Retail optical operators compete on price, service, product
availability and location. Buying group organizations compete on the basis of
price, size and purchasing power of their member buying group, the strength of
their credit, and the strength of their supplier agreements and relationships.

Several competitors in each of our divisions have greater capital than us
or may charge less for certain services. However, we believe the integrated
nature of our business model provides significant competitive advantages in the
marketplace.

OUR FORMATION

The present form of our company is the result of two mergers completed on
August 13, 1999 (more fully described below) between (i) a subsidiary of the
company and OptiCare Eye Health Centers, Inc., a Connecticut corporation
("OptiCare Eye Health Centers"), and (ii) another subsidiary of the company and
PrimeVision Health, Inc., a Delaware corporation ("PrimeVision Health"). As a
result of the mergers, OptiCare Eye Health Centers and PrimeVision Health are
wholly owned subsidiaries of the company. At the time of the mergers,
PrimeVision Health and OptiCare Eye Health Centers were each an integrated
vision services company, with PrimeVision Health headquartered in North
Carolina, and OptiCare Eye Health Centers headquartered in Connecticut.

The company was incorporated in Delaware in 1994 under the name "Saratoga
Resources, Inc." At the time the company was formed, it succeeded by merger to
the assets of an oil exploration and production business. Throughout this
prospectus:

o when we refer to "we," "our," "us" or the "company" for periods prior
to August 13, 1999, we are referring to PrimeVision Health or to
OptiCare Eye Health Centers, or to both of them on a combined pro
forma basis as the context requires, and not to Saratoga;

o when we use the word "Saratoga," we are referring to Saratoga
Resources, Inc., a Delaware corporation, and its oil business for
periods prior to August 13, 1999.

OUR HISTORY

Saratoga, while engaged in the oil business prior to 1999, experienced
several years of losses and in 1998 determined to spin off its oil assets and
seek a merger partner or other transaction to take advantage of Saratoga's
status as a publicly held company. On April 12, 1999, Saratoga entered into a
merger agreement with PrimeVision Health and OptiCare Eye Health Centers.
Pursuant to the merger agreement, Saratoga spun off or otherwise disposed of
its assets other than a modest amount of cash and two "shell" subsidiaries, and
PrimeVision Health and OptiCare Eye Health Centers merged with the shell
subsidiaries. The merger agreement closed on August 13, 1999, and, pursuant to
the merger agreement, Saratoga changed its name to "OptiCare Health Systems,
Inc.," which is now the name of the company.

At the closing of the merger agreement, the board of directors and
management of Saratoga resigned and, in accordance with the terms of the merger
agreement, were replaced by persons selected by PrimeVision Health and OptiCare
Eye Health Centers. Likewise, the capital structure of the company was altered
by amendments to the certificate of incorporation and by the filing of a
certificate of designation establishing a class of preferred stock designated
as the Series A Convertible Preferred Stock. For information about the current
board of directors and officers of the company, see "Management"; for
information about our capital structure, see "Capitalization," "Description of
the Capital Stock," and the financial statements included in this prospectus.

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GOVERNMENT REGULATION

The federal and state governments extensively regulate the health care
industry. Our business is subject to numerous federal and state laws and
regulations, including the following:

Excimer Laser Regulation. Medical devices, including the excimer lasers used
in our eye surgery and laser centers, are subject to regulation by the U.S.
Food and Drug Administration, referred to as the FDA. Medical devices may not
be marketed for commercial sale in the U.S. until the FDA grants pre-market
approval for the device.

The FDA has not specifically approved the use of LASIK or the use of
excimer lasers to treat both eyes on the same day, commonly referred to as
bilateral treatment. The FDA considers these uses to be practice of medicine
decision. Ophthalmologists, including our affiliated ophthalmologists, often
perform LASIK and bilateral treatment in an exercise of professional judgment
in connection with the practice of medicine.

Failure to comply with applicable FDA requirements could subject us, our
affiliated providers or laser manufacturers to enforcement action, product
seizures, recalls, withdrawal of approvals and civil and criminal penalties.
Further, failure to comply with regulatory requirements, or any adverse
regulatory action, including a reversal of the FDA's current position that the
"off-label," or non-FDA-approved, use of excimer lasers by physicians outside
the FDA approved guidelines is a practice of medicine decision, which the FDA
is not authorized to regulate, could result in a limitation on or prohibition
of our use of excimer lasers.

Regulation of Laser Vision Correction Marketing. The marketing and promotion
of laser vision correction and other vision correction surgery procedures in
the U.S. are subject to regulation by the FDA and the Federal Trade Commission,
referred to as the FTC. The FDA and FTC have released a joint communique on the
requirements for marketing these procedures in compliance with the laws
administered by both agencies. The FTC staff also issued more detailed staff
guidance on the marketing and promotion of these procedures and has been
monitoring marketing activities in this area through a non-public inquiry to
identify areas that may require further FTC attention. The FDA has
traditionally taken the position that the promotion and advertising of lasers
by manufacturers and physicians should be limited to the uses approved by the
FDA. Although the FDA does not prevent surgeons from using excimer lasers
off-label, the FDA reserves the right to regulate advertising and promotion of
off-label uses.

Insurance Licensure. Most states impose strict licensure requirements on
health insurance companies, HMO's, and other companies that engage in the
business of insurance or pre-paid health care. In most states, these laws do
not apply to discounted fee-for-service arrangements or networks that are paid
on a capitated basis, i.e. based on the number of covered persons the network
is required to serve without regard to the actual rendering of eye care service
to patients, provided that the association with which the network provider has
contracted is a licensed health insurer or HMO. There are exceptions to these
rules in some states. For example, certain states require a license for a
capitated arrangement with any party unless the risk-bearing association is a
professional corporation that employs the eye care providers. If we are
required to become licensed under these laws, the licensure process can be
lengthy and time consuming and, unless the regulatory authority permits us to
continue to operate while the licensure process is progressing, we could suffer
losses of revenue that would result in material adverse changes in our business
while the licensing process is pending. In addition, many of the licensing
requirements mandate strict financial and other requirements we may not
immediately be able to meet. Once licensed, we would be subject to continuing
oversight by and reporting to the licensing authority.

Regulation of our HMO Subsidiaries. We hold two single service HMO
licenses, one in North Carolina and one in Texas. Because of regulatory
changes, we will continue our business in North Carolina without renewing the
North Carolina license when it expires in 2000. The two states require the
filing of quarterly and annual reports as well as periodic on-site audits.

The Florida, North Carolina and Texas, managed care businesses are highly
regulated. Such regulation can include, but is not limited to, caps on
permissible premiums charged to customers;

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mandated benefits; and rules governing relationships with, and payments to,
network providers. Each of these states also require pre-approval from their
respective Departments of Insurance prior to allowing a significant change of
ownership control to take place.

In Texas, a single service HMO must maintain a reserve of $500,000, net of
accrued unpaid liabilities. However, if such a reserve is currently
unavailable, the HMO must achieve and maintain a current reserve of $200,000;
this reserve must increase to $275,000 by December 31, 1999; $350,000 by
December 31, 2000; $425,000 by December 31, 2001; and $500,000 by December 31,
2002.

Texas Administrative Oversight Order. Our wholly owned Texas HMO, AECC
Total Vision Health Plan of Texas, Inc., is required by the terms of an
administrative oversight order dated August 18, 1999, from the Texas Insurance
Department to maintain a minimum net worth of $1,400,000. The Texas HMO is also
prohibited from paying dividends or making any other payments to us without the
prior written approval of the Texas Insurance Department. Our Texas HMO
subsidiary is therefore restricted in its ability to apply its earnings (if
any) to the payment dividends on our common stock, the reduction of our bank
debt or any other corporate purpose, other than operation of the Texas HMO.
Management does not consider this requirement burdensome under present
circumstances, but we are nevertheless restricted in the use of our capital. We
have a cost allocation agreement with our Texas HMO subsidiary, approved by the
Texas Insurance Department, which permits our subsidiary to reimburse us, as
the parent company, for shared administrative costs. The cost allocation
agreement may be amended only with approval of the Texas Insurance Department.

Third Party Administration Licensing. Some states require licensing for
companies providing administrative services in connection with managed care
business. We hold third-party administrator's licenses in Florida and Rhode
Island. We intend to seek licenses in the states where they are available for
eye care networks. However, we may not be able to meet the licensing
requirements in all states, and this may have an adverse effect on our business
and operating results or inhibit our growth.

Physician Incentive Plans. Medicare regulations impose certain disclosure
requirements on managed care networks that compensate providers in a manner
that is related to the volume of services provided to Medicare patients (other
than services personally provided by the provider). If incentive payments
exceed 25% of the provider's potential payments, the network is also required
to show that the providers have certain "stop loss" financial protections and
to conduct certain Medicare enrollee surveys.

"Any Willing Provider" Laws. Some states have adopted, and others are
considering, legislation that requires managed care networks to include any
qualified and licensed provider who is willing to abide by the terms of the
network's contracts. These laws may also prohibit termination of providers
without cause. These laws limit our ability to develop effective managed care
networks in such states.

Corporate Practice of Optometry and Ophthalmology. The laws of many states
prohibit corporations that are not owned entirely by eye care professionals
from:

o employing eye care professionals;

o receiving for their own account reimbursements from third party payors
for health care services rendered by licensed professionals;

o controlling clinical decision-making; or

o engaging in other activities that constitute the practice of optometry
or ophthalmology.

To comply with these requirements, we:

o contract with professional associations (which are owned by one or
more licensed optometrists or ophthalmologists), which in turn employ
or contract with licensed optometrists or ophthalmologists to provide
professional services to patients;

o perform only non-professional services;

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o do not represent to the public or our customers that we provide
professional eye care services; and

o do not exercise influence or control over the practices of the eye
care practitioners employed by the professional associations.

Our agreements with eye care providers specifically provide that all
decisions required by law to be made by licensed ophthalmologists or
optometrists shall be made only by such licensed persons, and that we shall not
engage in any services or activities which would constitute the practice of
ophthalmology or optometry. If health care regulations and their
interpretations change in the future, we may have to revise the terms of such
agreements to comply with regulatory changes. See "Certain Relationships and
Related Transactions -- OptiCare P.C. and -- Optometric Eye Care Centers, Inc."

State Fee-Splitting and Anti-kickback Law. Most states have laws
prohibiting the paying or receiving of any remuneration, direct or indirect,
that is intended to induce referrals for health care products or services. Many
states also prohibit "fee-splitting" by health care professionals with any
party except other health care professionals in the same professional
corporation or practice association. In most cases, these laws apply to the
paying of a fee to another person for referring a patient or otherwise
generating business, and do not prohibit payment of reasonable compensation for
facilities and services other than the generation of business, even if the
payment is based on a percentage of the revenues of the professional practice.
However, in some states, "fee-splitting" has been interpreted to include
payments by health professionals of a portion of fees in return for certain
services.

The North Carolina Medical Board stated in an Official Position Statement,
which was adopted in 1993 and amended in 1996, that sharing profits between a
non-physician and physician partner on a percentage basis is fee splitting and
is grounds for disciplinary action. In the past year, this issue has been
raised in several lawsuits in the state. In each of these cases, the court was
asked to find that the profit sharing arrangement between a physician or
physician group and management company is unethical and void as against public
policy. To date, no court in North Carolina has ruled on this issue. There is a
risk that a court could find that our arrangements with physicians are
unethical and void as against public policy or that the Medical Board could
determine that our arrangements with physicians in the state constitute
unethical fee-splitting and that these physicians are subject to disciplinary
action. This risk could also extend to arrangements with optometrists since the
North Carolina Optometry Board has informally indicated that it takes a similar
view on fee-splitting.

North Carolina law also prohibits health care providers from paying any
type of financial compensation to any person, firm or corporation for
recommending or securing the provider's employment by a patient, or as a reward
for having made a recommendation resulting in the provider's employment by a
patient.

Federal Fee-Splitting and Anti-kickback Law. Federal law prohibits the
offer, payment, solicitation or receipt of any form of remuneration in return
for the referral of patients covered by federally funded health care programs
such as Medicare and Medicaid, or in return for purchasing, leasing, ordering
or arranging for the purchase, lease or order of any product or service that is
covered by a federal program.

On April 15, 1998 the Office of Inspector General of the U.S. Department
of Health and Human Services (the "OIG") issued Advisory Opinion 98-4, which
raised questions about whether a percentage of revenue management fee
arrangement could be viewed as violating the federal anti-kickback law if the
manager is involved in helping generate revenues derived from Medicare and
Medicaid programs. Under the arrangement reviewed by the OIG, the manager's
duties included management and marketing services, negotiation and oversight of
health care contracts with various payors, including Federal healthcare
programs, and setting up provider networks that included physicians. Payments
to the management company included a "fair market value payment" for operating
services provided by the manager, a payment based on a percentage of the cost
of capital assets, and an additional 20% of net revenues of the practice for
management services. The OIG

38
<PAGE>

noted that since the manager was paid a percentage of net revenue, including
revenue from business derived from managed care contracts arranged by the
manager, that a potential technical violation of the anti-kickback statute
existed. The OIG further noted that since the manager would presumably receive
some compensation for management efforts in connection with the development and
operation of specialist networks, any evaluation by the OIG would require
information about the relevant financial relationships. The OIG summarized that
while the management arrangement "may" violate the anti-kickback statute, a
definitive conclusion would require a determination of the parties' intent,
which is beyond the scope of the advisory opinion process.

Our services agreements are different from the arrangements reviewed by
the OIG in its advisory opinion. Therefore, we believe that the opinion is
inapplicable to our relationships with our eye care professionals. As a result,
we have no present plans to change the terms of these relationships, but we
continue to monitor any clarifications or determinations in this area. If the
forms of our services agreements are ever determined to be in violation of the
federal anti-kickback statute, it is likely that there would be a material
adverse impact on our business, financial condition and results of operation.

Advertising Restrictions. Many states, including Connecticut, prohibit
licensed eye care professionals from using advertising which includes any name
other than their own, or from advertising in any manner that is likely to lead
a person to believe that a non-licensed professional is engaged in the delivery
of eye care services. Certain of our forms of services agreements provide that
all advertising shall conform to these requirements, but there can be no
assurance that the interpretation of the applicable laws or our advertising
will not inhibit us or result in legal violations that could have a material
adverse effect on us.

The laws described above have civil and criminal penalties and have been
subject to limited judicial and regulatory interpretation. They are enforced by
regulatory agencies that are vested with broad discretion in interpreting their
meaning. Our agreements and activities have not been examined by federal or
state authorities under these laws and regulations. There can be no assurance
that review of our business arrangements will not result in determinations that
adversely affect our operations or that certain material agreements between us
and eye care providers or third-party payors will not be held invalid and
unenforceable. In addition, these laws and their interpretation vary from state
to state. The regulatory framework of certain jurisdictions may limit our
expansion into, or ability to continue operations within, such jurisdictions if
we are unable to modify our operational structure to conform with such
regulatory framework. Any limitation on our ability to continue operating in
the manner in which we have operated in the past could have an adverse effect
on our business, financial condition and results of operations.

39
<PAGE>

PROPERTIES

The following table sets forth a description of our properties, all of
which are leased under medium- to long-term leases which require payments of
base annual rent and, generally, a share of the operating expenses of the
properties or of increases in such costs. The company does not own any real
property.

<TABLE>
<CAPTION>
BASE
SQUARE ANNUAL REMAINING
LOCATION FOOTAGE RENT TERM RENEWAL OPTIONS USES
- ------------------- --------- ----------- ----------- ----------------- ------------------------------------
<S> <C> <C> <C> <C> <C>
Waterbury, CT* 33,000 $612,240 11 years 2 10-year terms Eye health services, retail
optical, ambulatory surgery
Waterbury, CT* 4,900 $ 96,500 13 years 2 10-year terms Managed care
Waterbury, CT* 5,200 $ 98,600 11 years 2 10-year terms Corporate offices
Waterbury, CT 4,100 $ 58,477 4 years 2 5-year terms Retail optical
Ansonia, CT 2,300 $ 20,400 3 years 1 5-year term Eye health services, retail optical
Bridgeport, CT 3,100 $ 42,000 1 year 2 5-year terms Eye health services, ambulatory
surgery
Cheshire, CT 3,600 $ 48,903 4 years 2 5-year terms Retail optical
Cheshire, CT 1,500 $ 24,123 1 year 1 5-year term Eye health services, retail optical
Clinton, CT 1,200 $ 18,000 6 months None Retail optical
Danbury, CT 3,100 $ 43,008 4 years 2 5-year terms Eye health services, retail optical
Fairfield, CT 2,100 $ 47,000 5 years 2 5-year terms Retail optical
Greenwich, CT 2,100 $ 70,400 4 years 2 5-year terms Eye health services, retail optical
Hamden, CT 2,900 $ 55,100 1 year 1 5-year term Eye health services, retail optical
Madison, CT 1,000 $ 12,600 1 year 2 1-year terms Retail optical
New Haven, CT 2,700 $ 27,749 4 months None Eye health services, retail optical
New Milford, CT* 2,400 $ 50,400 11 years 2 10-year terms Retail optical
Naugatuck, CT 1,400 $ 24,225 3 years 1 5-year term Retail optical
Norwalk, CT* 17,500 $421,000 1 year 2 3-year terms Eye health services, retail
optical, ambulatory and laser
surgery
Ridgefield, CT 3,100 $ 50,356 6 years 1 5-year term Eye health services, retail optical
Southbury, CT 1,700 $ 34,250 2.5 years 1 5-year term Eye health services, retail optical
Stratford, CT 3,700 $ 36,000 6 months 1 1-year term Eye health services
Torrington, CT 3,500 $ 64,385 4 years 2 5-year terms Retail optical
Torrington, CT 1,800 $ 33,243 2 years None Eye health services, retail optical
Trumbull, CT 2,000 $ 26,062 2.5 years None Retail optical
Watertown, CT 3,400 $ 55,890 4 years 2 5-year terms Retail optical
Westport, CT 3,000 $116,813 3 years 2 5-year terms Eye health services, retail optical
Fayetteville, NC* 4,100 98,000 5 years None Optometry operations and retail
optical
Jacksonville, NC* 5,400 62,000 5 years None Optometry operations and retail
optical
Raleigh, NC 10,800 $183,600 2 years 1 5-year term Offices
Rocky Mount, NC* 4,000 $ 46,500 3 years None HMO executive offices
Rocky Mount, NC* 15,100 $137,600 3 years None Operations center
Rocky Mount, NC* 1,800 $ 14,900 3 years None HMO offices
Rocky Mount, NC* 4,000 $ 40,000 5 years None Retail optometry
Burlington, NC 3,400 $ 65,100 1 year 1 5-year term Retail optometry
Garner, NC 4,000 $ 48,000 2 years 2 5-year terms Retail optometry
High Point, NC 3,700 $ 66,100 6 years 1 5-year term Retail optometry
Shelby, NC 2,700 $ 43,100 6 years None Retail optometry
Largo, FL 3,000 $ 27,000 5 years 2 5-year terms Software development
Dallas, TX 500 $ 8,400 1 year None HMO offices
</TABLE>

- ----------
* The lessor of these premises is affiliated or associated with one or more
directors, executive officers or principal stockholders of the company.
See "Certain Relationships and Related Transactions."

40
<PAGE>

EMPLOYEES

The company and its affiliates have approximately 925 employees, including
110 executive or managerial personnel, 207 licensed ophthalmologists,
optometrists, and opticians and 148 ophthalmologist assistants. These amounts
include an aggregate of 259 part-time personnel, i.e., working fewer than 30
hours per week. We believe that our relations with our employees are good. We
are not a party to any collective bargaining agreement.

LITIGATION

OptiCare Eye Health Centers Physicians Action and Countersuits. Seven
physicians employed by OptiCare, P.C. commenced an action in January 1999 in
the Connecticut Superior Court complaining of inducements that led them to
affiliate with OptiCare Eye Health Centers. Shortly after the commencement of
the action, three of the plaintiffs withdrew from the lawsuit. The remaining
four plaintiffs seek damages for individual harm they claim to have suffered.
One plaintiff also purports to sue derivatively on behalf of OptiCare Health
Eye Centers for harm suffered by the shareholders. The defendants deny the
factual and legal validity of the claims asserted and have moved to dismiss the
complaint. The derivative portion of the complaint was dismissed on June 14,
1999. Dr Yimoyines, our chairman, chief executive officer and president, has
been named as a defendant in this action.

OptiCare Eye Health Centers and OptiCare P.C. instituted actions in
January and February, 1999, in the Connecticut Superior court against two
physicians for unfair trade practices, tortious interference and abuse of
process based on defendants' course of conduct that plaintiffs complain is
unlawfully designed to force plaintiffs to modify the defendants' employment
contracts. Defendants have moved to strike the complaint. OptiCare Eye Health
Centers and OptiCare, P.C. are opposing the motion to strike, and if successful
in their opposition intend to vigorously pursue their claims. We have also
brought a counterclaim against three of the physicians for anticipatory breach
of contract.

The foregoing actions have been consolidated in Connecticut Superior
Court. These actions are in the early stages of discovery. We believe that we
will prevail in these actions. However, if the physicians prevail in these
actions, our business, financial condition and results of operations could be
materially adversely affected.

Missouri Action, Counterclaim and Related Put Option. PrimeVision Health
commenced an action (the "Missouri Action") in United States District Court for
the Eastern District of Missouri, in August 1998, seeking damages from an
ophthalmologist (the "Missouri Seller") who sold his ophthalmology practice to
PrimeVision Health. PrimeVision Health has alleged that the Missouri Seller
falsely and fraudulently inflated the value of the corporation he sold to
PrimeVision Health, in the amount of approximately $2 million. The Missouri
Seller has counterclaimed against PrimeVision Health, for, among other things,
enforcement of a put option, damages for allegedly malicious prosecution and a
declaration that his administrative services agreement with PrimeVision Health
is terminated and of no further force or effect. The litigation is in its
earliest stages.

As part of the purchase transaction, PrimeVision Health issued a put
option by which the Missouri Seller, at his election, may require PrimeVision
Health to purchase the balance of his ophthalmology practice, based on
substantially the same valuation which PrimeVision Health is challenging in
court. The exercise price that would be payable by PrimeVision Health under the
put option is approximately $4 million. In January 1999, the Missouri Seller
exercised the put option. PrimeVision Health has asserted to the Missouri
Seller that PrimeVision Health is not obligated to honor the put for the same
reasons that PrimeVision Health is seeking damages in the Missouri Action --
that the value of the corporation sold by the Missouri Seller to PrimeVision
Health was falsely inflated. As noted above, the Missouri Seller has
counterclaimed in the Missouri Action to enforce the put.

We believe that we will prevail in the pending Missouri Action and in any
attempt to enforce the put, but the expenses of the Missouri Action and the
defense of the Missouri Seller's attempts, if any, to enforce the put could be
substantial. If the Missouri Seller were to prevail in this action, our
business, financial condition and results of operations could be materially
adversely affected.

41
<PAGE>

CERTAIN INDEBTEDNESS

On August 13, 1999, we and PrimeVision Health, OptiCare Eye Health
Centers, and a subsidiary of PrimeVision Health, all of which are now our
subsidiaries), entered into an amended and restated loan and security agreement
and certain other agreements relating to the loan agreement with a group of
lenders represented by Bank Austria Creditanstalt Corporate Finance, Inc. The
outstanding balance under our credit facility as of December 1, 1999, is
approximately $32.7.

Under the terms of our credit facility, the lenders have made available us
a maximum aggregate principal amount at anytime outstanding of $34.2 million,
which includes a term loan facility in the aggregate principal amount of $21.5
million, and a revolving credit facility in the maximum aggregate principal
amount at anytime outstanding of $12.7 million, including, a letter-of-credit
sub-facility of up to $1.5 million. We use our credit facility to provide us
with working capital.

We may borrow and repay under the revolving credit facility until June 1,
2004, subject to the terms and conditions of the credit facility. The term loan
facility is repayable in fifteen quarterly principal installments, with the
first fourteen installments repayable in accordance with the amortization
schedule set forth in our credit facility, and the final payment of all
principal amounts outstanding, being due and payable on June 1, 2004. The
credit facility also requires us to make certain mandatory prepayments,
including on account of the offering of common stock in this prospectus, and
allows us to make optional prepayments. See "Use of Proceeds. " Our credit
facility terminates, and all amounts outstanding under our credit facility are
due and payable, on June 1, 2004.

The interest rate under the credit facility equals the base rate or the
eurodollar rate (each, as defined in the credit facility), as we may from time
to time elect in accordance with the provisions of our credit facility. The
base rate is generally the higher of (a) the prime rate of Bank Austria for
domestic commercial loans in effect on such applicable day, or (b) the federal
funds rate in effect on such applicable day plus one-half percentage point. The
eurodollar rate generally equals the quotient of the offered rate quoted by
Bank Austria in the interbank eurodollar market for U.S. dollar deposits of an
aggregate amount comparable to the principal amount of the eurodollar loan to
which the quoted rate is to be applicable.

Our subsidiaries have guaranteed the payments and our other obligations
under the credit facility, and we and certain of our subsidiaries have granted
a security interest in substantially all our assets, in favor of the lenders.
We have pledged the capital stock of certain of our subsidiaries to the
lenders.

The credit facility contains certain restrictions on the conduct of our
business, including restrictions on: incurring debt, declaring or paying any
cash dividends or any other payment or distribution on its capital stock, and
creating liens on our assets. We are required to maintain certain financial
covenants, including, a minimum fixed charge coverage ratio, a leverage ratio,
a senior leverage ratio, and an interest coverage ratio. We are also restricted
from incurring capital expenditures in excess of a specified amount and we are
required to achieve minimum cash flows.

The occurrence of certain events or conditions described in our credit
facility constitute an "event of default" under the credit facility, which
include:

o failure to make payment of principal or interest when due;

o failure to observe or perform certain affirmative covenants and other
covenants; or

o the occurrence of a vacancy in the offices of the chief executive or
chief financial officer which is not filled by a person reasonably
acceptable to the lenders.

In connection with this offering, Marlin Capital, L.P. will exchange a
$2.0 million subordinated note issued by us for shares of common stock offered
hereby at an exchange rate equal to the price of the common stock offered in
this offering. See "Certain Relationships and Related Transactions."

42
<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the name, age and position of each of our
directors and executive officers as of January 14, 2000. Each director will
hold office until the next annual meeting of stockholders or until his or her
successor has been elected and qualified. Our executive officers are appointed
by and serve at the discretion of the board of directors.

<TABLE>
<CAPTION>
NAME AGE POSITIONS
- ---------------------------------- ----- ----------------------------------------------
<S> <C> <C>
Dean J. Yimoyines, M.D. .......... 52 Chairman of the Board of Directors, President
and Chief Executive Officer
Steven L. Ditman ................. 45 Executive Vice President, Chief Financial
Officer and Director
Allan L.M. Barker, O.D. .......... 52 President of the Laser Correction and
Professional Services Division and Director
Martin E. Franklin ............... 35 Director
John F. Croweak .................. 63 Director
David A. Durfee, M.D. ............ 56 Director
Ian G.H. Ashken .................. 38 Director
D. Blair Harrold, O.D. ........... 53 President of Retail Optometry, North Carolina
Operations
Samuel B. Petteway ............... 43 President of the Managed Care Division
Gordon A. Bishop ................. 50 President of the Buying Group
</TABLE>

Dr. Yimoyines has served as our Chairman of the Board, Chief Executive
Officer and President since August 13, 1999. Dr. Yimoyines is a founder of
OptiCare Eye Health Centers and has served as the Chairman President and Chief
Executive Officer of OptiCare Eye Health Centers since 1985. Dr. Yimoyines has
been instrumental in the development and implementation of OptiCare Eye Health
Centers business for nearly twenty years. He graduated with distinction from
the George Washington School of Medicine. He completed his ophthalmology
residency at the Massachusetts Eye and Ear Infirmary, Harvard Medical School.
He completed fellowship training in vitreoretinal surgery at the Retina
Associates in Boston. Dr. Yimoyines is a graduate of the OPM (Owner/President
Management) program at Harvard Business School and a Fellow of the American
Academy of Ophthalmology.

Mr. Ditman has served as our Executive Vice President, Chief Financial
Officer and a Director since August 13, 1999. Mr. Ditman served as a director
of OptiCare Eye Health Centers since July 1989 and the Chief Financial Officer
and Treasurer of OptiCare Eye Health Centers since March, 1992. Mr. Ditman has
also served as Chief Operating Officer of OptiCare Eye Health Centers since
May, 1998. From October, 1986 until March, 1992, Mr. Ditman served as Director,
Chief Financial Officer and Treasurer of the Daytona Group and Drubner
Broadcasting. During the same period of time, Mr. Ditman also served as Chief
Financial Officer and Treasurer of The Drubner Investment Group. Mr. Ditman
served as Corporate Controller of Victor Electric Wire and Cable Corporation
from November, 1981 until October, 1986. Mr. Ditman served as a senior auditor
for KPMG Peat Marwick from 1977 to 1981. Mr. Ditman received his Bachelor of
Science in Accounting from Northeastern University in June 1977. Mr. Ditman
became a Certified Public Accountant in 1980 and was licensed in the State of
Rhode Island.

Dr. Barker is our President of the Laser Correction and Professional
Services Division and has served as a Director since August 13, 1999. Dr.
Barker has been a senior executive officer and director of Prime since 1996. He
is a licensed optometrist with 25 years experience in the eye care industry.
From October, 1989 to July, 1996, Dr. Barker served as co-president of
Consolidated Eye Care, Inc., the parent company of AECC/Pearlman Buying Group
and AECC Total Vision Health Plan, Inc. Also during this period Dr. Barker
served as vice president and secretary of Optometric Eye Care Center, P.A. Dr.
Barker received his Doctor of Optometry degree in 1975 from Southern College of
Optometry in Memphis, Tennessee.

43
<PAGE>

Mr. Franklin has served as a Director since August 13, 1999. Mr. Franklin
was a Director of PrimeVision Health from July, 1998 to August 13, 1999. Since
February 1, 1997, Mr. Franklin has served as Chairman of the Board of Directors
of Bolle Inc., an AMEX company, which is a manufacturer, marketer and
distributor of premium eyewear. Mr. Franklin has been Chairman and Chief
Executive Officer of Marlin Holdings, Inc., the general partner of Marlin
Capital, L.P., a private investment partnership, since October, 1996. From May,
1996 until December, 1998, Mr. Franklin served as Chairman and Chief Executive
Officer of Lumen Technologies, Inc., a NYSE company, which is a manufacturer
and distributor of specialty lighting equipment, and served as Executive
Chairman from May, 1996 until December, 1998. Mr. Franklin was Chairman of the
Board and Chief Executive Officer of Lumen's predecessor, Benson Eyecare
Corporation from October, 1992 to May, 1996 and President from November, 1993
until May, 1996. Mr. Franklin was non-executive Chairman and a director of
Eyecare Products plc, a London Stock Exchange Company, from December, 1993
until February, 1999. In addition, Mr Franklin has served as a director of
Specialty Catalog Corp., a NASDAQ listed company, since 1994 and of Corporate
Express, Inc., a NASDAQ listed company since March, 1999. Mr. Franklin also
serves on the boards of a number of privately held companies and charitable
organizations. Mr. Franklin received a B.A. in Political Science from the
University of Pennsylvania in 1986.

Mr. Croweak has served as a Director since August 13, 1999. Mr. Croweak
was a Director of OptiCare Eye Health Centers from September, 1995 to August
13, 1999. Mr Croweak has been Chairman of the Board of Directors of Anthem Blue
Cross and Blue Shield of Connecticut state chartered since August, 1997. From
April 4, 1988 through August, 1997, Mr. Croweak was Chief Executive Officer of
Blue Cross and Blue Shield of Connecticut. Mr. Croweak has been a director of
Anthem Insurance Companies, Inc., a multi-state health insurance company based
in Indianapolis, Indiana, since August, 1997. He is also a director of United
Illuminating, a diversified utility operator based in New Haven, Connecticut
and The New Haven Savings Bank, a state chartered savings bank based in New
Haven, Connecticut. Mr. Croweak received a BBA degree from the University of
Cincinnati in 1959.

Dr. Durfee has served as a Director since August 13, 1999. Dr. Durfee
served as acting Chief Executive Officer of PrimeVision Health from April, 1999
to August 13, 1999 and has served as Senior Vice President of PrimeVision
Health from September 1, 1996 until August 13, 1999, after a 21-year career in
clinical medicine. Dr. Durfee was a member of Oregon Eye Care, a group
ophthalmology practice in the Portland, Oregon market. He received his M.D.
degree from the University of Oregon Medical School in 1968 and was board
certified in ophthalmology in 1976. Dr. Durfee has been on the Board of
Directors of PACC Health Plans, a regional health insurer, since 1986. He
served as Chairman of the Board of PACC Health Plans from 1989 to 1994. Dr.
Durfee has served the American Academy of Ophthalmology since 1981. He has held
positions on the Board of Councilors, Long-Range Planning Committee, and was a
member of the Board of Trustees from 1990 to 1996. He last served as the Senior
Secretary for Ophthalmic Practice. He has delivered numerous lectures on
ophthalmology regarding practice management, networking, and contracting within
the managed care environment.

Mr. Ashken, A.C.A., has served as a Director since August 13, 1999. Mr.
Ashken has been Vice Chairman of Marlin Holdings, Inc., the general partner of
Marlin Capital, L.P., since October, 1996. Mr. Ashken has served as
Vice-Chairman and Secretary of Bolle Inc., an AMEX company, which is a
manufacturer, marketer and distributor of premium eyewear, since December,
1998. From February, 1997 until his appointment as Vice-Chairman, Mr. Ashken
served as Executive Vice President, Chief Financial Officer, Assistant
Secretary and a Director of Bolle Inc. Mr. Ashken was elected Executive Vice
President, Chief Financial Officer, Assistant Secretary and a Director of Lumen
Technologies, Inc., a NYSE company, which is a manufacturer and distributor of
specialty lighting equipment, from December, 1995 until he resigned from these
positions in December, 1998. Mr. Ashken was Chief Financial Officer of Lumen's
predecessor, Benson Eyecare Corporation, and a director of Benson Eyecare from
October, 1992 to May, 1996. Mr. Ashken also served as Benson Eyecare's
Executive Vice President from October, 1994 to May, 1996; and, Assistant
Secretary from December, 1993 to

44
<PAGE>

May, 1996. Mr. Ashken was a director of Eyecare Products plc, a London Stock
Exchange Company, from August, 1994 until he resigned from this position in
February, 1999. Mr. Ashken received his B.A. (Hons) in Economics and Account
from the University of Newcastle in England.

Dr. Harrold has served as the President of Retail Optometry, North
Carolina Operations since August 13, 1999. Prior thereto, Dr. Harrold served as
a senior executive and director of PrimeVision Health since its acquisition of
Consolidated Eye Care, Inc. in July, 1996. Dr. Harrold founded Consolidated
Eyecare in 1989 and served as its Co-President until its acquisition by
PrimeVision Health. Dr. Harrold is a licensed optometrist, having graduated
from Ohio State University with a B.S. in physiological optics and a Doctor of
Optometry degree in 1971. Dr. Harrold has also served as President of
Optometric Eye Care Center, PA, a North Carolina professional association. Dr.
Harrold is a member of the American Optometric Association and the North
Carolina State Optometric Association and is also a Fellow in the American
Academy of Optometry.

Mr. Petteway has served as the President of our Managed Care Division
since August 13, 1999. Mr. Petteway has been President of PrimeVision Health's
managed care business operations since July, 1996 and, prior to PrimeVision
Health's acquisition of Consolidated Eye Care, Inc, the managed care business
operations of Consolidated Eyecare since 1989. Since October 1994, Mr. Petteway
has served as Chairman of the Board for Association of Eye Care Centers Total
Vision Health Plan, Inc. From April, 1995 through August 13, 1999, Mr. Petteway
served as the Chairman of the Board of AECC Total Vision Health Plan of Texas,
Inc., which are both owned by Prime. Prior to 1989, Mr. Petteway was President
of Strategic Health Services, providing consulting services to hospitals,
physicians, pharmacies and companies. Mr. Petteway graduated from the
University of North Carolina at Chapel Hill with a Bachelor of Science in
Pharmacy in 1979 and received a Masters in Business Administration with
Distinction from Campbell University in 1985.

Mr. Bishop has served as President of the Company's Buying Group since
August, 1999. In that position, he has overall responsibility for the Company's
Buying Group and all Connecticut retail optical operations. From June, 1998 to
August, 1999, Mr. Bishop directed the retail operations of OptiCare Eye Health
Centers, Inc. Mr. Bishop has over 30 years of experience in the optical
industry, having served in a variety of different capacities with different
organizations in the United States and Canada. From August of 1997 to April,
1998, he served as Vice President of Operations for Public Optical. From July
of 1994 to April of 1997, he served as Operations Manager for Vogue Optical.
From June of 1990 to July of 1994, he held positions of increasing
responsibility with Standard Optical Ltd. He ultimately held the position of
Vice President of Operations for that company. Mr. Bishop received his Business
Administration Diploma from Confederation College of Applied Arts and
Technology and subsequently obtained an Ophthalmic Dispensing Diploma from
Ryerson Polytechnic University. He holds a variety of eye care professional
certifications and is certified by the American Board of Opticianry and holds a
Fellowship in the National Academy of Opticianry.

COMMITTEES OF THE BOARD OF DIRECTORS

Our board of directors currently has two committees, the audit committee
and the compensation committee. The audit committee, among other things,
recommends the selection of independent auditors to the board of directors,
reviews their reports to management, and meets from time to time as they deem
necessary or advisable to review our systems of internal financial controls.
The members of the audit committee are Messrs. John Croweak and David Durfee.

The compensation committee is responsible for establishing compensation
policy for senior management. The members of the compensation committee are
Messrs. John F. Croweak and David A. Durfee.

45
<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The compensation committee was formed on August 13, 1999. Mr. Croweak has
never been one of our officers or employees. Mr. Durfee, who is the other
member of the committee, served as the acting Chief Executive Officer and
Senior Vice President of PrimeVision Health from 1996 until the closing of the
mergers on August 13, 1999. Prior to the formation of the compensation
committee, all decisions regarding executive compensation, salaries and
incentive compensation for our employees and consultants were made solely by
the board of directors and executive officers of PrimeVision Health and
OptiCare Eye Health Centers, as the case may be.

EXECUTIVE COMPENSATION

The Executive Compensation discussion below:

o for periods prior to the closing of the mergers on August 13, 1999,
includes executive compensation of our directors and officers earned from
PrimeVision Health and OptiCare Eye Health Centers, as the case may be;
and

o does not include any information relating to Saratoga or Saratoga's
officers and directors prior to the mergers.

SUMMARY COMPENSATION TABLE

The following table sets forth, for the fiscal years ended December 31,
1999, 1998 and 1997, compensation paid by us to the Chief Executive Officer and
to our four other most highly compensated executive officers whose total
compensation exceeded $100,000.

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
-------------------------- ------------------------------------
ALL OTHER
NAME AND PRINCIPAL POSITION (9) YEAR SALARY ($) BONUS ($) OPTIONS (#) COMPENSATION (8)
- --------------------------------- ------ ------------ ----------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
Dean J. Yimoyines, M.D. (1) 1999 403,650 37,152 325,000(7) 10,671
Chairman of the Board of 1998 360,537 139,756 286,450(6) 10,948
Directors, President and 1997 350,000 20,803 0 7,034
Chief Executive Officer

Steven L. Ditman (2) 1999 159,135 0 150,000(7) 2,700
Executive Vice President, 1998 145,673 32,000 72,977(6) 0
Chief Financial Officer, 1997 125,000 20,000 0 692
Secretary and Director

Allan L.M. Barker, O.D. (3) 1999 263,161 0 0 5,000
President of the Integrated 1998 305,028 271 0 5,160
Eyecare Services Division 1997 299,839 0 0 4,750
and Director

D. Blair Harrold, O.D. (4) 1999 263,485 0 0 3,566
President of the Retail 1998 305,028 0 0 5,000
Optometry Division, North 1997 299,789 0 0 5,474
Carolina Operations

Samuel B. Petteway (5) 1999 294,590 63,868 45,000(7) 5,000
President of the Managed 1998 201,000 57,582 0 5,206
Care Division 1997 197,077 10,000 18,828(6) 4,750
</TABLE>

(See footnotes on following page)

46
<PAGE>

- ----------
(1) The information reflects the aggregate compensation paid by OptiCare Eye
Health Centers and OptiCare P.C. for the services of Dr. Yimoyines.

(2) The information reflects the compensation paid by OptiCare Eye Health
Centers for the services of Mr. Ditman.

(3) The information reflects the aggregate compensation paid by PrimeVision
Health and Consolidated Eye Care for the services of Dr. Barker.

(4) The information reflects the aggregate compensation paid by PrimeVision
Health and Consolidated Eye Care for the services of Dr. Harrold.

(5) The information reflects the aggregate compensation paid by PrimeVision
Health and Consolidated Eye Care for the services of Mr. Petteway.

(6) All awards reflected represent options currently held by our executive
officers which were received in connection with the mergers on August 13,
1999 in exchange for options of OptiCare Eye Health Centers capital stock
or PrimeVision Health common stock, as the case may be.

(7) Upon the closing of the mergers on August 13, 1999, we granted options to
purchase 325,000, 150,000 and 45,000 shares of common stock under our
Performance Stock Program to Dr. Yimoyines, Mr. Ditman and Mr. Petteway,
respectively.

(8) The executive officers were provided with certain group life, health,
medical and other non-cash benefits generally available to all salaried
employees and not included in this column pursuant to the rules
promulgated under the Exchange Act. The amounts shown include (i)
matching contributions by the Company under a 401(k) retirement savings
plan maintained by the Company for each of Messrs. Yimoyines $1,200,
$1,200 and $1,125, Ditman $0, $0 and $692, Barker $5,000, $5,160 and
$4,750, Harrold $3,566, $5,000 and $5,474 and Petteway $5,000, $5,206 and
$4,750, for the years 1999, 1998 and 1997, respectively, (ii) Insurance
premiums paid by the Company on behalf of Mr. Yimoyines for disability
insurance was $2,555 for each of the years 1999, 1998 and 1997, (iii) Car
allowance paid by the Company on behalf of Mr. Yimoyines was $3,438 and
$3,025 for the years 1999 and 1998, respectively, and on behalf of Mr.
Ditman of $2,700 for the year 1999, (iv) Country Club dues paid by the
Company on behalf of Mr. Yimoyines were $3,478, $4,168 and $3,354 for the
years 1999, 1998 and 1997, respectively.

(9) The Summary Compensation table does not include any information relating
to Thomas Cook who served as the Chief Executive Officer and President of
Saratoga prior to the mergers effected on August 13, 1999.

OPTIONS GRANTED IN 1999

The following table sets forth in information regarding our options
currently held by our Chief Executive Officer and our four other most highly
compensated executive officers whose total compensation exceeded $100,000. In
accordance with the rules of the Commission, the table sets forth the
hypothetical gains or "option spreads" that would exist for the options at the
end of their terms. These gains are based on assumed rates of annual compound
stock price appreciation of our common stock of 5% and 10% from the date the
options were granted to the end of the option terms.

<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
INDIVIDUAL PERCENTAGE VALUE AT ASSUMED
GRANTS OF TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION FOR
UNDERLYING EMPLOYEES PRICE OPTION TERM
OPTIONS IN FISCAL PER EXPIRATION ------------------
NAME GRANTED(#) 1998 SHARE DATE 5% 10%
- ------------------------- ---------------- --------------- --------- ---------- ---- -----------
<S> <C> <C> <C> <C> <C> <C>
Dean J. Yimoyines, M.D. 325,000(1) 45.1%(2) $5.85 8/09 0 $698,750
Steven L. Ditman 150,000(1) 20.8%(2) $5.85 8/09 0 $322,500
Samuel B. Petteway 45,000(1) 6.2%(2) $5.85 8/09 0 $ 96,873
</TABLE>

(See footnotes on following page)

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<PAGE>

- ----------
(1) Excludes options to purchase 286,450, 72,977 and 18,828 shares of common
stock which were received in connection with the mergers on August 13,
1999 in exchange for options of OptiCare Eye Health Centers capital stock
or PrimeVision Health common stock, as the case may be.

(2) The total options granted excludes options granted in connection with the
mergers on August 13, 1999.

AGGREGATED OPTION EXERCISES IN 1999 AND YEAR END OPTION VALUES

The following table summarizes certain information regarding option values
of our options as of January 14, 2000, held by the Chief Executive Officer and
each of the other named executive officers.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT 12/31/99(#) (1) OPTIONS AT 12/31/99($) (1)
----------------------------- ----------------------------
NON- NON-
NAME EXERCISABLE EXERCISABLE EXERCISABLE EXERCISABLE
- ------------------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Dean J. Yimoyines, M.D. 143,224 468,226 $134,631 $134,631
Steven L. Ditman 36,488 186,489 $ 34,299 $ 34,299
Samuel B. Petteway 17,782 46,046 0 0
</TABLE>

- ----------

(1) Includes options received in exchange for options of OptiCare Eye Health
Centers capital stock or PrimeVision Health common stock, as the case may
be, as well as options issued in fiscal 1999 after the mergers.

COMPENSATION PLANS

We maintain the following plans for the benefit of employees, including
directors and executive officers:

o Performance Stock Program;

o Employee Stock Purchase Plan;

o 401(k) plans; and

o health and other insurance plans.

We do not currently maintain a defined benefit pension plan or other
actuarial retirement plan for our named executive officers or otherwise.

PERFORMANCE STOCK PROGRAM

GENERAL

Our Performance Stock Program was adopted by the board of directors on May
14, 1999, and approved by our stockholders on August 13, 1999. The Program
provides for the issuance of awards of an aggregate maximum of up to the lesser
of (a) 3,000,000 shares of our common stock, or (b) 15% of the sum of (1) the
number of shares outstanding at the time the limitation in this clause (b) is
calculated, (2) the number of shares subject to options and performance shares
then outstanding, and (3) the number of shares then available for future awards
under the Program.

Awards may be comprised of incentive stock options, nonqualified stock
options, restricted stock, performance shares or cash units, each as described
below. No single individual may receive awards for (a) more than 600,000 shares
in 1999 (excluding substitute options granted to option holders of OptiCare Eye
Health Centers and PrimeVision Health pursuant to the merger agreement) or (b)
more than 200,000 shares in any subsequent calendar year.

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<PAGE>

The number of persons currently eligible for awards is approximately 925.
Authorized but previously unissued shares, treasury shares and shares forfeited
under the Program may be issued again under the Program up to the maximum
aggregate limit.

The Program provides for administration by either our board of directors
or the compensation committee of the board of directors. The compensation
committee has the general authority to interpret the provisions of the Program
and adopt such rules as it deems necessary or desirable for the administration
of the Program. The compensation committee also handles the selection of
employees, consultants and other service providers who will participate in the
Program, and the determination of the size and terms of awards made under the
Program.

The Program will terminate upon adoption by the board of directors of a
resolution terminating the Program, or upon the award and vesting of the
maximum aggregate number of shares of common stock available under the Program.

As of January 14, 2000, no options had been exercised pursuant to the
Program, options to purchase 1,316,778 shares were outstanding, and 266,539
shares remained available for future grants. On August 13, 1999, an aggregate
of approximately 630,737 options were granted to option holders of OptiCare Eye
Health Centers and PrimeVision Health in substitution for such options, which
contained substantially identical terms as the options substituted therefor,
except for a change in the exercise price and the number of shares for which
options can be exercised to reflect the mergers. In addition, after the
consummation of the mergers, on August 13, 1999 an aggregate of approximately
721,250 options were granted to our employees.

NON-QUALIFIED AND INCENTIVE STOCK OPTIONS

The compensation committee may designate options as either non-qualified
stock options (i.e., options not entitled to special tax benefits under the
Internal Revenue Code) or incentive stock options pursuant to Section 422 of
the Code. Incentive stock options may only be issued to employees and must be
issued at an option price no less than the fair market value of our common
stock on the date of the grant (and 110% of fair market value in the case of
10% stockholders). Subject to the foregoing, the price of the shares subject to
each option is set by the compensation committee.

The exercise of options granted under the Program is subject to terms and
conditions set by the compensation committee and set in the agreement
evidencing each option. The purchase price for the shares acquired upon
exercise of the option may be paid (a) in cash or by certified check, or (b) at
the discretion of the committee, by delivery of one or more stock certificates
evidencing other shares of our common stock with a fair market value equal to
the option price, or (c) by a combination of cash and common stock as described
in clauses (a) and (b).

The compensation committee sets the expiration date of each option, but in
the case of incentive stock options, the expiration date may not be longer than
ten years from the date of the grant (or five years in the case of 10%
stockholders).

All incentive stock options will terminate on the earlier of the
expiration date or one year following termination of employment due to
disability or death. Upon termination of employment for any reason other than
disability or death, all options will expire on the earlier of their expiration
date or ninety days following termination of employment, unless otherwise
provided in an applicable agreement or instrument. Non-qualified stock options
may be subject to the same provisions with respect to termination, or may
contain such other provisions as the compensation committee determines.

Options are not transferable or assignable other than by will or the laws
of descent and distribution and are exercisable during the participant's
lifetime only by the participant, except that the compensation committee may,
in its sole discretion, allow for transfers of awards (other than incentive
stock options) to other persons or entities.

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<PAGE>

RESTRICTED STOCK

An award of a share of restricted stock is an award to a participant of a
share of our common stock generally conditioned upon the attainment of
performance goals established by the compensation committee for the performance
period to which the award relates and the continued employment or retention as
a service provider of the participant with us or any of our majority-owned
subsidiaries through the end of the performance period. During the performance
period, the participant has all of the rights of one of our stockholders,
including the right to receive dividends, except that the participant shall not
have custody of the shares of common stock nor the right to transfer ownership
of the shares during the performance period.

Generally, a participant's termination of employment or provision of
services to us prior to the end of the relevant performance period results in
forfeiture of an award of restricted stock, although the compensation committee
is authorized to determine that all or any portion of the award shall not be
forfeited. If a portion of a restricted stock award is forfeited, the
non-forfeited portion is reduced by the amount of any dividends previously paid
to the participant with respect to the forfeited portion.

PERFORMANCE SHARES OR CASH UNITS

The compensation committee may establish performance programs and grant
awards of performance shares or cash units pursuant to such programs. The
compensation committee will establish performance goals and a schedule relating
to such goals to determine the performance awards to be granted to
participants. At the completion of a performance award period, the compensation
committee shall determine the award to be made to each participant by
multiplying the number of performance units granted to each participant by a
performance factor representing the degree of attainment of the performance
goals. Performance shares shall generally be paid in the form of common stock,
and cash units shall be paid in cash, provided that the compensation committee
may pay performance shares in the form of cash at the request of a participant.

THE EFFECT OF A CHANGE IN CONTROL

In the event of a change in control of us, as defined in the Program, all
awards will become fully vested and all options will become immediately
exercisable if the compensation committee so provides, if an award so provides
or if an employment agreement with a recipient of an award so provides.

EMPLOYEE STOCK PURCHASE PLAN

Our 1999 Employee Stock Purchase Plan was adopted by our board of
directors on May 14, 1999 and approved by our stockholders on August 13, 1999.
The Plan provides for an aggregate maximum of up to 450,000 shares of our
common stock to be sold to employees under the terms of the Plan. Authorized
but previously unissued shares and treasury shares may be issued under the Plan
up to the maximum aggregate limit.

The Plan is administered by the compensation committee. The compensation
committee has the general authority to interpret the provisions of the Plan and
adopt such rules as it deems necessary or desirable for the administration of
the Plan.

The Plan will terminate upon adoption by the board of a resolution
terminating the Plan, or upon the sale of the maximum aggregate number of
shares of common stock available under the Plan.

ELIGIBILITY

All of our employees and those of our subsidiaries, other than certain 5%
stockholders, are eligible to participate in the Plan if they customarily work
at least 20 hours per week for at least five months in a year.

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<PAGE>

ELECTION TO PARTICIPATE

Eligible employees elect to participate in the Plan by contributing a
portion of their compensation (not to exceed the lesser of 20% of base pay or
$21,250) to purchase shares of common stock under the Plan. Participating
employees may change their elections at any time, but not more than once in a
calendar quarter.

PURCHASE PRICE

Employee contributions will be used to purchase shares of common stock as
of the last business day of each calendar quarter at a price equal to 85% of
the then fair market value of such shares. Only whole numbers of shares will be
purchased for each employee, with any excess contributions being carried over
to the next quarter.

EMPLOYMENT AGREEMENTS WITH CERTAIN OFFICERS

The provisions of the employment agreements of Messrs. Yimoyines, Ditman,
Barker, Harrold and Petteway are summarized below.

Dean J. Yimoyines. The term of his employment the agreement is three
years, expiring August 13, 2002, and it is automatically renewable for
additional one year terms unless either party gives six months' notice. Dr.
Yimoyines may terminate his employment agreement without cause upon six months'
notice. Dr. Yimoyines' base annual salary and guaranteed bonus is $410,000, and
he may receive performance-based bonuses as determined by our board of
directors, up to 100% of base salary plus guaranteed bonus, subject to the
achievement of goals established for each calendar year by the board or the
compensation committee. Dr. Yimoyines is entitled to a disability benefit
consisting of full base salary and guaranteed bonus for the first six months of
a disability, and thereafter 65% of base salary, guaranteed bonus and
performance-based bonus earned as of the date of disability and to a life
insurance policy on his life in the amount of $1,500,000 payable to a
beneficiary designated by Dr. Yimoyines. If his employment is terminated on
account of disability or without cause by the company, or if the agreement is
not renewed at the end of the initial three year term, Dr. Yimoyines shall
receive a lump sum payment in an amount equal to three times total compensation
for the year prior to termination, plus continuation of all benefits for a
period of three years after termination. If (a) during the three year period
following a change in control, Dr. Yimoyines' duties are materially diminished,
his principal place of employment is moved more than 50 miles, or his
employment is terminated on account of disability or by us without cause or by
now-renewal of the agreement, or (b) Dr. Yimoyines voluntarily terminates his
employment during the one year period following a change in control, then Dr.
Yimoyines shall receive severance pay equal to three times total compensation
for the year ended prior to the change in control. If Dr. Yimoyines' employment
is not terminated at our election; including a termination on account of
non-renewal after the initial 3-year term, then (1) during the term of the
agreement and for a period of 18 months after the date of termination of
employment, Dr. Yimoyines shall not engage in the practice of any branch of
ophthalmology or ophthalmic surgery in any capacity in Connecticut or any
portion of any other state where the company actively conducts business; and
(2) for the 12 month period following termination, Dr. Yimoyines may not render
services to any organization which is engaged in (a) researching, developing,
marketing or selling any eye wear or eye care product, process or service or
(b) management of an ophthalmic medical practice which competes with any of our
products, processes or services.

Steven L. Ditman. The term of his employment is three years expiring
August 13, 2002, renewable for one year terms, subject to termination by Mr.
Ditman without cause upon six months' notice. His base annual salary, excluding
the cost of certain perquisites, is $175,000, and he may receive
performance-based bonuses as determined by the board of directors, subject to
the achievement of goals established for each calendar year by the board or the
compensation committee, up to 100% of base salary. If he becomes disabled, he
is entitled to full base salary for first three months, and thereafter 65% of
base salary and performance-based bonus earned as of the date of

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<PAGE>

disability. He is also entitled to a death benefit of $150,000. If (1) we do
not renew Mr. Ditman's agreement at the end of the initial 3-year term; (2) we
terminate Mr. Ditman's employment agreement without cause; (3) Mr. Ditman
voluntarily terminates his employment during the one year period following a
change of control; or (4) during the three year period following a change in
control, Mr. Ditman's duties are materially diminished, his principal place of
employment is moved more than 50 miles, or his employment is terminated by us
without cause or by non-renewal of the agreement, then he shall receive a lump
sum payment equal to two times his total compensation for the year prior to
termination. During the term of the agreement and for a period of 18 months
after termination, subject to certain exceptions, Mr. Ditman may not render
services directly or indirectly to any organization which is engaged in (1)
researching, developing, marketing or selling any eye wear or eye care product,
process or service which competes with us, or (2) managing the business
practice of ophthalmologists, optometrists, or opticians.

Allan L.M. Barker and D. Blair Harrold. The term of each agreement is seven
years, expiring August 13, 2006, and is automatically renewable for subsequent
one year terms unless either party gives six month prior notice. The employee
may terminate the agreement without cause upon six months' notice. Base annual
salary is $150,000, subject to cost of living adjustments on the third and sixth
anniversary dates. Each employee may receive performance-based bonuses as
determined by the board of directors, subject to the achievement of goals
established for each calendar year by the board or the compensation committee,
up to 100% of base salary. If the employee is disabled, he receives full base
salary for the first three months. The employee is entitled to receive a death
benefit of $150,000. If the employee is terminated by us without cause, he is
entitled to a lump sum payment equal to the base salary the employee would have
received from the date of termination to the end of the term, and continuation
of benefits to the end of the term; if the employee terminates his employment
with us following a change in control, he is entitled to a lump sum payment
equal to one year of base salary. During the term of the agreement and for a
period of 18 months after termination, subject to certain exceptions, the
employee may not render services directly or indirectly to any organization
which is engaged in (1) researching, developing, marketing or selling any eye
wear or eye care product, process or service which competes with us, or (2)
managing the business practice of ophthalmologists, optometrists, or opticians.

Samuel B. Petteway, President of the Managed Care division. The term of
the agreement is three years expiring August 13, 2002, and is automatically
renewable for subsequent one year terms unless either party gives six months
prior notice. Mr. Petteway may terminate the agreement without cause upon six
months' notice and we may terminate without cause upon 3 months' notice. His
base annual salary and guaranteed bonuses are: 1999: $221,000; 2000: $232,000;
2001: $243,000; 2002: $193,000. If the Managed Care division achieves specific
targets of net operating profit in each year, Mr. Petteway will receive
performance bonuses of $73,000 for 1999, and $77,000 for 2000. Thereafter, the
board shall determine net operating profit goals for 2001 and 2002, and Mr.
Petteway's bonuses for those years shall be $2,000 and $77,000 respectively if
such goals are achieved. Mr. Petteway shall also receive bonuses equal to
certain percentages of the growth of net operating income of the Managed Care
division. These bonuses are capped at $41,200 for 2000, $17,500 for 2001 and
$19,300 for 2002. He may also earn additional bonuses if we achieve certain
goals. Mr. Petteway is entitled to disability benefits consisting of full base
salary bonuses for the first three months, and thereafter 65% of base salary
plus bonuses earned as of the date of disability and to death benefits of
$200,000. If the employee is terminated by us without cause or if employee
terminates his employment following a change of control, he is entitled to a
lump sum payment equal to 18 months' base salary. If the employee terminates
the agreement without cause, he is entitled to 12 months' base salary, payable
in monthly installments. During the term of the agreement and for 12 months
thereafter, the employee may not compete with our managed eye care business.

COMPENSATION OF DIRECTORS

Directors who are also employees do not receive any additional
compensation for their service as directors. All other directors receive a fee
of $1,000 per board meeting attended in person, and $500 per committee meeting
attended in person. The chairman of the audit committee and the

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<PAGE>

compensation committee, receives an additional payment of $1,500 per year. We
also reimburse directors for their expenses incurred in connection with
attendance at board and committee meetings, including travel and lodging, if
necessary.

Each non-employee director receives options to purchase 10,000 shares of
common stock upon their election to the board (the "election options"), and
thereafter options to purchase 5,000 shares at the time of each annual meeting
of stockholders. All such options will vest in tranches of one-third of the
award on the first, second and third anniversaries of the awards. However, each
option granted to non-employee directors serving as of January 1, 2000 will
vest in tranches of one-third of the award on the sixth month, eighteenth month
and thirtieth month after the grant of award.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

As permitted by the Delaware General Corporation Law, our certificate of
incorporation, as amended, provides that no director will be personally liable
to us or our stockholders for monetary damages for breach of fiduciary duty as
a director, except for liability

o for any breach of the director's duty of loyalty to us or our
stockholders;

o for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;

o under Section 174 of the Delaware General Corporation Law, and

o for any transaction from which the director derived an improper
personal benefit.

Our certificate of incorporation, as amended, and bylaws generally provide
that we must indemnify our directors and officers to the fullest extent
permitted by Delaware law, including payment in advance of a final disposition
of a director's or officer's expenses and attorneys' fees incurred in defending
any action, suit or proceeding. We believe that the provisions will assist us
in attracting and retaining qualified individuals to serve as directors.

We intend to enter into indemnification agreements with each of our
directors. These indemnification agreements provide for the indemnification by
us of our directors for liability for acts and omissions as directors. We
believe that indemnification agreements are necessary to attract and retain
qualified persons as directors.

We currently maintain an executive liability insurance policy which
provides coverage for our directors and officers. Under this policy, the
insurer agreed to pay, subject to certain exclusions, for any claim made
against any of our directors or officers for a wrongful act by any such
director or officer.

There is no pending litigation or proceeding involving any of our
directors, officers, employees or agent as to which indemnification is being
sought other than against Dean Yimoyines who is named as defendant in the
OptiCare Eye Health Center Physicians Action. See "Business -- Litigation." The
board of directors passed a resolution directing us to pay for all his
expenses. We are not aware of any other pending or threatened litigation or
proceeding that might result in a claim for such indemnification.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

OPTICARE, P.C. PROFESSIONAL SERVICES AND SUPPORT AGREEMENT

OptiCare Eye Health Centers has entered into a Professional Services and
Support Agreement with OptiCare P.C., a Connecticut professional corporation,
effective December 1, 1995. Pursuant to that agreement, OptiCare P.C. employs
medical personnel and performs all ophthalmology and optometry services at our
facilities in Connecticut. We select and provide the facilities at which the
services are performed and are the exclusive provider of all administrative and
support services for the facilities operated by OptiCare P.C. pursuant to this
agreement. We bill and receive payment for the services rendered by OptiCare
P.C. and in turn pay OptiCare P.C. a service fee pursuant to a compensation
plan mutually agreed to each year. The company owns all the rights to the
"OptiCare" name and under the terms of the agreement, if the agreement with
OptiCare P.C. is terminated, OptiCare P.C. must change its name and discontinue
using the OptiCare name. The agreement expires on December 1, 2000 and
automatically renews for successive two year terms unless either party
terminates the agreement at least 180 days before the next renewal date. Dean
J. Yimoyines, M.D., our Chairman, Chief Executive Officer, and President, is
the sole stockholder of OptiCare, P.C.

OPTOMETRIC EYE CARE CENTER, P.A. PROFESSIONAL SERVICE AND SUPPORT AGREEMENT

Through one of our subsidiaries, we have entered into a Professional
Services and Support Agreement with Optometric Eye Care Center, P.A., a North
Carolina professional association, effective August 10, 1999. Pursuant to that
agreement, Optometric Eye Care Center employs optometrists and technical
personnel and performs all optometry services at our facilities in North
Carolina. We select and provide the facilities at which the services are
performed, and we provide all administrative and support services for the
facilities operated by Optometric Eye Care Center pursuant to this agreement.
We bill and receive payment for the services rendered by Optometric Eye Care
Center and in turn pay Optometric Eye Care Center a service fee pursuant to a
compensation plan mutually agreed to each year. We own all the rights to the
trade names used at the practice locations under the terms of the agreement. If
the agreement with Optometric Eye Care Center is terminated, Optometric Eye
Care Center must change its name to a name substantially dissimilar to our
trade names. The agreement expires in 15 years and automatically renews for
successive five-year terms unless either party terminates the agreement at
least 180 days before the next renewal date. Drs. Allan L.M. Barker, a member
of our board of directors and President of our Laser Correction and
Professional Services Division, and D. Blair Harrold, the President of Retail
Optometry, North Carolina Operations, own all the capital stock of Optometric
Eye Care Center.

CERTAIN LEASES

OptiCare Eye Health Centers is the tenant under a Lease Agreement dated
September 1, 1995 with O.C. Realty Associates Limited Partnership, as landlord.
The leased premises are located in New Milford, Connecticut and are used for
the practice of ophthalmology and optometry and incidental activities such as
the sale of eye glasses and corrective lenses. The term of the lease is 15
years. Under the Lease Agreement, during the first five years of the leasehold
term, OptiCare Eye Health Centers pays a minimum annual rental to O.C. Realty
Associates Limited Partnership of $50,400, subject to adjustment at the end of
the first five years and every five years thereafter plus all taxes,
assessments, utilities and insurance related to the property being leased. In
addition, OptiCare Eye Health Centers has guaranteed the mortgage of O.C.
Realty Associates Limited Partnership, the amount of which was approximately
$222,000 as of December 31, 1998. Dean J. Yimoyines, M.D., John Yimoyines,
brother of Dean Yimoyines, and Steven Ditman, our Executive Vice President, our
Chief Financial Officer and a director each owns a 4.11% interest in O.C.
Realty Associates Limited Partnership.

OptiCare Eye Health Centers is the tenant under a Lease Agreement dated
September 1, 1995 with French's Mill Associates, as landlord. The leased
premises are located in Waterbury, Connecticut and are used for the practice of
ophthalmology and optometry, an ambulatory surgery center, and incidental
activities such as the sale of eye glasses and corrective lenses. The term of
the lease is

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<PAGE>

fifteen years. Under the Lease Agreement, during the first five years of the
leasehold term, OptiCare Eye Health Centers pays annual rental to French's Mill
Associates of $604,000, subject to adjustment at the end of the first five
years and every five years thereafter. In addition, OptiCare Eye Health Centers
pays all taxes, assessments, utilities and insurance related to the property
being leased. Linda Yimoyines and John Yimoyines, the wife and brother,
respectively, of Dean Yimoyines, M.D., each owns a 14.28% interest in French's
Mill Associates.

We are currently negotiating an additional real property lease for
approximately 4,700 square feet with French's Mill Associates, which would be
used for clinical administrative space.

OptiCare Eye Health Centers is the tenant under a Lease dated September
30, 1997 with French's Mill Associates II, LLP, as landlord. The leased
premises are located in Waterbury, Connecticut and are the location of our main
headquarters. The term of the lease is fifteen years. Under the lease, during
the first five years of the leasehold term, OptiCare Eye Health Centers pays a
minimum annual rental to French's Mill Associates II, LLP of $76,800, subject
to adjustment at the end of the first five years and every five years
thereafter. In addition, OptiCare Eye Health Centers pays all taxes,
assessments, utilities and insurance related to the property being leased.
Linda Yimoyines and John Yimoyines each owns a 12.5% interest in French's Mill
Associates II, LLP.

O.N.B. Associates owns approximately a 25% interest in Cross Street
Medical Building Partnership, the landlord under a lease dated September 22,
1987 and a Lease Extension Agreement dated December 12, 1997 with Ophthalmic
Physicians and Surgeons, P.C., an entity that merged with and into OptiCare Eye
Health Centers in 1987. The leased premises are located in Norwalk, Connecticut
and are used for the practice of ophthalmology and optometry, an ambulatory
surgery center, and incidental activities such as the sale of eyeglasses and
corrective lenses. The term of the lease is three years. Under the Lease,
OptiCare Eye Health Centers pays a minimum annual rental to Cross Street
Medical Building Partnership of $427,600. In addition, OptiCare Eye Health
Centers pays all taxes, assessments, utilities and insurance related to the
property being leased. Linda Yimoyines and John Yimoyines each own an 11%
interest in O.N.B. Associates and Steven Ditman, our Chief Financial Officer
and a director, owns a 1.5% interest in O.N.B. Associates.

OptiCare Eye Health Centers is also the tenant under a second Lease
Agreement dated September 1, 1995 with French's Mill Associates II, L.L.P. as
landlord. The leased premises are located in Waterbury, Connecticut and are
also part of OptiCare's main headquarters. The term of the lease is fifteen
years. Pursuant to the Lease Agreement, during the first five years of the
leasehold term, OptiCare Eye Health Centers pays a minimum annual rental to
French's Mill Associates II of $54,210, subject to adjustment at the end of the
first five years and every five years thereafter. In addition, OptiCare Eye
Health Centers pays all taxes, assessments, utilities and insurance related to
the property being leased.

Consolidated Eye Care, Inc., one of our subsidiaries, is guarantor for a
$298,530 liability of Kirkland Drive Associates, an entity which, at the time
of the guarantee, was owned 50% by Prime and 50% by Drs. Barker and Harrold,
two of our officers. Kirkland Drive Associates is currently owned 100% by Drs.
Barker and Harrold. Dr. Barker is a director and officer of the company, and
Dr. Harrold is an officer of the company.

Consolidated Eye Care, Inc. is the tenant under a Lease Agreement dated
March 1, 1997 with Drs. D. Blair Harrold and Allan L. M. Barker. The leased
premises are located in Rocky Mount, North Carolina and are used for HMO
offices. The term of the lease is five years commencing on August 1, 1997.
Under the lease, Consolidated Eye Care, Inc. pays an annual rental of $13,500
and $14,850 during the first two years and second two years respectively. In
addition, Consolidated Eye Care, Inc. pays all taxes, assessments, utilities,
insurance and for certain repairs related to the property being leased. Dr.
Barker is a director and officer of the company, and Dr. Harrold is an officer
of the company.

Consolidated Eye Care, Inc. is the tenant under a Lease Agreement dated
March 1, 1997 with Drs. Harrold and Barker. The leased premises are located in
Rocky Mount, North Carolina and are

55
<PAGE>

used for HMO executive offices. The term of the lease is five years commencing
on May 1, 1997. Under the lease, Consolidated Eye Care, Inc. pays an annual
rental of $42,409 and $46,448 during the first two years and second two years
respectively. In addition, Consolidated Eye Care, Inc. pays all taxes,
assessments, utilities, insurance and for certain repairs related to the
property being leased.

Consolidated Eye Care, Inc. is the tenant under a Lease Agreement dated
March 1, 1997 with Drs. Harrold and Barker. The leased premises are located in
Rocky Mount, North Carolina and are used as an operations center. The term of
the lease is five years commencing on May 1, 1997. Under the lease,
Consolidated Eye Care, Inc. pays an annual rental of $122,467 and $137,552
during the first two years and second two years respectively. In addition,
Consolidated Eye Care, Inc. pays all taxes, assessments, utilities, insurance
and for certain repairs related to the property being leased.

Consolidated Eye Care, Inc. is the tenant under a Lease Agreement dated
September 1, 1999 with Drs. Harrold and Barker. The leased premises are located
in Rocky Mount, North Carolina and are used as executive offices. The term of
the lease is five years commencing September 1, 1999. Under the lease,
Consolidated Eye Care, Inc. pays an annual rental of $40,000 during the first
year of the lease. Thereafter, the rental amount is adjusted annually in
accordance with the consumer price index. In addition, Consolidated Eye Care,
Inc. pays all taxes, assessments, utilities, insurance and for certain repairs
related to the property being leased.

Optometric Eye Care Centers, P.A., a North Carolina professional
association affiliated with us through a management agreement, is the tenant
under a Lease Agreement dated March 1, 1997 with Drs. Harrold and Barker. The
leased premises are located in Fayetteville, North Carolina and are used for
the practice of optometry and the sale of eye glasses and corrective lenses.
The term of the lease is five years commencing May 1, 1997. Under the lease,
Optometric Eye Care Centers, P.A. pays an annual rental of $96,000 and $100,000
during the first two years and second two years respectively. In addition,
Optometric Eye Care Centers, P.A. pays all taxes, assessments, utilities,
insurance and for certain repairs related to the property being released.

Optometric Eye Care Centers, P.A., is the tenant under a Lease Agreement
dated March 1, 1997 with Drs. Harrold and Barker. The leased premises are
located in Jacksonville, North Carolina and are used for the practice of
optometry and the sale of eye glasses and corrective lenses. The term of the
lease is four years commencing May 1, 1997. Under the lease, Optometric Eye
Care Centers, P.A. pays an annual rental of $59,752 during the first two years.
During the second two years Optometric Eye Care Centers, P.A. pays an annual
rental of $65,184 or 6% of net revenues, whichever is greater. In addition,
Optometric Eye Care Centers, P.A. pays all taxes, assessment, utilities,
insurance and for certain repairs related to the property being released.

STOCK PURCHASE AGREEMENT AND CONSULTING AGREEMENT

Under the terms of a Stock Purchase Agreement dated as of October 15, 1997
among OptiCare Eye Health Centers and Oxford Health Plans, Inc., Nazem OptiCare
Partners, LP, Eugene W. Huang and Christopher Kaufman, as purchasers, OptiCare
Eye Health Centers sold, for an aggregate purchase price of $6,000,017 either
Class A preferred shares, or Class B preferred shares to Oxford, Nazen,
OptiCare Partners, Huang and Kaufman. In addition Oxford received warrents to
purchase Class B shares.

On October 15, 1997, OptiCare Eye Health Centers also entered into a
three-year Consulting Agreement with Mr. Fred Nazem, who is beneficial owner of
in excess of 5% of the outstanding capital stock of OptiCare. OptiCare paid to
Mr. Nazem a sum of $180,000 in consideration for consulting services under that
agreement, and issued to Mr. Nazem and two of his associates warrants to
purchase an aggregate of 19,911 shares of Class B preferred stock of OptiCare
Eye Health Centers. These warrants were exchanged in the merger for warrants in
the company, as described above.

Prior to the mergers, OptiCare Eye Health Centers, Oxford, Nazem OptiCare
Partners, Nazem, Huang and Kaufman were parties to a certain Amended and
Restated Stockholders Agreement (the "OptiCare Stockholders Agreement"), dated
as of October 15, 1997, that contained provisions such as restrictions on
transfers of shares, rights of first refusal, co-sale rights and provisions
relating to the

56
<PAGE>

election of directors. Pursuant to a Second Amended and Restated Stockholders'
Agreement entered into in connection with the mergers, the OptiCare
Stockholders Agreement was amended and restated so as to terminate most of its
provisions and to amend certain provisions relating to restrictions of the
employee/stockholders from competing with the company.

Prior to the mergers, OptiCare Eye Health Centers, Oxford, Nazem OptiCare
Partners, Huang and Kaufman were parties to a certain Registration Rights
Agreement (the "OptiCare Registration Rights Agreement"), dated as of October
15, 1997, that provided for certain demand and piggyback registration rights in
favor of the stockholders parties thereto. The OptiCare Registration Rights
Agreement was terminated, effective as of the mergers. However, pursuant to a
Letter Agreement, dated August 9, 1999, between the company and Oxford, we
agreed to continue the piggyback registration rights provided for in the
OptiCare Registration Rights Agreement with respect to the shares issuable upon
exercise of the warrants held by Oxford.

PARTICIPATING PROVIDER AGREEMENT

OptiCare Eye Health Centers is also a party to a participating provider
agreement with Oxford Health Plans, Inc., a holder of in excess of five percent
of our outstanding capital stock, under which OptiCare Eye Health Centers
provides medical services to the insured members of Oxford's insurance plans
and receives fees from Oxford for these services. This agreement may be
terminated by either party upon 90 days written notice.

SETTLEMENT WITH OPTOMETRIC EYE CARE CENTER, P.A.

In 1996, Drs. Allan L.M. Barker and D. Blair Harrold, majority
shareholders in Optometric Eye Care Center, P.A. and Consolidated Eye Care,
Inc., sold Consolidated to PrimeVision Health. At the same time, Drs. Barker
and Harrold became executive officers and directors of PrimeVision Health.
Consolidated and Optometric Eye Care had previously entered an administrative
services agreement which continued after the sale of Consolidated to
PrimeVision Health. Among other factors, the impending mergers of PrimeVision
Health and OptiCare Eye Health Centers prompted Drs. Barker and Harrold to
begin proceedings to terminate the administrative services agreement between
Consolidated (a subsidiary of PrimeVision Health at the time) and Optometric
Eye Care and to submit their resignations from PrimeVision Health forthwith. In
conjunction with these actions, Drs. Barker and Harrold submitted a Request for
Declaratory Ruling from the North Carolina Board of Examiners in Optometry and
instituted a lawsuit in North Carolina Superior Court, asking the court to
grant a Temporary Restraining Order, which was issued, enjoining, among other
things, the mergers.

On April 9,1999, Drs. Harrold and Barker entered into a settlement
agreement among Optometric Eye Care, PrimeVision Health, Consolidated and the
other parties to the lawsuit, and the transactions called for in the settlement
agreement closed on August 13, 1999, at the same time as the mergers of
PrimeVision Health and OptiCare Eye Health Centers with us. Following are the
material terms of this settlement agreement:

(1) Consolidated and Optometric Eye Care entered into a new 40-year
administrative services agreement with an initial 15 year term and
five automatic renewals for five years each. See above "Optometric Eye
Care Centers Professional Services and Support Agreement.

(2) $2.5 million was paid to Drs. Harrold and Barker.

(3) PrimeVision Health issued additional shares of its common stock to
Drs. Barker and Harrold such that, together with shares previously
owned, will constitute 32% of PrimeVision Health's total common stock
calculated on a primary basis immediately prior to the mergers. This
share grant satisfied a note receivable in the amount of $364,896 plus
accrued interest held by Consolidated Eye Care and all other alleged
claims.

(4) Drs. Harrold and Barker entered into new employment agreements with
the company that became effective on August 13, 1999, at the same time
as the closing of the mergers. See "Management -- Employment
Agreements with Certain Officers."

57
<PAGE>

(5) In the event of our subsequent insolvency or bankruptcy, Drs. Barker
and Harrold will have the right to purchase six retail business
operations in North Carolina for three times the earnings before
interest, taxes, depreciation and amortization excluding the effect of
all extraordinary items and non-recurring charges. This right will be
available to Drs. Barker and Harrold only until such time as the
aggregate market value of their common stock is less than $7 million.

(6) Dr. Barker was named as one of our directors.

ARRANGEMENTS WITH MARLIN CAPITAL, L.P.

Pursuant to the terms of a stock purchase agreement, dated as of June 4,
1998, between PrimeVision Health and Marlin Capital, L.P., PrimeVision Health
sold to Marlin Capital (i) 8,000 shares of Prime Vision Health's Class A
Preferred Stock and (ii) warrants to purchase 1,333,333 shares of PrimeVision
Health's common stock for an aggregate purchase price of $8,000,000. Mr. Martin
E. Franklin, who is a current director of OptiCare Eye Health Centers, is the
Chairman, Chief Executive Officer and principal stockholder of Marlin Holdings,
Inc., which is the general partner of Marlin Capital, L.P., a private
investment partnership since October 1996. Mr. Ian G.H. Ashken, who is a
current director of OptiCare Eye Health Centers, is the Vice Chairman of Marlin
Holdings, Inc.

In connection with the mergers, the 8,000 shares of Prime Vision Health
Class A Preferred Stock and warrants owned by Marlin Capital were exchanged as
follows:

o 2,000 shares of PrimeVision Health preferred stock and all the
warrants (as adjusted) were exchanged for 2,033,333 shares of
PrimeVision Health common stock, which in turn were exchanged in the
mergers for 638,059 shares of our common stock.

o 2,000 shares of PrimeVision Health preferred stock were exchanged for
a promissory note issued by us in the principal amount of $2,000,000,
having a three year term and bearing interest at the annual rate of
8%.

o 4,000 shares of PrimeVision Health preferred stock were exchanged for
a convertible promissory note issued by us in the principal amount of
$4,000,000, having a three year term, and bearing interest at the
annual rate of 9% beginning on February 14, 2000. The note is
convertible into our common stock after August 13, 2000 at a
conversion price which is the greater of (x) closing market price on
the first trading day after mergers, or (y) 90% of average closing
price of our common stock in the 20 trading days prior to conversion.
This note will be paid in full with a portion of the proceeds of the
offering. In general, we are required to redeem the note to the extent
that we raise net proceeds in the aggregate from the public or private
sales of common stock or convertible securities in an amount in excess
of $3 million.

Both of these Notes are subordinated in right of payment to our senior
bank debt. See "Use of Proceeds" and "Certain Indebtedness."

STOCK OPTIONS

In connection with the mergers, options to acquire shares of our common
stock or capital stock of OptiCare Eye Health Centers and PrimeVision Health,
as the case may be, were exchanged by our directors and officers for options
under our Performance Stock Program. See "Management -- Executive
Compensation", and "-- Performance Stock Program."

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<PAGE>

PRINCIPAL STOCKHOLDERS

As of January 14, 2000 there were 8,972,128 shares of our common stock
outstanding. The following table sets forth as of January 14, 2000 certain
information regarding the beneficial ownership of the common stock outstanding
(but without giving effect to the underwriters' exercise of the over-allotment
option) by (i) each person who is known to us to own 5% or more of our common
stock (the holdings of certain unrelated entities listed below are based on
shareholdings disclosed in their public filings), (ii) each of our directors,
(iii) our four other most highly compensated executive offices whose total
compensation exceeded $100,000 and (iv) all of our executive officers and
directors as a group. Unless otherwise indicated, each of the stockholders
shown in the table below has sole voting and investment power with respect to
the shares beneficially owned.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO THE OWNED
OFFERING (1) AFTER THE OFFERING (1)
------------------------ -------------------------------
NAME OF EXECUTIVE OFFICERS, DIRECTORS OR 5% STOCKHOLDERS SHARES PERCENT SHARES PERCENT
- ---------------------------------------------------------- ------------ --------- -------------------- --------
<S> <C> <C> <C> <C>
Oxford Health Plans (2) .................................. 775,996 8.8% 775,996 5.8%
Bank Austria Creditanstalt Corporate Finance,
Inc. (3) ................................................ 785,616 8.9% 785,616 5.8%
Fred Nazem (4) ........................................... 474,243 5.4% 474,243 3.6%
Marlin Capital, L.P. ..................................... 638,059 7.2% 1,209,487(13) 9.4%
Martin E. Franklin (5)(6) ................................ 777,144 8.8% 1,348,572(13) 10.3%
Ian G.H. Ashken (6)(7) ................................... 777,144 8.8% 1,348,572(13) 10.3%
Allan L.M. Barker, O.D. (8) .............................. 665,056 7.4% 665,056 5.1%
D. Blair Harrold, O.D. ................................... 660,505 7.4% 660,505 5.1%
Dean J. Yimoyines M.D. (9) ............................... 393,149 4.4% 393,149 3.0%
Steven L. Ditman (10) .................................... 38,488 * 38,488 *
Samuel B. Petteway (11) .................................. 118,225 1.3% 118,225 *
John F. Croweak .......................................... 2,000 * 2,000 *
David A. Durfee (12) ..................................... 86,765 * 86,765 *
Gordon A. Bishop ......................................... 0 * 0 *
All executive officers and directors as a group
(10 persons) (5) (6) (7) (8) (9) (10) (11) (12) ......... 4,690,422 52% 5,261,850(13) 41%
</TABLE>

- ----------
* Less than 1%

(1) Shares not outstanding but deemed beneficially owned by virtue of the
right of an individual to acquire them within 60 days upon the
exercise of an option are treated as outstanding for purposes of
determining beneficial ownership and the percent beneficially owned by
such individual and for the executive officers and directors as a
group.

(2) Includes 337,514 shares subject to currently exercisable warrants.
The address of Oxford is 800 Connecticut Avenue, Norwalk, Connecticut
06854.

(3) Includes 418,803 shares of non-voting convertible preferred stock
held by Bank Austria. See "Business -- Credit Facility." Also includes
warrants to purchase 100,000 shares of either common stock or
non-voting convertible preferred stock. Does not give effect to
provisions which may be included in the preferred stock and warrants,
which, for bank regulatory purposes, will restrict Bank Austria from
beneficially owning in excess of 4.99% of our outstanding common
stock. The address of Bank Austria is Two Ravinia Drive, Suite 168,
Atlanta, Georgia 30346.

(4) Includes 275,618 shares of common stock held by Nazem OptiCare
Partners, L.P., a limited partnership of which Mr. Nazem is the
general partner. Mr. Nazem disclaims beneficial

59
<PAGE>

ownership of such shares. Also includes 198,627 shares of common stock
subject to currently exercisable warrants. The address of Mr. Nazem is
c/o Nazem OptiCare Partners, L.P., 645 Madison Avenue, New York, New
York 10022.

(5) Includes 638,059 shares of common stock held by Marlin Capital, L.P.
Mr. Martin E. Franklin, who is a director of the company, is the
Chairman, Chief Executive Officer and principal stockholder of Marlin
Holdings, Inc. which is the general partner of Marlin Capital, L.P.
Mr. Franklin disclaims beneficial ownership of such shares. The
address of Marlin Capital, L.P. is 555 Theodore Fremd Ave., Rye, New
York 10584.

(6) Includes 137,085 shares of common stock held by a former principal
stockholder which are subject to a voting agreement whereby the
stockholder irrevocably appointed Martin E. Franklin or Ian Ashken as
his proxy, commencing August 13, 1999.

(7) Includes 638,059 shares of common stock held by Marlin Capital, L.P.
Mr. Ian G.H. Ashken is the Vice Chairman of Marlin Holdings, Inc.,
which is the general partner of Marlin Capital, L.P. Mr. Ashken
disclaims beneficial ownership of such shares.

(8) Includes 552 shares of common stock held by Dr. Barker's son, as to
which Dr. Barker disclaims beneficial ownership.

(9) Includes 249,825 shares of common stock held by Linda Yimoyines, wife
of Dean J. Yimoyines, and 143,224 shares of common stock issuable upon
the exercise of outstanding options. Excludes 468,226 shares of common
stock which are issuable upon the exercise of outstanding options
which are not currently exercisable.

(10) Includes 36,488 shares of common stock issuable upon the exercise of
outstanding options held by Mr. Ditman. Excludes 186,489 shares of
common stock which are issuable upon the exercise of outstanding
options which are not currently exercisable.

(11) Includes 17,782 shares of common stock issuable upon the exercise of
outstanding options held by Mr. Petteway. Excludes 46,046 shares of
common stock which are issuable upon the exercise of outstanding
options which are not currently exercisable.

(12) Includes 17,259 shares of common stock subject to currently
exercisable options held by Dr. Durfee.

(13) Includes 571,428 shares of common stock expected to be purchased by
Marlin Capital in this offering.

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<PAGE>

DESCRIPTION OF CAPITAL STOCK

GENERAL

We are authorized to issue an aggregate of 55,000,000 shares of capital
stock, consisting of 50,000,000 shares of common stock, $0.001 par value, and
5,000,000 shares of preferred stock, $0.001 par value. As of January 14, 2000,
there were 8,972,128 shares of common stock outstanding, 418,803 shares of
preferred stock outstanding, 100,000 shares of preferred stock reserved for
issuance under an outstanding warrant.

PREFERRED STOCK

Our board of directors is authorized, without further stockholder action,
to issue up to 5,000,000 shares of preferred stock in one or more series and to
fix the voting rights, liquidation preferences, dividend rights, repurchase
rights, conversion rights, preemption rights, redemption rights and other
rights and preferences of each class or series of preferred stock.

Effective August 13, 1999, our board of directors authorized a class of
preferred stock designated as the "Series A convertible preferred stock." The
total number of authorized shares of the Series A convertible preferred stock
is 550,000, of which 418,803 are issued and outstanding, and 100,000 are
reserved for issuance pursuant to an outstanding warrant. Bank Austria
Creditanstalt Corporate Finance, Inc., is currently the sole holder of the
issued and outstanding preferred stock and of the warrant. The principal terms
of the Series A convertible preferred stock are as follows:

Dividends: Dividends and other distributions, payable in cash or other
property, shall be paid on the Series A convertible preferred
stock equally, ratably and on parity with dividends and other
distributions paid on the common stock.

Liquidation: The Series A convertible preferred stock shall be preferred
upon liquidation over the common stock.

Conversion: Each share of Series A convertible preferred stock is
convertible at any time at the option of the holder thereof into
one fully paid non-assessable share of our common stock with
certain limitations. In addition, we may cause the conversion of
all, but not less than all, the outstanding shares of Series A
convertible preferred stock into shares of common stock provided
that the common stock to be received upon such conversion when
aggregated with all other shares of common stock currently or
previously held by or currently issuable without restrictions to
each holder, would be equal to or less than 3% of our then
outstanding common stock.

Because our certificate of incorporation authorizes "blank check"
preferred stock, the board of directors, at any time in the future, could
authorize and issue, without stockholder approval, a new class or series of
preferred stock with terms which could have the effect of protecting incumbent
management from a takeover, or could result in a change of control of us to the
holders of such new class or series of preferred stock, or a new class or
series of preferred stock could have an adverse effect upon the value of the
common stock. The issuance of any series of preferred stock could adversely
affect the rights of the holders of our common stock by restricting dividends
on, diluting the power of, or impairing the liquidation rights of common stock,
or delaying or preventing a change in control of us. We have no present plans
to issue any additional shares of preferred stock, other than upon exercise,
(if any), of the warrant held by Bank Austria to purchase up to 100,000 shares
of the Series A convertible preferred stock.

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<PAGE>

COMMON STOCK

The holders of our common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of stockholders. The holders
of our common stock are entitled to receive ratably such dividends, if any, as
may be declared from time to time by the board out of funds legally available
therefor. We do not anticipate paying dividends on our common stock in the
foreseeable future. See "Dividend Policy."

In the event of a liquidation, dissolution or winding up, the holders of
our common stock are entitled to share ratably in all assets remaining after
payment of liabilities and the liquidation preference and other amounts owed to
the holders of the preferred stock. Holders of common stock have no preemptive
rights or rights to convert their common stock into any other securities. There
are no redemption or sinking fund provisions applicable to the common stock.
All shares of common stock are, and the shares of common stock to be
outstanding upon completion of this offering will be, fully paid and
non-assessable.

TRANSFER AGENT

The transfer agent and registrar for our common stock is ChaseMellon
Shareholder Services, L.L.C.

LIMITATION OF LIABILITY AND INDEMNIFICATION

Our certificate of incorporation contains provisions permitted under the
Delaware General Corporation Law relating to the liability of directors. The
provisions eliminate a director's liability for monetary damages for a breach
of fiduciary duty as a director, except for liability in certain circumstances
involving wrongful acts, such as the breach of a director's duty of loyalty or
acts or omissions which involve intentional misconduct or a knowing violation
of law. Further, our certificate of incorporation and our bylaws contain
provisions to indemnify our directors and officers to the fullest extent
permitted by the Delaware General Corporation Law. See "Management --
Limitation of Liability and Indemnification Matters."

DELAWARE ANTI-TAKEOVER STATUTE

We are subject to Section 203 of the Delaware General Corporation law,
which, subject to certain exceptions, prohibits a publicly held Delaware
corporation from engaging in any "business combination" with any "interested
stockholder" for a period of three years following the date that such
stockholder became an interested stockholder, unless:

o prior to such date, the board of directors of the corporation approved
either the business combination or the transaction that resulted in
the stockholder becoming an interested stockholder, the interested
stockholder;

o upon consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested owned at least 85%
of the voting stock of the corporation outstanding at the time the
transaction was commenced; and

o 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 stockholder, and not by written consent, by the affirmative vote of
at least 66 2/3% of the outstanding voting stock that is not owned by
the interested stockholder.

Section 203 defines "business combination" to include:

o any merger or consolidation involving the corporation and the
interested stockholder;

o any sale, transfer, pledge or other disposition of 10% or more of the
assets of the corporation involving the interested stockholder;

o subject to certain exceptions, any transaction that results in the
issuance or transfer by the corporation of any stock of the
corporation to the interested stockholder;

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<PAGE>

o any transaction involving the corporation that has the effect of
increasing the proportionate share of the stock of any class or series
of the corporation beneficially owned by the interested stockholder;
and

o the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledged or other financial benefits provided by
or through the corporation.

In general, Section 203 defines an "interested stockholder" as an entity or
person beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by such entity or person.

SHARES ELIGIBLE FOR FUTURE SALE

GENERAL

Upon the consummation of this offering, assuming we sell all 4,000,000
shares being offered, we will have 12,972,128 shares of common stock issued and
outstanding. All of the 4,000,000 shares of common stock to be sold in this
offering will be freely tradable without restrictions or further registration
under the Securities Act, except for any shares purchased by an "affiliate" of
the Company (as that term is defined in Rule 144 under the Securities Act
("Rule 144")), which will be subject to certain resale limitations of Rule 144.
After the completion of this offering, we will have 2,388,942 shares of common
stock outstanding which are "restricted securities" as that term is defined in
Rule 144 and are also subject to certain restrictions on disposition.
Restricted securities may be sold in the public market only if registered or if
they qualify for an exemption from registration such as Rule 144 or Rule 701
under the Securities Act. Sales of restricted securities in the public market,
or the availability of such shares for sale, could have an adverse effect on
the price of the common stock. See "Risk Factors -- The significant number of
shares of common stock eligible for future sale could adversely effect the
price of our stock."

RULE 144

In general, under Rule 144, as currently in effect, a person (or persons
whose shares are required to be aggregated) who has beneficially owned shares
of common stock for at least one year, including a person who may be deemed our
"affiliate", is entitled to sell, within any three-month period, a number of
shares that does not exceed the greater of 1% of the total number of shares of
the class of stock sold or the average weekly reported trading volume of the
class of stock being sold during the four calendar weeks preceding such sale. A
person who is not deemed our "affiliate" at any time during the three months
preceding a sale and who has beneficially owned shares for at least two years
is entitled to sell such shares under Rule 144 without regard to the volume
limitations described above. As defined in Rule 144, an "affiliate" of an
issuer is a person that directly or indirectly through the use of one or more
intermediaries controls, is controlled by, or is under common control with,
such issuer. The foregoing summary of Rule 144 is not intended to be a complete
description thereof.

No prediction can be made as to the effect, if any, that market sales of
shares of common stock that are restricted securities, or the availability of
such shares, will have on the market price of the common stock prevailing from
time to time. Sales of substantial amounts of common stock, or the perception
that such sales could occur, could adversely affect prevailing market prices
for the common stock and could impair our future ability to raise capital
through an offering of equity securities.

In addition, we may file one or more registration statements on Form S-8
under the Securities Act covering all shares of common stock subject to
outstanding options and issuable pursuant to each of the Performance Stock
Program and the Employee Stock Purchase Plan. See "Management -- Performance
Stock Program" and "-- Employee Stock Purchase Program." Shares covered by
these registration statements will thereupon be available for sale, upon the
exercise of vested options, in the open market, except for shares acquired by
affiliates or persons who have agreed to lock-up agreements described above and
Rule 144 volume limitations applicable to affiliates.

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<PAGE>

LOCK-UP AGREEMENTS

Officers, directors, 10% stockholders and certain former stockholders of
OptiCare Eye Health Centers or PrimeVision Health (who acquired shares of our
common stock in the mergers) have agreed with us not to sell their shares of
our common stock prior to certain dates, or to limit the numbers of shares
which they will sell in certain periods. The following table summarizes, as of
the closing of the mergers on August 13, 1999, the approximate numbers of
shares which are so limited or restricted:

<TABLE>
<CAPTION>
shares
<S> <C>
Will not sell prior to February 9, 2000 and will not sell thereafter
until August 13, 2001 without first offering to sell to us ............ 1,886,250
Will not sell prior to February 9, 2000 (but may sell thereafter
without first offering to sell to us) ................................. 1,931,489
Will not sell more than 25% of holdings (as of August 13, 1999) in
any 6-month period (non-cumulative basis) ............................. 3,563,043
</TABLE>

REGISTRATION

We granted piggyback registration rights to Oxford Health Plans Inc. with
respect to the shares of our common stock it may acquire upon the exercise of a
warrant held by it. The warrant gives Oxford Health Plans, Inc. the right to
purchase 337,514 shares of our common stock. Any time we register stock in an
underwritten offering, we must give Oxford Health Plans, Inc. the option to
register all or some of the 337,514 shares in the registration. We can limit
the number of shares Oxford Health Plans, Inc. may register if the managing
underwriter determines that marketing factors require a limitation of the
number of shares to be underwritten.

We granted Bank Austria Creditanstalt Corporate Finance, Inc. piggyback
registration rights with respect to certain warrants and preferred stock held
by it and the shares issuable upon the exercise or conversion of those warrants
and preferred stock. See "Principal Stockholders." Subject to certain
exceptions, any time we register stock, we must give Bank Austria the option to
register all or some of its warrants or stock. If the registration relates to
an underwritten offering, we can limit the number of shares Bank Austria may
register if the managing underwriter determines that the amount of securities
being registered is sufficiently large to materially and adversely affect the
success of the offering. In addition, Marlin Capital, L.P. has been granted the
same registration rights with respect to the shares of our common stock which
may be issued upon conversion of the $4 million subordinated convertible
promissory note that are afforded to the common stock issued or to be issued to
Bank Austria.

Registration of shares held by Oxford, Bank Austria and Marlin Capital
under the Securities Act would cause such shares to be freely tradable without
restriction under the Securities Act, except for shares purchased by
affiliates, immediately upon the effectiveness of such registration, which
could result in some of such shares becoming eligible for sale in advance of
the dates set forth above.

PLAN OF DISTRIBUTION

We do not intend to use an underwriter or broker to sell our common stock
being sold in this offering. Our directors, salaried officers and employees
will solicit and process subscriptions on our behalf to selected individuals
and institutions. No additional compensation, commission or remuneration will
be paid to our directors, officers and employees who solicit or process
subscriptions. We are relying on Rule 3a4-1 promulgated under the Securities
Exchange Act for exemption of our directors, officers and employees from the
broker-dealer registration requirements under the Securities Exchange Act. In
certain states, we may be prohibited from selling securities other than through
a registered broker or dealer. We will not market our shares through any mass
mailings, or other personal solicitation.

The offering is not subject to the sale of any minimum number of shares.
All subscriptions to purchase shares will be irrevocable. Therefore, we will
not place any offering proceeds in escrow or trust pending the sale of any
minimum amount of shares. We cannot be certain that all the shares we have
registered in this offering will be sold.

64
<PAGE>

LEGAL MATTERS

The validity of the shares of common stock being offered by us will be
passed upon for us by Kane Kessler, P.C., in connection with this offering.

EXPERTS

The combined financial statements of OptiCare Eye Health Centers, Inc. and
Affiliate as of December 31, 1998 and 1997, and for each of the three years in
the period ended December 31, 1998, included in this Prospectus have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report appearing herein and are included in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.

The consolidated financial statements of PrimeVision Health, Inc. at
December 31, 1998 and 1997, and for each of the three years in the period ended
December 31, 1998, appearing in this prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon (which contains an explanatory paragraph describing conditions
that raise substantial doubt about Prime's ability to continue as a going
concern as described in Note 2 to the consolidated financial statements)
appearing elsewhere herein, and are included in reliance upon such report given
on the authority of such firm as experts in accounting and auditing.

CHANGES OF INDEPENDENT ACCOUNTANTS

Our board of directors formally approved the appointment of Deloitte &
Touche LLP as our independent accountants on August 30, 1999, and at the same
time, our board determined not to engage Ernst & Young LLP as our independent
accountants for the year ending December 31, 1999. Ernst & Young audited
Saratoga's consolidated financial statements as of and for the year ended
December 31, 1998. The board of directors of Saratoga formally approved the
appointment of Ernst & Young LLP, of Dallas, Texas, as its independent
accountants to audit Saratoga's consolidated financial statements for 1998 on
March 29, 1999.

The report of Ernst & Young on Saratoga's consolidated financial
statements for 1998 contained no adverse opinion or disclaimer of opinion and
was not qualified or modified as to uncertainty, audit scope or accounting
principle. In connection with Ernst & Young's audit of Saratoga's financial
statements for 1998, and through March 29, 1999, Ernst & Young had no
disagreements with us or Saratoga on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of Ernst & Young,
would have caused them to make reference to those disagreements in their report
on Saratoga's consolidated financial statements for 1998. At Saratoga's
request, Ernst & Young furnished a letter addressed to the Securities and
Exchange Commission stating that it agrees with the previous statements.

ADDITIONAL INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 (together with all amendments, exhibits, schedules and
supplements thereto) under the Securities Act with respect to us and the common
stock being offered by this prospectus. This prospectus, which forms a part of
the registration statement, does not contain all of the information set forth
in the registration statement. For further information with respect to us and
our common stock, reference is made to the registration statement. Statements
contained in this prospectus as to the contents of any contract or other
document are not necessarily complete, and, in each instance, reference is made
to the copy of such contract or document filed as an exhibit to the
registration statement, and each such statement is qualified in all respects by
such reference. We are subject to the information requirements of the
Securities Exchange Act and as a consequence file reports and other information
with the Commission. Copies of the registration statement may be examined
without charge at the Public Reference Section of the Securities and Exchange
Commission, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and the
Securities and Exchange Commission's Regional Offices located at Seven World
Trade Center, 13th Floor, New York, New York 10048 and Citicorp center, 500
West

65
<PAGE>

Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of all or any
portion of the registration statement can be obtained from the Public Reference
Section of the Securities and Exchange Commission, 450 Fifth Street,
Washington, D.C. 20549, upon payment of certain prescribed fees. The Securities
and Exchange Commission maintains a World Wide Web site that contains other
information regarding registrants (including us) that file electronically. The
address of such World Wide Web site is http://www.sec.gov. We intend to
distribute annual reports containing audited financial statements. In addition
our public filings are also available for inspection at the office of the
American Stock Exchange, 86 Trinity Place, New York, New York 10006. The
telephone number of the Securities and Exchange Commission is (800) SEC-0330.

We will provide, without charge, to each person who receives a prospectus,
upon the written or oral request of such person, a copy of any of the
aforementioned documents, and all exhibits and amendments thereto, including
the financial statements and schedules, as filed with the Commission. Requests
for such copies should be directed to our Corporate Secretary at c/o OptiCare
Health System Inc., 87 Grandview Avenue, Waterbury, Connecticut 06708, or via
telephone (203) 596-2236.

You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. This prospectus is an offer to sell, or a
solicitation of offers to buy, shares of common stock only in jurisdiction
where offers and sales are permitted. The information contained in this
prospectus is accurate only as of the date of this prospectus, regardless of
the time of delivery of this prospectus or any sale of common stock.

66
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
OPTICARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES

Pro Forma Combined Financial Statements
- ---------------------------------------
Introduction ...................................................................... F-2
Pro Forma Combined Statement of Operations for the nine months ended September 30,
1999 (unaudited) ................................................................. F-3
Pro Forma Combined Statement of Operations for the year ended December 31, 1998
(unaudited) ...................................................................... F-4
Notes to Pro Forma Combined Financial Statements .................................. F-5

Interim Financial Statements
- ----------------------------
Condensed Consolidated Statements of Operations for the three and nine months ended
September 30, 1999 and 1998 (unaudited) .......................................... F-6
Condensed Consolidated Balance Sheets at September 30, 1999 (unaudited) and
December 31, 1998 ................................................................ F-7
Condensed Consolidated Statements of Cash Flows for the nine months ended
September 30, 1999 and 1998 (unaudited) .......................................... F-8
Notes to Condensed Consolidated Financial Statements .............................. F-9

PRIMEVISION HEALTH, INC. AND SUBSIDIARIES

Annual Financial Statements
- ---------------------------
Report of Independent Auditors .................................................... F-13
Consolidated Balance Sheets as of December 31, 1998 and 1997 ...................... F-14
Consolidated Statements of Operations for the years ended December 31, 1998, 1997
and 1996 ......................................................................... F-15
Consolidated Statements of Shareholders' (Deficit) Equity for the years ended
December 31, 1998, 1997 and 1996 ................................................. F-16
Consolidated Statements of Cash Flows for the years ended December 31, 1998, 1997
and 1996 ......................................................................... F-17
Notes to Consolidated Financial Statements ........................................ F-18

OPTICARE EYE HEALTH CENTERS, INC. AND AFFILIATE

Interim Financial Statements
- ----------------------------
Combined Balance Sheets as of June 30, 1999 (unaudited) and December 31, 1998 ..... F-32
Combined Statements of Operations for the six months ended June 30, 1999
and 1998 (unaudited) ............................................................. F-33
Combined Statements of Cash Flows for the six months ended June 30, 1999 and 1998
(unaudited) ...................................................................... F-34
Notes to Combined Financial Statements ............................................ F-35

Annual Financial Statements
- ---------------------------
Report of Independent Auditors .................................................... F-36
Combined Balance Sheets as of December 31, 1998 and 1997 .......................... F-37
Combined Statements of Operations for the years ended December 31, 1998, 1997
and 1996 ......................................................................... F-38
Combined Statements of Shareholders' Equity for the years ended December 31, 1998,
1997 and 1996 .................................................................... F-39
Combined Statements of Cash Flows for the years ended December 31, 1998, 1997
and 1996 ......................................................................... F-40
Notes to Combined Financial Statements ............................................ F-41
</TABLE>

F-1
<PAGE>

OPTICARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
PRO FORMA COMBINED FINANCIAL STATEMENTS

The following unaudited pro forma combined statements of operations give
effect to (i) the mergers between Saratoga Resources, Inc., PrimeVision Health,
Inc. ("Prime Vision Health") and OptiCare Eye Health Centers, Inc. ("OptiCare
Eye Health Centers") and related transactions and (ii) this offering and the
application of the estimated net proceeds of $13.6 million therefrom as though
they had occurred as of the beginning of the periods presented.

The pro forma combined financial statements are derived from (i) the
historical unaudited financial statements of the company for the nine months
ended September 30, 1999; (ii) the unaudited financial statements of OptiCare
Eye Health Centers for the period January 1, 1999 through August 31, 1999;
(iii) the the historical audited financial statements of PrimeVision Health for
the year ended December 31, 1998; (iv) the historical audited financial
statements of OptiCare Eye Health Centers for the year ended December 31, 1998;
and (v) the adjustments set forth in the notes to the pro forma combined
financial statements.

The acquisition of OptiCare Eye Health Centers by Prime Vision Health was
accounted for under the purchase method of accounting, whereby the purchase
price has been allocated to the preliminary estimated fair value of assets
acquired and liabilities assumed. The excess of the aggregate purchase price of
$26.9 million over the estimated fair value of the net assets acquired, based
on a preliminary allocation, was approximately $21.7 million. Of this excess,
$17.7 million has been recorded as goodwill and is being amortized on a
straight-line basis over 25 years and $4.0 million has been used to eliminate
the valuation allowance related to Prime Vision Health's deferred tax assets.
In addition, the company recorded an intangible asset of $7.1 million in
connection with a new administrative services agreement that is being amortized
over 25 years. Also, in connection with the mergers, all of PrimeVision
Health's mandatorily redeemable preferred stock was converted into $2.0 million
of subordinated long term debt; $4.0 million of convertible subordinated long
term debt and approximately 638 thousand shares of common stock.

Pro forma adjustments are based upon preliminary estimates, available
information and certain assumptions that management deems appropriate.
Management does not expect material changes to purchase accounting and other
pro forma adjustments upon final allocation of the purchase price. The
unaudited pro forma combined financial information presented herein is not
necessarily indicative of the results of operation or financial position that
the company would have obtained had such events occurred at the beginning of
the periods presented, as assumed, or of the future events of the Company. The
pro forma combined financial statements should be read in conjunction with the
consolidated financial statements included in this Prospectus.

F-2
<PAGE>

OPTICARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)

<TABLE>
<CAPTION>
OPTICARE
HISTORICAL EYE HEALTH PRO FORMA OFFERING PRO FORMA
COMPANY (1) CENTERS (2) ADJUSTMENTS ADJUSTMENTS COMBINED
----------------- ------------- -------------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
NET REVENUES:
Total net revenues ................... $ 62,895 $ 29,992 $ 3,511(a) $ 96,398
OPERATING EXPENSES:
Salaries, wages and benefits ........... 10,102 15,543 3,511 (a) 29,225
69 (b)
Other operating expenses ............... 48,776 15,282 (544)(c) 63,514
Interest, net .......................... 2,588 150 (994)(d) (765)(n) 1,635
100 (e)
188 (f)
226 (g)
142 (h)
Depreciation and amortization .......... 1,098 1,021 190 (i) 2,695
386 (j)
------------
Total operating expenses ............. 62,564 31,996 3,274 (765) 97,069
-------- -------- ------------ ---- -----------
Income (loss) from continuing
operations before income taxes ......... 331 (2,004) 237 765 (671)
Income tax expense (benefit) ............ 119 (802) 109 (k) 306 (k) (268)
-------- -------- ------------ ---- -----------
Income (loss) from continuing
operations ............................. $ 212 $ (1,202) $ 128 459 $ (403)
======== ======== ============ ==== ===========
Basic weighted average
shares outstanding ..................... 3,414,626 5,447,502 (m) 4,000,000 12,862,128
Basic loss per share .................... $ (0.11)(3) $ (0.03)
</TABLE>

- ----------
(1) Represents the historical Company, as reported, for the nine months ended
September 30, 1999. On August 13, 1999, OptiCare Eye Health Centers was
acquired in a transaction accounted for as a purchase. Accordingly, the
results of Operations of OptiCare Eye Health Centers are included in the
Company's historical results of operations since September 1, 1999, the
deemed effective date of the acquisition for accounting purposes.

(2) Represents the results of operations of OptiCare Eye Health Centers for
the eight months ended August 31, 1999.

(3) Basic loss per share is calculated after giving effect to preferred stock
dividend.

See Notes to Pro Forma Combined Financial Statements.

F-3
<PAGE>

OPTICARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)

<TABLE>
<CAPTION>
OPTICARE
PRIME VISION EYE HEALTH MERGER OFFERING PRO FORMA
HEALTH CENTERS ADJUSTMENTS ADJUSTMENTS COMBINED
-------------------- ------------ --------------------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
NET REVENUES:
Net revenues-other .................... $ 64,612 $27,193 $ 4,625 (a) $ 96,430
Net revenues-related party ............ -- 7,552 -- 7,552
------------ ------- ------------- -----------
Total net revenues .................... 64,612 34,745 4,625 103,982
------------ ------- ------------- -----------
OPERATING EXPENSES:
Salaries, wages and benefits .......... 9,275 20,179 4,625 (a) 34,183
104 (b)
Other operating expenses .............. 52,227 14,443 66,670
Interest, net ......................... 4,498 (73) (2,105)(d) (1,020)(n) 2,353
160 (e)
300 (f)
365 (g)
228 (h)
Depreciation and amortization ......... 1,417 1,063 285 (i) 3,339
574 (j)
------------ ------- ------------- ------ -----------
Total operating expenses ............ 67,417 35,612 4,536 (1,020) 106,545
------------ ------- ------------- ------ -----------
Income (loss) from continuing
operations
before income taxes ................... (2,805) (867) 89 1,020 (2,563)
Income tax expense (benefit) ........... 434 (365) (1,502)(k) 408 (k) (1,025)
------------ ------- ------------- ------ -----------
Income (loss) from continuing
operations ............................ $ (3,239) $ (502) $ 1,591 612 $ (1,538)
============ ======= ============= ====== ===========
Basic weighted average
shares outstanding .................... 2,256,461 (1) 6,605,667 (l) 4,000,000 12,862,128
Basic loss per share ................... $ (2.54)(2) $ (0.12)
</TABLE>

- ----------
(1) The weighted average common shares outstanding have been adjusted to
reflect the conversion associated with the reverse merger with Saratoga.

(2) Basic loss per share is calculated after giving effect to preferred stock
dividends.

See Notes to Pro Forma Combined Financial Statements.

F-4
<PAGE>

OPTICARE HEALTH SYSTEMS, INC.

NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS

(a) Adjustment to reflect the consolidation of optometric practice
revenues and physician compensation in accordance with EITF 97-2.

(b) Adjustment to reflect the amortization of prepaid compensation of
$730,000 recorded in conjunction with the merger, calculated over
the 7-year term of related employment agreements.

(c) Adjustment to reflect the elimination of OptiCare Eye Health
Centers' merger related expenses incurred and charged to OptiCare
Eye Health Centers' operations prior to the merger. Such expenses do
not have a recurring effect on the results of the company.

(d) Adjustment to reflect reduction of interest expense based upon new
bank indebtedness of $29.9 million at an interest rate of
approximately 7.5% per annum. The adjustment is calculated after
considering the historical recorded amounts.

(e) Adjustment to reflect interest expense at 8% per annum on the $2
million of subordinated promissory notes.

(f) Adjustment to reflect the average interest expense at 7.5% on the
convertible subordinated debt of $4.0 million.

(g) Adjustment to reflect interest expense on new subordinated long term
debt of approximately $4.1 million, issued to physicians at interest
rates ranging from 7.0% to 9.5% per annum, as part of the disposal
of the ophthalmology operations.

(h) Adjustment to reflect the amortization of deferred financing fees of
approximately $1.1 million over five years (the term of the amended
credit facility).

(i) Adjustment to reflect amortization of intangibles of $7.1 million
recorded on the new administrative service agreement entered into in
conjunction with the merger, calculated on a straight line basis
over the estimated contract term of 25 years.

(j) Adjustment to reflect amortization of goodwill of $17.7 million
recorded on the purchase of OptiCare Eye Health Centers over an
estimated useful life of 25 years, less historic Opticare Eye Health
Centers intangible amortization.

(k) Adjustment to reflect estimated tax at the statutory rate of 40%.

(l) Adjustment to reflect the net issuance of shares in conjunction with
the mergers and related transactions as follows:

<TABLE>
<S> <C>
Shares issued in conjunction with the merger of OptiCare Eye Health Centers 4,387,050
Shares issued in conjunction with the merger of Saratoga Resources, Inc. ... 225,000
Shares issued in exchange for redeemable preferred stock and warrants ...... 638,060
Shared issued to the bank in conjunction with the new credit facility ...... 226,024
Shared issued in conjunction with the new administrative service agreement . 873,903
Other shares issued, net ................................................... 255,630
---------
Total net shares ....................................................... 6,605,667
=========
</TABLE>

(m) Adjustment to reflect total shares outstanding upon completion of
mergers and related transactions.

(n) Adjustment to reflect reduction of interest expense as a result of
$13.6 million of net proceeds from this offering at an interest rate
of approximately 7.5%.

F-5
<PAGE>

OPTICARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS EXCEPT SHARE AMOUNTS)
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
NET REVENUES:
Integrated services and product sales ......... $ 17,197 $ 12,781 $ 46,806 $ 38,976
Managed care services ......................... 6,356 3,776 16,089 11,188
--------- ---------- ---------- ----------
Total net revenues .......................... 23,553 16,557 62,895 50,164
--------- ---------- ---------- ----------
OPERATING EXPENSES:
Cost of product sales ......................... 10,044 9,109 31,423 27,627
Medical claims ................................ 5,177 2,877 12,904 8,240
Salaries, wages and benefits .................. 4,830 2,428 10,102 7,175
Selling, general and administrative ........... 1,969 1,463 4,449 4,290
Depreciation and amortization ................. 480 330 1,098 981
Interest, net ................................. 925 1,454 2,588 3,372
--------- ---------- ---------- ----------
Total operating expenses .................... 23,425 17,661 62,564 51,685
--------- ---------- ---------- ----------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES 128 (1,104) 331 (1,521)
Income tax expense (benefit) ................... 51 (172) 119 (236)
--------- ---------- ---------- ----------
NET INCOME (LOSS) FROM CONTINUING
OPERATIONS .................................... 77 (932) 212 (1,285)
DISCONTINUED OPERATIONS:
Income from discontinued operations, net of
tax ......................................... -- 538 -- 851
(Loss) from disposal of discontinued operations,
net of tax .................................... -- -- (2,317) --
--------- ---------- ---------- ----------
NET INCOME (LOSS) .............................. $ 77 $ (394) $ (2,105) $ (434)
========= ========== ========== ==========
NET INCOME (LOSS) PER COMMON
SHARE (NOTE 3):
Income (loss) from continuing operations
Basic ......................................... $ 0.01 $ (0.67) $ (0.11) $ (0.84)
========= ========== ========== ==========
Diluted ....................................... $ 0.01 $ (0.67) $ (0.11) $ (0.84)
========= ========== ========== ==========
Net income (loss)
Basic ......................................... $ 0.01 $ (0.43) $ (0.79) $ (0.46)
========= ========== ========== ==========
Diluted ....................................... $ 0.01 $ (0.43) $ (0.79) $ (0.46)
========= ========== ========== ==========
Weighted average shares outstanding
Basic ......................................... 5,593,626 2,286,425 3,414,626 2,241,275
========= ========== ========== ==========
Diluted ....................................... 6,260,396 2,286,425 3,414,626 2,241,275
========= ========== ========== ==========
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

F-6
<PAGE>

OPTICARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
--------------- -------------
<S> <C> <C>
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ...................................... $ 3,196 $ 5,956
Accounts receivable, net ....................................... 11,052 4,571
Inventories .................................................... 3,294 1,360
Net current assets of discontinued operations .................. -- 5,582
Deferred taxes ................................................. 6,173 1,499
Other .......................................................... 1,680 1,269
------------ ---------
TOTAL CURRENT ASSETS ......................................... 25,395 20,237
Property and equipment, net ..................................... 9,911 4,510
Intangible assets, net .......................................... 29,789 1,356
Deferred taxes .................................................. 485 123
Other ........................................................... 2,864 330
------------ ---------
TOTAL ASSETS ................................................ $ 68,444 $ 26,556
============ =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ............................................... $ 9,726 $ 3,926
Accrued expenses ............................................... 11,566 5,776
Current portion of long-term debt .............................. 2,923 39,784
Deferred income tax liability .................................. -- 1,620
Other .......................................................... 1,112 92
------------ ---------
TOTAL CURRENT LIABILITIES .................................... 25,327 51,198
Long-term debt, less current portion ............................ 34,459 192
Convertible subordinated debentures ............................. 4,000 --
Other ........................................................... 322 656
------------ ---------
TOTAL LIABILITIES ............................................ 64,108 52,046
COMMITMENTS AND CONTINGENCIES
Mandatorily Redeemable preferred stock, $.01 par value, 5,000,000
shares authorized, 8,000 shares issued and outstanding ......... -- 9,200
STOCKHOLDERS' EQUITY (DEFICIT):
Series A Convertible Preferred Stock, $.001 par value, 550,000
shares authorized; 418,803 shares issued and outstanding at
September 30, 1999. No shares outstanding at December 31,
1998 ........................................................... 1 --
Common Stock, $0.001 par value; 50,000,000 shares authorized;
8,862,128 and 2,325,124 shares outstanding at September 30, 1999
and December 31, 1998, respectively ............................ 9 2
Additional paid-in-capital ...................................... 46,994 5,862
Accumulated deficit ............................................. (42,668) (40,554)
------------ ---------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) ......................... 4,336 (34,690)
------------ ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) ................................................... $ 68,444 $ 26,556
============ =========
</TABLE>

See Notes to Condensed Consolidated Financial Statements

F-7
<PAGE>

OPTICARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------
1999 1998
------------ ----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss .................................................................... $ (2,105) $ (434)
Less: net income (loss) from discontinued operations ........................ (2,317) 851
-------- --------
Net income (loss) from continuing operations ................................ 212 (1,285)
Adjustments to reconcile net income (loss) from continuing operations to
net cash (used in) provided by operating activities .......................
Depreciation and amortization ............................................... 1,098 981
Changes in operating assets and liabilities (excluding the effects of the
acquisition of OptiCare)
Accounts receivable ....................................................... (988) (1,878)
Inventories ............................................................... (67) 785
Other current assets ...................................................... 434 232
Other assets .............................................................. (2,360) (49)
Accounts payable and accrued expenses ..................................... 3,065 2,084
Other current liabilities ................................................. (600) 1,160
Other liabilities ......................................................... (253) (1,112)
Cash (used in) discontinued operations ...................................... (1,467) (641)
-------- --------
Net cash (used in) provided by operating activities .......................... (926) 277
-------- --------
INVESTING ACTIVITIES:
Purchases of equipment ...................................................... (860) (360)
Cash acquired in merger ..................................................... 570 --
Cash used for acquisitions and related expenses ............................. (4,737) --
-------- --------
Net cash (used in) investing activities ...................................... (5,027) (360)
-------- --------
FINANCING ACTIVITIES:
Proceeds from issuance of long-term bank debt ............................... 3,274 --
Proceeds from issuance of mandatorily redeemable preferred stock ............ -- 8,000
Payments on long-term bank debt ............................................. -- (6,000)
Payments on capital lease obligations ....................................... (81) (104)
-------- --------
Net cash provided by financing activities .................................... 3,193 1,896
-------- --------
Increase (decrease) in cash and cash equivalents ............................. (2,760) 1,813
Cash and cash equivalents at beginning of year ............................... 5,956 2,478
-------- --------
Cash and cash equivalents at end of year ..................................... $ 3,196 $ 4,291
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest ....................................................... $ 3,047 $ 2,990
Cash paid for income taxes ................................................... $ 110 $ 1,616
(See also Note 2)

</TABLE>

See Notes to Condensed Consolidated Financial Statements

F-8
<PAGE>

OPTICARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The accompanying consolidated financial statements of OptiCare Health
Systems, Inc., a Delaware corporation (formerly known as Saratoga Resources,
Inc.), and subsidiaries (the "Company") for the three and nine months ended
September 30, 1999 and 1998 have been prepared in accordance with generally
accepted accounting principles for interim financial information and the
instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities
Exchange Act of 1934 and are unaudited. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of only normal recurring accruals) necessary for a fair
presentation of the consolidated financial statements have been included. The
results of operations for the three and nine month periods ended September 30,
1999 are not necessarily indicative of the results to be expected for the full
year. The condensed consolidated balance sheet as of December 31, 1998 was
derived from the Company's audited financial statements, but does not include
all disclosures required by generally accepted accounting principles.

The Company's shareholders approved an amendment to its Articles of
Incorporation changing, among other things, the Company's name to OptiCare
Health Systems, Inc., effective August 13, 1999.

2. THE MERGERS

On August 13, 1999 Saratoga Resources, Inc. ("Saratoga"), a Delaware
corporation, PrimeVision Health, Inc. ("Prime") and OptiCare Eye Health
Centers, Inc. ("OptiCare") merged (the "Mergers"). In this transaction Prime
merged with Saratoga through a reverse acquisition by Prime of Saratoga (the
"Prime Merger") whereby Prime has acquired Saratoga at book value with no
purchase accounting adjustments. Upon consummation of the Prime Merger, each
share of Prime common stock was converted into the right to receive 0.3138
shares of Common Stock of the Company. Immediately following the Prime Merger,
OptiCare was acquired by Prime (the "OptiCare Merger"). Upon consummation of
the OptiCare Merger, each share of OptiCare capital stock was converted into
the right to receive 11.7364 shares of Common Stock of the Company. The
OptiCare merger was accounted for under the purchase method of accounting,
whereby the purchase price has been allocated to preliminarily estimated fair
value of the tangible and identifiable intangible assets acquired and
liabilities assumed. The excess of the aggregate purchase price of $26.9
million over the estimated fair value of the net assets acquired, based on a
preliminary allocation, was approximately $21.7 million. Of this excess, $17.7
million has been recorded as goodwill and is being amortized on a straight-line
basis over 25 years and $4.0 million has been used to eliminate the valuation
allowance related to Prime's deferred tax assets. In addition, the company
recorded an intangible asset of $7.1 million in connection with a new
administrative services agreement that is being amortized over 25 years. Fair
values are based on valuations and other studies that are substantially
complete. The Company does not expect that the effect of any final adjustments
based upon the completion of such valuations and studies will result in any
material adjustments to the purchase allocations.

In connection with the merger, all of Prime's mandatorily redeemable
preferred stock was converted into $2.0 million of subordinated long term debt;
$4.0 million of convertible subordinated long term debt and approximately 2.0
million shares of common stock.

For accounting purposes, Prime is the accounting acquirer and the
surviving accounting entity. Accordingly, the operating results of OptiCare
have been included in the accompanying consolidated financial statements since
September 1, 1999, the deemed effective date of the acquisition for accounting
purposes. The impact of results from August 13, 1999 through August 31, 1999
are not material to the consolidated financial statements.

F-9
<PAGE>

OPTICARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED COLSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following is a summary of the pro forma results of the Company as if
the Mergers had closed effective January 1, of the respective periods:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------
1999 1998
---------- ----------
(AMOUNTS IN THOUSANDS,
EXCEPT SHARE DATA)
<S> <C> <C>
Net Revenues ............................................. $ 96,398 $ 78,092
Income (loss) from continuing operations ................. (862) (1,951)
Net income (loss) ........................................ (3,179) (1,100)
Income (loss) per common share from continuing operations:
Basic ................................................... $ (0.10) $ (0.22)
Diluted ................................................. $ (0.10) $ (0.22)
Net income (loss) per common share:
Basic ................................................... $ (0.36) $ (0.12)
Diluted ................................................. $ (0.36) $ (0.12)
</TABLE>

Pro forma data may not be indicative of the results that would have been
obtained had these events actually occurred at the beginning of the periods
presented, nor does it intend to be a projection of future results.

NOTE 3 -- EARNINGS PER COMMON SHARE

The following tables sets forth the computation of basic and diluted earnings
per share:

<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------- ---------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
(AMOUNTS IN THOUSANDS EXCEPT SHARE INFORMATION)
<S> <C> <C> <C> <C>
Income (loss) from continuing operations
applicable to common stockholders:
Income (loss) from continuing operations ..... $ 77 $ (932) $ 212 $ (1,285)
Preferred stock dividend ..................... (600) (600) (600)
--------- ---------- ---------- ----------
Income (loss) from continuing operations
applicable to common stockholders ............ $ 77 $ (1,532) $ (388) $ (1,885)
========= ========== ========== ==========
Net income (loss) applicable to common
stockholders:
Net income (loss) ............................ $ 77 $ (394) $ (2,105) $ (434)
Preferred stock dividend ..................... (600) (600) (600)
--------- ---------- ---------- ----------
$ 77 $ (994) $ (2,705) $ (1,034)
========= ========== ========== ==========
Income (loss) per common share from
continuing operations:
Basic ........................................ $ 0.01 $ (0.67) $ (0.11) $ (0.84)
========= ========== ========== ==========
Diluted ...................................... $ 0.01 $ (0.67) $ (0.11) $ (0.84)
========= ========== ========== ==========
Net income (loss) per common share:
Basic ........................................ $ 0.01 $ (0.43) $ (0.79) $ (0.46)
========= ========== ========== ==========
Diluted ...................................... $ 0.01 $ (0.43) $ (0.79) $ (0.46)
========= ========== ========== ==========
Weighted average common shares-basic .......... 5,593,626 2,286,425 3,414,626 2,241,275
Effect of dilutive securities:
Preferred stock .............................. 204,849 * * *
Options ...................................... 331,364 * * *
Warrants ..................................... 130,557 * * *
--------- ---------- ---------- ----------
Weighted average common shares-diluted ........ 6,260,396 2,286,425 3,414,626 2,241,275
========= ========== ========== ==========
</TABLE>

- ----------
* Anti-dilutive

F-10
<PAGE>

OPTICARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED COLSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The weighted average common shares outstanding for all periods prior to
the merger have been adjusted to reflect the conversion associated with the
reverse merger with Saratoga. In addition, the effect of dilutive securities
excludes the assumed conversion of convertible debt due to anti-dilution.

NOTE 4 -- DISCONTINUED OPERATIONS

In December 1998, Prime began the process of discontinuing its
ophthalmology operations and recorded a loss on the disposal of these
discontinued operations. The disposal of these operations continued in 1999
through the cancellation of the administrative service agreements with
affiliated ophthalmologists and the repurchase of practice assets by the
physicians. During the three months ended June 30, 1999 the Company revised its
estimate of loss on the disposal of its ophthalmology operations and
accordingly recorded an additional loss on the disposal of $2,529,000, net of
tax of $212,000. As of September 30, 1999 the disposal of these operations is
substantially complete.

NOTE 5 -- SEGMENT INFORMATION

The Company manages the operations of the business through two operating
segments: (1) integrated services and product sales and (2) managed care
services. The integrated services and product sales segment includes a range of
services rendered to licensed practitioners of ophthalmology and optometry,
including the development and marketing of laser vision correction centers, eye
health systems and software, a buying group and other services. In addition,
this segment provides services to eye care patients, including the operation of
integrated eye health centers and retail optical stores. The managed care
segment provides a range of administrative, network management and related
services to health maintenance organizations and other health care entities.

Management assesses the performance of its segments based on income before
income taxes, interest expense, depreciation and amortization, and other
corporate overhead. Summarized financial information, by segment, for the three
months and nine months ended September 30, 1999 and 1998 is as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
1999 1998 1999 1998
----------- ------------ ----------- ------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues:
Integrated services and products .............. $17,197 $ 12,781 $ 46,806 $ 38,976
Managed Care .................................. 6,526 3,776 16,259 11,188
------- -------- -------- --------
Segment totals ................................ 23,723 16,557 63,065 50,164
Elimination of inter-segment revenues ......... (170) (170)
------- -------- -------- --------
Total net Revenue ............................. $23,553 $ 16,557 $ 62,895 $ 50,164
======= ======== ======== ========
Operating earnings (loss)
Integrated services and products .............. $ 1,736 $ 681 $ 3,725 $ 2,541
Managed Care .................................. 426 263 1,047 1,084
------- -------- -------- --------
Segment totals ................................ 2,162 944 4,772 3,625
Depreciation and Amortization ................. (480) (330) (2,588) (981)
Interest Expense .............................. (925) (1,454) (1,098) (3,372)
Corporate ..................................... (629) (264) (755) (793)
======= ======== ======== ========
Operating earnings (loss) from continuing
operations .................................... $ 128 $ (1,104) $ 331 $ (1,521)
======= ======== ======== ========
</TABLE>

F-11
<PAGE>

OPTICARE HEALTH SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED COLSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6 -- CREDIT FACILITY

In August 1999, in connection with the Mergers, the Company entered into a
credit agreement (the "Credit Facility") with Bank Austria. The Credit Facility
was entered into for the purpose of facilitating the Mergers, to pay certain
indebtedness of Prime and OptiCare and to provide working capital. The Credit
Facility provides the Company with a $21.5 million term loan and up to a $12.7
million revolving credit facility and is secured by a security interest in
substantially all of the assets of the Company. The Company is required to
maintain certain financial ratios, which are to be calculated on a quarterly
and annual basis beginning on December 31, 1999. The first principal payment on
the term loan is April 1, 2000 and the Credit Facility terminates and all
amounts outstanding thereunder are due and payable on June 1, 2004. At
September 30, 1999, the Company had amounts outstanding of $29.9 million under
the Credit Facility.

The interest rate applicable to the Credit Facility will equal the base
rate or the eurodollar rate (each, as defined in the loan agreement with Bank
Austria ("Loan Agreement")), as the Company may from time to time elect, in
accordance with the provisions of the Loan Agreement. The base rate will
generally be the higher of (a) the prime rate of Bank Austria for domestic
commercial loans in effect on such applicable day or (b) the federal funds rate
in effect on such applicable day plus one-half of one percent ( 1/2 of 1%)
which generally equals LIBOR plus 2.25%. The eurodollar rate will generally
equal the offered rate quoted by Bank Austria in the interbank eurodollar
market for U.S. dollar deposits of an aggregate amount comparable to the
principal amount of the eurodollar loan to which the quoted rate is to be
applicable.

NOTE 7 -- CONTINGENCIES

The Company is both a plaintiff and defendant in lawsuits incidental to
its current and former operations. Management is of the opinion that, although
there can be no assurance as to the ultimate disposition of these matters, the
ultimate resolution of these matters will not have a material adverse effect on
the results of operations and the financial condition of the Company.

NOTE 8 -- SUBSEQUENT EVENTS

In October 1999, the Company signed a letter of intent with ConnectiCare,
Inc. to provide medical/surgical managed care services as well as routine eye
care coverage to its 215,000 commercial and Medicare members.

F-12
<PAGE>

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Prime Vision Health, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of Prime
Vision Health, Inc. and subsidiaries as of December 31, 1998 and 1997, and the
related consolidated statements of operations, shareholders' (deficit) equity
and cash flows for each of the three years in the period ended December 31,
1998. 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Prime Vision Health, Inc. and subsidiaries at December 31, 1998 and 1997,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended December 31, 1998, in conformity with
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that
Prime Vision Health, Inc. will continue as a going concern. As more fully
described in Note 2, the Company has incurred recurring operating losses and
has a working capital deficiency. In addition, the Company has not complied
with certain covenants of its loan agreement with a bank. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 2. The financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or
the amounts and classification of liabilities that may result from the outcome
of this uncertainty.

/s/ ERNST & YOUNG LLP
May 7, 1999
Raleigh, NC

F-13
<PAGE>

PRIME VISION HEALTH, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1998 1997
---------------- ---------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............................................. $ 5,955,527 $ 2,478,142
Accounts receivable, less allowance of $441,476 in 1998 and
$334,085 in 1997..................................................... 4,571,392 4,091,446
Inventories ........................................................... 1,359,524 2,272,073
Net current assets of discontinued operations ......................... 5,582,428 8,472,637
Income tax receivable ................................................. 1,088,502 --
Deferred tax asset, current ........................................... 1,499,595 545,274
Other current assets .................................................. 179,965 414,202
------------- ------------
Total current assets ................................................. 20,236,933 18,273,774
Property and equipment, net ............................................ 4,510,254 4,825,044
Intangible assets, net ................................................. 1,356,069 1,630,770
Net long-term assets of discontinued operations ........................ -- 61,000,290
Notes receivable from related parties, less current portion ............ 175,506 159,027
Deferred tax asset, non-current ........................................ 122,903 344,722
Other assets ........................................................... 4,907 13,169
Restricted cash ........................................................ 150,000 150,000
------------- ------------
TOTAL ASSETS ........................................................... $ 26,556,572 $ 86,396,796
============= ============
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Accounts payable ...................................................... $ 3,926,126 $ 2,747,625
Accrued salaries and related expenses ................................. 3,099,727 3,133,978
Accrued expenses ...................................................... 1,281,654 931,215
Income tax payable .................................................... -- 280,817
Deferred income tax liability, current ................................ 1,620,443 581,198
Current portion of long-term debt ..................................... 39,784,074 30,628
Current portion of capital lease obligations .......................... 91,583 85,708
Interest payable ...................................................... 1,394,411 497,706
------------- ------------
Total current liabilities ............................................ 51,198,018 8,288,875
Capital lease obligations, less current portion ........................ 202,119 128,238
Long-term debt, less current portion ................................... 192,436 45,928,118
Deferred tax liability ................................................. 2,055 27,142,344
Notes payable to related party ......................................... 451,916 363,431
------------- ------------
TOTAL LIABILITIES ...................................................... 52,046,544 81,851,006
Mandatorily redeemable preferred stock, $.01 par value, 5,000,000
shares authorized, 8,000 shares issued and outstanding ................ 9,200,000 --
Shareholders' (deficit) equity:
Common stock, $.01 par value, 15,000,000 and 80,000,000 shares
authorized; 7,409,574 and 6,916,270 shares issued and
outstanding ......................................................... 74,096 69,163
Additional paid-in capital ............................................ 5,790,232 5,647,527
Accumulated deficit ................................................... (40,554,300) (1,170,900)
------------- ------------
Total shareholders' (deficit) equity ................................... (34,689,972) 4,545,790
------------- ------------
Total liabilities, preferred stock and shareholders' (deficit) equity .. $ 26,556,572 $ 86,396,796
============= ============
</TABLE>

See accompanying notes.

F-14
<PAGE>

PRIME VISION HEALTH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1998 1997 1996
---------------- --------------- ---------------
<S> <C> <C> <C>
REVENUES:
Managed vision care ...................................... $ 14,901,627 $ 7,416,313 $ 4,116,925
Buying group and distribution ............................ 30,024,518 31,741,865 29,684,168
Optometric practice management and retail optical ........ 19,686,153 19,187,860 18,355,668
------------ ----------- -----------
Total revenues ........................................ 64,612,298 58,346,038 52,156,761
------------ ----------- -----------
COST AND EXPENSES:
Cost of sales and services:
Managed vision care ...................................... 10,994,145 4,992,592 2,635,194
Buying group and distribution ......................... 28,030,374 30,090,470 28,345,413
Optometric practice management and retail optical...... 7,206,607 6,920,347 6,437,718
------------ ----------- -----------
Total cost of sales and services ...................... 46,231,126 42,003,409 37,418,325
------------ ----------- -----------
Salaries, wages and benefits:
Managed vision care ...................................... 1,752,066 1,084,042 505,042
Buying group and distribution ............................ 731,794 1,071,371 1,154,920
Optometric practice management and retail optical ........ 6,215,786 5,963,209 5,394,296
Indirect ................................................. 575,725 1,011,326 715,548
------------ ----------- -----------
Total salaries, wages and benefits ..................... 9,275,371 9,129,948 7,796,806
------------ ----------- -----------
General and administrative expenses ...................... 5,995,563 5,195,798 5,492,744
Depreciation and amortization ............................ 1,417,296 1,220,085 1,331,254
Interest expense ......................................... 4,498,081 3,856,261 1,039,126
------------ ----------- -----------
Total costs and expenses ............................... 67,417,437 61,405,501 53,051,255
------------ ----------- -----------
Loss from continuing operations before minority interest
and income taxes ........................................ (2,805,139) (3,059,463) (894,494)
Minority interest ........................................ -- 9,166 76,796
------------ ----------- -----------
Loss from continuing operations before income taxes ...... (2,805,139) (3,068,629) (971,290)
Income tax (benefit) expense ............................. 433,516 (1,034,995) (204,577)
------------ ----------- -----------
Loss from continuing operations .......................... (3,238,655) (2,033,634) (766,713)
Discontinued operations:
Income (loss) from discontinued operations (Note 3) ..... (11,287,396) 628,373 (1,437,464)
Loss from disposal of discontinued operations, net
of tax ................................................ (23,564,016) -- --
------------ ----------- -----------
Net loss ................................................ $(38,090,067) $(1,405,261) $(2,204,177)
============ =========== ===========
Loss per common share (basic and diluted):
Loss from continuing operations .......................... $ (0.80) $ (0.34) $ (0.35)
============ =========== ===========
Net loss ................................................ $ (5.64) $ (0.24) $ (1.00)
============ =========== ===========
Weighted average shares outstanding ...................... 7,190,762 5,914,374 2,209,839
============ =========== ===========
</TABLE>

See accompanying notes.

F-15
<PAGE>

PRIME VISION HEALTH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' (DEFICIT) EQUITY

<TABLE>
<CAPTION>
RETAINED
ADDITIONAL EARNINGS
PREFERRED COMMON PAID-IN (ACCUMULATED DEFERRED
STOCK STOCK CAPITAL DEFICIT) COMPENSATION TOTAL
----------- ----------- --------------- ---------------- -------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 ...... $ -- $ 8,647 $ 183,744 $ 2,438,538 $ (104,778) $ 2,526,151
Issuance of 45,511 shares of
common stock ................... 455 455
Issuance of 3,966,771 shares
of preferred stock in
exchange for 910,221 shares
of common stock in
connection with the merger
with PrimeVision Group ......... $ 39,668 (9,102) (30,566)
Issuance of stock warrant ........ 124,562 124,562
Issuance of 3,166,465 shares
of common stock ................ 31,665 4,099,803 4,131,468
Amortization of deferred
compensation ................... 104,778 104,778
Net loss for 1996 ................ (2,204,177) (2,204,177)
--------- -------- ------------ ------------- ---------- -------------
Balance at December 31, 1996 ...... 39,668 31,665 4,377,543 234,361 -- 4,683,237
Issuance of 1,600,000 shares
of common stock in
exchange for 3,966,771
shares of preferred stock ...... (39,668) 16,000 (26,332) (50,000)
Purchase of minority interest..... 17 1,596 1,613
Issuance of stock warrant ........ 115,093 115,093
Administrative Services
Agreement renegotiation ........ (969,425) (969,425)
Issuance of 2,148,143 shares
of common stock ................ 21,481 2,149,052 2,170,533
Net loss for 1997 ................ (1,405,261) (1,405,261)
--------- -------- ------------ ------------- ---------- -------------
Balance at December 31, 1997 ...... -- 69,163 5,647,527 (1,170,900) -- 4,545,790
Issuance of stock warrant in
connection with the
issuance of redeemable
preferred stock ................ 1,293,333 1,293,333
Accretion of preferred stock ..... (1,293,333) (1,293,333)
Preferred stock dividends ........ (1,200,000) (1,200,000)
Issuance of 493,304 shares of
common stock ................... 4,933 49,372 54,305
Net loss for 1998 ................ (38,090,067) (38,090,067)
--------- -------- ------------ ------------- ---------- -------------
Balance at December 31, 1998 ...... $ -- $ 74,096 $ 5,790,232 $ (40,554,300) $ -- $ (34,689,972)
========= ======== ============ ============= ========== =============
</TABLE>

See accompanying notes.

F-16
<PAGE>

PRIME VISION HEALTH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------
1998 1997 1996
----------------- ---------------- ----------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss ................................................... $ (38,090,067) $ (1,405,261) $ (2,204,177)
Less: net income (loss) from discontinued
operations ............................................... (34,851,421) 628,373 (1,437,464)
------------- ------------- -------------
Net loss from continuing operations ........................ (3,238,655) (2,033,634) (766,713)
Adjustments to reconcile net loss from continuing
operations to net cash provided by (used in)
operating activities:
Depreciation ............................................. 1,133,322 1,035,661 1,177,848
Amortization ............................................. 283,974 184,424 153,406
Loss on sale of equipment ................................ -- -- 14,478
Changes in operating assets and liabilities:
Accounts receivable ..................................... (479,946) (349,735) (1,888,564)
Inventories ............................................. 912,549 611,388 (271,780)
Other current assets .................................... (1,808,584) (645,341) 135,569
Other assets ............................................ 230,081 (49,179) 766,387
Accounts payable and accrued expenses ................... 3,276,131 4,357,026 1,363,784
Cash provided by (used in) discontinued
operations .............................................. 1,898,798 (26,589,035) (10,921,562)
------------- ------------- -------------
Net cash provided by (used in) operating activities ......... 2,207,670 (23,478,425) (10,237,147)
------------- ------------- -------------
INVESTING ACTIVITIES:
Purchases of equipment -- continuing operations ............ (599,462) (1,851,237) (375,244)
Additions to intangible assets -- continuing
operations ............................................... (9,273) -- (708,476)
------------- ------------- -------------
Net cash used in investing activities ..................... (608,735) (1,851,237) (1,083,720)
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt ................... 17,764 28,809,392 10,974,626
Principal payments on long-term debt ....................... (6,000,000) -- --
Proceeds from issuance of redeemable preferred
stock .................................................... 8,000,000 -- --
Payment of financing costs ................................. -- (300,000) (460,098)
Payments on capital lease obligations ...................... (139,314) (95,153) (73,259)
------------- ------------- -------------
Net cash provided by financing activities ................... 1,878,450 28,414,239 10,441,269
------------- ------------- -------------
Increase (decrease) in cash and cash equivalents ............ 3,477,385 3,084,577 (879,598)
Cash and cash equivalents at beginning of year .............. 2,478,142 (606,435) 273,163
------------- ------------- -------------
Cash and cash equivalents at end of year .................... $ 5,955,527 $ 2,478,142 $ (606,435)
============= ============= =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest ...................... $ 3,986,581 $ 3,842,730 $ 686,757
Cash paid during the year for income taxes .................. $ 2,154,823 $ 83,750 $ 44,332
</TABLE>

See accompanying notes.

F-17
<PAGE>

PRIME VISION HEALTH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS AND ORGANIZATION

Prime Vision Health ("PVH" or the "Company") is a vertically integrated, vision
services company incorporated in Delaware and headquartered in North Carolina.
PVH, within its eye care services business segment is involved in three
vision-related lines of business: (1) managed vision care, (2) buying group and
distribution and (3) optometric practice management and retail optical. In
December 1998, the Board of Directors approved the reorganization and disposal
of the Company ophthalmology practice management segment and related
administrative support functions (the "ophthalmology segment"). Accordingly,
the ophthalmology division is presented as a discontinued operation for
financial reporting purposes.

PVH is a result of a merger between Consolidated Eye Care (CEC) and Prime
Vision Group (PVG) which occurred on July 3, 1996 whereby CEC exchanged all of
its outstanding voting common stock for 3,966,771 shares of voting preferred
stock of PVG. Since the former CEC shareholders retained the majority of the
voting rights in the combined company, CEC was treated as the acquirer in the
business combination. These shareholders, acting collectively as a group of the
former companies CEC and PVG, have the independent right to dissolve the
Company as defined in the corporate by-laws. The stated period of time for a
dissolution to occur commences in January 2001 and ends 60 days later. This
right of dissolution terminates if the Company completes an initial public
offering or is acquired.

The Company operated in two business segments: (1) eye care services, which
includes managed vision care, buying group and distribution and optometric
practice support including retail optical and (2) ophthalmology physician
practice management (ppm) and related administrative support. As discussed in
Note 3, the Board of Directors decided to reorganize and dispose of the
ophthalmology business segment. Segment disclosures relating to the operations
of the ophthalmology physician practice management business segment are
included in the accompanying financial statements as discontinued operations.
Continuing operations of the Company pertain to the eye care services business
segment.

Within the eyecare services segment, the Company provides consulting,
administrative and other support services to optometry eye care centers in
North Carolina. All of the optometry centers are owned by shareholders of the
Company who were formerly shareholders of CEC. The administrative services for
these optometry centers are provided under a 30 year contract which provides a
management fee to the Company.

Within the eyecare services segment, the Company operates managed vision care
business conducted primarily through its two wholly owned subsidiaries which
are licensed as single service Health Maintenance Organizations (HMOs) in North
Carolina and Texas.

In addition, as part of its eyecare services segment, the Company operates a
buying group and distribution business with approximately 4,000 individual
ophthalmology and optometry practices as customers throughout the United
States.

2. MERGER AND RESTRUCTURING

For the year ended December 31, 1998, the Company had a net loss of
approximately $38.1 million. The Company is highly leveraged and is not in
compliance with its bank debt covenants. Accordingly, all bank debt has been
classified in current liabilities. Management has determined that the
ophthalmology segment is the main contributing factor to the Company's
liquidity problems due to lower than anticipated cash flows from the
ophthalmology service agreements as evidenced by the historical operating
losses experienced by the ophthalmology segment. The Company's headquarters in
Raleigh, North Carolina exists primarily to support the ophthalmology segment
and such headquarter expenses were higher than justified by operating earnings
of the ophthalmology segment.

On December 15, 1998, in recognition of the significant losses and the fact
that the physician's practice management business model as operated by the
Company has been largely unsuccessful, the Company

F-18
<PAGE>

PRIME VISION HEALTH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

determined that the business should be disposed of and that a combination
should be sought with a related business with a stronger infrastructure.
Subsequent to such decision by the Board, the Merger described in Note 14 was
approved. The Merger and the disposal of the ophthalmology segment should
enable the Company to repay a substantial portion of its bank debt, resulting
in an amendment to such debt to provide financing to the merged entity. The
merger agreement and transition agreements covering the reorganization of the
ophthalmology segment expire on September 30, 1999 if the merger has not been
completed by that date.

3. DISCONTINUED OPERATIONS

On December 15, 1998, the Board of Directors decided to reorganize and dispose
of its ophthalmology segment. Such disposal is currently in process and is
expected to be completed by September 30, 1999.

The disposal is currently being accomplished primarily through cancellation of
the administrative services agreements and the repurchase of practice assets by
the physicians. Agreement has been reached with substantially all of the
practices comprising the Prime Ophthalmology division, whereby either the
assets of the practice have been sold back to the original owners of the
practice, or responsibility for collecting amounts owed for these assets has
been assumed by the Bank.

The Company's ophthalmology division consisted of 46 managed ophthalmology
practices acquired since 1996 and located throughout the United States. When
acquired, the professional corporation associated with the practice entered
into a 30 or 40 year Administrative Services Agreement ("ASA") whereby PVH
provided consulting, administrative and other support services in return for a
management fee. The management service fee is comprised of a monthly fixed fee,
plus a stated percentage of the net income of the practice. This segment has
performed poorly and accordingly management has decided to reorganize and
dispose of its ophthalmology segment. The Company anticipates that a new
agreement will be entered into with many of these practices following the
reorganization and disposal to provide the services of the Company's other
three divisions. Based upon agreements currently in place or verbally agreed,
the probable loss on the disposal of this segment is estimated to be
approximately $23 million. The investment in discontinued operations on the
balance sheet is shown net of this estimated loss. The ophthalmology segment
has been presented as a discontinued operation.

Summarized information on the discontinued ophthalmology segment follows:

<TABLE>
<CAPTION>
1998 1997 1996
---------------- -------------- ----------------
<S> <C> <C> <C>
Net revenues ..................................................... $ 69,441,745 $54,554,570 $ 10,559,787
(Loss) income from discontinued operations before taxes .......... (17,884,428) 1,041,178 (2,446,971)
Income tax (benefit) expense ..................................... (6,597,032) 412,805 (1,009,507)
------------- ----------- ------------
Income (loss) from discontinued operations ....................... (11,287,396) 628,373 (1,437,464)
(Loss) on disposal of discontinued operations .................... (23,564,016) -- --
------------- ----------- ------------
Total income (loss) from discontinued operations ................. $ (34,851,412) $ 628,373 $ (1,437,464)
============= =========== ============
Loss (income) per share from discontinued operations ............. $ (4.84) $ 0.10 $ (0.65)
============= =========== ============
</TABLE>

4. SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include PVH and all of its wholly-owned
subsidiaries. All significant intercompany accounts and transactions have been
eliminated in preparing the consolidated financial statements. In September
1997, the Company acquired the remaining 49% ownership interest in ExPec, Inc.,
thus eliminating the minority interest position held by the former owners.

F-19
<PAGE>

PRIME VISION HEALTH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

CASH AND CASH EQUIVALENTS

The Company considers highly liquid, short-term investments with a maturity of
three months or less when purchased to be cash equivalents.

INVENTORIES

Inventories consist primarily of eye care products and are stated at the lower
of cost (using the average cost method) or market.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation and amortization is
computed using the straight-line method over the estimated useful lives of the
assets ranging from 3 to 10 years.

STOCK BASED COMPENSATION

The Company has adopted Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"), which requires
companies to (i) recognize as expense the fair value of all stock-based awards
on the date of grant, or (ii) continue to apply the provisions of APB 25 and
provide pro forma net income disclosures for employee stock option grants as if
the fair-value-based method defined in SFAS 123 had been applied. The Company
has elected to continue to apply the provisions of APB 25 and provide the pro
forma disclosure provisions of SFAS 123 (see Note 12). The Company has not
granted options to non-employees, and therefore no stock based compensation has
been recorded under SFAS 123.

ADVERTISING COSTS

The Company expenses advertising costs as incurred. Total advertising expense
was approximately $501,975, $686,704 and $784,830 for 1998, 1997 and 1996,
respectively.

USE OF ESTIMATES

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company follows SFAS 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of". The company reviews the
carrying value of the intangible assets to determine if facts and circumstances
exist which would suggest that the intangible assets may be impaired or that
the amortization period needs to be modified. If indicators are present which
may indicate impairment is probable, PVH prepares a projection of the
undiscounted cash flows of the associated operations to determine whether the
intangible assets are recoverable based on these undiscounted cash flows. If
impairment is probable, an adjustment is made to reduce the carrying amount of
the intangible assets to their fair value. Fair value is determined using
available market and industry information including revenue, earnings and
multiples, discounted cash flow analyses and comparable public market
valuations.

INSURANCE OPERATIONS

The Company's managed vision care business is conducted primarily through two
wholly-owned subsidiaries which are licensed single service HMOs in the states
of North Carolina and Texas. Each is subject to regulation and supervision by
regulatory authorities of the state in which it operates. The

F-20
<PAGE>

PRIME VISION HEALTH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

regulatory bodies have broad administrative powers relating to standards of
solvency, minimum capital and surplus requirements, maintenance of required
reserves, payments of dividends, statutory accounting and reporting practices,
and other financial and operational matters. Each state insurance department
requires that stipulated amounts of paid-in-capital and surplus be maintained
at all times. Dividends generally are limited to the lesser of 10% of
statutory-basis capital and surplus or net income of the preceding year
excluding realized capital gains. At December 31, 1998, the amount of
restricted stockholders' equity is $275,000.

Under agreements with the North Carolina and Texas Departments of Insurance,
the Company is required to pledge investments on behalf of the respective
regulatory bodies. The investments pledged amount to $25,000 and $125,000 in
North Carolina and Texas, respectively.

Reserves for estimated insurance losses, included in accounts payable and
accrued expenses, are determined on a case basis for reported claims, and on
estimates based on company experience for loss adjustment expenses and incurred
but not reported claims. These liabilities give effect to trends in claims
severity and other factors which may vary as the losses are ultimately settled.
The Company's management believes that the estimates of the reserves for losses
and loss adjustment expenses are reasonable; however, there is considerable
variability inherent in the reserve estimates. These estimates are continually
reviewed and, as adjustments to these liabilities become necessary, such
adjustments are reflected in current operations of the period of the
adjustment.

CONCENTRATION OF CREDIT RISK

The Company's principal financial instrument subject to potential concentration
of credit risk is accounts receivable which are unsecured. The Company provides
an allowance for doubtful accounts equal to estimated losses expected to be
incurred in the collection of accounts receivable. During the years ended
December 31, 1998, 1997 and 1996, bad debt expense charged to operations was
$263,727, $190,833 and $270,411 respectively, and account receivable write offs
were $156,336, $228,557 and $202, respectively.

NEW ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities," ("SFAS
133") which is required to be adopted in years beginning after June 15, 1999.
Because of the Company's minimal use of derivatives, management does not
anticipate the adoption of the new Statement will have a significant effect on
earnings or the financial position of the Company.

RECLASSIFICATIONS

Certain 1997 and 1996 financial statement amounts have been reclassified to
conform current classifications. These reclassifications had no effect on net
loss or shareholders' equity as previously reported.

MANAGED VISION CARE REVENUE RECOGNITION

The Company provides vision care services, through its managed vision care
business, as a preferred provider to HMOs, PPOs, third party administrators,
insurance indemnity programs and large employer groups. The contractual
arrangements with these entities operate under capitated programs, exclusive
and non-exclusive fee-for-services, preferred provider arrangements and other
exclusive arrangements. Capitation payments are accrued when they are due under
the related contracts. Incurred but not reported by patient costs are estimated
and accrued based upon historical experience. Revenue from non-capitated
services is recognized when the services are provided and the Company's
customers are obligated to pay for such services.

BUYING GROUP AND DISTRIBUTION REVENUE RECOGNITION

The Company's buying group and distribution business sells ophthalmic products
and equipment to 4,000 independent doctor practitioners. The buying group
utilizes a bill-to-ship arrangement with its customers

F-21
<PAGE>

PRIME VISION HEALTH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

and acts as an intermediary between the doctor and the product manufacturer.
The distribution center buys eye care products in bulk from manufacturers and
resells the product to individual doctors. Revenue is recognized when the
product manufacturer ships the product to the individual doctor customers.
Historically, returns have been deminimus and are recorded when incurred.

OPTOMETRIC PRACTICE MANAGEMENT AND RETAIL OPTICAL REVENUE RECOGNITION

A significant portion of the optometric eye care centers' medical service
revenues are reimbursements received from Medicare, other governmental programs
and insurance companies. These payors reimburse providers based on pre-set fee
schedules. In the ordinary course of business, providers receiving
reimbursement from Medicare and other governmental programs are subject to
review by regulatory agencies concerning the accuracy of billings and
sufficiency of supporting documentation. The administrative services agreement
does not meet the consolidation criteria of EITF 97-2 and accordingly does not
consolidate the revenues and sales of the optometric centers. Management fee
revenues are recognized in the period the related optometric services are
rendered and are recorded at the net recoverable amount of charges for services
rendered after deducting physician compensation. All non-physician related
costs of providing the optometric services are expenses of the Company incurred
as part of providing administrative services to the optometric centers.

6. PROPERTY AND EQUIPMENT

Property and equipment consist of the following as of December 31:

<TABLE>
<CAPTION>
1998 1997
--------------- ---------------
<S> <C> <C>
Leasehold improvements .................................. $ 2,085,337 $ 2,171,460
Furniture and equipment ................................. 7,395,830 6,899,513
Computer hardware and software .......................... 1,089,835 1,021,247
------------ ------------
10,571,002 10,092,220
Less accumulated depreciation and amortization .......... (6,060,748) (5,267,176)
------------ ------------
$ 4,510,254 $ 4,825,044
============ ============
</TABLE>

7. INTANGIBLE ASSETS

Intangible assets consist of the following as of December 31:

<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
Optometric administrative services agreements and goodwill .......... $1,405,665 $1,405,665
Capitalized organization and financing costs ........................ 664,615 644,687
Other ............................................................... 30,661 41,416
---------- ----------
2,100,941 2,091,768
Accumulated amortization ............................................ (744,872) (460,998)
---------- ----------
Intangible assets, net .............................................. $1,356,069 $1,630,770
========== ==========
</TABLE>

The intangible assets relate primarily to the acquisition of the assets of
optometry practices, related administrative services agreements and costs
involved in arranging and obtaining long-term financing. Amortization of the
administrative service agreements and goodwill is provided on a straight-line
basis over a twenty-five year period. Other intangible assets are amortized
over their useful lives ranging from five to ten years. Amortization expense
related to these intangible assets was $283,874, $184,424 and $153,406 during
1998, 1997 and 1996, respectively.

F-22
<PAGE>

PRIME VISION HEALTH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. CREDIT AGREEMENTS

Long-term debt consists of the following:

<TABLE>
<CAPTION>
1998 1997
--------------- ---------------
<S> <C> <C>
Term note payable to bank in 19 quarterly principal amounts of
$1,200,000 from April, 1999 through July 1, 2001, then increasing to
$2,000,000 or until the obligation is paid in full, through January 1,
2004, with interest payable in quarterly installments at prime plus
1 3/4%, collateralized by substantially all assets of the Company . .......... $ 31,820,910 $ 31,784,910
Revolving credit note to bank, due May 1, 2002, interest payable
quarterly at prime plus 1 3/4%, collateralized by substantially all assets
of the Company (net of unamortized discount of $62,228 at
December 31, 1997). .......................................................... 7,929,940 13,948,176
Promissory notes payable due at various dates between 2001 and 2005.
Interest is payable annually at a rate of 8.25% and the notes are
secured by personal guarantees of the shareholders. .......................... 225,660 225,660
------------ ------------
39,976,510 45,958,746
Less current portion ........................................................... 39,784,074 30,628
------------ ------------
$ 192,436 $ 45,928,118
============ ============
</TABLE>

On July 3, 1996, the Company entered into a loan and security agreement with a
bank. The agreement, as amended on November 25, 1996 and May 30, 1997, made
available to the Company a revolving credit facility permitting advances of up
to $18 million at any one time and term loans in the aggregate principal amount
of $32 million. The terms of this agreement include restrictive covenants
which, among other things, require the Company to maintain specific levels of
net worth, not to exceed maximum leverage and fixed charge coverage ratios, and
not to exceed specified cash flow parameters.

The outstanding borrowings under the revolving loan facility and the term loan
facility are individually and collectively limited to specific available
borrowing base amounts, as defined in the agreement. The interest rate of these
loans can be changed, at the Company's option, from prime plus 1 3/4% to a
Quoted Rate, as defined, plus 3 3/4%. During 1998, the company's average
borrowing rate was 9.95%.

As of December 31, 1998 and currently, the Company is in default of certain
restrictive covenants of the term note payable to bank and the revolving credit
note to bank, as amended. Accordingly, all of the debt has been reclassified to
short-term.

Pursuant to the term note payable and the revolving credit agreement and
amendments, the Company issued the Series A, Series B, Series C and Series D
preferred shareholders warrants entitling the holders the right to purchase
57,506, 57,505, 92,020 and 13,250 shares of common stock, respectively, at a
warrant price of $.01 per share. The estimated fair value of the warrants was
recorded as debt discount with a corresponding credit to additional paid-in
capital. The fair value was determined by using the minimum value model with
the following assumptions: risk free interest rate of 5.5%, no dividend yield
and an expected life of five years. The amortization of the debt discount has
increased the stated interest rate to an effective rate of approximately 10.67%
per annum and is being amortized to interest expense using the interest method
over the terms of the related notes. The Series A, B and C warrants are
exercisable upon issuance and expire on November 25, 2006, January 7, 2007,
April 9, 2007 and June 26, 2008 respectively. As of December 31, 1998, the
warrants had not been exercised.

The promissory notes represent debt issued to certain sellers of optometric
assets in connection with acquisition activities. The acquisition terms include
an earn-out component tied to a percentage of certain future sales of
optometric products. The earn-out component guarantees additional consideration
to the seller if future sales of optometric products exceed a sales threshold.
Such earn-out components expire

F-23
<PAGE>

PRIME VISION HEALTH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

with the end of the term of the related promissory notes between 2001 and 2005.
During 1998 and 1997, no additional consideration was required to be paid or
accrued in connection with the earn-out component. Management does not expect
payment, if any, of the earn-outs to result in a material adverse affect on the
results of financial position of the Company.

The following represents maturities of long-term debt by year and in the
aggregate:

<TABLE>
<S> <C>
1999 ......................... $39,784,074
2000 ......................... 36,041
2001 ......................... 27,097
2002 ......................... 29,333
2003 ......................... 31,753
Thereafter ................... 68,212
-----------
$39,976,510
===========
</TABLE>

At December 31, 1998 and 1997, the Company was a guarantor of debt of related
parties in the amount of $298,530 and $327,005, respectively.

At December 31, 1998 and 1997, the Company had standby letters of credit
outstanding in the amount of $600,000 and $608,000, respectively.

The Company has concluded that it is not practicable to estimate the fair value
of its bank debt. Because of the Company's financial position as outlined in
Note 2, it is highly unlikely that similar debt could be obtained currently.
Therefore, while the fair value of the debt can be assumed to be lower than its
carrying amount, it is not practicable to estimate the fair value.

9. LEASES

The Company leases certain furniture, machinery and equipment under capital
lease agreements that expire through 2003. The Company primarily leases its
facilities under cancelable and noncancelable operating leases expiring in
various years through 2011. Several facility leases have annual rental terms
comprised of base rent at the inception of the lease adjusted annually by a
contingent amount based, in part, upon the increase in the consumer price
index. Also, certain facility leases contain provisions which provide for
additional contingent rents based on a stated percentage of sales. Rent expense
charged to operations during the years ended December 31, 1998, 1997 and 1996
was $2,302,269, $2,193,038 and $1,907,746 of which $132,132, $109,355 and
$159,295, respectively, represent contingent rent expense.

Property and equipment includes the following amounts for capital leases at
December 31:

<TABLE>
<CAPTION>
1998 1997
--------------- -------------
<S> <C> <C>
Furniture, machinery and equipment .......... $ 1,356,412 $1,211,116
Less accumulated amortization ............... (1,057,007) (980,937)
------------ ----------
$ 299,405 $ 230,179
============ ==========
</TABLE>

Capital lease obligations of $219,070 and $614,056 were incurred for
acquisition of new equipment in 1998 and 1997, respectively. Amortization of
capital leases is included in depreciation and amortization expense.

F-24
<PAGE>

PRIME VISION HEALTH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Future minimum lease payments, by year and in the aggregate, under capital
leases and operating leases with remaining terms of one year or more consisted
of the following at December 31, 1998:

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
----------- -------------
<S> <C> <C>
1999 .................................. $ 139,504 $1,524,414
2000 .................................. 102,668 1,362,108
2001 .................................. 47,557 1,103,340
2002 .................................. 43,031 696,887
2003 .................................. 19,102 681,828
2004 and thereafter ................... 0 1,976,286
--------- ----------
Total minimum lease payments .......... 351,862 $7,344,863
==========
Amounts representing interest ......... (58,160)
---------
$ 293,702
=========
</TABLE>

10. 401(K) SAVINGS PLAN

The Company has a 401(k) Plan and Trust covering substantially all employees
who meet certain age and employment criteria. Contributions are made on a
discretionary basis as authorized by the Board of Directors. Employer
contributions for the years ended December 31, 1998, 1997 and 1996 were
$576,770, $531,666 and $198,310 respectively. Plan administrative expenses paid
by the Company for the years ended December 31, 1998, 1997 and 1996 were
$52,829, $35,069 and $8,846, respectively.

11. RELATED PARTY TRANSACTIONS

The Company incurred rent expense and other fees of approximately $122,889,
$120,064 and $114,995 in 1998, 1997 and 1996, respectively, which was paid to
certain employee doctors for the use of equipment.

The Company incurred rent expense of approximately $450,074, $347,413 and
$831,000 in 1998, 1997 and 1996, respectively, which was paid to entities under
common ownership, primarily for the lease of facilities.

The Company has various notes receivable from related parties with interest
rates ranging from prime plus 1% to 9%, maturing from 1999 through 2006. The
total balance due under these notes receivable was $214,638 and $180,597 at
December 31, 1998 and 1997, respectively, of which $39,132 and $21,570 has been
reflected as a current asset.

The Company has a note payable to a related party with an interest rate of 6%
maturing in 2024. The total balance due, including accrued interest, on this
note payable was $451,916 and $363,431 at December 31, 1998 and 1997,
respectively.

12. SHAREHOLDERS' EQUITY

MANDATORILY REDEEMABLE PREFERRED STOCK

In June of 1998, the Company issued 8,000 shares of redeemable, 8% cumulative
preferred stock, together with a stock purchase warrant enabling the holder to
purchase 1,333,333 shares of the Company's common stock, for $8.0 million.
Under the terms of the agreement, the preferred stockholders are entitled to
receive a guaranteed annual rate of return of 30% over the first four years of
the agreement. Accordingly, the company has recorded accrued dividends of
$1,200,000 or $150 per share as of December 31, 1998. No dividends have been
paid. The number of shares purchasable and the initial exercise price of the
stock purchase warrant of $6.50 per share are subject to adjustment in order
for the preferred stockholder to

F-25
<PAGE>

PRIME VISION HEALTH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

achieve the guaranteed rate of return. The preferred stock agreement also
contains restrictive financial covenants which the company has violated as of
December 31, 1998. As a result of the violations, the preferred stockholder has
the right to redeem the preferred stock as of December 31, 1998.

The holder of the mandatorily redeemable preferred stock has full voting rights
and powers and is entitled to one vote for each share held.

In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holder of the mandatorily redeemable preferred
stock is entitled to receive payment out of assets of the Company in an amount
equal to $1,000 per share, plus any accumulated and unpaid dividends. If the
assets of the Company available for distribution are insufficient to make the
payment required in full, such assets shall be distributed pro-rata among the
holders of the mandatorily redeemable preferred stock based on the aggregate
liquidation preferences of the shares held by each holder. If the assets of the
Company available for distribution to the holders of the mandatorily redeemable
preferred stock exceed the distribution required, such excess assets shall be
distributed pro-rata to the holders of common stock.

The estimated fair value of the stock purchase warrant was $1,293,333 at the
date of issuance in June 1998. This value was determined using the
Black-Scholes pricing model with the following assumptions: risk free interest
rate of 4.67%, no dividend yield, volatility factor of .7604 and an expected
life of five years. Initially, this value was recorded as a discount to the
redeemable preferred stock balance with a corresponding credit to additional
paid-in capital. This discount was to be amortized through charges to retained
earnings over the initial redemption period of the preferred stock, seven
years. However, in light of the Company's violation of financial covenants in
the preferred stock agreement and the corresponding acceleration of the
redemption period, the remaining unamortized balance of the warrant discount
was fully amortized at December 31, 1998. The warrant expires in June 2005.

STOCK AWARDS

During 1995, the Company granted 44,133 shares of restricted common stock to
certain key employees. Upon issuance, deferred compensation equivalent to the
market value at the date of grant was charged to shareholders' equity and
amortized as compensation expense over the period which the restrictions lapse.
In connection with the merger with PVG on June 3, 1996, the restrictions on the
common stock lapsed when they were exchanged for preferred stock, therefore the
remaining balance of the deferred compensation was recognized as compensation
expense in 1996.

STOCK OPTION PLAN

A summary of the Company's stock option plan activity follows:

<TABLE>
<CAPTION>
NUMBER OF SHARES OPTION PRICE PER SHARE
------------------------------- ----------------------------------
AVAILABLE FOR OPTIONS
GRANT OUTSTANDING RANGE TOTAL
--------------- ------------- ---------------- ---------------
<S> <C> <C> <C> <C>
January 1, 1996
Reserved ................ 1,700,000
Granted ................... (218,000) 218,000 $1.50 - $ 5.00 $ 583,400
--------- ------- ---------------- ------------
December 31, 1996 ......... 1,482,000 218,000 $1.50 - $ 5.00 583,400
Granted ................... (551,000) 551,000 $2.00 - $20.00 9,530,000
Canceled .................. 1,500 (1,500) (22,500)
--------- ------- ---------------- ------------
December 31, 1997 ......... 932,500 767,500 $1.50 - $20.00 10,090,900
Granted ................... (9,500) 9,500 $2.00 - $20.00 70,000
Canceled .................. 124,145 (124,145) (2,183,175)
--------- -------- ---------------- ------------
December 31, 1998 ......... 1,047,145 652,855 $1.50 - $20.00 $ 7,977,725
--------- -------- ---------------- ------------
</TABLE>

F-26
<PAGE>

PRIME VISION HEALTH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Company's executive stock plan, approved by the Board of Directors in 1996,
provides for the granting of nonqualified incentive stock options. Grant prices
are determined by the Board of Directors. Options may be exercised for 10 years
after grant and become exercisable on the date of grant. In 1996, the Company
issued 218,000 options that became 100% vested and exercisable at the date of
grant. In 1997, the Company issued 551,000 options that vest ratably over 3
years and are exercisable after certain vesting criteria is met. The number of
options exercisable at December 31, 1998, 1997 and 1996 were 363,488, 218,000
and 218,000, respectively. The weighted average exercisable price of
outstanding options at December 31, 1998 is $12.22.

Pro forma information regarding net loss and loss per share is required by SFAS
123, and has been determined as if the Company accounted for its employee stock
options granted subsequent to December 31, 1995, under the fair value method of
SFAS 123. The fair value for these options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted average
assumptions for 1998 and 1997:

<TABLE>
<CAPTION>
1998 1997
------------ --------
<S> <C> <C>
Risk free interest rate .......... 4.67% 5.50%
Dividends ........................ -- --
Volatility factor ................ .7604 .6321
Expected Life .................... 8.27 years 5 years
</TABLE>

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The Company's pro
forma information follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------
1998 1997 1996
-------------- ------------- -------------
<S> <C> <C> <C>
Net loss as presented ......... $38,090,067 $1,405,261 $2,204,177
Pro forma net loss ............ $38,110,028 $1,415,124 $2,568,497
</TABLE>

The following table summarizes in more detail information regarding the
Company's stock options outstanding at December 31, 1998.

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
REMAINING
CONTRACTUAL OPTIONS
EXERCISE PRICE O/S OPTIONS LIFE EXERCISABLE
- ------------------ ------------- ------------- ------------
<S> <C> <C> <C>
$1.50 ............ 118,000 7.08 118,000
$2 to $6 ......... 37,500 9.15 10,000
$3.00 ............ 30,000 7.92 30,000
$4.04 ............ 35,000 7.75 35,000
$5.00 ............ 35,000 7.84 35,000
$15.00 ........... 140,555 8.02 50,555
$20.00 ........... 256,800 9.00 84,933
------- -------
652,855 363,488
======= =======
</TABLE>

F-27
<PAGE>

PRIME VISION HEALTH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

RESERVED SHARES

At December 31, 1998, the Company had reserved a total 3,334,497 of its
authorized 15,000,000 shares of common stock for future issuance as follows:

<TABLE>
<S> <C>
Outstanding practice acquisition stock ......... 80,883
Stock options .................................. 1,700,000
Warrants ....................................... 1,553,614
---------
Total shares reserved .......................... 3,334,497
=========
</TABLE>

LOSS PER SHARE

The Company presents per share information in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"). Due
to the net losses from continuing operations for each of the three years
presented, potential common shares are considered antidilutive and therefore
there are no differences between basic and diluted earnings per share.

The following table sets forth the computation of earnings per share for the
years ended December 31,

<TABLE>
<CAPTION>
1998 1997 1996
---------------- ---------------- ----------------
<S> <C> <C> <C>
Loss from continuing operations applicable to
common shareholders:
Loss from continuing operations .................... $ (3,238,655) $ (2,033,634) $ (766,713)
Accretion of redemption value of preferred stock
and preferred stock dividends .................... (2,493,333) -- --
------------- ------------- ------------
Loss from continuing operations applicable to
common shareholders ................................ $ (5,731,988) $ (2,033,634) $ (766,713)
============= ============= ============
Net loss applicable to common shareholders:
Net loss ........................................... $ (38,090,067) $ (1,405,261) $ (2,204,177)
Accretion of redemption value of preferred stock
and preferred stock dividends .................... (2,493,333) -- --
------------- ------------- ------------
Net loss applicable to common shareholders ......... $ (40,583,400) $ (1,405,261) $ (2,204,177)
============= ============= ============
Loss per common share:
Loss from continuing operations .................... $ (0.80) $ (0.34) $ (0.35)
============= ============= ============
Net loss per share ................................. $ (5.64) $ (0.24) $ (1.00)
============= ============= ============
Weighted average shares outstanding ................ 7,190,762 5,914,374 2,209,839
============= ============= ============
</TABLE>

F-28
<PAGE>

PRIME VISION HEALTH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax assets and liabilities consisted of the following
at December 31, 1998 and 1997:

<TABLE>
<CAPTION>
1998 1997
--------------- -------------
<S> <C> <C>
Deferred tax liabilities:
Cash to accrual adjustment ................... $ 1,604,167 $ 563,510
Other ........................................ 16,726 17,688
------------ -----------
Total current deferred tax liabilities ........ 1,620,443 581,198
ASAs basis difference ........................ -- 21,331,613
Fixed assets basis difference ................ -- 4,120,202
Cash to accrual adjustment ................... -- 1,690,529
Other ........................................ 2,055 --
------------ -----------
Total noncurrent deferred tax liabilities ..... 2,055 27,142,344
------------ -----------
Total deferred tax liabilities ................ $ 1,622,498 $27,723,542
============ ===========
Deferred tax assets:
Net operating loss carryforwards ............. $ -- $ 8,534
Discontinued operations ...................... 4,078,084 --
Accruals ..................................... 711,826 368,951
Allowance for bad debts ...................... 163,346 142,755
Other ........................................ 15,540 25,034
------------ -----------
Total current deferred tax assets ............. 4,968,796 545,274
Depreciation and amortization ................ 622,906 293,918
Other ........................................ 36,862 50,804
------------ -----------
Total noncurrent deferred tax asset ........... 659,768 344,722
Valuation allowance ........................... (4,006,066) --
------------ -----------
Total deferred tax assets ..................... $ 1,622,498 $ 889,996
============ ===========
</TABLE>

Management has provided a valuation allowance to offset the potential tax
benefits of the Company's net deferred tax assets based on its assessment that
it is more likely than not that the entire deferred tax asset will not be
realized based on the Company's experience of cumulative, historical operating
losses.

The components of income tax benefit (expense) for 1998, 1997 and 1996 are as
follows:

<TABLE>
<CAPTION>
1998 1997 1996
-------------- ------------ ----------
<S> <C> <C> <C>
Current:
Federal ................................... $ (141,064) $ -- $ --
State ..................................... (19,757) -- --
---------- ---------- --------
Total current .............................. (160,821) -- --
Deferred:
Federal ................................... (256,535) 984,495 194,595
State ..................................... (16,160) 50,500 9,982
---------- ---------- --------
Total deferred ............................. (272,695) 1,034,995 204,577
---------- ---------- --------
Total income tax benefit (expense) ......... $ (433,516) $1,034,995 $204,577
========== ========== ========
</TABLE>

F-29
<PAGE>

PRIME VISION HEALTH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

A reconciliation of the tax provision at the U.S. Statutory Rate to the
effective income tax rate as reported is as follows:

<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Tax provision at U.S. Statutory Rate ................ 34.0% 34.0% 34.0%
State income taxes, net of federal benefit .......... 3.0% 3.0% 3.0%
Non-deductible expenses ............................. (4.3%) (11.3%) (35.6%)
Change in valuation allowance ....................... (48.2%) 8.0% 19.7%
----- ----- -----
Effective income tax expense rate ................... (15.5%) 33.7% 21.1%
===== ===== =====
</TABLE>

14. SUBSEQUENT EVENTS -- MERGER AGREEMENT

In April 1999, the Company entered into a definitive Merger Agreement with
Saratoga Resources, Inc. and its subsidiaries ("Saratoga") and OptiCare Eye
Health Centers, Inc. ("OptiCare") whereby Company shareholders will receive
approximately 48.755% of the common stock of Saratoga, a publicly traded
company and OptiCare shareholders will receive approximately 48.745% of the
common stock of Saratoga (the "Merger"). The Merger is subject to a number of
conditions including but not limited to shareholder approval by each party and
amendment to the Company's credit facility.

In conjunction with the Merger, the Company will enter into long-term Health
Services Organization ("HSO") service agreements with a number of ophthalmology
practices. In addition to buying group and managed care access, the HSO
agreements provide the physician with a standardized marketing program.

15. COMMITMENT AND CONTINGENCIES

In December 1996, the Company acquired a 51% ownership interest in a managed
care contracting entity. In connection with this agreement, the Company is
obligated to acquire an additional 24% of the outstanding common stock of this
entity on December 20, 1999. Consideration for the additional shares is to be
paid in cash based upon a formula equal to the product of multiplying the gross
managed care revenues, as defined in the agreement, for the twelve preceding
calendar months immediately preceding the calendar month that includes November
1999 by 10% and multiplying the product by a factor of six. This additional
investment will be recorded when the purchase price is no longer contingent and
when the risks and rewards of ownership of the additional shares convey to the
Company. This additional investment will be recorded as an additional element
of the cost of the investment in the managed care contracting entity.

In connection with an Administrative Service Agreement ("ASA") consummated in
1997 between the Company and an ophthalmologist, the company also entered into
a related agreement which granted the ophthalmologist the right, between the
second and fourth anniversary of the ASA, to require the Company to locate a
third party to purchase all of the outstanding shares of the ophthalmologist's
practice for at least $4.0 million in either cash or stock, at the option of
the ophthalmologist.

During 1997, the Company entered into a revolving credit and term loan
agreement with a third party whereby the Company has established, as the
lender, a revolving line of credit not to exceed $1.0 million and a term loan
agreement not to exceed $4.0 million. Borrowings under both credit instruments
can only occur if the borrower is in compliance with stated financial
covenants. Borrowings under the revolving credit agreement can commence on
December 1, 1997 and are initially limited to $500,000. The remaining $500,000
will be made available to the borrower after the borrower has received at least
$2,000,000 in new equity funding, as defined. Any funding under the term loan
agreement requires approval of the Company's Board of Directors. The Company's
commitment to provide any funding under both of these agreements expires on
October 1, 1999. Outstanding borrowings shall accrue interest at the prime rate
of the Company's commercial lender, plus 1 3/4% and are payable in eleven equal
quarterly installments. Any borrowings shall be secured by a) valid perfected
first-priority security interest, as described and b) a guaranty by an
affiliate of the borrower. No funding has been provided under either agreement.

F-30
<PAGE>

PRIME VISION HEALTH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED)

On April 9, 1999, a settlement agreement was signed between the Company and two
Shareholders providing, among other items, for payment to the Shareholders in
an amount of $2.5 million, a shareholding position of 32% of the Company before
the close of the Merger discussed above, and a new administrative services
agreement between the Company and OECC to be executed in conjunction with the
closing of the Merger. The legal action filed against the Company that charged
the existing ASA agreement between the parties had been breached was dismissed.
This settlement agreement becomes effective with closing of the Merger.

The Company is a party to several lawsuits where they have sued or counter-sued
for alleged breach of the administrative service agreements or the non-compete
agreements. The lawsuits pertain to the ophthalmology segment which
discontinued operations during 1998. Although there can be no assurance as to
the ultimate disposition of these matters and proceedings, it is the opinion of
the Company's management that matters will be substantially resolved by
September 30, 1999. Based on current negotiations, management anticipates that
the outcome, individually or in aggregate, will not have a further material
adverse effect on the results of operations and financial condition of the
Company.

F-31
<PAGE>

OPTICARE HEALTH CENTERS, INC. AND AFFILIATE
COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 30, DECEMBER 31,
1999 1998
--------------- ---------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ......................................... $ 483,545 $ 938,927
Accounts receivable, net .......................................... 6,044,840 6,349,548
Inventory ......................................................... 1,762,922 1,717,964
Prepaid expenses and other assets ................................. 911,269 584,098
Deferred income taxes ............................................. 675,816 467,009
Income taxes receivable ........................................... 225,067 22,236
Advances to related parties ....................................... 128,072 117,951
------------ ------------
Total current assets ............................................ 10,231,531 10,197,733
PROPERTY AND EQUIPMENT, NET ........................................ 6,086,968 5,766,167
DEFERRED INCOME TAXES .............................................. 60,000 73,007
INTANGIBLE ASSETS, NET ............................................. 3,384,968 3,301,744
OTHER ASSETS ....................................................... 174,891 176,266
------------ ------------
TOTAL .............................................................. $ 19,938,358 $ 19,514,917
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable .................................................. $ 1,435,787 1,905,745
Accrued expenses .................................................. 2,407,542 1,384,638
Managed care claims ............................................... 1,858,560 1,405,644
Current maturities of long-term debt .............................. 2,255,235 2,183,826
------------ ------------
Total current liabilities ....................................... 7,957,124 6,879,853
------------ ------------
LONG-TERM DEBT, LESS CURRENT PORTION ............................... 1,070,104 1,135,462
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Class A convertible preferred stock (OptiCare) authorized 160,000
shares; Issued and outstanding 152,754 shares in 1999 and 1998, par
value $0.01 (liquidation value of $93.68 per share) ............... 1,527 1,527
Class B convertible preferred stock (OptiCare) authorized 640,000
Shares; issued and outstanding 220,824 shares in 1999 and 1998, par
value $0.01 (liquidation value of $93.68 per share) ............... 2,208 2,208
Common stock (OptiCare)-authorized 1,200,000 shares; none issued,
$0.01 par value ................................................... -- --
Common stock (OptiCare, P.C.)-authorized 100 shares; issued and
outstanding 100 shares in 1999 and 1998, no par value ............. -- --
Additional paid-in-capital (OptiCare) .............................. 12,942,190 12,942,190
Additional paid-in-capital (OptiCare, P.C.) ........................ 1,000 1,000
Retained earnings (deficit) ........................................ (2,035,795) (1,447,323)
------------ ------------
Total shareholders' equity ...................................... 10,911,130 11,499,602
------------ ------------
TOTAL .............................................................. $ 19,938,358 $ 19,514,917
============ ============
</TABLE>

See notes to combined financial statements

F-32
<PAGE>

OPTICARE EYE HEALTH CENTERS, INC. AND AFFILIATE COMBINED STATEMENTS OF
OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------------------
JUNE 30, JUNE 30,
1999 1998
--------------- ---------------
<S> <C> <C>
NET PATIENT REVENUE ............................... $ 15,861,264 $ 12,984,054
NET PATIENT REVENUE -- RELATED PARTY .............. 1,844,100 1,500,980
NET MANAGED CARE REVENUE .......................... 790,250 429,575
NET MANAGED CARE REVENUE -- RELATED PARTY ......... 4,060,597 1,090,100
------------ ------------
TOTAL NET REVENUE ................................. 22,556,211 16,004,709
------------ ------------
OPERATING EXPENSES:
Staff compensation ............................... 6,926,723 5,387,381
Physician compensation ........................... 4,596,161 4,199,046
Surgical eyecare supplies ........................ 2,772,806 2,024,814
General and administrative ....................... 2,162,477 1,647,493
Facility rental .................................. 1,366,149 1,135,533
Managed care claims .............................. 3,861,099 1,092,375
Depreciation and amortization .................... 765,600 510,000
Marketing ........................................ 528,809 391,802
Merger costs ..................................... 450,000 --
------------ ------------
Total operating expenses ....................... 23,429,824 16,388,444
------------ ------------
OPERATING INCOME (LOSS) ........................... (873,613) (383,735)
INTEREST INCOME (EXPENSE):
Interest income .................................. 14,900 80,806
Interest expense ................................. (122,074) (4,980)
------------ ------------
Net interest income (expense) .................. (107,174) 75,826
------------ ------------
LOSS BEFORE INCOME TAXES .......................... (980,787) (307,909)
INCOME TAX BENEFIT ................................ (392,315) (123,890)
------------ ------------
NET LOSS .......................................... $ (588,472) $ (184,019)
============ ============
</TABLE>

See notes to combined financials

F-33
<PAGE>

OPTICARE EYE HEALTH CENTERS, INC. AND AFFILIATE
COMBINED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
-------------------------------
JUNE 30, JUNE 30,
1999 1998
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ........................................................ $ (588,472) $ (184,019)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation and amortization ................................. 765,600 510,000
Deferred income taxes ......................................... (195,800) (87,024)
Changes in operating assets and liabilities:
Accounts receivable, net ..................................... 304,708 (1,043,298)
Inventory .................................................... (44,958) (183,000)
Prepaid expenses and other assets ............................ (327,171) (388,987)
Income taxes receivable ...................................... (202,831) (10,361)
Advances to related parties .................................. (10,121) (43,588)
Other non-current assets ..................................... 1,375 (61,768)
Accounts payable and other liabilities ....................... (469,958) 512,888
Accrued expenses ............................................. 1,022,904 (74,671)
Managed care claims .......................................... 452,916 396,003
------------ ------------
Net cash used in operating activities ...................... 708,192 (657,825)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment ............................. (998,801) (1,003,503)
Contract acquisitions ........................................... (170,824) --
Practice acquisitions ........................................... -- (136,503)
------------ ------------
Net cash used in investing activities ...................... (1,169,625) (1,140,006)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt ............................ (193,949) (15,039)
Borrowings under line of credit ................................. 200,000 --
------------ ------------
Net cash provided by financing activities .................. 6,051 (15,039)
------------ ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS ........................ (455,382) (1,812,870)
CASH AND CASH EQUIVALENS, BEGINNING OF PERIOD .................... 938,927 4,901,666
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD ......................... $ 483,545 $ 3,088,796
============ ============
SUPPLEMENTAL INFORMATION:
Cash paid for:
Interest ...................................................... 93,062 --
============ ============
Income taxes .................................................. 3,600 30,010
============ ============
</TABLE>

See notes to combined financial statements.

F-34
<PAGE>

OPTICARE EYE HEALTH CENTERS, INC. AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1999 AND 1998

1. BASIS OF PRESENTATION

The accompanying unaudited combined financial statements of OptiCare Eye
Health Centers, Inc. ("OptiCare") and OptiCare, P.C. (collectively "the
Company") for the six months ended June 30, 1999 and 1998 have been prepared in
accordance with generally accepted accounting principles for interim fianancial
information and the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of only normal
recurring accruals) necessary for a fair presentation of the combined financial
statements have been included. The accompanying combined financial statements
should be read in conjunction with the combined financial statements and
footnotes for the year ended December 31, 1998. The results of operations for
the six month period ended June 30, 1999 are not necessarily indicative of the
results to be expected for the year ending December 31, 1999.

2. REVOLVING CREDIT AGREEMENT

In September 1997, the Company entered into a $3,000,000 unsecured
revolving line of credit agreement with a bank for the purpose of providing
working capital and financing acquisitions. The agreement matures on September
30, 1999 and bears interest, at the Company's option, at Prime or LIBOR plus
1.50%, with a 0.25 % annual commitment fee charged on the unused balance of the
facility. At June 30, 1999, the Company had advances of $2,000,000 outstanding
under this line of credit and was in compliance with the restrictive covenants
under the line of credit agreement.

3. SUBSEQUENT EVENTS

On August 13, 1999 Opticare, PrimeVison Health, Inc. ("Prime") and
Saratoga Resources, Inc. ("Saratoga"), a Delaware corporation, merged. In this
transaction Prime merged with Saratoga through a reverse acquisition by Prime
of Saratoga (the "Prime Merger"). Immediately following the Prime Merger,
OptiCare was acquired by Prime (the "OptiCare Merger"). Upon consummation of
the OptiCare Merger, each share of OptiCare capital stock was converted into
the right to receive 11.7364 shares of Saratoga common stock. For accounting
purposes, Prime was the accounting acquirer and the surviving accounting
entity.

F-35
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors
OptiCare Eye Health Centers, Inc. and Affiliate

We have audited the accompanying combined balance sheets of OptiCare Eye
Health Centers, Inc. (OptiCare) and OptiCare, P.C. (an affiliated corporation),
which is under common ownership and common management (collectively, the
"Company"), as of December 31, 1998 and 1997, and the related combined
statements of operations, shareholders' equity and of cash flows for each of
the three years in the period ended December 31, 1998. These combined financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.

In our opinion, such combined financial statements present fairly, in all
material respects, the combined financial position of OptiCare and OptiCare,
P.C., as of December 31, 1998 and 1997, and the combined results of their
operations and their combined cash flows for each of the three years in the
period ended December 31, 1998 in conformity with generally accepted accounting
principles.

/s/ Deloitte & Touche LLP

Hartford, Connecticut

March 26, 1999

F-36
<PAGE>

OPTICARE EYE HEALTH CENTERS, INC. AND AFFILIATE

COMBINED BALANCE SHEETS--DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
1998 1997
ASSETS --------------- ---------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents .................................. $ 938,927 $ 4,901,666
Accounts receivable, net (Note 1) .......................... 6,349,548 4,505,077
Inventory (Note 3) ......................................... 1,717,964 1,067,535
Prepaid expenses and other assets .......................... 584,098 323,665
Deferred income taxes (Note 10) ............................ 467,009 --
Income taxes receivable .................................... 22,236 --
Advances to related parties (Note 12) ...................... 117,951 129,137
------------ -----------
Total current assets ..................................... 10,197,733 10,927,080
PROPERTY AND EQUIPMENT, NET (Note 4) ........................ 5,766,167 3,433,772
DEFERRED INCOME TAXES (Note 10) ............................. 73,007 162,976
INTANGIBLE ASSETS, NET (Note 5) ............................. 3,301,744 262,130
OTHER ASSETS ................................................ 176,266 263,070
------------ -----------
TOTAL ....................................................... $ 19,514,917 $15,049,028
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ........................................... $ 1,905,745 $ 995,859
Accrued expenses (Note 6) .................................. 1,384,638 1,378,587
Managed care claims (Note 1) ............................... 1,405,644 427,757
Deferred income taxes (Note 10) ............................ -- 66,760
Current maturities of long-term debt (Note 7) .............. 2,183,826 59,559
------------ -----------
Total current liabilities ................................ 6,879,853 2,928,522
------------ -----------
NONCURRENT LIABILITIES:
Long-term debt (Note 7) .................................... 1,135,462 168,516
------------ -----------
COMMITMENTS AND CONTINGENCIES (Notes 8 and 14)
SHAREHOLDERS' EQUITY (Note 9):
Class A convertible preferred stock (OptiCare) authorized
160,000 shares; issued and outstanding 152,754 shares in
1998 and 1997, par value $.01 (liquidation value of $93.68
per share) ............................................... 1,527 1,527
Class B convertible preferred stock (OptiCare) authorized
640,000 shares; issued and outstanding 220,824 and 220,424
shares in 1998 and 1997, respectively, par value $.01
(liquidation value of $93.68 per share)................... 2,208 2,204
Common stock (OptiCare)--authorized 1,200,000 shares; none
issued, $.01 par value.................................... -- --
Common stock (OptiCare, P.C.)--authorized 100 shares;
issued and outstanding 100 shares in 1998 and 1997, no par
value .................................................... -- --
Additional paid-in capital (OptiCare) ...................... 12,942,190 12,892,194
Additional paid-in capital (OptiCare, P.C.) ................ 1,000 1,000
Retained earnings (deficit) ................................ (1,447,323) (944,935)
------------ -----------
Total shareholders' equity ............................... 11,499,602 11,951,990
------------ -----------
TOTAL ....................................................... $ 19,514,917 $15,049,028
============ ===========
</TABLE>

See notes to combined financial statements.

F-37
<PAGE>

OPTICARE EYE HEALTH CENTERS, INC. AND AFFILIATE

COMBINED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
1998 1997 1996
-------------- ------------- -------------
<S> <C> <C> <C>
NET PATIENT REVENUE ................................ $25,799,934 22,746,619 20,850,864
NET PATIENT REVENUE -- RELATED PARTY ............... 3,816,979 $ 2,527,402 $ 2,843,300
NET MANAGED CARE REVENUE ........................... 1,392,543 1,366,570 1,026,083
NET MANAGED CARE REVENUE -- RELATED PARTY .......... 3,735,173 601,660 --
----------- ----------- -----------
TOTAL NET REVENUE .................................. 34,744,629 27,242,251 24,720,247
----------- ----------- -----------
OPERATING EXPENSES:
Staff compensation ................................ 11,579,083 8,450,861 7,154,733
Physician compensation ............................ 8,599,689 8,200,965 7,751,549
Surgical and eyecare supplies ..................... 4,401,250 3,066,694 2,734,154
General and administrative ........................ 3,587,533 2,824,863 2,979,691
Facility rental (Note 12) ......................... 2,422,494 1,957,593 1,876,406
Managed care claims (Note 1) ...................... 3,063,902 1,087,964 748,431
Depreciation and amortization ..................... 1,063,074 644,683 547,280
Marketing ......................................... 968,346 620,266 634,472
----------- ----------- -----------
Total operating expenses ........................ 35,685,371 26,853,889 24,426,716
----------- ----------- -----------
OPERATING INCOME (LOSS) ............................ (940,742) 388,362 293,531
INTEREST INCOME (EXPENSE):
Interest income ................................... 133,775 75,506 7,525
Interest expense .................................. (60,298) (4,551) --
----------- ----------- -----------
Net interest income ............................. 73,477 70,955 7,525
----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES .................. (867,265) 459,317 301,056
INCOME TAX PROVISION (BENEFIT) (Note 10) ........... (364,877) 132,600 158,252
----------- ----------- -----------
NET INCOME (LOSS) .................................. $ (502,388) $ 326,717 $ 142,804
=========== =========== ===========
</TABLE>

See notes to combined financial statements.

F-38
<PAGE>

OPTICARE EYE HEALTH CENTERS, INC. AND AFFILIATE

COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
OPTICARE OPTICARE
CLASS A CLASS B OPTICARE
PREFERRED PREFERRED COMMON
STOCK STOCK STOCK
----------- ----------- ---------------
<S> <C> <C> <C>
BALANCE, DECEMBER 31, 1995 ................ $ -- $ -- $ 2,595,000
Exercise of warrants (Note 9) ............ -- -- 647,815
Net income ............................... -- -- --
------ ------ -------------
BALANCE, DECEMBER 31, 1996 ................ -- -- 3,242,815
Recapitalization in October 1997
(Note 9) ................................ 887 2,193 (3,242,753)
Sale of shares in October 1997 (Note 9)... 640 -- --
Repurchase of shares (Note 9) ............ -- -- (62)
Shares issued in connection with
Practice Acquisitions in December
1997 (Note 2) ........................... -- 11 --
Net income ............................... -- -- --
------ ------ -------------
BALANCE, DECEMBER 31, 1997 ................ 1,527 2,204 --
Shares issued in connection with
Practice Acquisitions in 1998 (Note 2)... 4
Net loss ................................. -- -- --
------ ------ -------------
BALANCE, DECEMBER 31, 1998 ................ $1,527 $2,208 $ --
====== ====== =============

<CAPTION>
OPTICARE OPTICARE P.C.
ADDITIONAL ADDITIONAL RETAINED
PAID-IN PAID-IN EARNINGS
CAPITAL CAPITAL (DEFICIT) TOTAL
-------------- -------------- ---------------- ---------------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1995 ................ $ 3,301,131 $1,000 $ (1,414,456) $ 4,482,675
Exercise of warrants (Note 9) ............ 1,012,185 -- -- 1,660,000
Net income ............................... -- -- 142,804 142,804
----------- ------ ------------ -----------
BALANCE, DECEMBER 31, 1996 ................ 4,313,316 1,000 (1,271,652) 6,285,479
Recapitalization in October 1997
(Note 9) ................................ 3,239,673 -- -- --
Sale of shares in October 1997 (Note 9)... 5,783,498 -- -- 5,784,138
Repurchase of shares (Note 9) ............ (586,749) -- -- (586,811)
Shares issued in connection with
Practice Acquisitions in December
1997 (Note 2) ........................... 142,456 -- -- 142,467
Net income ............................... -- -- 326,717 326,717
----------- ------ ------------ -----------
BALANCE, DECEMBER 31, 1997 ................ 12,892,194 1,000 (944,935) 11,951,990
Shares issued in connection with
Practice Acquisitions in 1998 (Note 2)... 49,996 50,000
Net loss ................................. -- -- (502,388) (502,388)
----------- ------ ------------ -----------
BALANCE, DECEMBER 31, 1998 ................ $12,942,190 $1,000 $ (1,447,323) $11,499,602
=========== ====== ============ ===========
</TABLE>

See notes to combined financial statements.

F-39
<PAGE>

OPTICARE EYE HEALTH CENTERS, INC. AND AFFILIATE

COMBINED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
1998 1997 1996
-------------- --------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ............................................ $ (502,388) $ 326,717 $ 142,804
Adjustments to reconcile net income (loss) to net cash used in
operations:
Depreciation and amortization .............................. 1,063,074 644,683 547,280
Deferred income taxes ...................................... (443,800) (299,724) (200,090)
(Gain) loss on disposal of fixed assets .................... -- (3,900) 6,321
Changes in operating assets and liabilities:
Accounts receivable, net .................................. (1,794,471) (944,865) (347,183)
Inventory ................................................. (250,475) (157,572) (91,510)
Prepaid expenses and other assets ......................... (260,433) (185,655) 15,308
Advances to related parties ............................... 11,186 (60,067) 40,823
Other noncurrent assets ................................... 19,521 (114,001) 17,766
Accounts payable and other liabilities .................... 648,134 119,004 (321,499)
Accrued expenses .......................................... 6,051 87,808 27,329
Managed care claims ....................................... 977,887 427,757 --
Income taxes payable ...................................... -- (190,096) 160,342
------------ ------------ ----------
Net cash used in operating activities ................... (525,714) (349,911) (2,309)
------------ ------------ ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment .......................... (2,622,856) (1,501,185) (986,640)
Proceeds from sale of fixed assets ........................... -- 3,900 16,156
Practice acquisitions ........................................ (2,554,610) (108,680) --
------------ ------------ ----------
Net cash used in investing activities ................... (5,177,466) (1,605,965) (970,484)
------------ ------------ ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt ......................... (59,559) (14,364) (252,936)
Borrowings under line of credit .............................. 1,800,000 --
Net proceeds from issuance of stock .......................... -- 5,784,138 1,660,000
Cash used to repurchase stock ................................ -- (586,811) --
------------ ------------ ----------
Net cash provided by financing activities ............... 1,740,441 5,182,963 1,407,064
------------ ------------ ----------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS .................................................. (3,962,739) 3,227,087 434,271
CASH AND CASH EQUIVALENTS, BEGINNING OF
YEAR ......................................................... 4,901,666 1,674,579 1,240,308
------------ ------------ ----------
CASH AND CASH EQUIVALENTS, END OF YEAR ........................ $ 938,927 $ 4,901,666 $1,674,579
============ ============ ==========
SUPPLEMENTAL INFORMATION :
Cash paid for:
Interest ................................................... $ 29,531 $ 4,802 $ 13,807
============ ============ ==========
Income taxes ............................................... $ 130,550 $ 622,974 $ 185,000
============ ============ ==========
</TABLE>

See notes to combined financial statements.

F-40
<PAGE>

OPTICARE EYE HEALTH CENTERS, INC. AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Busines

OptiCare Eye Health Centers, Inc. ("OptiCare") and OptiCare, P.C.
(collectively, the "Company") operate in the eye health business providing
general eye care, optical services, outpatient ophthalmic surgery, consultative
services for complicated eye diseases and a managed care network throughout
Connecticut. OptiCare owns and operates the retail eyeglass and eyeglass
manufacturing business and the related assets. OptiCare P.C., was established
for the purpose of rendering ophthalmology and optometry services exclusively
for OptiCare. OptiCare, P.C. entered into a Professional Services and Support
Agreement with OptiCare effective December 1, 1995.

Basis of Presentation

The accompanying combined financial statements include the accounts of OptiCare
and OptiCare, P.C. Due to the related business activities, common management
control and the interdependence of the affiliated entities, combined financial
statements are presented because they are more meaningful. All significant
intercompany accounts and transactions have been eliminated in the combined
financial statements.

Estimates

The financial statements have been prepared in conformity with generally
accepted accounting principles. In preparing financial statements, management
is required to make estimates and assumptions, particularly in determining the
adequacy of the allowance for doubtful accounts, insurance disallowances and
managed care claims accrual, that affect the reported amounts of assets and
liabilities as of the balance sheet date and results of operations for the
year. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers investments purchased with an original maturity of three
months or less to be cash equivalents.

Receivables

Receivables are stated net of allowances for doubtful accounts which aggregated
$114,300 and $81,100 as of December 31, 1998 and 1997, respectively. Gross
receivables are stated net of contractual allowances and insurance
disallowances.

Inventories

Inventories are valued at the lower of cost or market, determined on the
first-in, first-out (FIFO) basis.

Intangible Assets

The Company uses the straight-line method to amortize intangible assets over
their estimated useful lives which range from 5 to 20 years. The Company's
management periodically evaluates the carrying value of its intangible assets
for impairment whenever events or changes in circumstances indicate that the
carrying amount of the asset may not be recoverable. Recoverability is based on
estimated future undiscounted cash flows from the use and ultimate disposition
of the asset.

F-41
<PAGE>

OPTICARE EYE HEALTH CENTERS, INC. AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

Property and Equipment

Property and equipment consists of furniture, fixtures, equipment, leasehold
improvements and a vehicle and are recorded at cost. Leasehold improvements are
being amortized over the term of the lease or the life of the improvement,
whichever is shorter. Depreciation and amortization are provided primarily
using the straight-line method over the estimated useful lives of the
respective assets as follows:

<TABLE>
<CAPTION>
CLASSIFICATION ESTIMATED USEFUL LIFE
- ------------------------------------------------------- ----------------------
<S> <C>
Furniture, fixtures and equipment .......... 5--7 years
Leasehold improvements ..................... 3--20 years
Vehicle .................................... 5 years
</TABLE>

Stock-based Compensation

Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation", encourages, but does not require companies to record
compensation cost for stock-based employee compensation plans at fair value.
The Company has chosen to account for stock-based compensation using the
intrinsic value method prescribed in Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB No. 25), and related
interpretations. Accordingly, compensation cost for the stock options included
under the Company's 1997 Stock Option Plan is measured as the excess, if any,
of the fair value of the Company's stock at the date of the grant over the
amount an employee must pay to acquire the stock.

Fair Value of Financial Instruments

SFAS No. 107, Disclosures about Fair Value of Financial Instruments, requires
the disclosure of fair value information for certain assets and liabilities,
whether or not recorded in the balance sheet, for which it is practicable to
estimate that value. The Company has the following financial instruments: cash
and cash equivalents, receivables, accounts payable, accrued liabilities and
long-term debt. The Company considers the carrying amount of these items,
excluding long-term debt, to approximate their fair values because of the short
period of time between the origination of such instruments and their expected
realization. Refer to Note 7 for fair value disclosures of long-term debt.

Net Patient Revenue

The Company has agreements with third-party payors that provide for payments to
the Company at amounts different from its established rates. Net patient
revenue is reported at the estimated net realizable amounts from patients,
third-party payors, and others for services rendered.

Net Managed Care Revenue

Revenue is derived from monthly capitation payments from health benefits payors
which contract with the Company for the delivery of eye care services. The
Company records this revenue at contractually agreed-upon rates during the
period in which the Company is obligated to provide services to members.

Managed Care Claims Expense

Claims expense is recorded as provider services are rendered and includes an
estimate for claims incurred but not reported.

Malpractice Claims

The Company purchases insurance to cover medical malpractice claims. There are
known claims and incidents as well as potential claims from unknown incidents
that may be asserted from past services provided. Management believes that
these claims, if asserted, would be settled within the limits of insurance
coverage.

F-42
<PAGE>

OPTICARE EYE HEALTH CENTERS, INC. AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

Income Taxes

The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" which requires an
asset and liability method of accounting for deferred income taxes. Under the
asset and liability method, deferred tax assets and liabilities are recognized
for the estimated future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax basis using enacted tax rates expected to apply to taxable
income in the years the temporary differences are expected to reverse.

Reclassification

Certain amounts in the 1997 and 1996 financial statements have been
reclassified to conform to the 1998 presentation.

2. ACQUISITIONS

The Company acquired seven optometric medical and retail optical practices in
1998 for $2,554,610 in cash, $50,000 in stock, and $1,375,000 in notes payable
for a total of $3,979,610 (see also Note 14). The Company acquired one
optometric medical and retail optical practice in 1997 for $108,680 in cash,
$142,467 in stock and $189,324 in notes payable for a total of $440,471. The
Company issued 400 shares and 1,140 shares of OptiCare Class B Preferred stock
in 1998 and 1997, respectively, in connection with these acquisitions.

The 1998 and 1997 acquisitions were accounted for as purchases. Accordingly,
the results of operations of the acquired practices are included in the
combined financial statements from the dates of acquisition and the assets and
liabilities of the acquired entities have been recorded at their estimated fair
values at the dates of acquisition. The excess of the purchase prices over the
estimated fair values of the net assets acquired in the amount of $2,993,752 in
1998 and $258,991 in 1997 is recorded as goodwill and is being amortized on a
straight-line basis over 20 years.

Assuming all of the aforementioned acquisitions had occurred on January 1,
1997, combined net revenues for the Company would have been $38,596,000 for
1998 and $33,023,000 for 1997. Combined net income (loss) for the Company would
have been $(378,000) and $429,000 for 1998 and 1997, respectively.

3. INVENTORY

Inventory as of December 31, 1998 and 1997 consists of the following:

<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
Surgical supplies ....................... $ 168,306 $ 130,484
Eye glasses and contact lenses .......... 1,455,067 851,167
Eye glasses work-in-process ............. 94,591 85,884
---------- ----------
Total ................................... $1,717,964 $1,067,535
========== ==========
</TABLE>

F-43
<PAGE>

OPTICARE EYE HEALTH CENTERS, INC. AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

4. PROPERTY AND EQUIPMENT

Property and equipment as of December 31, 1998 and 1997 consist of the
following:

<TABLE>
<CAPTION>
1998 1997
--------------- ---------------
<S> <C> <C>
Equipment .......................................... $ 7,779,516 $ 7,586,877
Furniture and fixtures ............................. 2,193,960 1,024,896
Leasehold improvements ............................. 2,627,781 1,904,993
Vehicle ............................................ 21,853 21,352
------------ ------------
Total .............................................. 12,623,110 10,538,118
Accumulated depreciation and amortization .......... (6,856,943) (7,104,346)
------------ ------------
Property and equipment, net ........................ $ 5,766,167 $ 3,433,772
============ ============
</TABLE>

Depreciation expense was $968,461, $633,680 and $542,752 for the years ended
December 31, 1998, 1997 and 1996, respectively.

5. INTANGIBLE ASSETS

Intangible assets as of December 31, 1998 and 1997 consist of the following:

<TABLE>
<CAPTION>
1998 1997
--------------- -------------
<S> <C> <C>
Goodwill .......................... $ 3,401,091 $ 434,147
Other intangibles ................. 982,946 815,663
------------ ----------
Total ............................. 4,384,037 1,249,810
Accumulated amortization .......... (1,082,293) (987,680)
------------ ----------
Intangible assets, net ............ $ 3,301,744 $ 262,130
============ ==========
</TABLE>

Amortization of the intangible assets for the years ended December 31, 1998,
1997 and 1996 was $94,613, $11,003 and $4,528, respectively.

6. ACCRUED EXPENSES

Accrued expenses as of December 31, 1998 and 1997 consist of the following:

<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
Patient refunds ........... $ 369,935 $ 213,300
Incentives ................ 310,395 266,419
Payroll ................... 262,596 567,447
Vacation .................. 251,744 287,703
Accrued interest .......... 30,767 --
Other ..................... 159,201 43,718
---------- ----------
Total ..................... $1,384,638 $1,378,587
========== ==========
</TABLE>

F-44
<PAGE>

OPTICARE EYE HEALTH CENTERS, INC. AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

7. LONG-TERM DEBT

The details of the Company's long-term debt and the provisions thereof at
December 31, 1998 and 1997 are as follows:

<TABLE>
<CAPTION>
1998 1997
------------ ----------
<S> <C> <C>
Note payable due in quarterly payments of $3,100, including interest
at 6.69% per year, through June 2001, collateralized by specific
assets of the Company ............................................... $ 28,516 $ 38,751
Notes payable from acquisitions at various interest rates with various
maturities through September 2001, unsecured (see Note 2) ........... 290,772 189,324
Note payable from acquisition due in annual installments of $240,000
plus interest at 7.0% per year, through October 2003, collateralized
by specific assets of the Company (see Note 2) ...................... 1,200,000 --
Revolving line of credit, unsecured .................................. 1,800,000 --
---------- --------
Total ................................................................ 3,319,288 228,075
Less current maturities .............................................. 2,183,826 59,559
---------- --------
$1,135,462 $168,516
========== ========
</TABLE>

Required principal payments on the obligations discussed above as of December
31, 1998 are as follows:

<TABLE>
<S> <C>
1999 ................... $2,183,826
2000 ................... 327,731
2001 ................... 327,731
2002 ................... 240,000
2003 ................... 240,000
----------
Total .................. $3,319,288
==========
</TABLE>

Notes payable at December 31, 1998 and 1997 represent debt issued to employees
or employee shareholders in connection with practice acquisitions.

In September 1997, the Company obtained a $3,000,000 unsecured revolving line
of credit from a bank which matures on June 30, 1999 and bears interest, at the
Company's option, at Prime or LIBOR plus 1.50%. The interest rate on this line
of credit was 7.75% at December 31, 1998. Additionally, there is a 0.25%
commitment fee on the unused balance of the facility. The Company must comply
with various restrictive covenants in connection with its revolving line of
credit. The Company was in violation of certain covenants in 1998 and received
a waiver from the bank with respect to these violations.

The fair value of each of the Company's debt instruments approximated its
recorded value at December 31, 1998 and 1997, based on the Company's effective
current borrowing rate for debt with similar terms and remaining maturities.

8. LEASES

The Company leases facilities and certain equipment under several cancelable
and noncancelable operating leases expiring in various years through 2010.
Certain of the facility leases provide for renewal periods of up to 10 years,
at the option of the Company, and at rental payments as negotiated under the
respective leases (see Note 12).

Aggregate future minimum rental payments under noncancelable operating leases
as of December 31, 1998 are as follows:

F-45
<PAGE>

OPTICARE EYE HEALTH CENTERS, INC. AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
- -------------------------------
<S> <C>
1999 ........................ $1,864,613
2000 ........................ 1,308,274
2001 ........................ 780,211
2002 ........................ 657,471
2003 ........................ 427,689
Thereafter .................. 354,124
----------
Total ....................... $5,392,382
==========
</TABLE>

9. SHAREHOLDERS' EQUITY

All employee shareholders of OptiCare and OptiCare P.C. have executed a
"Shareholders' Agreement" with their respective entities. The agreements
provide, among other things, that no shareholder can dispose of their stock
without first offering the stock to the entity. The agreements also provide
that certain shareholders, who are also employees of OptiCare or OptiCare P.C.,
must offer their stock to the respective entity upon voluntary termination or
termination for cause, as defined in the agreement.

During 1996, Blue Cross and Blue Shield of Connecticut, Inc. exercised a
warrant to purchase 20,494 shares of Class D common stock, par value $31.64 per
share for a total price of $1,660,000.

On October 15, 1997, OptiCare underwent a recapitalization in connection with
the stock purchase and warrant agreements described below. The new equity
structure established three new classes of stock and canceled all of the
preexisting classes.

Outstanding shares of Class A and C common stock were converted one for one to
new Class B Convertible Preferred Stock, with the exception of 6,264 shares of
Class A common stock and 16,312 shares of Class C common stock. Outstanding
shares of Class B and D common stock, as well as the remaining 16,312 shares
Class C common stock, were all converted one for one to New Class A Convertible
Preferred Stock. Both Series A and B Preferred Shares are convertible into
common stock based on a one for one basis. Additionally, all preferred shares
shall be automatically converted into common stock in the event of an initial
public offering meeting certain qualifications as defined in the Certificate of
Incorporation.

Series A and B Preferred Shareholders are entitled to $93.68 per share plus any
unpaid dividends upon voluntary or involuntary liquidation. Upon liquidation,
Series A Preferred Shareholders shall be entitled to receive their liquidation
value per share before Series B Preferred Shareholders receive any
distributions. Additionally, Series B Preferred Shareholders shall be entitled
to receive their liquidation value per share before the common stockholders
receive any distributions in liquidation.

On October 15, 1997, OptiCare entered into a stock purchase agreement with a
group of investors (the "New Investors") which provided for the sale of 64,048
shares of New Class A Preferred Stock for $6,000,000 in cash, less expenses of
$215,862. Additionally, OptiCare entered into a warrant agreement which
resulted in the issuance of warrants to the New Investors to purchase 48,669
shares of New Class B Preferred Stock and to existing investors to purchase
12,353 shares of New Class B Preferred Stock. These warrants are exercisable at
a price of $93.68 per share of New Class B Preferred Stock and expire on
October 15, 2002. No warrants were exercised during 1998 or 1997.

In November 1997, OptiCare repurchased the remaining 6,264 shares of Class A
common stock from an employee shareholder for an aggregate price of $586,811.

On January 1, 1998 Opticare adopted the 1997 Stock Option Plan (the "Plan"),
which permits the granting of options to employees of OptiCare and OptiCare
P.C., which shall be either incentive stock options, as defined under Section
422 of the Internal Revenue code, or non-qualified options. The Company is

F-46
<PAGE>

OPTICARE EYE HEALTH CENTERS, INC. AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

authorized to grant 48,814 options under the Plan, which expire in 2008. The
options vest ratably over a four-year period. During 1998, 42,497 options were
granted at an exercise price of $30. No options were exercised or canceled
during 1998. The Company applies APB Opinion No. 25 and related interpretations
in accounting for its Plan. Accordingly, no compensation cost has been
recognized for stock options awarded under the Plan. Had compensation cost for
the Company's stock option plan been determined based on the fair value at
grant dates consistent with the methodology prescribed under SFAS No.123, the
Company's net loss for the year ended December 31, 1998 would have been
increased by an immaterial amount.

10. INCOME TAXES

The tax effects of significant items comprising the net deferred tax assets
(liabilities) as of December 31, 1998 and 1997 are as follows:

<TABLE>
<CAPTION>
1998 1997
---------- --------------
<S> <C> <C>
Current:
Cash to accrual conversion .................... $ -- $ (211,857)
Managed care claims ........................... 320,279 31,231
Vacation accrual .............................. 101,377 118,232
Other ......................................... 45,353 (4,366)
-------- ----------
Total net current assets (liabilities) ......... $467,009 $ (66,760)
======== ==========
Noncurrent:
Depreciation .................................. $ 45,814 $ 140,411
Other ......................................... 27,193 22,565
-------- ----------
Total net noncurrent assets .................... $ 73,007 $ 162,976
======== ==========
</TABLE>

In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. Management considers the scheduled reversal of
deferred tax assets, the availability of federal income tax carrybacks and
projected future taxable income. Based upon the level of historical taxable
income in 1998, 1997 and 1996 and projections for future taxable income over
the periods in which the deferred tax assets are deductible, management
believes it is more likely than not that all of the deferred tax assets will be
fully realized.

The provision (benefit) for income taxes for the years ended December 31, 1998,
1997 and 1996 consists of the following:

<TABLE>
<CAPTION>
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
Current:
Federal ................ $ 78,923 $ 336,054 $ 265,711
State .................. -- 96,270 92,631
---------- ---------- ----------
Total current .......... 78,923 432,324 358,342
========== ========== ==========
Deferred:
Federal ................ (339,100) (221,324) (144,090)
State .................. (104,700) (78,400) (56,000)
---------- ---------- ----------
Total deferred ......... (443,800) (299,724) (200,090)
---------- ---------- ----------
Total .................. $ (364,877) $ 132,600 $ 158,252
========== ========== ==========
</TABLE>

F-47
<PAGE>

OPTICARE EYE HEALTH CENTERS, INC. AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

A reconcilation from the Federal income tax provision (benefit) at the
statutory rate to the effective rate is as follows:

<TABLE>
<CAPTION>
1998 1997 1996
-------------- ----------- -----------
<S> <C> <C> <C>
Federal statutory rate .............................. $ (294,870) $ 156,167 $102,359
State income taxes, net of federal benefit .......... (52,036) 32,589 22,850
Other ............................................... (17,971) (56,156) 33,043
---------- --------- --------
$ (364,877) $ 132,600 $158,252
========== ========= ========
</TABLE>

11. RETIREMENT PLAN

The Company provides a defined contribution 401(k) savings plan (the "Plan"),
in which all full-time employees of the Company with at least one year of
service are eligible to participate. Eligible employees may contribute between
1% to 25% of their salary to the Plan subject to IRS limitations. The Company
provides a matching contribution of 25% of the employee contributions, whereby
only the first 3% of employee salaries are matched. The Company's contribution
to the Plan was $70,916, $55,909 and $40,077 for the years ended December 31,
1998, 1997 and 1996, respectively.

12. RELATED PARTY TRANSACTIONS

The Company has advanced funds to shareholders and employees which are
repayable under various arrangements. All advances are unsecured. Interest
income under these agreements was not significant during the years ended
December 31, 1998, 1997 and 1996.

In addition, the Company leases various facilities from several of its
shareholders and entities owned by several of its shareholders. Payments under
such leases approximated $1,528,000, $1,259,000 and $1,124,000 during the year
ended December 31, 1998, 1997 and 1996, respectively.

OptiCare, Inc. has guaranteed an obligation of O.C. Realty Associates, a
related party. The amount of such indebtedness at December 31, 1998, 1997 and
1996 was $221,853, $233,814 and $244,706, respectively, and is secured by the
assets of O.C. Realty Associates.

In connection with the stock purchase agreement, the Company also entered into
a consulting agreement with one of the New Investors. Under the terms of this
agreement this individual will provide management consulting services for a
period of 36 months beginning October 15, 1997.

The Company, in its normal course of business, has entered into various arm's
length managed care, ambulatory surgery center, and provider agreements with
its health care investors. Total net revenue earned from these related parties
was $7,552,152, $3,129,602, and $2,843,300 for the years ended December 31,
1998, 1997 and 1996, respectively.

13. MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK

Medicare represented 25%, 29%, and 28% of total net revenue for the years ended
December 31, 1998, 1997 and 1996, respectively and 13% and 16% of accounts
receivable at December 31, 1998 and 1997, respectively. In addition, one other
customer/shareholder represented approximately 20%, 11% and 12% of total net
revenue during 1998 , 1997 and 1996, respectively and 29% and 22% of accounts
receivable at December 31, 1998 and 1997, respectively.

F-48
<PAGE>

OPTICARE EYE HEALTH CENTERS, INC. AND AFFILIATE

NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

14. CONTINGENCIES

In connection with the purchase of a practice in 1998, the Company agreed to
pay, as additional consideration for the acquisition of the assets, a
contingent payment based upon the profitability of the practice for the twelve
month period beginning November 1, 1998. The contingent payment, not to exceed
$320,000, is due in quarterly installments beginning on January 1, 2000 through
October 1, 2003 at an interest rate of 7%. Any such contingent payments will be
recorded, when earned, as goodwill as additional purchase price consideration.

The Company is involved in litigation in the normal course of business. The
Company is vigorously defending its position and, based on discussions with
outside counsel, believes it will prevail with respect to any outstanding
litigation. Therefore, no provision for loss has been recorded.

******

F-49
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the costs and expenses we must pay in
connection with the sale of our common stock in this offering, other than
underwriting commissions and discounts. All amounts, except the SEC
registration fee and the American Stock Exchange listing fee are estimates.

<TABLE>
<CAPTION>
ITEM AMOUNT
- ---------------------------------------------- -----------
<S> <C>
SEC registration fee ......................... $ 4,026
American Stock Exchange listing fee .......... 17,500
Printing and engraving expenses .............. 15,000
Legal fees and expenses ...................... 200,000
Accounting fees and expenses ................. 125,000
Miscellaneous expenses ....................... 50,000
--------
Total ..................................... $411,526
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law ("Section 145")
permits indemnification of directors, officers, employees, agents and
controlling persons of a corporation under certain conditions and subject to
certain limitations. Section 145 empowers a corporation to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
director, officer or agent of the corporation or another enterprise if serving
at the request of the corporation. Depending on the character of the
proceeding, a corporation may indemnify against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with such action, suit or proceeding if the person
indemnified acted in good faith and in a manner he reasonably believed to be
in, or not opposed to, the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. In the case of an action by or in the right of the
corporation, no indemnification may be made with respect to any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the court of chancery or the
court in which such action or suit was brought shall determine that despite the
adjudication of liability such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper. Section 145
further provides that to the extent a director or officer of a corporation has
been successful in the defense of any action, suit or proceeding referred to
above or in the defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith. See "Management --
Limitation of Liability and Indemnification Matters" and "Description of
Capital Stock -- Limitation of Liability and Indemnification."

Our certificate of incorporation and bylaws provide for the
indemnification of or directors, officers and our other authorized
representatives to the maximum extent permitted by the Delaware General
Corporation Law, as may be amended (but in the case of such amendment, only to
the extent that such amendment permits us to provide broader indemnification
rights than the law permitted the Corporation to provide prior to the
Amendment) against all expense, loss and liability (including, without
limitation, judgments, fines, amounts paid in settlement and reasonable
expenses, including attorneys' fees),actually and necessarily incurred or
suffered by such person in connection with the defense of or as a result of
such proceeding, or in connection with any appeal therein. Our certificate of
incorporation and bylaws permit us to purchase insurance for the
indemnification of directors, officers and employees to the full extent
permitted by the Delaware General Corporation Law.

II-1
<PAGE>

The certificate of incorporation and bylaws provide that the right to
indemnification conferred in the bylaws are contract rights and the certificate
of incorporation includes the right to be paid by the corporation for expenses
incurred in defending any such proceeding in advance of its final disposition;
provided, however, that if the Delaware General Corporation Law requires: the
payment of such expenses incurred by a director or officer 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 person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the company of an undertaking by or on behalf of such director or officer, to
repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this bylaw or
otherwise.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Described below is information regarding all securities of the company
that have been issued by the company within the past three years that were not
registered under the Securities Act.

On or about August 13, 1999, in connection with the closing of the
mergers, the company granted options to purchase 631,367 shares of Common Stock
of the company under the Performance Stock Program, at an average exercise
price of $5.44 per share, in replacement of options previously granted by each
of PrimeVision Health, Inc. and OptiCare Eye Health Centers, Inc.

On or about August 13, 1999, the company granted options to purchase
721,250 shares of Common Stock of the company under the Performance Stock
Program, at an average exercise price of $5.85 per share.

On August 13, 1999 in connection with the company entering into a new
credit facility, the company issued to Bank Austria Creditanstalt Corporate
Finance, Inc. (i) 418,803 shares of the Series A Convertible Preferred Stock
upon conversion by the bank of debt in the amount of $2,450,000, and (ii) as a
financing fee, 100,000 warrants to purchase, at an exercise price of $5.85 per
warrant, 100,000 shares of (A) Common Stock or (B) Series A Convertible
Preferred Stock, or (C) a combination of Common Stock and Series A Convertible
Preferred Stock aggregating 100,000 shares.

On August 13, 1999, in connection with the mergers, the company issued a
convertible promissary note in the aggregate principal amount of $4,000,000 to
Marlin Capital, L.P. in exchange for, among other things, the cancellation of
4,000 shares of Preferred Stock of PrimeVision Health, Inc. The note is
convertible into our Common Stock after August 13, 2000 at a conversion price
which is the greater of (x) the closing market price on the first trading day
after the mergers or (y) 90% of the average closing price of our Common Stock
twenty trading days prior to conversion.

On October 1, 1999, the company entered into a stock purchase agreement
with Stephen Cohen, Robert Airola, Gerald Mandel and Reginald Westbrook.
Pursuant to the agreement, the Company acquired all of the issued outstanding
shares of capital stock of Cohen Systems, Inc. d/b/a/ CC Systems, Inc. in
exchange for, among other things, a base purchase price comprised of 110,000
shares of Common Stock, and $750,000.00 in the form of installment payments
over a two year period and a promissory note.

The above transactions were private transactions not involving a public
offering and were exempt from the registration provisions of the Securities Act
pursuant to Section 4(2) thereof. No underwriter was engaged in connection with
the foregoing sales of securities. The company has reason to believe that (i)
all of the foregoing purchasers were familiar with or had access to information
concerning the operations and financial conditions of the company, (ii) all of
those individuals purchasing securities represented that they acquired the
shares for investment and not with a view to the distribution thereof, and
(iii) other than with respect to the options, that the foregoing purchasers are
accredited investors within the meaning of Regulation D promulgated under the
Securities Act. At the time of issuance, all of the foregoing securities of our
Common Stock were deemed to be restricted securities for purposes of the
Securities Act and the certificates representing such securities bore or will
bear legends to that effect.

II-2
<PAGE>

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits:

<TABLE>
<S> <C>
3.1 Certificate of Incorporation of Registrant, incorporated by reference to Exhibit 3.1 to the
Registrant's Annual Report on Form 10-KSB filed February 3, 1995.
3.2 Certificate of Amendment of the Certificate of Incorporation, dated as of August 13, 1999, as
filed with the Delaware Secretary of State on August 13, 1999, incorporated by reference to
Exhibit 3.1 to Registrant's report on Form 8-K filed on August 30, 1999.
3.3 By-laws of Registrant adopted January 20, 1994, as amended September 14, 1996,
incorporated herein by referenced to Exhibit 3.2 to the Registrant's Quarterly Report on
Form 10-QSB filed November 13, 1996.
3.4 Certificate of Designation with respect to the Registrant's Series A Convertible Preferred
Stock., as filed with the Delaware Secretary of State on August 13, 1999, incorporated by
reference to Exhibit 3.2 to Registrant's report on Form 8-K filed on August 30, 1999.
3.5 Warrant agreement dated as of August 13, 1999 between the Registrant and Bank Austria
Creditanstalt Corporate Finance, Inc., incorporated by reference to Exhibit 3.3 to the
Registrant's report on Form 8-K filed on August 30, 1999.
4.1 Performance Stock Program, incorporated herein by reference to Exhibit 4.1 to the
Registrant's Registration Statement on Form S-4, registration no. 333-78501, first filed on
May 14, 1999, as amended (the "Registration Statement 333-78501).+
4.2 Employee Stock Purchase Plan, incorporated herein by reference to Exhibit 4.2 to the
Registration Statement 333-78501.+
5.1 Opinion of Kane Kessler, P.C.**
10.1 Compromise and Settlement Agreement dated May 7, 1996, by and between Saratoga
Resources, Inc. a Delaware corporation, Saratoga Resources, Inc., a Texas corporation, Lobo
Operating, Inc., a Texas corporation, Lobo Energy, Inc., a Texas corporation, Thomas F.
Cooke, Joseph T. Kaminski, Randall F. Dryer, and Internationale Nederlanden (U.S.) Capital
Corporation, incorporated by reference to Exhibit 1 to the Registrant's Report on Form 8-K
dated May 7, 1996.
10.2 Purchase and Sale Agreement dated May 7, 1996, by and between Internationale Nederlanden
(U.S.) Capital Corporation and Prime Energy Corporation, incorporated by reference to
Exhibit 2 to our Report on Form 8-K dated May 7, 1996.
10.3 Assignment and Bill of Sale dated May 7, 1996, by and between Saratoga Resources, Inc., a
Delaware corporation and Prime Energy Corporation, incorporated by reference to Exhibit 3
to our Report on Form 8-K dated May 7, 1996.
10.4 Settlement Agreement and Full and Final Release dated March 10, 1997, by and between
Saratoga Resources, Inc., a Delaware corporation, Thomas F. Cooke, Randall F. Dryer, Dryer,
Ltd., a Texas Family Partnership and Joseph T. Kaminski, incorporated by reference to
Exhibit 1 to our Report on Form 8-K dated March 12, 1997.
10.5 Purchase and Sale agreement dated effective November 12, 1998, between Saratoga Holdings
I, Inc. and The Premium Group, Incorporated by reference to Exhibit 10.1 to the Registration
Statement on Form SB-2 of Saratoga Holdings I, Inc. filed with the SEC on December 1,
1998.
10.6 Service Agreement dated as of November 12, 1998, between Saratoga Holdings and Premium
Recoveries, Inc. Incorporated by reference to Exhibit 10.2 to the Registration Statement on
Form SB-2 of Saratoga Holdings I, Inc. filed on December 1, 1998.
</TABLE>

II-3
<PAGE>

<TABLE>
<S> <C>
10.7 Settlement agreement dated as of April 9, 1999, among PrimeVision Health, Inc., Dr. Allan
L.M. Barker, Dr. D. Blair Harrold, Optometric Eye Care Center, P.A., Steven B. Waite, Bank
Austria AG, and Bank Austria Corporate Finance, Inc., incorporated by reference to
Exhibit 10.8 to the Registration Statement 333-78501.
10.8 Vision care capitation agreement between OptiCare Eye Health Centers and Blue Cross &
Blue Shield of Connecticut, Inc. (and its affiliates) dated October 23, 1999, incorporated by
reference to Exhibit 10.9 to the Registration Statement 333-78501.
10.9 Eye care services agreement between OptiCare Eye Health Centers and Anthem Health
Plans, Inc. (d/b/a Anthem Blue Cross and Blue Shield of Connecticut), effective November 1,
1998, incorporated by reference to Exhibit 10.10 to the Registration Statement 333-78501.
10.10 Contracting provider services agreement dated April 26, 1996, and amendment thereto dated
as of January 1, 1999, between Blue Cross and Blue Shield of Connecticut, Inc., and OptiCare
Eye Health Centers , incorporated herein by reference to Exhibit 10.11 to the Registration
Statement 333-78501.
10.11 Form of employment agreement between the Registrant and Dean J. Yimoyines, M.D.,
effective August 13, 1999, incorporated herein by reference to Exhibit 10.12 to the
Registration Statement 333-78501.+
10.12 Form of employment agreement between the Registrant and Steven L. Ditman, effective
August 13, 1999, incorporated herein by reference to Exhibit 10.13 to the Registration
Statement 333-78501.+
10.13 Form of employment agreement between the Registrant and Dr. Allan L.M. Barker, effective
August 13, 1999, , incorporated herein by reference to Exhibit 10.14 to the Registration
Statement 333-78501.+
10.14 Form of employment agreement between the Registrant and Dr. D. Blair Harrold, effective
August 13, 1999, incorporated herein by reference to Exhibit 10.15 to the Registration
Statement 333-78501.+
10.15 Employment Agreement between the Registrant and Samuel B. Petteway dated August 9,
1999 incorporated by reference to Exhibit 10.11 to the Registrant's report on Form 10-Q filed
on November 15, 1999.+
10.16 Lease dated September 22, 1987 and lease extension agreement dated December 12, 1997 by
and between Cross Street Medical Building partnership, as landlord, and Ophthalmic
Physicians and Surgeons, P.C., as tenant, for premises located at 40 Cross Street, Norwalk,
Connecticut incorporated herein by reference to Exhibit 10.16 to the Registration Statement
333-78501.
10.17 Lease agreement dated September 1, 1995 by and between French's Mill Associates, as
landlord, and OptiCare Eye Health Centers as tenant, for premises located at 87 Grandview
Avenue, Waterbury, Connecticut incorporated herein by reference to Exhibit 10.17 to the
Registration Statement 333-78501.
10.18 Lease agreement dated September 30, 1997 by and between French's Mill Associates II, LLP,
as landlord, and OptiCare Eye Health Centers Eye Health Center P.C., as tenant, for premises
located at 160 Robbins Street, Waterbury, Connecticut (upper level), incorporated herein by
reference to Exhibit 10.18 to the Registration Statement 333-78501.
10.19 Lease agreement dated September 1, 1995 and amendment to lease dated September 30, 1997
by and between French's Mill Associates II, LLP, as landlord, and OptiCare Eye Health
Centers Eye Health center P.C., as tenant, for premises located at 160 Robbins Street,
Waterbury, Connecticut (lower level), incorporated herein by reference to Exhibit 10.19 to the
Registration Statement 333-78501.
</TABLE>

II-4
<PAGE>

<TABLE>
<S> <C>
10.20 Lease agreement dated September 1, 1995 between O.C. Realty Associates Limited
Partnership, as landlord, and OptiCare Eye Health Centers, as tenant, for premises located at
54 Park Lane, New Milford, Connecticut, incorporated herein by reference to Exhibit 10.20 to
the Registration Statement 333-78501.
10.21 Lease dated March 1, 1997 by and between HBIC, as landlord, and CEC, as tenant, for
premises located at 112-B Zebulon Court, Rocky Mount, North Carolina, incorporated by
reference to Exhibit 10.12 to the Registrant's report on Form 10-Q filed on November 15,
1999.
10.22 Lease dated March 1, 1997 by and between D. Blair Harrold & Allan L.M. Barker d/b/a
Harrold Barker Investment Co. ("HBIC"), as landlord, and Consolidated Eye Care, Inc.
("CEC"), a wholly-owned subsidiary of PrimeVision Health, Inc., as tenant, for premises
located at 110 Zebulon Court, Rocky Mount, North Carolina, incorporated by reference to
Exhibit 10.13 to the Registrant's report on Form 10-Q filed on November 15, 1999.
10.23 Lease dated March 1, 1997 by and between HBIC, as landlord, and CEC, as tenant, for
premises located at 112-A Zebulon Court, Rocky Mount, North Carolina, incorporated by
reference to Exhibit 10.14 to the Registrant's report on Form 10-Q filed on November 15,
1999.
10.24 Form of health services organization agreement between PrimeVision Health, Inc. and eye
care providers, incorporated herein by reference to Exhibit 10.21 to the Registration
Statement 333-78501.
10.25 Professional services and support agreement dated December 1, 1995 between OptiCare Eye
Health Centers and OptiCare P.C., a Connecticut professional corporation, incorporated
herein by reference to Exhibit 10.22 to the Registration Statement 333-78501.
10.26 Voting Agreement, dated as of July 14, 1999, between Thomas Cooke and PrimeVision
Health, Inc., incorporated herein by reference to Exhibit 10.23 to the Registration Statement
333-78501.
10.27 Amended and Restated Loan and Security Agreement, dated as of August 13, 1999, among
Consolidated Eye Care, Inc., OptiCare Eye Health Centers, and PrimeVision Health, Inc. as
borrowers, the Registrant as the Parent, the lenders named therein (the "Lenders"), Bank
Austria, AG (the "LC Issuer"), and Bank Austria Creditanstalt Corporate Finance, Inc., as
the agent (the "Agent") (excluding schedules and other attachments thereto), incorporated by
reference to Exhibit 10.1 to the Registrant's report on Form 8-K filed on August 30, 1999.
10.28 Guaranty dated as of August 13, 1999, among the Registrant, OptiCare Eye Health Centers,
PrimeVision Health, Inc., Consolidated Eye Care, Inc. and each of the other subsidiaries and
affiliates of the Registrant listed on the signature pages thereto, in favor of the Lenders, the
LC Issuer and the Agent, incorporated by reference to Exhibit 10.2 to the Registrant's report
on Form 8-K filed on August 30, 1999.
10.29 Security Agreement dated as of August 13, 1999, among the Registrant and the other parties
listed on the signature page thereto in favor of the Agent for the benefit of the Lenders and
the LC Issuer, incorporated by reference to Exhibit 10.3 to the Registrant's report on
Form 8-K filed on August 30, 1999.
10.30 Conditional Assignment and Trademark Security Agreement dated as of August 13, 1999,
between the Registrant and the Agent for the benefit of the Lenders and the LC Issuer,
incorporated by reference to Exhibit 10.4 to the Registrant's report on Form 8-K filed on
August 30, 1999.
</TABLE>

II-5
<PAGE>

<TABLE>
<S> <C>
10.31 Pledge and Security Agreement, dated as of August 13, 1999, among each of the Registrant,
OptiCare Eye Health Centers, PrimeVision Health, Inc., Consolidated Eye Care, Inc. and
each of the other subsidiaries and affiliates of the Company listed on the signature pages
thereto, in favor of the Agent for the benefit of the Lenders and the LC Issuer, incorporated
by reference to Exhibit 10.5 to the Registrant's report on Form 8-K filed on August 30, 1999.
10.32 Assignment of Notes and Security Agreement, dated as of August 13, 1999, between
PrimeVision Health, Inc. and the Agent, incorporated by reference to Exhibit 10.6 to the
Registrant's report on Form 8-K filed on August 30, 1999.
10.33 Agreement and Plan of Merger, dated as of April 12, 1999, among the Registrant (then
known as "Saratoga Resources, Inc."), OptiCare Shellco Merger Corporation, Prime Shellco
Merger Corporation, OptiCare Eye Health Centers, Inc., a Connecticut corporation, and
PrimeVision Health, Inc., incorporated herein by reference to Exhibit 2 to the Registration
Statement 333-78501.
10.34 Subordinated Promissory Note of the Company dated August 13, 1999 in the aggregate
principal amount of $2,000,000, payable to Marlin Capital, L.P., incorporated by reference to
Exhibit 10.8 to the Registrant's report on Form 10-Q filed on November 15, 1999.
10.35 Subordinated Convertible Promissory Note of the Company dated August 13, 1999 in the
aggregate principal amount of $4,000,000, payable to Marlin Capital, L.P., incorporated by
reference to Exhibit 10.9 to the Registrant's report on Form 10-Q filed on November 15, 1999.
10.36 Stock Purchase Agreement dated October 1 , 1999, among the Company, Stephen Cohen,
Robert Airola, Gerald Mandel and Reginald Westbrook (excluding schedules and other
attachments thereto), incorporated by reference to Exhibit 10.10 to the Registrant's report on
Form 10-Q filed on November 15, 1999.
10.37 Registration Rights Agreement dated as of August 13, 1999 between Registrant and Bank
Austria Creditanstalt Corporate Finance, Inc.*
10.38 Lease dated March 1, 1997, between the Registrant as tenant and Drs. Blair Harrold and
Allan L.M. Barker as landlord, covering premises known as 579 Cross Creek Mall,
Fayetteville, N.C.**
10.39 Lease dated March 1, 1997, between the Registrant as tenant and Optometric Eye Care
Center, P.A., as landlord, covering premises at 315-A Western Boulevard, Jacksonville, N.C.**
10.40 Employment agreement between the Registrant as employer and Gordon A. Bishop, dated
August, 13, 1999.+*
10.41 Lease dated September 1, 1999, between the Registrant as tenant and Harrold-Barker Realty,
as landlord, covering premises located in Rocky Mount, N.C.**
10.42 Professional Services and Support Agreement between the Registrant and Optometric Eye
Care Centers, P.A.**
16.1 Letter of Hein + Associates LLP regarding Change in Certifying Accountants, incorporated
by reference to Exhibit 16 of the Amendment No. 1 filed April 6, 1999, of Registrant"s
Current Report on Form 8-K dated March 29, 1999.
16.2 Letter of Ernst & Young LLP regarding Change in Certifying Accountants, incorporated by
reference to Exhibit 16 of the Amendment No. 2 filed September 17, 1999 of Registrant's
Current Report on Form 8-K dated August 13, 1999.
21 List of Subsidiaries of the Registrant.**
23.1 Consent of Deloitte & Touche LLP.**
</TABLE>

II-6
<PAGE>

<TABLE>
<S> <C>
23.2 Consent of Ernst & Young LLP with respect to the financial statements of the PrimeVision
Health, Inc.**
23.3 Consent of Kane Kessler, P.C. (included in Exhibit 5.1).**
</TABLE>

- ----------
+ Management or compensatory plan.

* Previously filed.

** Filed herewith.

(b) Financial Statement Schedules: Schedules have been omitted because
they are either not applicable or the required information has been disclosed
in the consolidated financial statements or the notes thereto.

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted form 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 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 offerings of such
securities at that time shall be deemed to be the initial bona fide
offerings thereof.

II-7
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, there unto duly authorized, in the City of Waterbury, State of
Connecticut, on January 18, 2000.

OPTICARE HEALTH SYSTEMS, INC.

By: /s/ Dean J. Yimoyines
--------------------------------
Dean J. Yimoyines, M.D.,
Chairman of the Board,
Chief Executive Officer and President

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Dean J. Yimoyines and Steven L. Ditman,
jointly and severally, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments and any abbreviated registration statement, and any
amendments thereto, filed pursuant to Rule 462(b) increasing the amount of
securities or which registration is being sought) to his registration statement
and all documents relating thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent 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 attorney-in-fact and agent or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------- ------------------------------------ -----------------
<S> <C> <C>
/s/ Dean J. Yimoyines Director, Chairman of the Board, January 18, 2000
- --------------------------- Chief Executive Officer and
Dean J. Yimoyines, M.D. President (Principal Executive
Officer)

/s/ Steven L. Ditman Director, Executive Vice President January 18, 2000
- --------------------------- and Chief Financial Officer
Steven L. Ditman (Principal Financial and
Accounting Officer)

* Director January 18, 2000
- ---------------------------
Martin E. Franklin
* Director January 18, 2000
- ---------------------------
Ian G.H. Ashken
* Director January 18, 2000
- ---------------------------
Allan L.M. Barker
* Director January 18, 2000
- ---------------------------
John F. Croweak
* Director January 18, 2000
- ---------------------------
David A. Durfee, M.D.

* By /s/ Steven L. Ditman
----------------------
Steven L. Ditman
as Attorney-in-fact

</TABLE>

II-8
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
- ------------- --------------------------------------------------------------------------------- ---------
<S> <C> <C>
3.1 Certificate of Incorporation of Registrant, incorporated by reference to Exhibit
3.1 to the Registrant's Annual Report on Form 10-KSB filed February 3, 1995.
3.2 Certificate of Amendment of the Certificate of Incorporation, dated as of
August 13, 1999, as filed with the Delaware Secretary of State on August 13,
1999, incorporated by reference to Exhibit 3.1 to Registrant's report on Form
8-K filed on August 30, 1999.
3.3 By-laws of Registrant adopted January 20, 1994, as amended September 14,
1996, incorporated herein by referenced to Exhibit 3.2 to the Registrant's
Quarterly Report on Form 10-QSB filed November 13, 1996.
3.4 Certificate of Designation with respect to the Registrant's Series A Convertible
Preferred Stock., as filed with the Delaware Secretary of State on August 13,
1999, incorporated by reference to Exhibit 3.2 to Registrant's report on Form
8-K filed on August 30, 1999.
3.5 Warrant agreement dated as of August 13, 1999 between the Registrant and
Bank Austria Creditanstalt Corporate Finance, Inc., incorporated by reference
to Exhibit 3.3 to the Registrant's report on Form 8-K filed on August 30, 1999.
4.1 Performance Stock Program, incorporated herein by reference to Exhibit 4.1 to
the Registrant's Registration Statement on Form S-4, registration no. 333-78501,
first filed on May 14, 1999, as amended (the "Registration Statement
333-78501).+
4.2 Employee Stock Purchase Plan, incorporated herein by reference to Exhibit 4.2
to the Registration Statement 333-78501.+
5.1 Opinion of Kane Kessler, P.C.**
10.1 Compromise and Settlement Agreement dated May 7, 1996, by and between
Saratoga Resources, Inc. a Delaware corporation, Saratoga Resources, Inc., a
Texas corporation, Lobo Operating, Inc., a Texas corporation, Lobo Energy, Inc.,
a Texas corporation, Thomas F. Cooke, Joseph T. Kaminski, Randall F. Dryer,
and Internationale Nederlanden (U.S.) Capital Corporation, incorporated by
reference to Exhibit 1 to the Registrant's Report on Form 8-K dated May 7,
1996.
10.2 Purchase and Sale Agreement dated May 7, 1996, by and between Internationale
Nederlanden (U.S.) Capital Corporation and Prime Energy Corporation,
incorporated by reference to Exhibit 2 to our Report on Form 8-K dated May 7,
1996.
10.3 Assignment and Bill of Sale dated May 7, 1996, by and between Saratoga
Resources, Inc., a Delaware corporation and Prime Energy Corporation,
incorporated by reference to Exhibit 3 to our Report on Form 8-K dated May 7,
1996.
10.4 Settlement Agreement and Full and Final Release dated March 10, 1997, by and
between Saratoga Resources, Inc., a Delaware corporation, Thomas F. Cooke,
Randall F. Dryer, Dryer, Ltd., a Texas Family Partnership and Joseph T.
Kaminski, incorporated by reference to Exhibit 1 to our Report on Form 8-K
dated March 12, 1997.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
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<S> <C> <C>
10.5 Purchase and Sale agreement dated effective November 12, 1998, between
Saratoga Holdings I, Inc. and The Premium Group, Incorporated by reference to
Exhibit 10.1 to the Registration Statement on Form SB-2 of Saratoga Holdings I,
Inc. filed with the SEC on December 1, 1998.
10.6 Service Agreement dated as of November 12, 1998, between Saratoga Holdings
and Premium Recoveries, Inc. Incorporated by reference to Exhibit 10.2 to the
Registration Statement on Form SB-2 of Saratoga Holdings I, Inc. filed on
December 1, 1998.
10.7 Settlement agreement dated as of April 9, 1999, among PrimeVision Health,
Inc., Dr. Allan L.M. Barker, Dr. D. Blair Harrold, Optometric Eye Care Center,
P.A., Steven B. Waite, Bank Austria AG, and Bank Austria Corporate Finance,
Inc., incorporated by reference to Exhibit 10.8 to the Registration Statement
333-78501.
10.8 Vision care capitation agreement between OptiCare Eye Health Centers and
Blue Cross & Blue Shield of Connecticut, Inc. (and its affiliates) dated
October 23, 1999, incorporated by reference to Exhibit 10.9 to the Registration
Statement 333-78501.
10.9 Eye care services agreement between OptiCare Eye Health Centers and Anthem
Health Plans, Inc. (d/b/a Anthem Blue Cross and Blue Shield of Connecticut),
effective November 1, 1998, incorporated by reference to Exhibit 10.10 to the
Registration Statement 333-78501.
10.10 Contracting provider services agreement dated April 26, 1996, and amendment
thereto dated as of January 1, 1999, between Blue Cross and Blue Shield of
Connecticut, Inc., and OptiCare Eye Health Centers , incorporated herein by
reference to Exhibit 10.11 to the Registration Statement 333-78501.
10.11 Form of employment agreement between the Registrant and Dean J. Yimoyines,
M.D., effective August 13, 1999, incorporated herein by reference to Exhibit
10.12 to the Registration Statement 333-78501.+
10.12 Form of employment agreement between the Registrant and Steven L. Ditman,
effective August 13, 1999, incorporated herein by reference to Exhibit 10.13 to
the Registration Statement 333-78501.+
10.13 Form of employment agreement between the Registrant and Dr. Allan L.M.
Barker, effective August 13, 1999, , incorporated herein by reference to Exhibit
10.14 to the Registration Statement 333-78501.+
10.14 Form of employment agreement between the Registrant and Dr. D. Blair
Harrold, effective August 13, 1999, incorporated herein by reference to Exhibit
10.15 to the Registration Statement 333-78501.+
10.15 Employment Agreement between the Registrant and Samuel B. Petteway dated
August 9, 1999 incorporated by reference to Exhibit 10.11 to the Registrant's
report on Form 10-Q filed on November 15, 1999.+
10.16 Lease dated September 22, 1987 and lease extension agreement dated
December 12, 1997 by and between Cross Street Medical Building partnership,
as landlord, and Ophthalmic Physicians and Surgeons, P.C., as tenant, for
premises located at 40 Cross Street, Norwalk, Connecticut incorporated herein
by reference to Exhibit 10.16 to the Registration Statement 333-78501.
10.17 Lease agreement dated September 1, 1995 by and between French's Mill
Associates, as landlord, and OptiCare Eye Health Centers as tenant, for
premises located at 87 Grandview Avenue, Waterbury, Connecticut incorporated
herein by reference to Exhibit 10.17 to the Registration Statement 333-78501.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
- ------------- ---------------------------------------------------------------------------------- ---------
<S> <C> <C>
10.18 Lease agreement dated September 30, 1997 by and between French's Mill
Associates II, LLP, as landlord, and OptiCare Eye Health Centers Eye Health
Center P.C., as tenant, for premises located at 160 Robbins Street, Waterbury,
Connecticut (upper level), incorporated herein by reference to Exhibit 10.18 to
the Registration Statement 333-78501.
10.19 Lease agreement dated September 1, 1995 and amendment to lease dated
September 30, 1997 by and between French's Mill Associates II, LLP, as
landlord, and OptiCare Eye Health Centers Eye Health center P.C., as tenant,
for premises located at 160 Robbins Street, Waterbury, Connecticut (lower
level), incorporated herein by reference to Exhibit 10.19 to the Registration
Statement 333-78501.
10.20 Lease agreement dated September 1, 1995 between O.C. Realty Associates
Limited Partnership, as landlord, and OptiCare Eye Health Centers, as tenant,
for premises located at 54 Park Lane, New Milford, Connecticut, incorporated
herein by reference to Exhibit 10.20 to the Registration Statement 333-78501.
10.21 Lease dated March 1, 1997 by and between HBIC, as landlord, and CEC, as
tenant, for premises located at 112-B Zebulon Court, Rocky Mount, North
Carolina, incorporated by reference to Exhibit 10.12 to the Registrant's report
on Form 10-Q filed on November 15, 1999.
10.22 Lease dated March 1, 1997 by and between D. Blair Harrold & Allan L.M.
Barker d/b/a Harrold Barker Investment Co. ("HBIC"), as landlord, and
Consolidated Eye Care, Inc. ("CEC"), a wholly-owned subsidiary of PrimeVision
Health, Inc., as tenant, for premises located at 110 Zebulon Court, Rocky
Mount, North Carolina, incorporated by reference to Exhibit 10.13 to the
Registrant's report on Form 10-Q filed on November 15, 1999.
10.23 Lease dated March 1, 1997 by and between HBIC, as landlord, and CEC, as
tenant, for premises located at 112-A Zebulon Court, Rocky Mount, North
Carolina, incorporated by reference to Exhibit 10.14 to the Registrant's report
on Form 10-Q filed on November 15, 1999.
10.24 Form of health services organization agreement between PrimeVision Health,
Inc. and eye care providers, incorporated herein by reference to Exhibit 10.21 to
the Registration Statement 333-78501.
10.25 Professional services and support agreement dated December 1, 1995 between
OptiCare Eye Health Centers and OptiCare P.C., a Connecticut professional
corporation, incorporated herein by reference to Exhibit 10.22 to the
Registration Statement 333-78501.
10.26 Voting Agreement, dated as of July 14, 1999, between Thomas Cooke and
PrimeVision Health, Inc., incorporated herein by reference to Exhibit 10.23 to
the Registration Statement 333-78501.
10.27 Amended and Restated Loan and Security Agreement, dated as of August 13,
1999, among Consolidated Eye Care, Inc., OptiCare Eye Health Centers, and
PrimeVision Health, Inc. as borrowers, the Registrant as the Parent, the lenders
named therein (the "Lenders"), Bank Austria, AG (the "LC Issuer"), and Bank
Austria Creditanstalt Corporate Finance, Inc., as the agent (the "Agent")
(excluding schedules and other attachments thereto), incorporated by reference
to Exhibit 10.1 to the Registrant's report on Form 8-K filed on August 30, 1999.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
- ------------- ----------------------------------------------------------------------------------- ---------
<S> <C> <C>
10.28 Guaranty dated as of August 13, 1999, among the Registrant, OptiCare Eye
Health Centers, PrimeVision Health, Inc., Consolidated Eye Care, Inc. and each
of the other subsidiaries and affiliates of the Registrant listed on the signature
pages thereto, in favor of the Lenders, the LC Issuer and the Agent,
incorporated by reference to Exhibit 10.2 to the Registrant's report on Form 8-K
filed on August 30, 1999.
10.29 Security Agreement dated as of August 13, 1999, among the Registrant and the
other parties listed on the signature page thereto in favor of the Agent for the
benefit of the Lenders and the LC Issuer, incorporated by reference to Exhibit
10.3 to the Registrant's report on Form 8-K filed on August 30, 1999.
10.30 Conditional Assignment and Trademark Security Agreement dated as of
August 13, 1999, between the Registrant and the Agent for the benefit of the
Lenders and the LC Issuer, incorporated by reference to Exhibit 10.4 to the
Registrant's report on Form 8-K filed on August 30, 1999.
10.31 Pledge and Security Agreement, dated as of August 13, 1999, among each of the
Registrant, OptiCare Eye Health Centers, PrimeVision Health, Inc.,
Consolidated Eye Care, Inc. and each of the other subsidiaries and affiliates of
the Company listed on the signature pages thereto, in favor of the Agent for the
benefit of the Lenders and the LC Issuer, incorporated by reference to Exhibit
10.5 to the Registrant's report on Form 8-K filed on August 30, 1999.
10.32 Assignment of Notes and Security Agreement, dated as of August 13, 1999,
between PrimeVision Health, Inc. and the Agent, incorporated by reference to
Exhibit 10.6 to the Registrant's report on Form 8-K filed on August 30, 1999.
10.33 Agreement and Plan of Merger, dated as of April 12, 1999, among the
Registrant (then known as "Saratoga Resources, Inc."), OptiCare Shellco
Merger Corporation, Prime Shellco Merger Corporation, OptiCare Eye Health
Centers, Inc., a Connecticut corporation, and PrimeVision Health, Inc.,
incorporated herein by reference to Exhibit 2 to the Registration Statement
333-78501.
10.34 Subordinated Promissory Note of the Company dated August 13, 1999 in the
aggregate principal amount of $2,000,000, payable to Marlin Capital, L.P.,
incorporated by reference to Exhibit 10.8 to the Registrant's report on Form
10-Q filed on November 15, 1999.
10.35 Subordinated Convertible Promissory Note of the Company dated August 13,
1999 in the aggregate principal amount of $4,000,000, payable to Marlin Capital,
L.P., incorporated by reference to Exhibit 10.9 to the Registrant's report on
Form 10-Q filed on November 15, 1999.
10.36 Stock Purchase Agreement dated October 1 , 1999, among the Company,
Stephen Cohen, Robert Airola, Gerald Mandel and Reginald Westbrook
(excluding schedules and other attachments thereto), incorporated by reference
to Exhibit 10.10 to the Registrant's report on Form 10-Q filed on November 15,
1999.
10.37 Registration Rights Agreement dated as of August 13, 1999 between Registrant
and Bank Austria Creditanstalt Corporate Finance, Inc.*
10.38 Lease dated March 1, 1997, between the Registrant as tenant and Drs. Blair
Harrold and Allan L.M. Barker as landlord, covering premises known as 579
Cross Creek Mall, Fayetteville, N.C.**
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
- ------------- ------------------------------------------------------------------------------ ---------
<S> <C> <C>
10.39 Lease dated March 1, 1997, between the Registrant as tenant and Optometric
Eye Care Center, P.A., as landlord, covering premises at 315-A Western
Boulevard, Jacksonville, N.C.**
10.40 Employment agreement between the Registrant as employer and Gordon A.
Bishop, dated August, 13, 1999.+*
10.41 Lease dated September 1, 1999, between the Registrant as tenant and
Harrold-Barker Realty, as landlord, covering premises located in Rocky Mount,
N.C.**
10.42 Professional Services and Support Agreement between the Registrant and
Optometric Eye Care Centers, P.A.**
16.1 Letter of Hein + Associates LLP regarding Change in Certifying Accountants,
incorporated by reference to Exhibit 16 of the Amendment No. 1 filed April 6,
1999, of Registrant"s Current Report on Form 8-K dated March 29, 1999.
16.2 Letter of Ernst & Young LLP regarding Change in Certifying Accountants,
incorporated by reference to Exhibit 16 of the Amendment No. 2 filed
September 17, 1999 of Registrant's Current Report on Form 8-K dated
August 13, 1999.
21 List of Subsidiaries of the Registrant.**
23.1 Consent of Deloitte & Touche LLP.**
23.2 Consent of Ernst & Young LLP with respect to the financial statements of the
PrimeVision Health, Inc.**
23.3 Consent of Kane Kessler, P.C. (included in Exhibit 5.1).**
</TABLE>

- ----------
+ Management or compensatory plan.

* Previously filed.

** Filed herewith.

<PAGE>

KANE KESSLER, P.C.
1350 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019-4896

January 18, 2000

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549

Ladies and Gentlemen:

We have acted as counsel for OptiCare Health Systems, Inc., a Delaware
corporation (the "Company") in connection with the Registration Statement on
Form S-1 (No. 333-93043), as amended (the "Registration Statement"), under the
Securities Act of 1933, as amended (the "Act") filed by the Company with the
Securities and Exchange Commission. The Registration Statement relates to the
offer and sale of up to a maximum of 4,000,000 shares (the "Shares") of Common
Stock, par value $.001 per share (the "Common Stock"), of the Company, proposed
to be sold by the Company.

We have examined copies of the Certificate of Incorporation, as amended,
and Bylaws, as amended, of the Company, the Registration Statement, records of
certain of the Company's corporate proceedings as reflected in the Company's
minute books, and other records and documents that we have deemed necessary for
purposes of this opinion. We have also examined such other documents, papers,
authorities and statutes as we have deemed necessary to form the basis of the
opinion hereinafter set forth.

In our examination, we have assumed the genuineness of all signatures and
the conformity to original documents of all copies submitted to us. As to
various questions of fact material to our opinion, we have relied on statements
and certificates of officers and representatives of the Company and public
officials.

Based upon the foregoing and the statements contained herein, it is our
opinion that the Common Stock proposed to be sold by the Company, when duly
sold, issued and paid for pursuant to, and in the manner contemplated by, the
Prospectus included as part of the Registration Statement and assuming that
adequate consideration therefor has been paid to, and received by the Company,
will be validly issued, fully paid and non-assessable.

<PAGE>

Securities and Exchange Commission
January 18, 2000
Page 2

We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Legal
Matters" in the Prospectus which forms a part thereof. In giving this consent,
we do not 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 Securities and
Exchange Commission promulgated thereunder.

We are qualified to practice law in the State of New York and do not
purport to be experts on, or to express any opinion herein concerning any law,
other than the laws of the State of New York and the General Corporation Law of
the State of Delaware.

Very truly yours,

KANE KESSLER, P.C.

<PAGE>
NORTH CAROLINA

NASH COUNTY

THIS LEASE AGREEMENT, made and entered into this 1st day of March, 1997, by
and between D. BLAIR HARROLD and ALLAN L.M. BARKER, d/b/a HARROLD-BARKER
INVESTMENT COMPANY, hereinafter referred to as LESSORS, and OPTOMETRIC EYE CARE
CENTERS, P.A., a North Carolina Corporation hereinafter referred to as LESSEE.

WITNESSETH:

WHEREAS Lessors and Lessee agree to the lease and rental of the premises
herein described on terms and conditions as herein set out; and

WHEREAS, the Lessors and Lessee acknowledge that each will enjoy the mutual
benefits of this Lease;

NOW THEREFORE, in consideration of the premises and further consideration
of mutual covenants and agreements hereinabove set forth, Lessor and Lessee have
contracted and agreed, and the Lessors in consideration of the terms and
conditions herein described, hereby demise, let, and lease unto the Lessee, and
the Lessee hereby accepts the Lease from the Lessors, all of the certain
premises, together with the improvements, lying thereon and being located in
Fayetteville, North Carolina, and more particularly described as follows:

579 Cross Creek Mall

TO HAVE AND TO HOLD the above described real estate uno the Lessee for a
period and upon the terms and conditions herein set out, together with all
privileges and appurtenances thereunto belonging to it the said Lessee, their
successors and assigns, as follows:

1. This Lease shall commence effective May 1st, 1997, unless sooner
terminated as hereinafter

<PAGE>

provided, and this Lease shall exist and continue until the 1st day of May,
2002, the term being five (5) years.

2. During the year 1 and year 2 of the term of this Lease, the rent shall
be Ninety Six Thousand and No/100 ($96,000.00) dollars per year (based on 4,125
square feet) payable in monthly installments of Eight Thousand and No/100
($8,000.00) Dollars, per month, payable monthly in advance on or before the 10th
day of each month during the term of the Lease. During the year 3 and year 4 of
the term of this Lease, the rent shall be One Hundred Thousand and No/100
($100,000.00) Dollars per year (based on 4,125 square feet) payable in monthly
installments of Eight Thousand Three Hundred and Thirty Three and No/100
($8,333.00) Dollars, per month, payable monthly in advance on or before the 10th
day of each month during the term of the Lease or six percent (6%) of net
revenues, whichever is greater.

3. The Lessee shall pay all taxes and assessments imposed by any lawful
authority upon its personal property and fixtures and any other improvements
placed in and upon the premises. The Lessee also agrees to pay all bills for
electricity, heat, air conditioning, water and other utilities used upon the
leased premises. Lessee shall MAKE ALL REPAIRS and IMPROVEMENTS to electrical,
heating, air conditioning, water, plumbing, roof system, under the amount of
Five Hundred and No/100 ($500.00) Dollars per occurrence of or manifestation of
any required repair and maintenance. The LESSOR agrees to pay for electrical,
heating, air conditioning, and external plumbing maintenance and repairs in
EXCESS OF FIVE HUNDRED AND NO/100 ($500.00) DOLLARS, per occurrence or
manifestation, and further agrees to maintain and repair all exterior portions
of the building, except as specifically set forth above. The Lessee accepts the
premises in the condition in which they exist at the beginning of the term of
this Lease, and the LESSOR shall be under NO OBLIGATION TO IMPROVE OR REPAIR THE
SAME, except as specifically set out above. The Lessee shall have the right, at
its own expense, TO REMODEL AND MAKE IMPROVEMENTS to the interior as it

-2-
<PAGE>

elects, specifically subject to notice and to and approval of the Lessors. The
Lessee shall be responsible for the cleanup, restoration and replacement of keys
at the end of the term of this Lease.

4. The Lessee may, at its own cost and expense, install, erect and maintain
signs in and upon the premises, within the applicable codes and ordinances
provided, however the written consent of the Lessors must be obtained for the
location and design of all exterior signs.

5. Any fixtures, equipment and other personal property installed or
attached to the demised premises by the Lessee, will be at the expense of the
Lessee, and shall remain the property of the Lessee, and the Lessee shall have
the right at any time, provided it is not then in default hereunder, to remove
any and all such fixtures, provided, however, that in such event Lessee shall
repair any damage to the demised premises cause by such installation and
removal.

6. The Lessee shall maintain, at its own cost and expense, fire insurance,
and furnish to Lessors, liability insurance in the amount of $500,00 per person
/$1,000,000.00 per accident, and $100,00 in property damage, which policy shall
name the Lessors as an additional insured. On each policy, Lessee shall
designate Lessors as a party insured and furnish Lessors with a certificate of
said insurance or applicable riders as issued or renewed.

7. The Lessors hereby covenant and warrant that they have a good right and
title to lease said premises; that it will suffer and permit the Lessee to
occupy, possess and enjoy said premises during the term herein set out, without
hinderance or molestation by the Lessors or from any persons claiming by or
under the Lessors, and will defend against any suit or action brought by such
person.

8. It is expressly agreed that Lessee shall not assign this Lease or these
premises without the written consent of the Lessors. It is expressly agreed that
Lessee shall not, under any circumstances, sublease the premises without the
prior written consent of the Lessors. Such consent, shall not be

-3-
<PAGE>

unreasonably withheld by Lessors, and in the event of any assignment or
sublease, Lessee shall remain personally responsible to Lessors for performance
of the terms of this Lease, and any acceptance of rent by Lessors, by any
assignee or sublease is not an approval or consent of said assignee or sublease
without compliance of the terms above.

9. If the Lessee shall neglect or fail to pay any rent or monthly
Installments of rent when due, or neglect or fail to do or perform any other
thing required of it and any of the covenants herein contained, on their part,
or to be performed or observed, and the Lessee is so notified in writing by
letter through registered mail addressed to its address as provided below and if
such default or defaults shall not be cured within 15 days after the sending of
said registered notice, the Lessors may terminate this Lease and may re-enter
upon the leased premises and may annul this Lease as regards all future rights
of the Lessee, and the Lessors shall have the legal rights and remedies
permitted by and available under the law of this State or for the collection of
any rent due and payable thereunder, without prejudice of any other right they
may have because of such default. No failure of the Lessors to exercise any
rights which it may have by reason of any default shall constitute a waiver of
any such rights with respect to any subsequent default. Under no circumstances
shall the Lessor be under any obligation whatever to release the Lessee from any
liability arising under this Lease for damages, which damages shall include, but
shall not necessarily be limited to, all rent due until the end of the term of
the Lease; nor shall Lessors be obligated to expend any sum to reduce or
litigate damages. If during the term of this Lease the premises shall be
partially damaged by fire or other casualty, but thereby rendered untenantable,
the same shall be repaired with diligence by the Lessors, at its expense, any
amount over the amount of $5,000.00. If the damage shall be so extensive as to
render the premises untenantable, the rent shall be proportionately paid up to
the time of such damage, and shall thenceforth cease until such time as the
premises shall be restored; but in such event the Lessors

-4-
<PAGE>

may elect whether or not to restore said premises or to terminate the Lease. If
the Lessor shall not elect within 30 days after such damage to rebuild or
restore said premises, then this Lease shall forthwith terminate. In the event
of the total destruction of the premises by fire or other casualty, this Lease
shall cease and terminate and the lessee shall be liable for the rent,
proportionally, only up to the time of such destruction, and the Lessee shall be
entitled in such event, to receive a proportional part of any advanced rent paid
by it for the rent period during which the leased premises are wholly destroyed.

10. If the whole of the premises shall be taken or condemned by imminent
domain for any public or quasi public use or purpose, then in that event, the
term of this Lease shall cease and terminate from the date of title vesting in
such proceedings, and the Lessee shall have no claim against the Lessors for the
value of the unexpired term of the Lease.

11. It is agreed that the Lessee shall have the right at the termination or
expiration of this Lease to remove within 15 days, at its own expense, all trade
fixtures, personal property and other installations, which it may have placed or
made on the premises, as provided in Paragraph 5 above, provided the premises
are restored by the Lessee to their original condition. If, after this 15 day
period, there remains any personal property, fixtures, or improvements of
Lessee, the Lessors shall then restore or cause to be restored such property for
a period of not to exceed 30 days, the costs and risks of such restoring to be
borne by the Lessee. If after this 30 days, the Lessee has failed to cure such
breach, any obligations arising from said breach, the Lessors may then dispose
of said property by whatever means deems necessary and proper.

-5-

<PAGE>

under and through it and remove its effect without prejudice to any remedies
which the Lessors may otherwise have for arrears of rent, or breach of covenant,
and upon such entry, this Lease shall terminate, and the Lessee covenants that
in case of such termination, it will indemnify the Lessors against all loss of
rent which the Lessors may incur by reason of such termination for the remainder
of the term.

13. It is expressly agreed, as a matter of law, that in the event of any
hold over under this Lease, that said hold over shall be deemed a hold over
under a month to month, periodic tenancy, and not other term.

14. All references herein to relative pronoun shall be read in the plural
and in the singular, and in the masculine and in the feminine or neuter gender,
as the case may be. This agreement shall be binding upon the heirs, assigns and
successors of the parties hereto. This agreement shall be construed under the
laws of the State of North Carolina, and any change or amendment of this
agreement shall require the written consent of both parties.

15. All rentals, notices, or communications as required hereunder shall be
addressed and given to the parties as follows:

TO LESSORS: HARROLD-BARKER INVESTMENT CO.
P.O. BOX 7185
112 ZEBULON COURT
ROCKY MOUNT, NC 27804

TO LESSEE: OPTOMETRIC EYE CARE CENTER, P.A.
579 CROSS CREEK MALL
FAYETTEVILLE, NC 28303

-6-
<PAGE>

IN WITNESS WHEREOF, the parties have hereunto set their hands and seals in
duplicate originals, one of which is retained by each of the parties on the day
and year as first above written.

HARROLD-BARKER INVESTMENT CO.

By: /s/ D. Blair Harrold
----------------------------------
D. BLAIR HARROLD, Partner

By: /s/ Allan L.M. Barker
----------------------------------
ALLAN L.M. BARKER, Partner

ATTEST: OPTOMETRIC EYE CARE CENTER, P.A.

/s/ Allan L.M. Barker By: /s/ D. Blair Harrold
- ------------------------- ----------------------------------
Secretary President

-7-

<PAGE>

NORTH CAROLINA

NASH COUNTY

WITNESSETH:

WHEREAS Lessors and Lessee agree to the lease and rental of the premises
herein described on terms and conditions as herein set out; and

WHEREAS, the Lessors and Lessee acknowledge that each will enjoy the mutual
benefits of this Lease;

NOW THEREFORE, in consideration of the premises and further consideration
of mutual covenants and agreements hereinabove set forth, Lessor and Lessee have
contracted and agreed, and the Lessors in consideration of the terms and
conditions herein described, hereby demise, let, and lease unto the Lessee, and
the Lessee hereby accepts the Lease from the Lessors, all of the certain
premises, together with the improvements, lying thereon and being located in
Jacksonville, North Carolina, and more particularly described as follows:

315-A Western Boulevard

TO HAVE AND TO HOLD the above described real estate unto the Lessee for a
period and upon the terms and conditions herein set out, together with all
privileges and appurtenances thereunto belonging to it the said Lessee, their
successors and assigns, as follows:

1. This Lease shall commence effective May 1st, 1997, unless sooner
terminated as

<PAGE>

hereinafter provided, and this Lease shall exist and continue until the 1st day
of May, 2001, the term being four (4) years.

2. During the year 1 and year 2 of the term of this Lease, the rent shall
be Fifty Nine Thousand Seven Hundred Fifty Two and No/100 ($59,752.00) dollars
per year (based on 5,432 square feet) payable in monthly installments of Four
Thousand Nine Hundred Seventy Nine and No/100 ($4,979.00) Dollars per month,
payable monthly in advance on or before the 10th day of each month during the
term of the Lease. During the year 3 and year 4 of the term of this Lease, the
rent shall be Sixty Five Thousand One Hundred Eighty Four and No/100
($65,184.00) Dollars per year (based on 5,432 square feet) payable in monthly
installments of Five Thousand Four Hundred Thirty Two and No/100 ($5,432.00)
Dollars, per month, payable monthly in advance on or before the 10th day of each
month during the term of the Lease or six percent (6%) of net revenues,
whichever is greater.

-2-

<PAGE>

specifically set out above. The Lessee shall have the right, at its own expense,
TO REMODEL AND MAKE IMPROVEMENTS to the interior as it elects, specifically
subject to notice and to and approval of the Lessors. The Lessee shall be
responsible for the cleanup, restoration and replacement of keys at the end of
the term of this Lease.

8. It is expressly agreed that Lessee shall not assign this Lease or these
premises without

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<PAGE>

the written consent of the Lessors. It is expressly agreed that Lessee shall
not, under any circumstances, sublease the premises without the prior written
consent of the Lessors. Such consent, shall not be unreasonably withheld by
Lessors, and in the event of any assignment or sublease, Lessee shall remain
personally responsible to Lessors for performance of the terms of this Lease,
and any acceptance of rent by Lessors, by any assignee or sublease is not an
approval or consent of said assignee or sublease without compliance of the terms
above.

-4-

<PAGE>

$5,000.00. If the damage shall be so extensive as to render the premises
untenantable, the rent shall be proportionately paid up to the time of such
damage, and shall thenceforth cease until such time as the premises shall be
restored; but in such event the Lessors may elect whether or not to restore said
premises or to terminate the Lease. If the Lessor shall not elect within 30 days
after such damage to rebuild or restore said premises, then this Lease shall
forthwith terminate. In the event of the total destruction of the premises by
fire or other casualty, this Lease shall cease and terminate and the lessee
shall be liable for the rent, proportionally, only up to the time of such
destruction, and the Lessee shall be entitled in such event, to receive a
proportional part of any advanced rent paid by it for the rent period during
which the leased premises are wholly destroyed.

-5-

<PAGE>

12. If the tenant shall voluntarily or involuntarily file a Petition in
bankruptcy, or be adjudicated bankrupt or insolvent, according to law, or shall
make an assignment for the benefit of creditors, then the Lessors may lawfully
enter the premises and repossess the same and expel the tenant and those
claiming under and through it and remove its effect without prejudice to any
remedies which the Lessors may otherwise have for arrears of rent, or breach of
covenant, and upon such entry, this Lease shall terminate, and the Lessee
covenants that in case of such termination, it will indemnify the Lessors
against all loss of rent which the Lessors may incur by reason of such
termination for the remainder of the term.

15. All rentals, notices, or communications as required hereunder shall be
addressed and given to the parties as follows:

TO LESSORS: HARROLD-BARKER INVESTMENT CO.
P.O. BOX 7185
112 ZEBULON COURT
ROCKY MOUNT, NC 27804

TO LESSEE: OPTOMETRIC EYE CARE CENTER, P.A.
315-A WESTERN BOULEVARD
JACKSONVILLE, NC 28540

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<PAGE>

IN WITNESS WHEREOF, the parties have hereunto set their hands and seals in
duplicate originals, one of which is retained by each of the parties on the day
and year as first above written.

HARROLD-BARKER INVESTMENT CO.

By: /s/ D. Blair Harrold
----------------------------------
D. BLAIR HARROLD, Partner

By: /s/ Allan L.M. Barker
----------------------------------
ALLAN L.M. BARKER, Partner

ATTEST: OPTOMETRIC EYE CARE CENTER, P.A.

/s/ Allan L.M. Barker By: /s/ D. Blair Harrold
- ---------------------------- ----------------------------------
Secretary President

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<PAGE>

NORTH CAROLINA

NASH COUNTY

LEASE
(TRIPLE NET)

THIS LEASE, made this 1st day of September, 1999, by and between
Harrold-Barker Realty hereinafter "Landlord" and CEC/Opticare, hereinafter,
"Tenant".

WITNESSETH:

Upon the terms and conditions hereinafter set forth, the landlord leases to
Tenant and Tenant leases from Landlord certain property and improvements, which
shall hereinafter be referred to as the "Premises", all as follows:

ARTICLE I
PREMISES

1.01 Premises. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord that certain office building, or portion thereof, herein
"Premises" located in Rockymount, North Carolina mor particularly described on
Exhibit A attached hereto.

ARTICLE II
TERM/USE

2.01 Term. The initial term of this Lease shall commence on the
Commencement Date and shall terminate at midnight on the last date of the month
of the "Initial Term" following the Commencement Date. Provided that Tenant is
not in default under the provisions hereof and provided further that Tenant
gives Landlord written notice of Tenant's intention to do so at least one
hundred fifty (150) days prior to the expiration of the Initial Term hereof, as
to the "First Renewal Term" (if any) and at least 150 days prior to the
expiration of the First Renewal Term as to the "Second Renewal Term" (if any),
Tenant shall have the right and option to renew this Lease for such periods and
upon such rental rates hereinafter set forth in this Lease. The renewal term(s),
if any, shall be upon the same terms and conditions as provided herein for the
Initial Term, except that the Base Rent and other costs payable by Tenant during
such renewal terms shall be determined as provided herein. If Tenant does not
exercise a renewal option, Tenant shall furnish Landlord written evidence in
recordable form of the fact that Tenant has no further right to occupy the
Premises.

2.02 Use. Tenant may use and occupy the Premises solely for the designated
"Permitted Uses" as set forth on Exhibit A, but for no other purpose without
Landlord's prior written consent, which consent shall not be unreasonably
withheld. In no event shall Tenant make any use of the Premises which is in
violation of any lawful governmental laws, rules or regulations insofar as they

<PAGE>

might relate to Tenant's use and occupancy of the Premises; nor may Tenant make
any use of the Premises not permitted by any restrictive covenants, which apply
to the Premises, or in a manner which constitutes a nuisance, or which results
in the cancellation of any fire insurance policy on the Premises.

ARTICLE III
RENT

3.01 Minimum Rent.

(a) The fixed minimum annual rent ("Base Rent") during the term of
this lease, or any renewal, shall be payable by Tenant in equal monthly
installments, on or before the first day of each month in advance, at the office
of Landlord or at such other place designated by Landlord, without any prior
demand therefore and without any deduction or set-off whatsoever, and shall be
as set forth in the Adoption Agreement.

A prorated monthly installment of Base Rent shall be paid for any fraction
of a month if the lease term shall begin on any day except the first day of a
month.

The term "lease year" as used herein shall mean a period of twelve (12)
consecutive full calendar months. The initial lease year ("initial lease year")
shall begin on the Commencement Date if the Commencement Date shall occur on the
first day of a calendar month; if not, then the initial lease year shall
commence upon the first day of the calendar month next following the
Commencement Date. Each succeeding lease year shall commence upon the
anniversary date of the initial lease year.

(b) During the term of each and any renewal term, the Base Rent for each
lease year of the renewal term shall be the Base Rent for the Initial Term,
increased to the extent, if any, required in order to reflect any increase in
the cost of living between the beginning of the respective renewal term and the
beginning of the initial lease year.

The change in the cost of living shall be measured by the change in the
Consumer Price Index, All Urban Consumers, All Items, South (1982-84=100),
published by the Bureau of Labor Statistics, U.S. Department of Labor, [unless
said Index is not published for the date to be used, in which case the most
recent index dates in uniform manner preceding the respective initial lease year
and renewal terms shall be used]. Said rental adjustment will be in addition to
any additional payments or reimbursement for expenses to Landlord, as provided
in this Lease. If the manner in which such Consumer Price Index as determined by
the Bureau of Labor Statistics shall be substantially revised, an adjustment
shall be made in such revised Index which would provide results equivalent, as
nearly as possible, to those which would have been obtained if the Consumer
Price Index had not been so revised. If the Consumer Price Index shall become
unavailable to the public because publication is discontinued or otherwise,
Landlord will substitute therefor a comparable

<PAGE>

Index based upon changes in the cost of living or purchasing power of the
consumer dollar published by any other governmental agency, or if no such Index
shall be available, then comparable Index based upon changes in the cost of
living or purchasing power of the consumer dollar published by any other
governmental agency, or if no such Index shall be available, then a comparable
Index published by a major bank or by a university or recognized financial
publication.

3.02 Percentage Rent.

(a) In addition to the payment of the "Base Rent" as hereinbefore
provided, Tenant shall pay to the Landlord in the manner and upon the conditions
and at the times hereinafter set forth, during each lease year of the Initial
Term hereof, and each lease year of any renewal, a Percentage Rent equal to the
amount, if any, by which the Rental Percentage (as set forth on Exhibit A) of
the gross receipts as hereinafter defined, from all business done on and from
the Premises, exceeds the sum of the Base Rent, actually paid, if any. the
Percentage Rent shall be payable at such place as Landlord may designate without
any prior demand therefor, and without any set-off or deduction whatsoever.

(b) The said Percentage Rent shall become due and payable within
thirty (30) days after the last day of each lease year during the term of the
lease, or any renewal term, with respect to gross receipts during said period.

3.03 Gross Receipts Defined. The term "Gross Receipts"as used herein is
hereby defined to mean sales of Tenant and of all licensees, concessionaires and
sub-tenants of Tenant, from all business conducted upon or from the Premises or
elsewhere and whether such business be conducted by Tenant or by any licensees,
concessionaires or sub-tenants and whether such sales be evidenced by check,
credit, charge account, exchange or otherwise , and shall include, but not be
limited to, the amounts received from the sale of goods, wares, and merchandise
and for services performed on or at the Premises, together with the amount of
all orders taken or received at the Premises or elsewhere, and whether such
sales be made by means of merchandise or other vending devices in the Premises,
without reserve or deduction for inability or failure to collect the same. Each
charge or sale for the full price in the month during which such charge or sale
shall be made, irrespective of the time when the Tenant shall receive payment
therefor. If any one or more departments or other divisions of Tenant's business
shall be sublet by Tenant or conducted by any person, firm or corporation other
than Tenant, then there shall be included in gross receipts for the purposes of
fixing the Percentage Rent payable hereunder all the gross sales of such
departments or divisions, whether such sales be made at the Premises or
elsewhere, in the same manner and with the same effect as if the business or
sales of such departments and divisions of tenant's business had been conducted
by Tenant itself. Gross sales shall not include sales of merchandise for which
cash has been refunded, or allowances made on merchandise claimed to be
defective or unsatisfactory provided they shall have been included in gross
sales; and there shall be deducted from gross sales the sales price of
merchandise returned by customers for exchange, provided that the sales price of
merchandise delivered to the customer in exchange shall be included in gross
sales. Gross receipts shall not include tax imposed by any federal, state,
municipal or governmental authority directly on sales and

<PAGE>

collected from customers, provided that the amount thereof is added to the
selling price or absorbed therein, and paid by the Tenant to such governmental
authority. No franchise or capital stock tax and no income or similar tax based
upon income or profits as such shall be deducted from gross receipts in any
event whatever.

3.04 Past Due Rent or Prorata Expenses. In the event the Base Rent,
Percentage Rent or Tenant's share of "additional rent" (including taxes,
insurance, or other charges due hereunder) are not paid to Landlord by Tenant
within ten (10) days of the date on which they are due, Tenant agrees to pay to
Landlord a late charge of Four Percent (4%) of the amount due. Tenant further
agrees to pay Landlord any costs incurred by Landlord in effecting the
collection of any past due amounts and late charge including but not limited to
fees of any attorney or collection agency. Nothing herein contained shall limit
any other remedy of Landlord.

ARTICLE IV
TAXES

4.01 Taxes. Tenant agrees to pay, as additional rent, all real property
taxes and assessments which may be levied or assessed by any lawful authority
against the Premises.

Landlord will bill the Tenant annually for said real estate taxes,
accompanied by copies of the appropriate tax bills. The Tenant will remit to the
Landlord within 30 days the taxes due.

For any portion of the aggregate lease term computed from the date hereof
covered herein which is less than a full calendar year, the allocation of taxes
shall be reduced to limit such charge to a corresponding pro rata portion of
such year. This provision shall apply both at the beginning and the end of the
lease term.

"Real Estate Taxes" shall mean any property taxes and assessments imposed
upon the land and improvements upon said land. If due to a change in the method
of taxation, any franchise, income or profit tax shall be levied against
landlord in substitution for or in lieu of any tax which would otherwise
constitute a real estate tax , such franchise, income or profit tax shall be
deemed to be a real estate tax for the purpose hereof.

Tenant further covenants that if its lease is terminated by reason of
default on its part, or if it fails to take possession of its Premises or leaves
the Premises prior to the expiration of this lease, that it shall remain liable
to pay such taxes. Tenant agrees that this is not to be construed as a penalty
and that it shall be liable therefore only for such period or periods of time as
during the term of this lease during which the Premises are unrented.

ARTICLE V
RECORDS/AUDIT

5.01 Records and Books of Account. Tenant agrees to prepare and keep on the
Premises

<PAGE>

for a period of not less than two (2) years following the end of such lease year
adequate records which shall show inventories and receipts of merchandise at the
Premises, and daily receipts from all sales, and other transactions on the
Premises by Tenant and any other persons conducting any business upon said
Premises. Tenant shall record at the time of sale, in the presence of the
customer, all receipts from sales or other transactions whether for cash or
credit in a cash register or in cash registers having a cumulative total which
shall be sealed in a manner approved by Landlord and having such other features
as shall be approved by Landlord. Tenant further agrees to keep on Premises for
at least two (2) years following the end of each lease year all pertinent
original sales records. Pertinent original sales records shall include: (a) if
cash register tapes are used by Tenant, cash register tapes, including tapes
from temporary registers; (b) serially numbered sales slips; (c) the originals
of all mail orders at and to the Premises; (d) the original records of all
telephone orders at and to Premises; (e) settlement report sheets of
transactions with sub-tenants, concessionaires and licensees; (f) the original
records showing that merchandise returned by customers was purchased at the
Premises by such customers; (g) memorandum receipts or other records of
merchandise taken out on approval or consignment; (h) all income and sales tax
returns filed by Tenant; (i) such other sales records, if any, which would
normally be examined by an independent accountant pursuant to accepted auditing
standards in performing any audit of Tenant's sales; and (j) the records
specified in (a) to (i) above of sub-tenants, assignees, concessionaires, or
licensees.

Tenants shall submit to Landlord on or before the 15th day following each
monthly period during each lease year during the term or renewal term hereof
(including the 15th day of the month following the end of the term) at the place
then fixed for the payment of rent, together with the remittance of monthly
Percentage Rent, a written statement signed by Tenant, and certified by it to be
true and correct, showing in reasonably accurate detail, the amount of gross
receipts for each preceding month. No Percentage Rent shall be due for any
partial month between the Commencement Date and the first day of the lease year.
Tenant shall submit to the Landlord on or before the 30th day following the end
of each lease year at the place then fixed for the payment of rent a written
statement signed by the Tenant, and certified to be true and correct, showing in
reasonably accurate detail satisfactory in scope to Landlord the amount of gross
receipts during the preceding lease year, and duly certified to be correct by
Tenant, which certification shall be one which is satisfactory to Landlord in
scope and substance. The statements referred to herein shall be in such form and
style and contain such details and breakdown as the Landlord may reasonably
determine.

Tenant shall furnish to Landlord a copy of Tenant's "Sales and Use Tax
Report" prepared for the North Carolina Department of Revenue, by the 15th day
of each following month, and shall furnish upon request any annual "Sales and
Use Tax Report" provided to said department.

5.02 Audit. The acceptance by the Landlord of payments of Percentage Rent
shall be without prejudice to the Landlord's right to an examination of the
Tenant's books and records of its gross receipts and inventories of merchandise
on the Premises in order to verify the amount of annual gross receipts received
by the Tenant in and from the Premises.

<PAGE>

At its option, Landlord may cause, at any reasonable time upon five (5)
days prior written notice to Tenant, a complete audit to be made of Tenant's
entire business affairs and records relating to the Premises for the period
covered by any statement issued by the Tenant as above set forth. If such audit
shall disclose liability for rent to the extent of two percent (2%) or more in
excess of the rentals theretofore computed and paid by Tenant for such period,
Tenant shall promptly pay to Landlord the cost of said audit (as "additional
rent") in addition to the deficiency, which deficiency shall be payable in any
event. In addition, if the audit discloses that the sales reported was
understated by five percent (5%) or more, Landlord, at Landlord's option, may
terminate this Lease upon five (5) days notice to Tenant of Landlord's election
to do so. Any information obtained by the Landlord as a result of such audit
shall be held in strict confidence by Landlord. A report of findings by the
Landlord's accountant shall be binding and conclusive upon the Landlord and the
Tenant. Any information by the Landlord as a result of such audit shall be held
in strict confidence by the Landlord except in any proceedings or actions with
respect to that audit, the cost thereof, or with respect to a prospective sale,
mortgage or lease of the Premises.

ARTICLE VI
CONDUCT OF BUSINESS OF TENANT

6.01 Operation of Business. Tenant shall operate one hundred percent (100%)
of the Premises during the entire term of this lease with due diligence and
efficiency so as to produce all of the gross sales which may be produced by such
manner of operation , unless prevented from doing so by causes beyond Tenant's
control. Tenant will conduct its business in the Premises during the regular
customary days and hours for such type of business in the trade area in which
the Premises is located. Provided, said Premises shall be open a minimum of the
"Customary Hours" unless otherwise consented in writing by the Landlord.

Landlord and Tenant acknowledge that if Tenant abandons or closes its
store, Landlord may deem such closing as a default by Tenant and have such
remedies as set forth in Article XVIII. In the alternative, Tenant agrees that
in the event this clause is violated, Tenant will pay the Landlord as additional
rent $5.00 per square foot per year payable in monthly installments as
liquidated damages together with Tenant's other rents and payments as outlined
in this lease. Provided, however, the acceptance of said additional rent by
Landlord shall not constitute a penalty or a waiver of Landlord's right to treat
the violation hereunder as a breach and default of this Lease at anytime
thereafter or affect any remedy of Landlord for said default.

Tenant shall not perform any acts or carry on any practices which may
injure the Premises or be of nuisance or menace to others.

6.02 Competition. During the term of this lease, Tenant shall not directly
or indirectly engage in any similar or competing business (and if Tenant is a
corporation, its officers, directors, stockholders and any other affiliates
shall not so compete or own, operate,

<PAGE>

manage or have any interest in the profits of any similar or competitive store
or business within a radius of five (5) miles of the Premises. Landlord, for
breach of this covenant and in addition to any other remedy otherwise available,
may require that such store be deemed part of the Premises for the purpose of
determining gross receipts in accordance with Section 3.03 hereof, for which
percentage rent shall be paid..

6.03 Storage, Office Space. Tenant shall warehouse, store, and/or stock in
the Premises, only such goods, wares ad merchandise as Tenant intends to offer
for sale at retail at, in, from or upon the Premises. Tenant shall use for
office, clerical or other non-selling purposes only such space in the Premises
as is from time to time reasonably required for Tenant's business in the from
time to time reasonably required for Tenant's business in the Premises. No
auction, fire, going out of business, or bankruptcy sales may be conducted in
the Premises without the previous written consent of Landlord.

6.04 Security Deposit. Tenant, contemporaneously with the execution of this
lease, will deposit with Landlord forthwith the designated "Security Deposit".
Said deposit shall be held by Landlord, without liability for interest, as
security for the faithful performance by Tenant of all of the terms, covenants,
and conditions of this lease by said Tenant to be kept and performed during the
term hereof. It is expressly understood that this sum does not apply toward
rent, except that if at any time during the term of this lease any of the rent
(or additional rent) herein reserved shall be overdue and unpaid, or any other
sum (or additional rent) payable to Tenant to Landlord hereunder shall be
overdue and unpaid then Landlord may, at the option of Landlord (but Landlord
shall not be required to), appropriate and apply any portion of said deposit to
the payment of such overdue rent or other sum.

In the event of the failure to keep and perform any of the terms, covenants
and conditions of this lease to be kept and performed by Tenant, then the
Landlord at its option may, after terminating this lease, appropriate and apply
said entire deposit or so much thereof as sustained or suffered by Landlord due
to such breach on the part of the Tenant. Should the entire deposit, or any
portion thereof, be appropriated and applied by Landlord for the payment of
overdue rent or other sums due and payable to Landlord by Tenant hereunder, then
Tenant shall, upon the written demand of Landlord forthwith remit to Landlord a
sufficient amount in cash to restore said security to the original sum
deposited, and Tenant's failure to do so within five (5) days after receipt of
such demand shall constitute a breach of this lease. Should Tenant comply with
all of said terms, covenants and conditions and promptly pay all of the rental
herein provided for as it falls due, and all other sums payable by Tenant to
Landlord hereunder, the said deposit shall be returned in full to Tenant at the
end of the term of this lease, or upon the earlier termination of this lease.

Landlord shall deliver the funds deposited hereunder by Tenant to the
purchaser of Landlord's interest in the Premises in the event that such interest
be sold, and thereupon Landlord shall be discharged from any further liability
with respect to such audit.

<PAGE>

Landlord shall be entitled to intermingle such deposit with its own funds.
The security deposit shall not preclude the Landlord from recovering any
additional rent or damage which may be due or sustained as a result of this
lease.

ARTICLE VII
FIXTURES/ALTERATIONS

7.01 Fixtures, Alterations. With Landlord's prior written consent, Tenant,
at its expense, may, in good workmanlike manner, make structural or interior
alterations to the Premises as it deems necessary in the conduct of its business
provided said alterations do not reduce the value of such Premises.

Tenant shall present to the Landlord plans and specifications for such work
at the time approval is sought.

All alterations, additions and improvements (excluding personal property
and movable business fixtures of Tenant, no part of the cost of which shall have
been paid by Landlord) made by, for or at direction of the Tenant, shall become
the property of the Landlord and shall remain upon Premises and shall be the
surrender with the Premises as part thereof at the expiration or termination of
this lease whether pursuant to the terms hereof or re-entry and possession
without termination; provided, however, the Landlord shall have the right to
require Tenant to remove any of such alterations, additions, or improvements and
to restore Premises to the condition in which they were at the commencement of
Tenant's occupancy thereof and such right shall be exercised by Landlord by
giving notice to Tenant at any time prior to or not later than thirty (30) days
after the expiration or earlier termination or repossession. Upon receipt of
such notice, Tenant at Tenant's sole cost and expense shall comply with the
requirements therein on or before the expiration or earlier termination of this
Lease or within five (5) days of receipt of said notice by Tenant, whichever
shall be later.

Tenant shall promptly pay all contractors and materialmen, so as to
minimize the possibility of a lien attaching to the Premises, and should any
such lien be made or filed, Tenant shall within ten (10) days of receipt thereof
give notice to Landlord of same and Tenant shall bond against or discharge the
same within ten (10) days after written request by Landlord.

ARTICLE VIII
MAINTENANCE

8.01 Tenant Maintenance. Tenant shall at all times keep the interior and
exterior of the Premises in good order, condition and repair. Tenant shall
perform all necessary and normal maintenance and repair to doors, fixtures,
equipment, and appurtenances thereof (including lighting, heating and plumbing
fixtures, and any air conditioning system serving the Premises. Tenant shall
further be responsible for all exterior and interior painting, repair of the
roof of the Premises, and all structural repairs to the exterior walls and
foundations. Tenant shall further be

<PAGE>

responsible for maintaining the upkeep of the landscaped areas of the Premises,
and shall keep in good repair and condition all parking areas located upon the
Premises.

Tenant shall further be responsible for implementing and maintaining a pest
control contract with regard to the Premises.

It is expressly understood and agreed that the obligation of the Tenant
shall be solely at its expense for the total upkeep and maintenance of the
Premises. It is further acknowledged that the Landlord shall not have any
obligation for the repair and maintenance of the Premises with the exception of
the application of any insurance proceeds insuring the Landlord as provided
herein.

Tenant agrees to sweep and clean, and remove snow and ice from entrances of
Premises.

8.02 Failure of Tenant. If Tenant refuses or neglects to repair or maintain
the Premises as required hereunder after reasonable time and after written
demand from the Landlord, Landlord may make such repairs without liability to
the Tenant, and upon completion thereof, Tenant will pay Landlord's cost for
making such repairs plus fifteen percent (15%) for overhead, upon presentation
of the bill therefore, as additional rent.

ARTICLE IX
SURRENDER

9.01 Surrender of Premises. At the expiration of the tenancy hereby
created, Tenant shall surrender the Premises in the same condition as the
Premises were upon delivery of possession hereto under this Lease, reasonable
wear and tear excepted, and shall surrender all keys for the Premises to
Landlord at the place then fixed for the payment of rent. Tenant shall remove
all of its trade fixtures, and any alterations or improvements (if required
hereunder) before surrendering the Premises and shall repair any damage to the
Premises caused thereby. Tenant's obligations to observe or perform this
covenant shall survive the expiration or other termination of the term of this
lease.

ARTICLE X
INSURANCE AND INDEMNITY

10.01 Liability Insurance. Tenant shall, during the entire term hereof,
keep in full force and effect policies of:

(a) comprehensive public liability insurance with a contractual
liability endorsement covering property damage, death and personal injury with
respect to the Premises, the entrance and walk area in front of the Premises,
and the business operated by Tenant and any subtenants of Tenant in the Premises
in which the limits of public liability shall not be less than $1,000,000 per
occurrence and $2,000,000 aggregate and in which the property damage liability

<PAGE>

shall be not less than $1,000,000.

(b) all risks, property insurance (in an adequate amount) to cover the
full replacement value of all personal property, inventory, trade fixtures,
furnishings, equipment, alterations, leasehold improvements and betterments and
all other items located or placed in the Premises by the Tenant.

(c) workman's compensation insurance covering all persons employed,
directly or indirectly, by the Tenant as required by the laws of the State of
North Carolina.

Landlord reserves the right to increase the foregoing insurance limits as
it deems reasonably necessary to protect itself, the Tenant and the property.
The aforesaid policies, excepting the workman's compensation, shall name
Landlord, any person, firms or corporations designated by Landlord, and Tenant
as insured, and shall contain a clause that the insurer will not cancel or
change the insurance without first giving the Landlord sixty (60) days prior
written notice. The insurance shall be written by an insurance company approved
by Landlord and a copy of the policy or a certificate of insurance shall be
delivered to Landlord. Thereafter, at least fifteen (15) days prior to the
expiration of any such policy, Tenant shall deliver either a duplicate original
or a certificate of insurance for the policy together with satisfactory evidence
of the payment of the premiums therefore. If Tenant fails to obtain or provide
any or all of the insurance required by this section, then Landlord may, but
shall not be required to, purchase such insurance on behalf of the Tenant and
add the costs of such insurance as additional rent payable on demand.

10.02 Fire and Extended Coverage Insurance. In addition to the insurance
which Tenant is required to maintain pursuant to this Lease, Tenant agrees to
pay to Landlord promptly upon receipt of invoices from Landlord the total
premium paid by Landlord for fire, extended coverage and rental insurance
(including so-called "extended coverage and/or all risk endorsement") upon
Landlord's buildings and improvements consisting of the Premises. The amount of
fire insurance to be maintained by Landlord shall not be less than ninety
percent (90%) and not more than one hundred percent (100%) of the replacement
value of Landlord's buildings and improvements on the Premises as such value may
exist from time to time. Landlord will bill the Tenant periodically accompanied
by copies of the appropriate bills. Tenant will remit within ten (10) days any
premiums due to the Landlord for such insurance.

Tenant agrees that it will not keep, use sell or offer for sale in or upon
the Premises any article which may be prohibited by the standard form of fire
insurance policy.

10.03 Glass. Tenant shall replace, at the expense of Tenant, any and all
glass damaged or broken from any cause whatsoever in and about the Premises.

10.04 Indemnification of Landlord. Tenant will indemnify Landlord and save
it harmless from and against any and all claims, actions, damages, liability and
expense in

<PAGE>

connection with loss of life, personal injury and/or damage to property arising
from or out of any occurrence in, upon, or at the Premises, or the occupancy or
use by Tenant of the Premises or any omissions of Tenant, its agents,
contractors, employees, invitees, servants, lessees or concessionaires. In the
case Landlord shall, without fault on its part, be made party to any litigation
commenced by or against Tenant, then Tenant shall protect and hold Landlord
harmless and shall pay all costs, expenses and reasonable attorney's fees that
may be incurred or paid by Landlord in enforcing any covenants and agreements in
this lease.

10.05 Waiver of Subrogation. Landlord and Tenant shall to the extent
possible obtain from any insurer providing insurance to either the Landlord or
Tenant as required by this Lease, covering the Demised Premises, the
improvements therein or the contents thereof, a waiver of any right of
subrogation which such insurer of one party may acquire against the other party
by virtue of payment of any loss under such insurance. The extra cost of any
such waiver, shall be treated as an additional cost of the insurance payable
under the terms hereof.

ARTICLE XI
UTILITIES

11.01 Utility Services. Tenant shall be solely responsible for and promptly
pay all deposits and charges for heat, water, gas, electricity or any other
utility used or consumed in the Premises. In no event shall Landlord be liable
for any interruption or failure in the supply of any such utilities to the
Premises.

ARTICLE XII
ESTOPPEL, ATTORNMENT, SUBORDINATION

12.01 Estoppel Certificate. If within ten (10) days after request therefor
by Landlord, or in the event that upon any sale, assignment or hypothecation of
the Premises by Landlord, an estoppel certificate shall be required from Tenant,
Tenant agrees to deliver in recordable form a certificate to any proposed
mortgagee or purchaser, or to Landlord, certifying that Tenant is in possession
of the Premises, has unconditionally accepted the same and is currently, paying
the rents reserved herein; that this lease is unmodified and in full force and
effect (or if there have been modifications, that the lease is in full force and
effect as modified and stating the modifications) and that there are no defaults
by Landlord therein and no defenses or offsets thereto, or stating those claimed
by Tenant. Tenant shall agree to give Landlord's mortgagee notice of and a
reasonable opportunity to cure any Landlord default, and to accept such cure if
affected by Landlord's mortgagee, and further shall agree to permit such
mortgagee (or the purchaser at any foreclosure sale) on acquiring title to
become substitute Landlord with liability only for such Landlord obligations as
accrue after title is so acquired. Such statements or certificate shall also
state the date to which the rent and other charges hereunder have been paid by
Tenant.

12.02 Attornment / Subordination. Tenant, shall, in the event any
proceedings are

<PAGE>

brought for the foreclosure of, or in the event of exercise of the power of sale
under any mortgage made or other sale by the Landlord covering the Premises,
attorn to the purchaser upon any such foreclosure or sale and recognize such
purchaser as the Landlord under this lease and purchaser shall not disturb
Tenant's possession so long as Tenant is not in default under the terms of this
lease. The lease will be subordinate to the lien resulting from any method of
financing or refinancing, including by mortgage or deed of trust, now or
hereafter in force against the land of which the Premises are a part or upon any
buildings hereafter placed upon the land of which the Premises are a part, and
to all advances made or hereafter to be made upon the security thereof. This
section shall be self-operative and no further instrument of subordination shall
be required by any mortgagee; provided, however, at the request of any
mortgagee, the Tenant shall execute in recordable form such subordination
agreements required.

The Tenant, upon request of any party in interest, shall execute promptly
such instruments or certificates to carry out the intent of Attornment and
Subordination above as shall be requested by the Landlord. The Tenant hereby
irrevocable appoints the Landlord as attorney-in-fact for the Tenant with full
power and authority to execute and deliver in the name of the Tenant any such
instruments or certificates. If fifteen (15) days after the date of a written
request by Landlord to execute the same, the Landlord may, at its option, cancel
this lease without incurring any liability on account thereof, and the term
hereby granted is expressly limited accordingly.

ARTICLE XIII
SIGNS

13.01 Signs. The Tenant shall have the exclusive right to place Tenant's
signs in and on about the facia of the Premises, provided the same are: in
compliance with the law and any restrictive covenants affecting the Premises;
approved by Landlord (which approval will not unreasonably be withheld);
purchased and installed at the sole cost and expense of Tenant; and are removed
from the Premises at the expiration or earlier termination of the term hereof
and such damages as caused by the removal shall be repaired by Tenant. The
Tenant shall be responsible for all applications, fees and permits required in
conjunction with such signage.

All signs used in or about the Premises shall be professionally executed
and in good taste.

ARTICLE XIV
ASSIGNMENT/SUBLETTING

14.01 Assignment or Subletting. Without the prior written consent of the
Landlord, which consent may be arbitrarily denied, Tenant will not by operation
of law or otherwise, assign, transfer, mortgage, or encumber this lease, or
sublet or permit the Premises or any part thereof to be used by others. Neither
this lease nor any interest therein, nor any estate thereby

<PAGE>

created, shall pass by operation of law or otherwise to any trustee or receiver
in bankruptcy of Tenant or any assignee for the benefit of the creditors of
Tenant. In the event that Tenant by operation of law or otherwise, assigns,
mortgages, or encumbers this lease or sublets the Premises or any part thereof
in violation of this provision, then Landlord shall have the option to cancel
and terminate this lease in which event Tenant shall immediately surrender the
Premises to Landlord and Tenant shall hold Landlord harmless for any loss or
damage, including attorney's fees, which Landlord may suffer by reason of such
termination. If this Lease shall be assigned with consent, or if the Leased
Premises or any part thereof, shall be sublet or occupied by anyone other than
Tenant, the Landlord may collect rent from the assignee, other tenant or
occupant, and apply the net amount collected to the rent herein reserved.
Notwithstanding any assignment or sublease, Tenant shall remain fully liable on
this Lease and shall not be released from performing any terms, covenants and
conditions of this Lease.

ARTICLE XV
WASTE, GOVERNMENTAL REGULATION

15.01 Waste or Nuisance. Tenant shall not commit or suffer to be committed
any waste upon the Premises or any nuisance.

15.02 Governmental Regulations. Tenant shall, at Tenant's sole cost and
expense, comply with all of the requirements of the city, county, municipal,
state, federal and other applicable governmental authorities, now in force, or
which may hereafter be in force, pertaining to the Premises, and shall
faithfully observe in the use of the Premises all municipal and county
ordinances and state and federal statutes now in force or which may hereafter be
in force.

15.03 Hazardous Substance. during the lease term, Tenant shall not, and
shall not allow any other party to, bring upon, store, dispose of or install in
or upon the Premises: (i) any hazardous waste, hazardous substances, hazardous
materials, toxic substances, hazardous air pollutants or toxic pollutants, as
those terms are used in the Resources Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Hazardous Materials Transportation Act, the Toxic Substances Control Act,
the Clean Air Act and the Clean Water Act or any amendments thereto, or any
regulations promulgated thereunder; (ii) any "PCBs" or "PCB Items" (as defined
in 40 C.F.R. S761.3); or (iii) any "asbestos" (as defined in 40 C.F.R. S763.63).
Tenant shall indemnify, defend and hold Landlord harmless from and against any
liability, cost, damage, or expense incurred or sustained by landlord
(including, without limitation, reasonable attorneys fees and expenses,
remediation costs, engineering fees, court costs and costs incurred in the
investigation, settlement and defense of claims) as a result of or in connection
with any violation of the preceding prohibition. It is specifically understood
and agreed to by Tenant that the indemnity contained in this paragraph shall
survive the expiration or earlier termination of the Lease Term.

<PAGE>

ARTICLE XVI
DESTRUCTION OF PREMISES

16.01 Total or Partial Destruction. In the event the Premises are partially
damaged by fire or other perils covered by extended coverage insurance, Landlord
agrees to forthwith repair same, and this lease shall remain in full force and
effect, except that Tenant shall be entitled to a proportionate reduction of the
Base Rent from the date of damage and while such repairs are being made, such
proportionate reduction to be based upon the portion of the Premises rendered
untenantable during repairs. If the damage is due to the fault or neglect of
Tenant or its employees, there shall be no abatement of rent.

In the event the Premises are damaged as a result of fire or other cause
thereby rendering the Premises wholly untenantable, then Landlord shall have the
option: (a) to repair or restore such damage, this lease continuing in full
force and effect, but the Base Rent to be proportionately reduced as hereinabove
provided or (b) to give notice to Tenant at any time within thirty (30) days
after such damage, terminating this lease as of the date specified in such
notice, which date shall be no more than thirty (30) days after the giving of
such notice. Provided, however, the landlord may not elect to terminate this
Lease unless the necessary repairs cannot reasonably be made within a period of
ninety (90) days or less, or unless the cost of repairing such damage shall
equal or exceed sixty percent (60%) of fair replacement value of the Premises
immediately prior to such damage (provided this sentence shall not apply if two
years or less remain in the lease term, or if then in a renewal term, the
renewal term). In the event of giving such notice, this lease shall expire and
all interest of the Tenant in the Premises shall terminate on the date which the
Premises were rendered untenantable.

Notwithstanding anything to the contrary, landlord's obligation to rebuild
shall be limited to the proceeds actually received by the Landlord under any
casualty insurance policy or policies, if any, which have not been required to
be applied towards the reduction of any indebtedness secured by a mortgage
covering the Premises.

Landlord shall not be required to make any repairs or replacements of any
leasehold improvements, fixtures, or other personal property of Tenant.

ARTICLE XVII
CONDEMNATION

17.01 Condemnation. If the whole or any part of the Premises, parking area,
or means of access thereto shall be condemned or sold under threat of
condemnation, and such condemnation shall render the Premises unsuitable for the
business of the Tenant, this lease shall terminate. Tenant shall have no claim
against Landlord or to any portion of the award in condemnation for the value of
any unexpired term of this Lease, but this shall not limit Tenant's right to
compensation from the condemning authority for the value of any Tenant's
property taken (other than Tenant's leasehold interest in the Premises).

<PAGE>

ARTICLE XIIII
DEFAULT OF TENANT

18.01 Right to Re-enter. In the event of any failure of Tenant to pay any
rental due hereunder within ten (10) days after the same shall be due, or any
failure to perform any other terms, conditions or covenants of this Lease to be
observed or performed by Tenant for more than thirty (30) days (or such earlier
time as may be specified herein) after written notice of such default shall have
been mailed to Tenant, or if Tenant shall become bankrupt or insolvent or file
any debtor proceedings, or take or have taken against Tenant in any court
pursuant to any statute either of the United States or of any State a petition
in bankruptcy or insolvency or for reorganization or for the appointment of a
receiver or trustee of all or a portion of Tenant's property, or if Tenant makes
an assignment for the benefit of creditors or petitions for or enters into such
an arrangement, or if Tenant shall abandon said Premises, or suffer this lease
to be taken under any writ of execution, then Landlord, besides and in addition
to other rights or remedies it may have, shall have the immediate right to
re-entry and may remove all persons and property from the Premises and such
property may be removed and stored in a public warehouse or elsewhere at the
cost of, and for the account of Tenant, all without service of notice or resort
to legal process and without being deemed guilty of trespass or becoming liable
for any loss or damage which may be occasioned thereby.

18.02 Right to Relet. Should Landlord elect to re-enter, as herein provided
or should it take possession pursuant to legal proceedings or pursuant to any
notice provided for by law, it may either terminate this lease or it may from
time to time without terminating this Lease, make such alterations and repairs
as may be necessary in order to relet the Premises, and relet said Premises or
any part thereof for such term or terms (which may be for a term extending
beyond the terms of this Lease) and at such rental or rentals and upon such
other terms and conditions as landlord in its sole discretion may deem
advisable. Upon each reletting all rentals received by Landlord from such
reletting shall be applied, first, to the payment of any indebtedness other than
rent due hereunder from Tenant to Landlord; second, to the payment of any costs
and expenses of such reletting, including brokerage fees and attorneys' fees and
of costs of such alteration and repairs, third, to the payment of rent due and
unpaid hereunder, and the residue, if any, shall be held by the Landlord and
applied in payment of future rent as the same may become due and payable
hereunder. If such rentals received from such reletting during any month be less
than that to be paid during that month by Tenant hereunder, Tenant shall pay any
such deficiency to landlord. Such deficiency shall be calculated and paid
monthly. No such re-entry or taking possession of said Premises by Landlord
shall be construed as an election on its part to terminate this Lease unless a
written notice of such intention be given to Tenant or unless the termination
thereof be decreed by a court of competent jurisdiction. Notwithstanding any
such reletting without termination, Landlord may at any time thereafter elect to
terminate this lease for such previous breach. Should Landlord at any time
terminate this Lease for any breach, in addition to any other remedies it may
have, it may recover from Tenant all damages it may incur by reason of such
breach, including the cost of recovering the Premises, and the present worth
(discounted at 6%) at the time of such termination of the excess, if any, of the
amount of rent reserved in this

<PAGE>

lease for the remainder of the stated term over the then reasonable rental value
of the Premises for the remainder of the stated term, all of which amounts shall
be immediately due and payable from Tenant to Landlord. In determining the rent
which would be payable by Tenant hereunder, subsequent to default, with or
without termination, the annual rent for each year of the unexpired term shall
be equal to the Base Rent applicable under the terms of the lease plus the
annual average of Percentage Rents paid by Tenant from the commencement of the
term to the time of default or during the preceding two full lease years,
whichever period is shorter.

The above stated remedies of Landlord shall be deemed to be in addition to,
and not in lieu of, any other rights and remedies which Landlord may have in law
or in equity.

18.03 Legal Expenses. Should it become necessary for Landlord to employ
legal counsel to enforce any of the provisions herein contained, Tenant agrees
to pay all attorneys' fees and costs or expenses of any kind reasonably incurred
by Landlord, including costs of appeal, if any.

18.04 Waiver of Jury Trial and Counterclaim. The parties hereto shall and
they hereby do waive trial by jury in action, proceeding or counterclaim brought
by either of the parties hereto against the other on any matters whatsoever
arising out of or in any way connected with this lease, the relationship of
Landlord and Tenant, Tenant's use or occupancy of the leased Premises, and/or
any claim of injury or damage.

In the event Landlord commences any proceedings for non-payment of rent,
Base Rent, Percentage Rent or additional rent, Tenant will not interpose any
counterclaim of whatever nature or description in any such proceedings. This
shall not, however, be construed as a waiver of the Tenant's right to assert
such claims in any separate action or actions brought by the Tenant.

ARTICLE XIX
ACCESS BY OWNER

19.01 Right of Entry. Landlord or Landlord's agents shall have the right to
enter the Premises at all reasonable times to examine the same, and to show them
to prospective purchasers or lessees of the Premises, and to make such repairs,
alterations, improvements or additions as Landlord may deem necessary or
desirable, and Landlord shall be allowed to take all material into and upon said
Premises that may be required therefor without the same constituting an eviction
of Tenant in whole or in part and the rent reserved shall not abate while said
repairs, alterations, improvements, or additions are being made, by reason of
loss or interruption of business of tenant or otherwise. During the six months
prior to the expiration of the term of this Lease or any renewal term, Landlord
may exhibit the premises to prospective tenants or purchasers, and place upon
the Premises the usual notices "to rent" or "for sale" which notices Tenant
shall permit to remain thereon without molestation.

<PAGE>

ARTICLE XX
HOLDING OVER, SUCCESSORS

20.01 Holding Over. Any holding over after the expiration of the term
hereof, with the consent of the Landlord, shall be construed to be a tenancy
from month to month at the rents herein specified (prorated on a monthly basis)
and shall otherwise be on the terms and conditions herein specified, so far as
applicable.

20.02 Successors. All rights and liabilities herein given to, or imposed
upon, the respective parties hereto shall extend to and bind the several
respective heirs, executors, administrators, successors, and assigns of the said
parties.

ARTICLE XXI
QUIET ENJOYMENT

21.01 Landlord's Covenant. Upon payment by the Tenant of the rents herein
provided, and upon the observance and performance of all the covenants, terms
and conditions on Tenant's part to be observed and performed, Tenant shall
peaceably and quietly hold and enjoy the Premises for the term hereby demised
without hindrance or interruption by Landlord or any other person or persons
lawfully or equitable claiming by, through or under the Landlord, subject,
nevertheless, to the terms and conditions of this Lease.

ARTICLE XXII
MISCELLANEOUS

22.01 Waiver. The waiver of Landlord of any term, covenant or condition
herein contained shall not be deemed to be a waiver of such term, covenant or
condition herein contained. The subsequent acceptance of rent hereunder by
Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of
any term, covenant or condition of this Lease, other than the failure of Tenant
to pay the particular rental so accepted, regardless of Landlord's knowledge of
such preceding breach at the time of acceptance of such rent. No covenant, term
or condition of this lease shall be deemed to have been waived by Landlord,
unless the waiver shall be in writing by Landlord.

22.02 Accord and Satisfaction. No payment by Tenant or receipt by Landlord
of a lesser amount than the monthly rent herein stipulated shall be deemed to be
other than on account of the earliest stipulated rent; nor shall any endorsement
of statement on any check or any letter accompanying any check or payment as
rent be deemed an accord and satisfaction, and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of such
rent or pursue any other remedy in this lease provided.

22.03 Entire Agreement. This lease and the Adoption Agreement and the
exhibits, and rider, if any, attached hereto and forming a part hereof, set
forth all the covenants, promises,

<PAGE>

agreements, conditions or understandings, either oral, or written, between them
other than are herein set forth. Except as herein otherwise provided, no
subsequent alteration, amendment, change or addition to this Lease shall be
binding upon landlord or Tenant unless reduced to writing and signed by them,
and no act by any representative or agent of Landlord other than a written
agreement shall constitute an acceptance thereof.

22.04 No Partnership. Landlord does not, in any way, or for any purpose,
become a partner of Tenant in the conduct of its business, or otherwise, or
joint adventurer or a member of a joint enterprise with Tenant. The provisions
of this Lease relating to the percentage rent payable hereunder are included
solely for the purpose of providing a method whereby the rent is to be measured
and ascertained.

22.05 Notices. Any notice, demand, request or other instruments which may
be or are required to be given under this Lease shall be delivered in person or
sent by United States certified mail postage prepaid and shall be addressed to
the Landlord and Tenant at their respective addresses as set forth on Exhibit A,
or at such other address as they may designate by written notice.

22.06 Recording. Tenant shall not record this lease without the written
consent of Landlord; provided, however, upon the request of and expense of
either party hereto, the other party shall join in the execution of the
statutory memorandum of this lease for purposes of recordation.

22.07 Adoption Agreement. The fundamental lease provisions appearing in the
Adoption Agreement (Exhibit A) for this Lease are an integral pat of this Lease
and are incorporated herein by reference. Each of the fundamental lease
provisions and terms shall be deemed a definition of an essential term of this
Lease and whenever any such term shall appearing this Lease, it shall be deemed
to have the meaning therefor set forth in the Adoption Agreement and shall be
limited by the provisions of this Lease applicable thereto.

22.08 Landlord Liability. Notwithstanding anything in this Lease to the
contrary, Tenant agrees that it will look solely to the estate of the Landlord
in the Premises for the collection of any judgment (or other judicial process)
requiring the payment of money by Landlord in the event of default or breach by
landlord with respect to any of the terms, covenants and conditions of this
lease to be observed and/or performed by the Landlord, and no other property or
assets of the Landlord shall be subject to levy, execution or other procedures
for the satisfaction of Tenant's remedies.

<PAGE>

IN WITNESS WHEREOF, the Landlord and Tenant have signed and sealed this
Agreement as of the date above written.

TENANT:

CEC/OPTICARE

By: /s/ D. Blair Harrold
---------------------------

LANDLORD:

HARROLD-BARKER REALTY

By: /s/ Allan L.M. Barker
---------------------------

19
<PAGE>

GUARANTY
--------

The undersigned, as an inducement to the Landlord to enter the aforesaid
lease, do hereby, jointly and severally, guarantee the full payment and
performance of CEC/Opticare under the terms of the foregoing lease, including
without limitation the payment of all rents (including "additional rents") and
charges and assessed costs thereunder.

This 1st day of September, 1999.

/s/ Allan L.M. Barker (SEAL)
-----------------------------------

/s/ D. Blair Harrold (SEAL)
-----------------------------------

20
<PAGE>

EXHIBIT A

ADOPTION AGREEMENT

This Adoption Agreement made this 1st day of September, 1999 by and between
Harrold- Barker Realty (herein "Landlord") and CEC/Opticare (herein "Tenant")
sets forth fundamental terms and definitions of terms referenced in a Lease
between said parties dated September 1, 1999, and the parties do hereby execute
this Adoption Agreement and incorporate all terms set forth herein said lease.

LANDLORD: Harrold-Barker Realty

ADDRESS: P.O. Box 7185
Rocky Mount, NC 27804

TENANT: CEC/Opticare

ADDRESS: P.O. Box 7185
Rocky Mount, NC 27804

TENANT'S TRADENAMES: Opticare

COMMENCEMENT DATE: 9/1/99

- --------------------------------------------------------------------------------
PREMISES: 4,000 feet of rental space contained in
the Building Complex which contains
approximately 7,000 square feet of gross
lease able space located at 2325 Sunset
Ave., Rocky Mount, North Carolina.
- --------------------------------------------------------------------------------
INITIAL TERM: Commencing 9/1/99 and ending midnight on
9/1/04.
- --------------------------------------------------------------------------------
FIRST RENEWAL TERM: Commencing on _____________ and
terminating as of midnight on ___________
_____________.
- --------------------------------------------------------------------------------
SECOND RENEWAL TERM: Commencing on _____________ and
terminating as of midnight on ___________
_____________.
- --------------------------------------------------------------------------------

21
<PAGE>

- --------------------------------------------------------------------------------
PERMITTED USES: ________________________________
________________________________
________________________________
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
BASE RENT FOR INITIAL PERIOD $40,000 per annum or $3,333 per month
based on $10 per square foot of leased
premises
- --------------------------------------------------------------------------------
MINIMUM BASE RENT FOR FIRST $_____________ per annum or
RENEWAL TERM: $_____________ per month based on
$____________ per square foot of leases
Premises.
- --------------------------------------------------------------------------------
MINIMUM BASE RENT FOR SECOND $_____________ per annum or
RENEWAL TERM: $_____________ per month based on
$____________ per square foot of leases
Premises.
- --------------------------------------------------------------------------------
INITIAL CAM ESTIMATE: N/A
- --------------------------------------------------------------------------------
SECURITY DEPOSIT: N/A
- --------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties have executed this Adoption Agreement,
this the day and year first above written.

LANDLORD: Harrold-Barker Realty

By: /s/ Allan L.M. Barker
----------------------------
Title: President

TENANT: CEC/Opticare

By: /s/ D. Blair Harrold
----------------------------
Title: President, NC Optometry

<PAGE>

PROFESSIONAL SERVICES AND SUPPORT AGREEMENT

THIS PROFESSIONAL SERVICES AND SUPPORT AGREEMENT is entered into effective
as of the ___ day of ______, 199__ by and between CONSOLIDATED EYE CARE, INC., a
North Carolina corporation ("CEC"), and OPTOMETRIC EYE CARE CENTER, P.A., a
North Carolina professional corporation ("Professional Corporation").

W I T N E S S E T H

WHEREAS, Professional Corporation is a North Carolina professional
corporation engaged in the practice of optometry through the work of
optometrists, who are employed by Professional Corporation, and who are duly
licensed under the laws of the State of North Carolina.

WHEREAS, CEC is in the business of managing comprehensive integrated eye
health centers and eye health provider networks, including the administration,
support, and contracting for ophthalmology practices and services, optometry
practice and services, ambulatory surgery centers, retail eye wear sales and
fitting services, and eye wear manufacturing (collectively, the "Business"); and

WHEREAS, CEC desires to have Professional Corporation participate in CEC's
eye health provider network, and Professional Corporation desires to provide
services through the network and to contract with CEC on an exclusive basis to
provide administrative and support services to assist Professional Corporation
in operating comprehensive integrated eye health centers.

NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and conditions contained herein, the parties hereby agree as follows:

1. Services Agreement. The parties hereby agree to provide the following
services subject to the terms of this Agreement (referred to herein as the
"Services Agreement").

2. Duties of Professional Corporation. During the term of this Services
Agreement, Professional Corporation shall, at Professional Corporation's
expense:

(a) provide professional optometric services, through its employed
optometrists, at each of Professional Corporation's offices listed in Exhibit A
attached hereto and incorporated herein by reference (referred to herein as the
"Practice Locations"). Professional Corporation agrees and acknowledges that
this Services Agreement with CEC is exclusive and that Professional Corporation
will not contract with any other person or entity for such services.
Professional

<PAGE>

Corporation shall designate an optometrist at each Practice Location to serve as
the Lead Optometrist for the Practice Location. To facilitate local autonomy and
input for each of the Practices Locations, Professional Corporation shall
consider recommendations from the Lead Optometrists regarding the operation of
the Practice Locations and each of its duties set forth herein;

(b) use and occupy each Practice Location exclusively as an eye health
center, for the practice of optometry and for providing other related services
and products, and establish all fee or charge schedules relating to the
rendition of all services by optometrists employed by Professional Corporation;

(c) establish and implement optometric practice standards, policies and
protocols, and provide optometric services consistent with generally accepted
professional standards for the practice of optometry, and in compliance with all
credentialing, quality assurance, practice standardization, risk management,
access, and/or utilization management programs, criteria and procedures which
Professional Corporation and CEC may mutually adopt for the eye health centers
including those with which CEC is obligated to comply as part of its Business,
such as any such programs, criteria or procedures required by governmental
agencies, accrediting bodies and third-party payers with whom CEC contracts;

(d) comply with all applicable provisions of the law and of the rules and
regulations of all governmental authorities relating to licensing and the
regulation of optometrists employed by Professional Corporation;

(e) recommend the types and amounts of equipment and supplies to be
purchased and owned by CEC for the use of the Practice Locations and comply with
all inventory and ordering procedures and systems established mutually by CEC
and Professional Corporation to ensure that reasonable inventories are
available;

(f) approve each Practice Location's budget, compensation, billing and
collection matters based on recommendations from CEC;

(g) develop training guidelines and provide training and supervision of
professional staff, including without limitation, providing professional
supervision of technicians and other clinical personnel rendering services for
the Practice Locations consistent with generally accepted standards for the
practice of optometry and as required by applicable law or the conditions of
participation of third-party payors;

2
<PAGE>

(h) participate in CEC's eye health provider network and assist CEC in
developing relationships with third-party payors;

(i) submit accurate and complete data required for the billing and
collection by CEC of fees for professional services on behalf of Professional
Corporation;

(j) keep accurate and complete medical records of professional eye care
services rendered to patients;

(k) monitor utilization and quality of services, promptly take all
necessary steps to remedy all deficiencies in the quality of eye care provided
and notify CEC promptly of, and direct and assist CEC in implementing all
necessary steps to remedy all deficiencies in each Practice Location's
non-clinical services ;

(l) purchase professional liability insurance for Professional Corporation
and its optometrists, and direct CEC in handling of the defense and settlement
of all claims made against such insurance, including, without limitation,
promptly notifying CEC in writing upon: (A) the making of a claim or institution
of a lawsuit against Professional Corporation or any employee relating in any
way to services provided pursuant to this Services Agreement; and (B) the filing
of a complaint against Professional Corporation or any employee with any
governmental agency or disciplinary board, or the loss, suspension or voluntary
relinquishment of any license or permit held by any employee necessary to the
performance of such employee's duties for Professional Corporation, or the
cancellation or termination of his or her professional liability coverage;

(m) obtain legal services required by Professional Corporation including,
without limitation, engaging counsel, supervising counsel's engagement and
controlling fees; and

(n) apply for and maintain in Professional Corporation's name, any filings,
licenses, permits, notices or other documents required by applicable
governmental entities for the practice of optometry by Professional Corporation;

3. Operation of the Practice Location

(a) Professional Corporation shall cause each Practice Location to be
adequately staffed with appropriately trained and licensed professional and
technical personnel for full operation at hours established by Professional
Corporation which shall comply with requirements of third-party payors who
contract with CEC.

3
<PAGE>

(b) Professional Corporation shall participate in CEC's eye care provider
network and CEC's third-party payor contracts and agrees that professional eye
care services furnished hereunder shall meet the requirements of this Services
Agreement. Each Optometrist employed by Professional Corporation to provide
professional eye care services will comply with applicable provisions of this
Services Agreement and shall:

(i) provide clinical services consistent with generally accepted
professional standards and the requirements of this Services
Agreement;

(ii) be appropriately licensed to practice in the jurisdiction(s) in
which such optometrist provides services.

(c) Professional Corporation shall be responsible for maintaining
sufficient professional personnel to ensure that Professional Corporation can
meet its obligations under this Services Agreement;

(d) Professional Corporation shall be responsible for hiring all
optometrists. Professional Corporation has entered, or will enter, into
Employment Agreements with optometrists in the form set forth in Exhibit B
attached hereto. Professional Corporation shall have the exclusive right to
terminate any Employment Agreement.

(e) Professional Corporation and its practicing optometrists shall have
sole authority and responsibility for the practice of optometry and the
provision of professional optometric services. While CEC may make
recommendations with respect to operation of the Practice Locations, as set
forth in this Agreement, CEC shall not seek to control or interfere with the
practice of optometry or the professional judgment of Professional Corporation's
practicing optometrists.

4. Duties of CEC. During the term of this Services Agreement, CEC shall, at
its expense:

(a) maintain each Practice Location's facilities, including common areas,
maintenance and utilities;

(b) provide technical and Practice Location support services;

4
<PAGE>

(d) provide all accounting, bookkeeping, and accounting control services
relating to the Practice Locations, including without limitation, development of
a system of accounts, preparation of monthly financial statements, development
of accounting procedures and controls, and assisting any outside auditors;

(e) bill and collect on behalf of Professional Corporation for all services
rendered by Professional Corporation as provided herein, consistent with the
provisions of Section 6 hereof,

(f) make recommendations and assist in the purchase of professional
liability (malpractice) and other customary and reasonable types of insurance on
behalf of Professional Corporation, with limits, as approved by Professional
Corporation, and handle the defense and settlement of all claims made against
such insurance under the direction of Professional Corporation.

(g) except when the parties may otherwise agree, CEC shall have the
exclusive authority to negotiate and administer, according to terms agreed to by
Professional Corporation and CEC (including reimbursement and service rates),
all contracts with third party payers, employer groups, and joint venturers for
the provision of eye care services, including without limitation, all
participating provider agreements, managed care agreements, network rental or
access agreements, and all capitation and reimbursement agreements, each of
which agreements shall be entered into by CEC, or an affiliate of CEC, unless
otherwise required by law.

5. Budget and Compensation Plan.

(a) Professional Corporation shall in consultation with CEC, adopt an
annual Budget for the Practice Locations. The Budget shall include, but is not
limited to, major operating objectives, anticipated Practice Revenues and
Practice Location Expenses, Professional Compensation, cash flow and capital
expenditures, and the Administrative Services Charge.

(b) Professional Compensation shall include all salaries and benefits paid
to optometrists employed by Professional Corporation, as well as technicians
employed by Professional Corporation. Professional Compensation shall be
calculated according to the terms of Professional Corporation's Employment
Agreements with optometrists and technicians. The Lead Optometrist for each
Practice Location shall make recommendations to Professional Corporation on
Professional Compensation for his or her Practice Location.

(c) As compensation to CEC for rendering those services set forth in
Section 4 of this Agreement, which administratively support Professional
Corporation's eye care centers, OECC shall pay an Administrative Services Charge
to CEC. For the period from the Closing of the

5
<PAGE>

Contemplated Transactions (as such terms are defined in the Agreement and Plan
of Merger dated April 12, 1999, by and among PrimeVision Health, Inc., OptiCare
Eye Health Centers, Inc., Saratoga Resources, Inc. and certain other parties)
through December 31, 1999, the Administrative Services Charge shall be
calculated as set forth in Exhibit C. Thereafter, by November 30th of each
calendar year, the Administrative Services charge shall be negotiated by OECC
and CEC, in good faith, for the following calendar year, in accordance with
Section 5(a) of this Agreement. In the event that OECC and CEC are unable to
agree on the Administrative Services Charge for the following year, then the
Administrative Services Charge for the following year shall be the current
Administrative Services Charge increased by a factor of eight percent (8%).

6. Billing and Collections.

(a) It is agreed that only CEC shall bill, collect and receive payment on
behalf of Professional Corporation for the performance of services and sale of
goods by the Practice Locations. CEC shall submit all claims and other documents
necessary or appropriate for making claims for such services, to collect,
receive payment of, receipt for and give discharges and releases of all claims
for such eye care services; to make demand with respect to, settle, compromise
and adjust such claims, and to commence and prosecute in the name of
Professional Corporation or any employee any suit, action or proceeding to
collect any such claims. CEC will use commercially reasonable efforts to
properly and promptly perform such duties. In performing such duties, CEC shall
have the right, after giving reasonable notice, to inspect and copy the records
of Professional Corporation relating to the eye care services rendered by
Professional Corporation and its employees, subject to applicable law.
Professional Corporation shall ensure that each of its employees shall submit
timely, accurate and complete billing information to CEC in compliance with all
applicable laws, regulations, policies and practices governing payment for eye
care services rendered by Professional Corporation.

(b) CEC shall, in the name of Professional Corporation, deposit in
Professional Corporation's bank account (the "Deposit Account") all receipts and
monies arising from the sale of goods or performance of services at or on behalf
of the Practice Locations ("Practice Location Revenues") that are received by
CEC on behalf of Professional Corporation. Professional Corporation shall have
sole control of the the Deposit Account, and the bank shall be subject only to
Professional Corporation's instructions regarding the Deposit Account, which
will be set up as a lockbox account such that all checks or other payments are
immediately processed, endorsed and funds credited, and no withdrawals are made
from the account by Professional Corporation. The Deposit Account shall be
subject to a standing transfer order from Professional Corporation as
hereinafter set forth. Professional Corporation will retain absolute right to
cancel or change the standing transfer order with the bank. It is specifically
agreed and understood that all revenues of

6
<PAGE>

the Practice Locations, to the extent permitted by law, shall be delivered to
CEC by or on behalf of Professional Corporation for deposit directly into the
Deposit Account.

(c) Disbursements from the Deposit Account shall be made according to the
Budget for the Practice Locations set forth in Section 5 hereof, in the
following manner. On a daily basis, Professional Corporation's Deposit Account
will be swept and all funds therein transferred and deposited in one or more
investment accounts of CEC. All funds deposited in such account(s) will be
maintained, tracked and recorded in such account(s) as a Professional
Corporation subaccount (PC Account). CEC will pay for all operating and non
operating expenses arising out of the operation of the Professional Corporation,
including but not limited to utilities and other facility expenses, cost of
supplies and inventory and other direct and indirect costs and expenses of
operating the Practice Locations ("Practice Location Expenses"). All Practice
Location Expenses are covered by CEC as part of CEC services under Section 4 of
this Agreement and are included in CEC's Administrative Services Charge as set
forth in Section 5(c) of this Agreement. Professional Corporation will be
responsible for all Professional Compensation.

7. Quality Assurance

(a) Professional Corporation shall establish a Quality Assurance Committee
which will be responsible for evaluating the quality of care provided by the
Practice Locations and making appropriate recommendations.

(b) The resources of CEC will be available to assist Professional
Corporation in monitoring the utilization and quality of services provided by
the Practice Locations and to assist Professional Corporation in implementing
quality improvement programs.

8. Books and Records.

(a) Professional Corporation shall be the owner and custodian of all
records pertaining to eye care services rendered in connection with the Practice
Locations, and all other records of the Practice Locations. The records
pertaining to eye care services shall at all times be freely available for the
use of the optometrists employed by Professional Corporation; provided, however
that such patient records may not be removed from a Practice Location without
Professional Corporation's prior written consent unless directed by the
applicable patient. Professional Corporation shall be responsible for
prescribing the content of the patient records maintained for the Practice
Locations, consistent with applicable law, rules and regulations, and consistent
with the information and documentation requirements of third-party payors with
whom CEC contracts, and all applicable accrediting bodies. Professional
Corporation shall adhere to the record retention and destruction

7
<PAGE>

policies and procedures adopted by Professional Corporation, in accordance with
applicable laws, regulations and CEC's obligations to third party payors.

(b) CEC shall have access to patient information only as needed to provide
services to Professional Corporation pursuant to this Agreement. CEC shall
maintain confidentiality of all patient information, as required by state and
federal law. Professional Corporation shall not disclose patient records or
other patient information to third persons except such governmental agencies or
licensing bodies as required by law or regulation, unless the patient shall have
given his/her written consent for the release of the information or unless
otherwise required by law. The foregoing shall be deemed to include patient's
records and all other information and records kept in the normal operation of
the Practice Locations.

9. Independent Contractor.

(a) In the performance of their respective duties under this Services
Agreement, Professional Corporation and its optometrists shall at all times be
acting and performing collectively as independent contractors with CEC. Without
limiting the generality of the foregoing, neither CEC nor any of its affiliates
shall in any particular instance exercise any control or direction over the
clinical methods, procedures and practices utilized by Professional Corporation
and its optometrists either in the performance of their duties or in the
provision of optometric services and care hereunder, or interfere in the
professional judgment of optometrists, or cause any optometrist to do or take
any action which would be inconsistent with his or her physician-patient
responsibilities.

(b) Nothing contained in this Services Agreement shall be construed to deem
CEC responsible for any professional liability or other obligations of
Professional Corporation or its optometrists.

10. Covenant Not to Compete.

(a) During the term hereof and for two (2) years after the termination
hereof, Professional Corporation will not, without the prior written consent of
CEC, have an interest in (whether as a proprietor, partner, investor,
shareholder, officer, director, manager or any type of principal whatsoever) or
enter the employment of, or act as the agent or the advisor or consultant for, a
Competitive Business. For purposes of this Section, the term "Competitive
Business" shall mean any person, firm, partnership, association, corporation or
business organization, entity or enterprise which is not wholly owned by duly
licensed optometrists and which is or is about to operate any business which
manages comprehensive integrated eye health centers and eye health

8
<PAGE>

provider networks within North Carolina and in those counties in South Carolina
in which CEC is doing business.

(b) Professional Corporation agrees that CEC's remedy at law for any breach
of the covenants set forth in this Section 10 would be inadequate and agrees
that in addition to any remedy at law which it may have, CEC may be granted
temporary and permanent injunctive relief in any proceeding which may be brought
to enforce this Section 10, without the necessity of proof of actual damage,
and, furthermore, CEC may recover all costs and reasonable attorneys' fees
incurred as a result of a breach of the covenants set forth in Section 10(a).

(c) The provisions of Section 10 shall be null and void and of no force and
effect if the Closing of the Contemplated Transactions (as such terms are
defined in the Agreement and Plan of Merger dated April 12, 1999, by and among
PrimeVision Health, Inc., OptiCare Eye Health Centers, Inc., Saratoga Resources,
Inc., and certain other parties) does not occur on or before September 30, 1999,
and all other terms and conditions of the Settlement Agreement dated April 9,
1999, by and among CEC, Professional Corporation and certain other parties (the
"Settlement Agreement") required to be met by the Closing have not been met by
Closing.

11. Term.

(a) (i) Except as otherwise provided herein, this Services Agreement shall
remain in full force and effect for a term of fifteen (15) years from the date
hereof ("Initial Term") and shall automatically renew for successive terms of
five (5) years each (each such subsequent five (5) year term is hereinafter
referred to as a "Renewal Term") unless terminated as provided herein. (ii) This
Services Agreement shall automatically become terminable on thirty (30) days
notice if the Closing of the Contemplated Transactions has not occurred by
September 30, 1999, and all other terms and conditions of the Settlement
Agreement required to be met by the Closing have not been met by Closing.

(b) Subject to Section 11(a)(ii) hereof, either CEC or Professional
Corporation may elect to terminate this Services Agreement by written notice to
the other given not less than one hundred and eighty (180) days and not more
than one year prior to the end of the then current term.

(c) Either CEC or Professional Corporation may terminate this Services
Agreement by written notice to the other, upon the failure by the other to
perform one or more of its obligations under this Services Agreement, if such
failure continues uncorrected for sixty (60) days after receipt of written
notice thereof. Such notice shall describe the specific conduct which serves as
the basis of the alleged breach. Actions by CEC to manage, control, supervise or
conduct any of the acts or

9
<PAGE>

practices constituting the practice of optometry or to control or interfere with
the professional judgment of an optometrist shall constitute a breach of this
Services Agreement.

(d) CEC shall be entitled to terminate this Services Agreement immediately
if OECC cancels or changes the standing order for the Deposit Account as set
forth in Section 6(b) hereof or if CEC and OECC are unable to agree on the
Budget as set forth in Section 5 hereof.

(e) Upon termination of this Services Agreement, no party shall have any
further liability or obligation to any other hereunder, except for the
obligations under Sections 7,10 and 12 hereof, and except that each party shall
remain liable to the other with respect to any liability arising prior to such
termination, including without limitation, liability for the payment of the
Administrative Services Charge secured through the date of such termination.

(f) It is the intention of the parties hereto that the service arrangements
provided for herein not represent the unlawful practice of optometry by a
corporation, and this Services Agreement shall be construed accordingly, and the
parties shall take such reasonable steps, including consultation with the North
Carolina State Board of Examiners in Optometry and modification of this Services
Agreement as may be appropriate to implement such intention while preserving the
overall relationships contemplated hereby. If at any time CEC reasonably
concludes after consultation with Professional Corporation that as constituted,
or with modifications, the parties intention as aforesaid cannot be implemented,
then this Services Agreement shall be terminable by CEC or Professional
Corporation without further liability on ninety (90) days written notice to the
other party, which termination shall render null and void the covenant not to
compete contained in Section 10 of this Services Agreement.

12. Proprietary Interests and Rights.

(a) Professional Corporation recognizes the proprietary interest of CEC in
the trade name and trademark "CEC" and all other names, trademarks, service
marks, policies, procedures, operating manuals, forms, contracts and other
information used or employed by the Business. Upon the termination of this
Services Agreement, Professional Corporation shall delete any reference to CEC
and to any confusingly similar name, and shall provide evidence, reasonably
satisfactory to CEC, of such change, shall discontinue the use of such trade
name, the "CEC" trademark, and any other names, trade marks, service marks,
policies, procedures, operating manuals, forms, contract or other proprietary
information used in the Business, and shall agree to destroy and/or return to
CEC all copies of documents, forms, operating manuals and other materials
displaying such names, trade marks and service marks, or setting forth such
policies, procedures or other proprietary information.

(b) Professional Corporation acknowledges its confidential relationship
with CEC and CEC's ownership of all information relating to the Business,
including without limitation business

10
<PAGE>

methods, business plans, expansion and acquisition plans and strategy, marketing
plans, customer information and lists, statistical data and reports, and
financial information relating to the Business, (the foregoing collectively
referred to as "Confidential Information"). Professional Corporation
acknowledges and agrees that CEC is entitled to prevent its competitors from
obtaining and utilizing its Confidential Information and that Professional
Corporation may be provided access to the same by CEC solely to enable
Professional Corporation to perform the services provided for in this Services
Agreement. Professional Corporation agrees to hold CEC's Confidential
Information in strictest confidence and not to disclose it or allow it to be
disclosed directly or indirectly to any person or entity (other than persons
employed by Professional Corporation who have a need to know such information
and who are obligated by written agreement to maintain the confidentiality
thereof) without CEC's prior written consent.

(c) CEC recognizes the proprietary interest of Professional Corporation in
the name Optometric Eye Care Center, P.A. and all other names, trademarks,
service marks, policies, procedures, operating manuals, forms, contracts and
other information used or employed by Professional Corporation. Upon the
termination of this Services Agreement, CEC shall delete any reference to
Professional Corporation and to any confusingly similar name, and shall provide
evidence, reasonably satisfactory to Professional Corporation, of such change,
shall discontinue the use of such name, and any other names, trade marks,
service marks, policies, procedures, operating manuals, forms, contract or other
proprietary information used in the Practice Location, and shall agree to
destroy and/or return to CEC all copies of documents, forms, operating manuals
and other materials displaying such names, trade marks and service marks, or
setting forth such policies, procedures or other proprietary information.

(d) CEC acknowledges its confidential relationship with Professional
Corporation and Professional Corporation's ownership of all information relating
to Professional Corporation, including without limitation, optometric practice
standards, policies, and protocols, training programs and materials, educational
programs and materials, marketing plans, patient information and lists,
statistical data and reports, and financial information relating to the Practice
Locations, (the foregoing collectively referred to as "Confidential
Information"). CEC acknowledges and agrees that Professional Corporation is
entitled to prevent its competitors from obtaining and utilizing its
Confidential Information and that CEC may be provided access to the same by
Professional Corporation solely to enable CEC to perform the services provided
for in this Services Agreement. CEC agrees to hold Professional Corporation's
Confidential Information in strictest confidence and not to disclose it or allow
it to be disclosed directly or indirectly to any person or entity (other than
persons employed by CEC who have a need to know such information and who are
obligated by written agreement to maintain the confidentiality thereof) without
Professional Corporation's prior written consent.

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<PAGE>

13. Restrictions on Authority of Professional Corporation.

(a) Professional Corporation shall give CEC at least 180 days' prior
written notice of its decision to:

(i) adopt any annual or long-term capital or operating budget of
Professional Corporation;

(ii) enter into any contract or commitment the funds for which are not
provided in the operating budget mutually approved by
Professional Corporation and CEC;

(iii) sell, exchange, lease or otherwise dispose of all or
substantially all the assets of Professional Corporation;

(iv) merge or consolidate Professional Corporation with or into any
other entity;

(v) liquidate or dissolve Professional Corporation; or

(vi) authorize the filing of any receivership, bankruptcy, insolvency
or similar proceeding on behalf of Professional Corporation.

(vii) authorize the issuance of any capital stock of Professional
Corporation or of any options, warrants or other commitments to
issue such capital stock (except as provided in a stockholders'
agreement entered into between Professional Corporation and all
of its stockholders in form and substance reasonably acceptable
to CEC); or

(viii) amend Professional Corporation's Certificate of Incorporation
or Bylaws.

14. General Provisions.

(a) No failure by any party to insist upon the strict performance of any
covenant, agreement, term or condition of this Services Agreement or to exercise
a right or remedy shall constitute a waiver. No waiver of any breach shall
affect or alter this Services Agreement, but each and every covenant, condition,
agreement and term of this Services Agreement shall continue in full force and
effect with respect to any other existing or subsequent breach.

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<PAGE>

(b) This Services Agreement, together with the Employment Agreements,
constitute the entire agreement between the parties and contains all the
agreements between the parties with respect to the subject matter hereof. This
Services Agreement supersedes any and all prior agreements among the parties,
and all such prior agreements, and any duties and obligations arising
thereunder, are hereby rendered null and void.

(c) The provisions of this Services Agreement may be waived, altered,
amended or supplemented, in whole or in part, only by a writing signed by all of
the parties hereto. However, notwithstanding any other provision of this
Agreement, this Agreement shall be null and void and of no force or effect
unless the Closing of the Contemplated Transactions occurs on or before
September 30, 1999, and all terms and conditions of the Settlement Agreement
required to be met by the Closing have been met by the Closing.

(d) Neither this Services Agreement nor any right or interest hereunder may
be assigned in whole or in part by any party without the prior written consent
of the other parties, except that CEC may assign its rights or duties under this
Services Agreement to a corporation which acquires all or substantially all of
the assets of CEC, or with which CEC merges or consolidates.

(e) If any provision of this Services Agreement is held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provision of this Services Agreement that can be given effect without the
invalid provision. In such event, all parties agree that the court making such
determination shall have the power to alter or amend such provision so that it
shall be enforceable consistent with the intentions of the parties.

(f) This Services Agreement shall be construed and enforced under and in
accordance with the laws of the State of North Carolina.

(g) Nothing in this Services Agreement shall be construed as creating or
giving rise to any rights in any third parties or any persons other than the
parties hereto.

(h) All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be delivered personally or sent by
certified mail, postage prepaid, addressed to the party at the following
address:

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<PAGE>

If to CEC:

with a copy to:

If to Professional Corporation:

Any party may change its address for notice purposes by written notice to the
other party and such change shall be effective upon receipt. Notices shall be
deemed to have been received at the earlier of actual receipt or three (3) days
after deposit in the mail, as provided above.

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

CONSOLIDATED EYE CARE HEALTH CENTERS, INC.

By:
--------------------------------------

Name:
------------------------------------

Its:
-------------------------------------

OPTOMETRIC EYE CARE CENTER, P.A.

By:
--------------------------------------

President

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<PAGE>

EXHIBIT C
- ---------

For the period from the Closing of the Contemplated Transactions (as such
terms are defined in the Agreement and Plan of Merger dated April 12, 1999, by
and among PrimeVision Health, Inc., OptiCare Eye Health Centers, Inc., Saratoga
Resources, Inc. and certain other parties) through December 31, 1999, the
Administrative Services Charge shall be calculated as follows:

1. Professional Corporation shall pay to CEC a fixed fee of $185,000.00 per
month.

2. In addition, Professional Corporation shall pay to CEC __percent (__%) of
the collected revenues for optical goods; provided, however, that payment
shall not be made to CEC until Professional Compensation has been fully
paid, in accordance with Professional Corporation's Employment Agreements
and that such payment shall be reduced as necessary to fully fund
Professional Compensation.

<PAGE>

EXHIBIT 21 -- SUBSIDIARIES

1. The Registrant has two direct subsidiaries and owns 100% of the outstanding
capital stock of each:

a. PrimeVision Health, Inc., a Delaware corporation; and

b. OptiCare Eye Health Centers, Inc., a Connecticut corporation.

2. PrimeVision Health, Inc., owns 100% of the outstanding capital stock of the
following corporations:

a. Accountable Eye Care Associates, Inc., a California corporation;

b. Consolidated Eye Care, Inc., a North Carolina corporation;

c. PrimeVision Central, Inc., a Delaware corporation;

d. PrimeVision East, Inc., a Delaware corporation;

e. PrimeVision North Carolina, Inc., a North Carolina corporation;

f. PrimeVision University, Inc.;

g. PrimeVision West, Inc., a Delaware corporation.

h. Cohen Systems, Inc., a Florida corporation.

3. Consolidated Eye Care, Inc., owns 100% of the outstanding capital stock or
equity interests (except as noted) of the following entities:

a. AECC Total Vision Health Plan of Texas, Inc., a Texas corporation;

b. Association of Eye Care Centers Total vision Health Plan, Inc., a North
Carolina corporation;

c. Eye Care Eyes, a North Carolina general partnership; Consolidated Eye
Care, Inc., owns a 50% equity interest in the partnership, and 2 other
persons own the balance of equity interests.

4. Accountable Eye Care Associates, Inc., owns 51% of the capital stock of
Georgia Eye Care, Inc., a Georgia corporation.

<PAGE>

Exhibit 23.1

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Amendment No. 1 to Registration Statement No.
333-93043 on Form S-1 of OptiCare Health Systems, Inc. of our report related to
the combined financial statements of OptiCare Eye Health Centers, Inc. and
Affiliate dated March 26, 1999, appearing in the Prospectus, which is a part of
this Registration Statement, and to the reference to us under the heading
"Experts" in such Prospectus.

Deloitte & Touche LLP
Hartford, Connecticut

January 17, 2000

<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated May 7, 1999, with respect to the financial
statements of Prime Vision Health, Inc. and subsidiaries included in Amendment
No. 1 to the Registration Statement (Form S-1 No. 333-93043) and related
Prospectus of OptiCare Health Systems, Inc. for the registration of 4,000,000
shares of its common stock.

/s/ Ernst & Young LLP

Raleigh, North Carolina
January 17, 2000