EYE CARE CENTERS OF AMERICA INC, S-4/A, 1998-11-10

EYE CARE CENTERS OF AMERICA INC
S-4/A, 1998-11-10
RETAIL STORES, NEC

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 10, 1998

REGISTRATION NO. 333-56551
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 5

TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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EYE CARE CENTERS OF AMERICA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<TABLE>
<S> <C> <C>
TEXAS 5995 74-2337775
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>

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

11103 WEST AVENUE
SAN ANTONIO, TEXAS 78213
(210) 340-3531
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

SEE TABLE OF ADDITIONAL REGISTRANTS
------------------------

BERNARD W. ANDREWS
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
EYE CARE CENTERS OF AMERICA, INC.
11103 WEST AVENUE
SAN ANTONIO, TEXAS 78213
(210) 340-3531
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------

COPIES OF ALL COMMUNICATIONS TO:

FRANCIS J. FEENEY, JR., ESQ.
HUTCHINS, WHEELER & DITTMAR
A PROFESSIONAL CORPORATION
101 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
(617) 951-6600
------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement has become effective.

If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

TABLE OF ADDITIONAL REGISTRANTS

<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
STATE OR OTHER JURISDICTION PRIMARY STANDARD
EXACT NAME OF REGISTRANT OF INCORPORATION CLASSIFICATION CODE I.R.S EMPLOYER
AS SPECIFIED IN ITS CHARTER OR ORGANIZATION IDENTIFICATION NO.
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ECCA Managed Vision Care, Inc.(1) Texas 5995 74-2759084
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Enclave Advancement Group, Inc.(1) Texas 5995 74-2510780
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Eye Care Holdings, Inc.(1) Delaware 6719 74-2849556
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Hour Eyes, Inc.(2) Maryland 5995 54-1517741
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Metropolitan Vision Services, Inc.(2) Virginia 5995 54-1579086
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Skylab Optical, Inc.(2) Virginia 5995 54-1450693
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The Samit Group, Inc.(2) Delaware 5995 54-1702412
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Visionary MSO, Inc.(2) Delaware 8741 74-2849555
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Visionary Properties, Inc.(2) Delaware 6531 74-2849554
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Visionary Retail Management, Inc.(2) Delaware 6531 74-2849552
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Visionworks Holdings, Inc.(1) Florida 6719 59-3226333
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Visionworks, Inc.(1) Florida 5995 59-3226331
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Visionworks Properties, Inc.(1) Florida 6531 59-3226335
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- --------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) The address, including zip code, and telephone number, including area code,
of the Additional Registrant's principal executive offices is 11103 West
Avenue, San Antonio, Texas 78213, (210) 340-3531.

(2) The address, including zip code, and telephone number, including area code,
of the Additional Registrant's principal executive offices is 5568 General
Washington Drive, Suite A-215, Alexandria, Virginia 22312, (703) 941-8100.
<PAGE> 3

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

SUBJECT TO COMPLETION, DATED NOVEMBER 10, 1998

PROSPECTUS
$150,000,000

[EYE CARE CENTERS OF AMERICA, INC. LOGO]
------------------

OFFER TO EXCHANGE $100,000,000 IN PRINCIPAL AMOUNT OF 9 1/8% SENIOR
SUBORDINATED NOTES DUE 2008 FOR $100,000,000 IN PRINCIPAL AMOUNT OF OUTSTANDING
9 1/8% SENIOR SUBORDINATED NOTES DUE 2008, AND $50,000,000 IN PRINCIPAL AMOUNT
OF FLOATING INTEREST RATE SUBORDINATED TERM SECURITIES DUE 2008 (FIRSTS(SM)*)
FOR $50,000,000 IN PRINCIPAL AMOUNT OF OUTSTANDING FLOATING INTEREST RATE
SUBORDINATED TERM SECURITIES DUE 2008 (FIRSTS(SM)*).

Eye Care Centers of America, Inc., a Texas corporation (the "Company" or
"Issuer"), hereby offers to exchange (the "Exchange Offer") up to $150,000,000
aggregate principal amount of its senior subordinated notes due 2008, consisting
of $100,000,000 aggregate principal amount of its 9 1/8% Senior Subordinated
Notes due 2008 (the "Fixed Rate Exchange Notes") for $100,000,000 aggregate
principal amount of its outstanding 9 1/8% Senior Subordinated Notes due 2008
(the "Fixed Rate Notes"), and $50,000,000 aggregate principal amount of its
Floating Interest Rate Subordinated Term Securities due 2008 (the "Floating Rate
Exchange Notes" and, together with the Fixed Rate Exchange Notes, the "Exchange
Notes") for $50,000,000 aggregate principal amount of its outstanding Floating
Interest Rate Subordinated Term Securities due 2008 (the "Floating Rate Notes"
and together with the Fixed Rate Notes, the "Initial Notes" and together with
the Exchange Notes, the "Notes").

The terms of the Exchange Notes are identical in all respects (including
principal amount, interest rate and maturity) to the terms of the Initial Notes
for which they may be exchanged pursuant to this offer, except that the Exchange
Notes are freely transferable by holders thereof (except as provided in the next
paragraph below) and are issued without any covenant upon the Issuer regarding
registration. The Exchange Notes will be issued under the same indenture
governing the Initial Notes. For a complete description of the terms of the
Exchange Notes, see "Description of the Exchange Notes." There will be no cash
proceeds to the Issuer from this offer. The Exchange Notes will be guaranteed on
a senior subordinated basis, jointly and severally (the "Note Guarantees"), by
the Company's domestic subsidiaries (the "Guarantors"). The Exchange Note
Guarantees are an unconditional obligation of the Guarantors.

The Initial Notes were originally issued and sold on April 24, 1998 (the
"Issue Date") in a transaction (the "Initial Offering") not registered under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance upon the
exemption provided in Section 4(2) of the Securities Act. Accordingly, the
Initial Notes may not be reoffered, resold or otherwise pledged, hypothecated or
transferred in the United States unless so registered or unless an applicable
exemption from the registration requirements of the Securities Act is available.
Based upon the interpretations by the Staff of the Securities and Exchange
Commission (the "Commission") issued to third parties, the Issuer believes that
the Exchange Notes issued pursuant to the Exchange Offer in exchange for Initial
Notes may be offered for resale, resold or otherwise transferred by holders
thereof (other than any holder which is an "affiliate" of the Issuer within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act provided
that such Exchange Notes are acquired in the ordinary course of such holders'
business and such holders have no arrangement with any person to participate in
the distribution of such Exchange Notes. Each broker-dealer that receives
Exchange Notes for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. The Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Initial Notes where such Initial Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. Broker-dealers who did not acquire their Initial Notes as a result
of market-making or other trading activities may not participate in the Exchange
Offer. The Issuer has agreed that, for a period of 180 days after the Expiration
Date, it will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution."

The Initial Notes and the Exchange Notes constitute issues of securities
with no established trading market. Any Initial Notes not tendered and accepted
in the Exchange Offer will remain outstanding. To the extent that Initial Notes
are tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered and tendered but unaccepted Initial Notes could be adversely
affected. Following consummation of the Exchange Offer, the holders of the
Initial Notes will continue to be subject to the existing restrictions on
transfer thereof and the Issuer will have no further obligation to such holders
to provide for the registration under the Securities Act of the Initial Notes
held by them. No assurance can be given as to the liquidity of the trading
market for either the Initial Notes or the Exchange Notes. The Company does not
intend to apply for listing of the Exchange Notes offered hereby on any
securities exchange or through the National Association of Securities Dealers
Automated Quotation System.

The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Initial Notes being tendered for exchange. The Exchange Offer will
expire at 5:00 p.m., New York City time, on , 1998, unless
extended (the "Expiration Date"). The date of acceptance for exchange for the
Initial Notes (the "Exchange Date") will be the first business day following the
Expiration Date. Initial Notes tendered pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date; otherwise such tenders are
irrevocable.
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INTEREST ON THE EXCHANGE NOTES SHALL ACCRUE FROM APRIL 24, 1998 OR FROM THE
LAST MAY 1 OR NOVEMBER 1 (EACH AN "INTEREST PAYMENT DATE") ON WHICH INTEREST WAS
PAID ON THE INITIAL NOTES SO SURRENDERED.

SEE "RISK FACTORS," BEGINNING ON PAGE 15, FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED IN EVALUATING AN INVESTMENT IN THE NOTES.
------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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* FIRSTS is a service mark of BT Alex. Brown Incorporated.
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THE DATE OF THIS PROSPECTUS IS , 1998.
<PAGE> 4

AVAILABLE INFORMATION

The Issuer has filed with the Commission a Registration Statement on Form
S-4 (the "Registration Statement," which term shall include all amendments,
exhibits, annexes and schedules thereto) pursuant to the Securities Act, and the
rules and regulations promulgated thereunder, covering the Exchange Notes being
offered hereby. This Prospectus does not contain all the information set forth
in the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission and to which reference is
hereby made. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily complete.
With respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved, and each such statement shall
be deemed qualified in its entirety by such reference.

For further information with respect to the Issuer and the Notes, reference
is made to such Registration Statement. A copy of the Registration Statement can
be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W. Washington,
D.C. 20549, and at the Regional Offices of the Commission at 7 World Trade
Center, 13th Floor, New York, New York 10048 and Northwestern Atrium Center, 500
West Madison Street Suite 1400, Chicago, Illinois 60661-2511. Copies of such
materials can be obtained from the public reference facilities of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. The address of such site is http://www.sec.gov.

The Issuer intends, and is required by the terms of the Indenture dated as
of April 24, 1998 (the "Indenture") among the Company, the Guarantors and the
United States Trust Company of New York, as trustee, under which the Notes are
issued, to furnish the holders of the Notes with annual reports containing
financial statements audited by its independent certified public accountants and
with quarterly reports containing unaudited financial statements for each of the
first three quarters of each fiscal year.

Upon completion of the Exchange Offer, the Issuer will become subject to
the informational requirements of the Securities Exchange Act of 1934, and in
accordance therewith, will file reports and other information with the
Securities and Exchange Commission.

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

Until , all dealers effecting transactions in the
registered securities, whether or not participating in this distribution, may be
required to deliver a prospectus. This is in addition to the obligation of
dealers to deliver a prospectus when acting as underwriters and with respect to
their unsold allotments or subscriptions.

i
<PAGE> 5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and the consolidated
financial statements and notes thereto appearing elsewhere in this Prospectus.
As used herein, unless the context otherwise indicates, references in this
Prospectus to the "Company" or "ECCA" refer to Eye Care Centers of America, Inc.
and its subsidiaries. Unless otherwise indicated, references herein to the
number of stores for the Company are as of June 1, 1998 and include the twelve
Hour Eyes stores located in Virginia which are managed by the Company.

THE COMPANY

Eye Care Centers of America, Inc. ("ECCA" or the "Company") is the third
largest retail optical chain in the United States as measured by net revenues,
operating 243 stores, 214 of which are optical superstores. The Company operates
predominately under the trade name "EyeMasters," and in certain geographical
regions under the trade names "Binyon's," "Visionworks" and "Hour Eyes." The
Company utilizes a strategy of clustering its stores within its targeted markets
in order to build local market leadership and strong consumer brand awareness,
as well as to achieve economies of scale in advertising, management and field
overhead. Management believes that the Company has the number one or two
superstore market share position in fourteen of its top fifteen markets,
including Washington, D.C., Houston, Dallas, Tampa/St. Petersburg, Phoenix,
Miami/Ft. Lauderdale, Portland and San Antonio. Based on a 1997 survey conducted
at the request of the Company on an annual basis in seven of its top markets,
the Company has average total brand awareness of 90% and a reputation for
quality service and value. The Company has achieved positive same store sales
growth in each of the past five years and generated net revenues, income (loss)
from continuing operations, and EBITDA for the fiscal year ended January 3,
1998, pro forma for the Hour Eyes Acquisition and the VisionWorld Acquisition,
of $264.2 million, $(2.4) million and $39.6 million, respectively. The Company's
retained deficit as of July 4, 1998 was $62.2 million. See "Summary Historical
and Pro Forma Financial Data."

The Company's stores, which average approximately 4,600 square feet, carry
a broad selection of branded frames at competitive prices, including designer
eyewear such as Armani, Laura Ashley, Calvin Klein and Polo/Ralph Lauren, as
well as its own proprietary brands. In addition, the Company's superstores offer
customers "one-hour service" on most prescriptions, utilizing on-site processing
laboratories to grind, coat and edge lenses. Moreover, independent optometrists
("ODs"), located inside or adjacent to all of the Company's stores, offer
customers convenient eye exams and provide a consistent source of retail
business. In the Company's experience, over 80% of such ODs' regular eye exam
patients purchase eyewear from the Company.

Since joining the Company as President and Chief Executive Officer in early
1996, Bernard W. Andrews has built a management team with extensive operating,
merchandising and marketing experience in the optical and retail industries.
This management team has focused on improving operating efficiencies and growing
the business through both strategic acquisitions and new store openings. Under
current management, the Company's EBITDA margin has increased from 10.7% in 1995
to 16.1% in 1997 (pro forma for the Hour Eyes Acquisition and the VisionWorld
Acquisition), while the Company's store base has increased from 152 to 239 over
the same period, primarily as a result of two acquisitions. The Company's senior
management team owns or has the right to acquire approximately 15% of the
Company's common stock on a fully diluted basis, through direct ownership and
incentive option plans.

INDUSTRY

Optical retail sales in the United States totaled $15.4 billion in 1997,
according to industry sources. Since 1987, the optical retail market has grown
each year at an average annual rate of approximately 5%. Management believes
that the industry will continue to grow at a similar rate over the next several
years due to a number of favorable trends discussed below. The optical retail
industry in the United States is highly fragmented and consists of (i) optical
retail chains, (ii) independent practitioners (including opticians,

1
<PAGE> 6

optometrists and ophthalmologists) and (iii) warehouse clubs and mass
merchandisers. In 1997, optical retail chains accounted for approximately 32.5%
of the total market, while independent practitioners comprised approximately
61.5% and other distribution channels represented approximately 6.0%. Optical
retail chains have begun consolidating the optical retail market at the expense
of independent practitioners. Management believes that growth and consolidation
in the optical retail market is being driven by the following trends:

FAVORABLE DEMOGRAPHICS. Approximately 60% of the U.S. population, or
160 million individuals, and nearly 95% of people over the age of
forty-five, require some form of corrective eyewear. In addition to their
higher utilization of corrective eyewear, the over forty-five segment
spends more per pair of glasses purchased due to their need for premium
priced products like bifocals and progressive lenses and their generally
higher levels of discretionary income. In 1996, the over forty-five segment
represented 58% of retail optical spending despite representing just 33% of
the U.S. population. As the "baby boom" generation ages and life
expectancies increase, management believes that this demographic trend is
likely to increase the number of eyewear customers and the average price
per purchase.

INCREASING ROLE OF MANAGED VISION CARE. Management believes that
optical retail sales through managed vision care programs, which were
approximately $4.1 billion (or approximately 30% of the market) in 1995,
will continue to increase over the next several years. Managed vision care,
including the benefits of routine annual eye examinations and eyewear
discounts, is being utilized by a growing number of managed care
participants. Since regular eye examinations may assist in the
identification and prevention of more serious conditions, managed care
programs encourage members to have their eyes examined more regularly,
which in turn typically results in more frequent eyewear replacement.
Management believes that large optical retail chains are likely to be the
greatest beneficiaries of this trend as payers look to contract with chains
who deliver superior customer service, have strong local brand awareness,
offer competitive prices, provide multiple convenient locations and
flexible hours of operation, and possess sophisticated information
management and billing systems.

CONSOLIDATION. Although the optical retail market in the United
States is highly fragmented, the industry is experiencing increasing
consolidation. In 1997, the top ten and the top one hundred optical retail
chains represented approximately 18% and 28% of the total optical market,
respectively. The remaining approximately 72% of the market includes
independent practitioners, smaller chains, warehouse clubs and mass
merchandisers. Independent practitioners' market share dropped from 63.0%
to 61.5% between 1996 and 1997, while optical retail chains' market share
increased over the same period from 31.3% to 32.5%. Management believes
that several factors are likely to drive further consolidation: (i) the
importance of scale to managed care programs which require providers with
strong local brand awareness, multiple locations and sophisticated
information management and billing systems, (ii) efficiencies of scale in
merchandising, marketing, manufacturing and sourcing product, (iii) the
significant capital required to build lens processing laboratories on
premises and (iv) the desire of small regional chains and independent
practitioners to achieve liquidity by selling to larger optical retail
chains. Management believes that the large optical retail chains are better
positioned than mass merchandisers and warehouse clubs to benefit from this
consolidation trend and that such chains will continue to gain market share
from the independent practitioners over the next several years.

NEW PRODUCT INNOVATIONS. Since the late 1980's, several technological
innovations have led to the introduction of new optical lenses and lens
treatments, including progressive addition lenses (no-line bifocals),
high-index and aspheric lenses (thinner and lighter), polycarbonate lenses
(shatter resistant) and anti-reflective coatings. These innovative products
are popular among consumers, generally command premium prices and yield
higher margins than traditional lenses. The average retail price for all
lenses and lens treatments has increased over 4% per year from $87.94 to
$95.50 between 1995 and 1997, reflecting, in part, the rising popularity of
these products. Similarly, during the same period, the average retail price
for eyeglass frames has increased over 4% per year from $57.03 to $62.20,
due in large part to both technological innovation and an evolving customer
preference for higher priced, branded frames.

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<PAGE> 7

increases in the frequency of eyewear purchases, as plan participants are
encouraged to have their eyes examined more frequently. In addition,
consumers are currently purchasing multiple eyewear products for distinct
occasions (work, casual, fashion, driving, sun, sport, etc.), driven, in
part, by the growing consumer perception of eyewear as a fashion accessory.

BUSINESS STRATEGY

The Company plans to capitalize on these favorable industry trends by
building local market leadership through the implementation of the following key
elements of its business strategy.

MAXIMIZE STORE PROFITABILITY. Management plans to continue to improve
the Company's operating margins through superior day-to-day store
execution, customer service and inventory asset management. The Company has
implemented various programs focused on (i) increased sales of higher
margin, value-added and proprietary products, (ii) continued store cost
reductions, (iii) extensive productivity-enhancing employee training and
(iv) an upgraded point-of-sale information system. Management believes its
store clustering strategy will enable the Company to continue to leverage
local advertising and field management costs to improve its operating
margins. In addition, management believes that the Company can achieve
further improvement in its operating margins by realizing certain synergies
from its recent acquisitions, particularly from the recent introduction of
its point-of-sale information system to the acquired stores.

EXPAND STORE BASE. In order to continue to build leadership in its
targeted markets, the Company plans to take advantage of significant
"fill-in" opportunities in its existing markets, as well as enter
attractive new markets where it can achieve a number one or two market
share position. Consequently, the Company currently plans to open twenty to
thirty new stores per year over the next three years, with approximately
two-thirds of these new stores currently expected to be opened in existing
markets. The Company's anticipated cost for new store openings for the next
three years is approximately $35.0 million, which the Company expects to
fund utilizing its internal operating cash flows. Management believes that
the Company has in place the systems and infrastructure to execute its
expanded new store opening plan. The Company uses a sophisticated site
selection model utilizing proprietary software which incorporates industry
and internally generated data (such as competitive market factors,
demographics and customer specific information) to evaluate the
attractiveness of new store openings. The Company invests approximately
$500,000 in capital expenditures, inventory and pre-opening costs per new
store, and generally expects its new stores to generate positive cash flow
by the sixth month of operation.

PURSUE ACQUISITION OPPORTUNITIES. The Company has successfully
acquired and integrated two acquisitions over the last two years: (i) in
September 1996, Visionworks Holdings, Inc., a sixty store optical retailer
located along the Atlantic Coast from Florida to Washington, D.C. and (ii)
in September 1997, The Samit Group, Inc. ("TSGI"), with ten Hour Eyes
stores in Maryland and Washington, D.C. Simultaneously with the acquisition
of TSGI, the Company entered into a long-term business management agreement
with a private optometrist to manage an additional twelve Hour Eyes stores
located in Virginia (collectively with the acquisition of TSGI, the "Hour
Eyes Acquisition"). In September 1998, the Company acquired the assets of
Dr. Bizer's VisionWorld, PLLC ("VisionWorld"), a nineteen store optical
retailer located primarily in Kentucky and Tennessee. Simultaneously with
the acquisition of VisionWorld, the Company entered into a long-term
business management agreement with a private optometrist to manage the
stores (collectively with the acquisition of VisionWorld, the "VisionWorld
Acquisition"). See "Recent Developments". Management believes that it has
the experience, internal resources and information systems to continue to
identify and integrate acquisitions successfully. Acquisition candidates
typically would be independent practitioners and smaller chains, which face
increasing difficulties competing with larger, more efficient chains,
particularly in a managed care environment. In addition, acquisition
candidates generally would have significant market share in a given
geographic region and offer the Company opportunities to increase revenues,
generate cost savings and extend managed care coverage.

CAPITALIZE ON MANAGED VISION CARE. Management has made a strategic
decision to pursue managed care contracts aggressively in order to help
grow the Company's retail business and over the past

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<PAGE> 8

three years has devoted significant management resources to the development
of its managed care business. As part of its effort, the Company has: (i)
implemented direct marketing programs and information systems necessary to
compete for managed care contracts with large employers, groups of
employers and other third party payers, (ii) developed significant
relationships with certain HMOs and insurance companies (e.g., Kaiser
Permanente and Humana), which have strengthened the Company's ability to
secure managed care contracts, (iii) entered into a strategic relationship
with Vision Twenty-One, Inc. ("VTO") to be the principal optical retail
center of its total eye care delivery systems and (iv) obtained a single
service HMO license in Texas to target additional managed care contracts
with large employers and groups of employers. While the average ticket
price on products purchased under managed care reimbursement plans is
typically lower, managed care transactions generally earn comparable
operating profit margins as they require less promotional spending and
advertising support. The Company believes that the increased volume
resulting from managed care contracts more than offsets the lower average
ticket price. As of January 3, 1998, the Company participated in managed
vision care programs covering approximately 2.5 million lives, with retail
sales from managed care lives totaling approximately 20% of fiscal 1997 net
revenues. Management believes that the increasing role of managed vision
care will continue to benefit the Company and other large retail optical
chains with strong local market shares, broad geographic coverage and
sophisticated information management and billing systems. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Overview."

THE RECAPITALIZATION

On March 6, 1998, ECCA Merger Corp. ("Merger Corp."), a Delaware
corporation formed by Thomas H. Lee Company ("THL Co."), and the Company entered
into a recapitalization agreement (the "Recapitalization Agreement") providing
for, among other things, the merger of such corporation with and into the
Company (the "Merger" and, together with the financing of the recapitalization
and related transactions described below, the "Recapitalization"). The
Recapitalization was consummated on April 24, 1998. Thomas H. Lee Equity Fund
IV, L.P. ("THL Fund IV") and other affiliates of THL Co. (collectively with THL
Fund IV and THL Co., "THL") currently own approximately 89.7% of the issued and
outstanding shares of common stock of the Company ("Common Stock"), existing
shareholders (including management) of the Company retained approximately 7.3%
of the issued and outstanding Common Stock and management purchased additional
shares representing approximately 3.0% of the issued and outstanding Common
Stock. The total transaction value of the Recapitalization was approximately
$323.8 million, including related fees and expenses, and the implied total
equity value of the Company following the Recapitalization is approximately
$107.3 million.

In addition to the net proceeds from the sale of the Initial Notes, the
Recapitalization was financed with (a) approximately $55.0 million of borrowings
under the New Credit Facility (see "Description of the New Credit Facility") and
(b) approximately $99.4 million from the sale of capital stock to THL, Bernard
W. Andrews and other members of management (the "Equity Contribution")
consisting of (i) approximately $71.6 million from the sale of Common Stock and
(ii) approximately $27.8 million from the sale of shares of a newly created
series of preferred stock of the Company ("New Preferred Stock"). See
"Description of New Preferred Stock." The Company used the proceeds from such
bank borrowings, the sale of the Initial Notes, and the Equity Contribution
principally to finance the conversion into cash of the shares of Common Stock
which were not retained by existing stockholders, to refinance certain existing
indebtedness of the Company, to redeem certain outstanding preferred stock of
the Company and to pay related fees and expenses of the Recapitalization. In
connection with the Recapitalization, the Company defeased its previously issued
12% Senior Notes due 2003 (the "Senior Notes") by depositing with the trustee
for the Senior Notes (i) an irrevocable notice of redemption of the Senior Notes
on October 1, 1998 and (ii) United States government securities in an amount
necessary to yield on October 1, 1998 $78.4 million, which constitutes the
principal amount, premium and interest payable on the Senior Notes on the
October 1, 1998 redemption date.

4
<PAGE> 9

The following table sets forth the cash sources and uses of funds in
connection with the financing of the Recapitalization, which occurred on April
24, 1998:

<TABLE>
<CAPTION>
AMOUNT
--------------
SOURCES: (IN THOUSANDS)
<S> <C>
New Credit Facility(1).................................... $ 55,000
Notes offered hereby(2)................................... 149,511
New equity capital(3)..................................... 99,440
--------
Total............................................. $303,951
========
USES:
Cash merger consideration................................. $153,036
Repayment of existing indebtedness(4)..................... 102,866
Redemption of existing preferred stock.................... 12,480
Excess cash............................................... 5,101
Bond defeasance cost...................................... 6,619
Estimated fees and expenses............................... 23,849
--------
Total............................................. $303,951
========
</TABLE>

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

(1) The New Credit Facility consists of (i) the $55.0 million Term Loan
Facility (as defined); (ii) the $35.0 million Revolving Credit
Facility (as defined); and (iii) the $100.0 million Acquisition
Facility (as defined), of which $50.0 million was committed at
closing. Approximately $10.0 million of the Revolving Credit Facility
is restricted for the repayment of the capital lease obligation due
in February 1999.

(2) Reflects $100.0 million of Fixed Rate Notes, net of discount of $0.5
million, and $50.0 million of Floating Rate Notes.

(3) Does not include Common Stock of $5.6 million retained by existing
shareholders and New Preferred Stock of $2.3 million received by such
shareholders.

(4) Reflects the payment of existing debt of $102.6 million, (including
$70.0 million in connection with the defeasance of the Senior Notes)
and the payment of $0.3 million of accrued interest payable. In
connection with the Recapitalization, the Company defeased the
previously issued Senior Notes by depositing with the trustee for the
Senior Notes (i) an irrevocable notice of redemption of the Senior
Notes on October 1, 1998 and (ii) United States government securities
in an amount necessary to yield on October 1, 1998 $78.4 million,
which constitutes the principal amount, premium and interest payable
on such Senior Notes on the October 1, 1998 redemption date. The
Senior Notes continue to be reflected as a liability on the Company's
balance sheet with an offsetting asset representing the deposit of
United States government securities made for defeasance through the
second quarter of fiscal 1998.

5
<PAGE> 10

THE EXCHANGE OFFER

THE EXCHANGE OFFER............ The Issuer is offering to exchange (the
"Exchange Offer") up to $100,000,000 in
principal amount of its 9 1/8% Senior
Subordinated Notes due 2008 and up to
$50,000,000 in principal amount of its Floating
Interest Rate Subordinated Term Securities due
2008 (FIRSTS(SM)) (collectively, the "Exchange
Notes") for $100,000,000 in principal amount of
its outstanding 9 1/8% Senior Subordinated
Notes due 2008, and $50,000,000 in principal
amount of its outstanding Floating Interest
Rate Subordinated Term Securities due 2008
(FIRSTS(SM)), respectively (collectively, the
"Initial Notes" and together with the Exchange
Notes the "Notes"). The terms of the Exchange
Notes are substantially identical in all
respects (including principal amount, interest
rate and maturity) to the terms of the Initial
Notes for which they may be exchanged pursuant
to the Exchange Offer, except that the Exchange
Notes are freely transferable by holders
thereof (except as provided herein see "The
Exchange Offer -- Terms and Conditions of the
Exchange") and are not subject to any covenant
regarding registration under the Securities
Act. The Exchange Notes will be guaranteed on a
senior subordinated basis, jointly and
severally, by the Guarantors (the "Exchange
Note Guarantees").

INTEREST PAYMENTS............. Interest on the Exchange Notes shall accrue
from April 24, 1998 or from the last Interest
Payment Date on which interest was paid on the
Initial Notes so surrendered. Interest on the
Fixed Rate Exchange Notes will accrue at the
rate of 9 1/8% per annum. The Floating Rate
Exchange Notes will bear interest at a rate per
annum, reset semiannually equal to LIBOR (see
"Description of Exchange Notes -- Principal,
Maturity and Interest") plus 3.98%.

MINIMUM CONDITION............. The Exchange Offer is not conditioned upon any
minimum aggregate principal amount of the
Initial Notes being tendered for exchange.

EXPIRATION DATE............... The Exchange Offer will expire at 5:00 p.m.,
New York City time, on , 1998 unless
extended.

EXCHANGE DATE................. The date of acceptance for exchange of the
Initial Notes will be the first business day
following the Expiration Date.

CONDITION OF THE EXCHANGE
OFFER......................... The obligation of the Issuer to consummate the
Exchange Offer is subject to certain
conditions. See "The Exchange
Offer -- Conditions to the Exchange Offer." The
Issuer reserves the right to terminate or amend
the Exchange Offer at any time prior to the
Expiration Date upon the occurrence of any such
condition.

WITHDRAWAL RIGHTS............. Tenders may be withdrawn at any time prior to
the Exchange Date. Otherwise, all tenders are
irrevocable. Any Initial Notes not accepted for
any reason will be returned without expense to
the tendering holders thereof as promptly as
practicable after the expiration or termination
of the Exchange Offer.

PROCEDURES FOR TENDERING
INITIAL NOTES................. See "The Exchange Offer -- How to Tender."

6
<PAGE> 11

FEDERAL INCOME TAX
CONSEQUENCES.................. The exchange of Initial Notes for Exchange
Notes should be treated as a "non-event" for
Federal income tax purposes. See "Income Tax
Considerations."

EFFECTS ON HOLDERS OF INITIAL
NOTES......................... As a result of the making of, and upon
acceptance for exchange of all validly tendered
Initial Notes pursuant to the terms of, this
Exchange Offer, the Issuer will have fulfilled
a covenant contained in the terms of the
Initial Notes and the Registration Rights
Agreement (the "Registration Rights
Agreement"), dated as of April 24 1998, by and
among the Company, the Guarantors, BT Alex.
Brown Incorporated and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, (collectively, the
"Initial Purchasers"), and, accordingly, there
will be no increase in the interest rate on the
Initial Notes pursuant to the terms of the
Registration Rights Agreement, the Initial
Notes or the Indenture. The holders of the
Initial Notes will have no further registration
rights under the Registration Rights Agreement
with respect to the Initial Notes. Holders of
the Initial Notes who do not tender their
Initial Notes in the Exchange Offer will
continue to hold such Initial Notes and their
rights under such Initial Notes will not be
altered, except for any such rights under the
Registration Rights Agreement, which by their
terms terminate or cease to have further
effectiveness as a result of the making of, and
the acceptance for exchange of all validly
tendered Initial Notes pursuant to, the
Exchange Offer. All untendered and tendered but
unaccepted Initial Notes will continue to be
subject to the restrictions on transfer
provided for in the Initial Notes and in the
Indenture. To the extent that Initial Notes are
tendered and accepted in the Exchange Offer,
the trading marked for untendered Initial Notes
could be adversely affected.

TERMS OF THE EXCHANGE NOTES

The Exchange Offer applies to $150,000,000 aggregate principal amount of
the Initial Notes. The form and terms of the Exchange Notes are the same as the
form and terms of the Initial Notes except as noted above and except that the
Exchange Notes have been registered under the Securities Act and, therefore,
will not bear legends restricting the transfer thereof. The Exchange Notes will
evidence the same debt as the Initial Notes and will be entitled to the benefits
of the Indenture. See "Description of the Exchange Notes."

Terms capitalized below have the meanings ascribed to them in "Description
of the Exchange Notes."

NOTES OFFERED................. $100,000,000 in principal amount of Issuer's
9 1/8% Senior Subordinated Notes due 2008 and
$50,000,000 in principal amount of Issuer's
Floating Interest Rate Subordinated Term
Securities due 2008 (FIRSTS(SM)) for
$100,000,000 in principal amount of the
Issuer's outstanding 9 1/8% Senior Subordinated
Notes due 2008, and $50,000,000 in principal
amount of the Issuer's outstanding Floating
Interest Rate Subordinated Term Securities due
2008 (FIRSTS(SM)), respectively.

MATURITY DATE................. May 1, 2008.

INTEREST PAYMENT DATES........ May 1 and November 1 of each year, commencing
November 1, 1998.

CHANGE OF CONTROL............. Upon the occurrence of a Change of Control,
each holder of Exchange Notes will have the
right to require the Issuer to
7
<PAGE> 12

repurchase all or any part of such holder's
Exchange Notes at an offer price in cash equal
to 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the date
of purchase. See "Description of Exchange
Notes -- Change of Control." There can be no
assurance that, in the event of Change of
Control, the Issuer would have sufficient funds
to purchase all Notes tendered. The Company's
offer to purchase the Exchange Notes may be
limited to the extent that the provisions of
any securities laws or regulations conflict
with the "Change of Control" provisions of the
Indenture, the Company shall comply with the
applicable securities laws or regulations and
shall not be deemed to have breached its
obligations under the "Change of Control"
provisions of the Indenture by virtue thereof.
The definition of Change of Control encompasses
the sale, lease, exchange or other transfer of
"all or substantially all" of the Company's
assets. The Company's offer to purchase the
Exchange Notes in the event of such sale of
assets is limited to the extent that there may
be a degree of uncertainty in ascertaining
whether a particular transaction would involve
a disposition of "all or substantially all" of
the assets of the Company, and therefore it may
be unclear as to whether a Change of Control
has occurred requiring the Company to
repurchase such Exchange Notes. Neither the
Board of Directors nor the Trustee may waive
the covenants set forth under the Indenture
relating to a holder's right to redemption upon
a Change of Control. In addition, the Indenture
may not be amended, changed or modified in any
material respect to alter the obligations of
the Company in the event of a Change of Control
or Asset Sale without the consent of the
holders of the Exchange Notes. A Change of
Control or a sale of all or substantially all
of the Company's assets encompasses a
transaction approved by the Company's Board of
Directors. The occurrence of a Change of
Control would constitute a default under the
New Credit Facility and may constitute a
default under the other agreements governing
Indebtedness that the Company or its
Subsidiaries may enter into from time to time.
The New Credit Facility prohibits the purchase
of the Exchange Notes by the Company in the
event of a Change of Control, unless and until
such time as the indebtedness under the New
Credit Facility is repaid in full and the
Company's failure to purchase the Exchange
Notes in such instance would result in a
default under the Indenture and the New Credit
Facility. The failure to pay principal at
maturity under the terms of any Indebtedness,
after giving effect to any applicable grace
period or extension thereof, would also result
in an event of default under the Exchange
Notes. See "Risk Factors -- Limitations on
Ability to Make Change of Control
Payment -- Cross Default under Exchange Notes"
and also "Description of Exchange Notes --
Certain Definitions -- Asset Sale and Change of
Control."

EXCHANGE NOTE GUARANTEES...... The Exchange Notes will be guaranteed on a
senior subordinated basis, jointly and
severally, (the "Exchange Note Guarantees") by
the domestic subsidiaries of the Issuer (the
"Guarantors"). The Exchange Note Guarantees
will be an unconditional obligation of the
Guarantors.

8
<PAGE> 13

RANKING....................... The Exchange Notes will be general unsecured
senior subordinated obligations of the Company
and subordinated in right of payment to all
existing and future Senior Indebtedness of the
Company, including indebtedness under the New
Credit Facility. The Exchange Notes will rank
pari passu in right of payment with any future
Senior Subordinated Indebtedness of the Company
and senior in right of payment to all existing
and future Subordinated Obligations of the
Company. The Exchange Note Guarantees will be
general unsecured senior subordinated
obligations of the Guarantors and will be
subordinated in right of payment to all
existing and future Guarantor Senior Debt,
including the guarantees of the Guarantors
under the New Credit Facility. The Exchange
Note Guarantees will rank pari passu with any
future Senior Subordinated Indebtedness of the
Guarantors and will rank senior in right of
payment to all other Subordinated Obligations
of the Guarantors. The Exchange Notes and the
Exchange Note Guarantees will also be
effectively subordinated to all secured
indebtedness of either the Company or any of
its subsidiaries (including indebtedness under
the New Credit Facility) to the extent of the
assets secured by such indebtedness. As of
April 4, 1998, on a pro forma basis after
giving effect to the Offering and the
Recapitalization, the total amount of all
indebtedness to which the Exchange Notes would
effectively be subordinated is approximately
$66.0 million of Senior Indebtedness
outstanding (including a $1.0 million guarantee
by the Company, but exclusive of unused
commitments). Although the Indenture contains
limitations on the amount of additional
Indebtedness which the Company and its
Restricted Subsidiaries may incur, under
certain circumstances the amount of certain
Indebtedness could be substantial and, in any
case, such Indebtedness may be Senior
Indebtedness, Guarantor Senior Indebtedness, or
Secure Indebtedness. See "Exchange Notes --
Ranking of Exchange Notes."

CERTAIN COVENANTS............. The Indenture pursuant to which the Exchange
Notes will be issued (the "Indenture") contains
certain covenants that, among other things,
will limit the ability of the Company and any
Restricted Subsidiary to (i) incur additional
indebtedness; (ii) pay dividends or make other
distributions in respect of its capital stock,
(iii) repurchase equity interests or
subordinated indebtedness, (iv) create certain
liens, (v) enter into certain transactions with
affiliates, (vi) consummate certain asset sales
and (vii) merge or consolidate. See
"Description of Exchange Notes -- Certain
Covenants." The Company will not, and will not
cause or permit its Restricted Subsidiaries to
declare or pay any dividend or make any
distribution (other than dividends or
distributions in Qualified Capital Stock) on or
in respect of shares of Capital Stock of the
Company or the Restricted Subsidiaries to
holders of such Capital Stock if (i) an Event
of Default has occurred and is continuing, (ii)
the Company is not able to incur $1.00 of
additional Indebtedness (other than Permitted
Indebtedness) or (iii) the sum of such payments
shall exceed a specified amount, calculated as
set forth under "Description of Exchange
Notes -- Certain Covenants -- Limitations on
Restricted Payments." This restricts each

9
<PAGE> 14

Restricted Subsidiary's ability to pay
dividends to the Company. In addition, under
certain circumstances, the Company will be
required to offer to purchase the Exchange
Notes, in whole or in part, at a purchase price
equal to 100% of the principal amount thereof,
plus accrued and unpaid interest to the date of
purchase, with the proceeds of certain Asset
Sales. All of such covenants are subject to
significant qualifications and exceptions. See
"Description of Exchange Notes -- Certain
Covenants."

USE OF PROCEEDS............... There will not be any proceeds from the
Exchange Offer. The net proceeds to the Issuer
from the sale of the Initial Notes was $144.5
million (after deducting discounts,
commissions, fees and expenses thereof) and
were used to fund a portion of the financing
for the Recapitalization and related
transactions, including to finance the
conversion into cash of shares of Common Stock
which were not retained by existing
stockholders, to refinance certain existing
indebtedness of the Company, to redeem certain
outstanding preferred stock of the Company and
to pay related fees and expenses of the
Recapitalization. See "Use of Proceeds."

ABSENCE OF MARKET FOR THE
EXCHANGE NOTES................ The Exchange Notes will be new securities for
which there is currently no trading market.
Although the Issuer has been advised by the
Initial Purchasers that, following the
completion of the Exchange Offer, the Initial
Purchasers presently intend to make a market in
the Exchange Notes, the Initial Purchasers are
under no obligation to do so and may
discontinue any market making activities at any
time without notice. Accordingly, there can be
no assurance as to the development or liquidity
of any market for the Exchange Notes. The
Issuer does not intend to apply for listing of
the Exchange Notes on any securities exchange
or through the National Association of
Securities Dealers Automated Quotation System.

NO PERSONAL LIABILITY OF
DIRECTORS, OFFICERS, EMPLOYEES
AND STOCKHOLDERS............ No director, officer, employee, incorporator or
stockholder of the Company shall have any
liability for any obligations of the Company
under the Exchange Notes or the Indenture for
any claim based on, in respect of, or by reason
of, such obligations of their creation. Each
Holder of Exchange Notes by accepting an
Exchange Note waives and releases all such
liability. The waiver and release are part of
the consideration for issuance of the Exchange
Notes. Such waiver may not be effective to
waive liabilities under the Federal Securities
Laws and it is the view of the Commission that
such a waiver is against public policy. See
"Description of Exchange Notes -- No Personal
Liability of Directors, Officers, Employees and
Stockholders."

ABILITY TO SERVICE
INDEBTEDNESS.................. The Company's ability to repay or refinance its
obligations with respect to its Indebtedness
(including the Exchange Notes) will depend on
its future financial and operating performance,
which in turn, will be subject to prevailing
economic and competitive conditions and to
certain financial, business, legislative,
regulatory and other factors, many of which are
beyond the Company's
10
<PAGE> 15

control, as well as the ability of borrowings
under the New Credit Facility. If the Company
is unable to fund its debt service obligations,
including the repayment of the Exchange Notes
at maturity, the Company may be forced to
reduce or delay capital expenditures, sell
assets, or seek to obtain additional debt or
equity capital, which will refinance or
restructure its debt (including the Exchange
Notes). See "Risk Factors -- Substantial
Leverage; Ability to Service Indebtedness." The
Company may need to obtain additional financing
sources to currently fund the repurchase of the
Exchange Notes. If the Company fails to make
any payment on the Exchange Notes when due
within any applicable grace period, whether or
not on account of the payment blockage
provisions referred to herein, such failures
will constitute an Event of Default under the
Indenture and the remedy available to the
holders of the Exchange Notes would be to
accelerate the maturity thereof. See
"Description of Exchange Notes -- Events of
Default."

SEE "RISK FACTORS" ON PAGE 15 DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS IN EVALUATING AN INVESTMENT IN THE EXCHANGE
NOTES.

11
<PAGE> 16

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA

The summary financial data for each of the fiscal years in the five year
period ended January 3, 1998 have been derived from the Company's audited
financial statements. Such information is contained in and should be read in
conjunction with the Consolidated Financial Statements of the Company. The
selected financial data for the twenty-six weeks ended June 28, 1997 and July 4,
1998 have been derived from the Company's unaudited interim financial
statements, which in the opinion of management include all adjustments,
consisting only of normal recurring adjustments, which the Company considers
necessary for a fair presentation of the financial position and results of
operations of the Company for these periods. Operating results for the
twenty-six weeks ended July 4, 1998 are not necessarily indicative of the
results that may be expected for the full year. The selected unaudited pro forma
financial data of the Company have been derived from, and should be read in
conjunction with, the Unaudited Pro Forma Financial Statements, including the
notes thereto, appearing elsewhere in this Prospectus. See "Unaudited Pro Forma
Condensed Consolidated Financial Statements."

<TABLE>
<CAPTION>
TWENTY-SIX WEEKS
YEAR ENDED ENDED
---------------------------------------------------------------------- -------------------
DECEMBER 31, DECEMBER 31, DECEMBER 30, DECEMBER 28, JANUARY 3, JUNE 28, JULY 4,
1993(A) 1994 1995 1996 1998 1997 1998
------------ ------------ ------------ ------------ ---------- -------- --------
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues....................... $118,701 $130,673 $140,198 $158,224 $219,611 $111,972 $120,259
Gross profit....................... 80,025 85,433 92,673 106,340 142,477 73,527 79,771
Selling, general and administrative
expenses(c)...................... 73,117 81,434 87,402 91,897 120,319 60,769 65,342
Recapitalization expenses.......... -- -- -- -- -- -- 25,263
Income (loss) from operations...... 3,286 (6,543) (280) 11,505 19,288 11,452 (12,494)
Interest expense, net.............. 3,106 9,072 8,839 9,899 13,738 6,629 8,262
In-substance defeased bonds
interest expense, net............ -- -- -- -- -- -- 1,460
Income (loss) before extraordinary
item............................. -- -- -- -- -- 4,632 (22,229)
Extraordinary item................. -- -- -- -- -- -- 4,155
Net income (loss).................. (2,111) (15,615) (9,119) 1,418 5,215 4,632 (26,384)
OTHER FINANCIAL DATA:
Net cash provided by (used for)
operating activities............. $ 15,363 $ 4,765 $ 8,484 $ 13,963 $ 15,516 $ 13,849 $ (9,916)
Net cash used for investing
activities....................... (100,856) (5,112) (4,966) (57,737) (20,826) (6,780) (7,784)
Net cash provided by (used for)
financing activities............. 94,007 (6,759) (130) 49,474 1,838 (2,510) 19,324
EBITDA(d).......................... 16,672 14,132 14,949 23,954 34,289 18,729 20,340
Depreciation and amortization(e)... 13,386 20,675 15,229 12,449 15,001 7,277 7,571
Capital expenditures............... 14,449 5,367 6,765 4,233 9,470 7,010 8,632
Gross margin....................... 67.4% 65.4% 66.1% 67.2% 64.9% 65.7% 66.3%
EBITDA margin...................... 14.0 10.8 10.7 15.1 15.6 16.7 16.9
STORE DATA:
End of period stores............... 146 162 152 218 239 211 243
Comparable store sales growth(f)... 0.3% 1.1% 4.2% 3.5% 3.8% 2.8% 1.2%
Sales per store(g)................. $ 913 $ 878 $ 904 $ 935 $ 995 -- --
Sales per square foot(h)........... 204 202 210 214 214 -- --
</TABLE>

<TABLE>
<CAPTION>
AS OF JULY 4, 1998
-----------------------
ACTUAL PRO FORMA(B)
------- ------------
<S> <C> <C>
BALANCE SHEET DATA:(I)
Cash and cash equivalents................................... $ 8,796 $ 8,796
Net working capital......................................... 14,007 10,844
Total assets................................................ 263,460 219,828
Total debt.................................................. 214,490 247,390
Shareholders' equity (deficit).............................. (62,235) (67,393)
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED TWENTY-SIX WEEKS ENDED
JANUARY 3, 1998 JULY 4, 1998
--------------- ----------------------
<S> <C> <C>
PRO FORMA UNAUDITED FINANCIAL DATA:(b)
Income from operations(b)................................... $21,655 $14,016
Depreciation and amortization(e)............................ 17,909 8,377
EBITDA(d)(j)................................................ 39,564 22,393
Capital expenditures........................................ 10,489 8,843
Gross margin................................................ 66.6% 67.8%
Income from operations margin............................... 8.2 10.0
EBITDA margin............................................... 15.0 16.0
</TABLE>

(see footnotes on following page)

12
<PAGE> 17

(a) The Company was purchased by Desai Capital Management Incorporated on
October 7, 1993 and fiscal 1993 presented herein represents results of
operations both after and before the acquisition date.

(b) See "Unaudited Pro Forma Condensed Consolidated Financial Statements" for a
description of certain adjustments made to the historical statement of
income of The Samit Organization for the nine-month period January 1, 1997
through September 30, 1997 in connection with the adjustments made to the
Company's summary pro forma statement of operations data relating to the
Hour Eyes Acquisition. See "Unaudited Pro Forma Condensed Consolidated
Financial Statements" for a description of certain adjustments made to the
historical statement of income of Dr. Bizer's VisionWorld, PLLC for the
fiscal year ended December 31, 1997 and for the six-month period ending
June 30, 1998 in connection with the adjustments made to the Company's
summary pro forma statement of operations data relating to the VisionWorld
Acquisition. The Company is unable to calculate pro forma net cash flows
from operating, investing and financing activities. Therefore, the Company
has presented pro forma income from operations.

(c) The Company recorded a $0.7 million non-cash impairment charge related to
its investment in its subsidiary in Mexico, which is included in selling,
general and administrative expenses for 1996.

(d) EBITDA represents consolidated net income (loss) before interest expense,
income taxes, depreciation and amortization (other than amortization of
store pre-opening costs) and recapitalization expenses. The Company has
included information concerning EBITDA because it believes that EBITDA is
used by certain investors as one measure of a company's historical ability
to fund operations and meet its financial obligations. EBITDA should not be
considered as an alternative to, or more meaningful than, operating income
(loss) or net income (loss) in accordance with generally accepted accounting
principals as an indicator of the Company's operating performance or cash
flow as a measure of liquidity.

(e) Depreciation and amortization shown here does not include the amortization
of store pre-opening costs, which is included in selling, general and
administrative expenses.

(f) Comparable store sales growth is calculated comparing net revenues for the
period to net revenues of the prior period for all stores open at least
twelve months prior to each such period.

(g) Sales per store is calculated on a monthly basis by dividing total net
revenues by the total number of stores open during the period. Annual sales
per store is the sum of the monthly calculations.

(h) Sales per square foot is calculated on a monthly basis by dividing total net
revenues by total square feet of stores open during the period. Annual sales
per square foot is the sum of the monthly calculations.

(i) The summary pro forma balance sheet data does not reflect either (i) the
liabilities of the Company to pay the previously issued Senior Notes or (ii)
the offsetting asset representing the deposit made to defease the Senior
Notes. In connection with the Recapitalization, the Company defeased the
Senior Notes by depositing with the trustee for the Senior Notes (i) an
irrevocable notice of redemption of the Senior Notes on October 1, 1998 and
(ii) United States government securities in an amount necessary to yield on
October 1, 1998 $78.4 million, which constitutes the principal amount,
premium and interest payable on such Senior Notes on the October 1, 1998
redemption date. The Senior Notes will continue to be reflected as a
liability on the Company's balance sheet with an offsetting asset
representing the deposit of United States government securities made for
defeasance through the third quarter of fiscal 1998.

(j) Pro forma EBITDA does not include certain known benefits achieved related to
the Hour Eyes Acquisition in the amount of $1.9 million for the year ended
January 3, 1998 and known benefits of the VisionWorld Acquisition of $1.4
million and $0.7 million for the year ended January 3, 1998 and the
twenty-six weeks ended July 4, 1998, respectively. Additionally, pro forma
EBITDA does not reflect additional management fees to be incurred by the
Company of $0.3 million and $0.2 million for the year ended January 3, 1998
and the twenty-six weeks ended July 4, 1998, respectively. After considering
the impact of these items, pro forma EBITDA would have been $42.6 million
and $22.9 million for the year ended January 3, 1998 and the twenty-six
weeks ended July 4, 1998, respectively. See "Unaudited Pro Forma Condensed
Consolidated Financial Statements" for further discussion of these items.

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RECENT DEVELOPMENTS

As part of its strategy of acquiring other companies with complimentary
businesses to strengthen or expand the Company's geographic or product offering
base, on September 30, 1998, the Company acquired (the "VisionWorld
Acquisition") substantially all of the assets, properties and rights
(collectively, the "Assets") of Dr. Bizer's VisionWorld, PLLC and its
affiliates: Doctor's Valuvision, PLLC; Bizer Enterprises, LLC, Bizer Service
Company; LLC; Eye Care Associates, PLLC; Optical Processors, LLC; The Eye
Surgery Center, PSC; American Vision Administrators, LLC; and Vision for Less of
Kentucky, Inc. (collectively, the "Companies"). Each of the Companies is engaged
in the business of providing optometric and ophthalmologic services, selling
optical goods and providing other related services in Kentucky, Tennessee,
Indiana and Missouri. Simultaneously with the VisionWorld Acquisition, the
Company entered into a long term business management agreement with a private
optometrist to manage the stores.

The aggregate cash consideration paid by the Company in the VisionWorld
Acquisition was $32.9 million, subject to a post-closing price adjustment based
upon a final closing date audit of the Companies.

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RISK FACTORS

Prospective investors should consider carefully the following factors in
addition to other information included in this Prospectus before making an
investment in the Notes offered hereby.

SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE INDEBTEDNESS

The Company is highly leveraged, with indebtedness that is substantial in
relation to its shareholders' equity. As of July 4 , 1998, the Company's
aggregate outstanding indebtedness, excluding the in-substance defeased bonds,
was approximately $214.5 million, net of a discount of $0.5 million, and the
Company's shareholders' equity was a deficit of $62.2 million. In addition,
subject to certain limitations, the New Credit Facility and the Indenture
(defined below) permit the Company to incur or guarantee certain additional
indebtedness. See "Unaudited Pro Forma Condensed Consolidated Financial
Statements," "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources," and "Description of
Exchange Notes -- Certain Covenants."

The Company's high degree of leverage could have important consequences to
holders of Notes, including, but not limited to, the following: (i) the
Company's ability to obtain additional financing for working capital, capital
expenditures, acquisitions or general corporate purposes may be impaired in the
future; (ii) a substantial portion of the Company's cash flow from operations
must be dedicated to the payment of principal and interest on its indebtedness
(including the Notes), thereby reducing the funds available to the Company for
its operations and other purposes; including acquisitions and new store
openings; (iii) the Company may be substantially more leveraged than certain of
its competitors, which may place the Company at a competitive disadvantage; (iv)
the Company may be hindered in its ability to adjust rapidly to changing market
conditions; (v) the Company's high degree of leverage could make it more
vulnerable in the event of a downturn in general economic conditions or its
business or changing market conditions and regulations; and (vi) in addition, to
the extent that the Company's obligations under the Floating Rates Notes and the
New Credit Facility bears interest at floating rates, an increase in interest
rates could adversely affect, among other things, the Company's ability to meet
its financing obligations.

The Company's ability to repay or to refinance its obligations with respect
to its indebtedness (including the Notes) will depend on its future financial
and operating performance, which, in turn, will be subject to prevailing
economic and competitive conditions and to certain financial, business,
legislative, regulatory and other factors, many of which are beyond the
Company's control, as well as the availability of borrowings under the New
Credit Facility. These factors could include operating difficulties,
difficulties in identifying and integrating acquisitions, increased operating
costs, product pricing pressures, the response of competitors, regulatory
developments and delays in implementing strategic projects, including store
openings. The Company's ability to meet its debt service and other obligations
may depend in significant part on the extent to which the Company can implement
successfully its business strategy. There can be no assurance that the Company
will be able to implement its strategy fully or that the anticipated results of
its strategy will be realized.

If the Company is unable to fund its debt service obligations, the Company
may be forced to reduce or delay capital expenditures, sell assets, or seek to
obtain additional debt or equity capital, or to refinance or restructure its
debt (including the Notes). The Company may need additional financing to repay
the Exchange Notes at maturity. There can be no assurance that any of these
remedies can be effected on satisfactory terms, if at all. Factors which could
affect the Company's or its subsidiaries' access to the capital markets, or the
cost of such capital, include changes in interest rates, general economic
conditions and the perception in the capital markets of the Company's business,
results of operations, leverage, financial condition and business prospects.

SUBORDINATION OF THE NOTES AND GUARANTEES; ASSET ENCUMBRANCES

The Notes and the Guarantees are subordinated in right of payment to all
existing and future Senior Indebtedness of the Company, including indebtedness
of the Company under the New Credit Facility, and to all existing and future
Guarantor Senior Indebtedness of the Guarantors, including the guarantees of the
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<PAGE> 20

Guarantors under the New Credit Facility, respectively, and the Notes were also
effectively subordinated to all secured indebtedness of the Company and the
Guarantors, respectively, to the extent of the value of the assets securing such
indebtedness. The obligations under the New Credit Facility are guaranteed by
the Guarantors and are secured by substantially all of the assets of the Company
and all direct and indirect subsidiaries of the Company and a pledge of the
capital stock of each such subsidiary (but not to exceed 65% of the voting stock
of foreign subsidiaries). As of July 4, 1998, the aggregate amount of Senior
Indebtedness of the Company was approximately $66.0 million (including a $1.0
million guarantee by the Company, but exclusive of unused commitments under the
New Credit Facility of approximately $85.0 million and an additional $50.0
million that may be available in the future), $65.0 million of which is
guaranteed by the Guarantors under the New Credit Facility.

In the event of bankruptcy, liquidation, reorganization or any similar
proceeding regarding the Company, or any Guarantor, or any default in payment,
the assets of the Company or such Guarantor, as applicable, will be available to
pay obligations on the Notes only after the Senior Indebtedness of the Company
or the Guarantor Senior Indebtedness of such Guarantor, as applicable, has been
paid in full, and there may not be sufficient assets remaining to pay amounts
due on all or any of the Notes. Moreover, under certain circumstances, if any
nonpayment default exists with respect to Designated Senior Indebtedness which
would permit the holders of such Designated Senior Indebtedness to accelerate
the maturity thereof, the Company may not make any payments on the Notes for a
specific time, unless such default is cured or waived, or such Designated Senior
Indebtedness is paid in full. See "Description of Exchange
Notes -- Subordination" and "Description of the New Credit Facility." The
holders of the Notes will have no direct claim against the Guarantors other than
the claim created by the Guarantees. The rights of holders of the Notes to
participate in any distribution of assets of any Guarantor upon liquidation,
bankruptcy or reorganization may, as is the case with other unsecured creditors
of the Company, be subject to prior claims against such Guarantor. The
Guarantees may themselves be subject to legal challenge in the event of the
bankruptcy or insolvency of a Guarantor, or in certain other circumstances. If
such a challenge were upheld, the Guarantees would be invalidated and
unenforceable. See "-- Fraudulent Conveyance and Preference Considerations."

RESTRICTIONS IMPOSED BY TERMS OF THE COMPANY INDEBTEDNESS

The Indenture restricts, among other things, the Company's and its
subsidiaries' ability to: incur additional indebtedness; incur liens; pay
dividends or make certain other restricted payments; consummate certain asset
sales; enter into certain transactions with affiliates; incur indebtedness that
is subordinate in right of payment to any Senior Indebtedness and senior in
right of payment to the Notes; create or cause to exist restrictions on the
ability of a subsidiary to pay dividends or make certain payments to the
Company; merge or consolidate with any other person or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of the assets of
the Company. See "Description of Exchange Notes -- Certain Covenants." In
addition, the New Credit Facility contains other and more restrictive covenants
and prohibits the Company in all circumstances from prepaying certain of its
indebtedness (including the Notes). The New Credit Facility also requires the
Company to maintain specified financial ratios. The Company's ability to meet
those financial ratios can be affected by events beyond its control, and there
can be no assurance that the Company will meet those tests. A breach of any of
these covenants could result in a default under the New Credit Facility and/or
the Indenture. Upon the occurrence of an event of default under the New Credit
Facility, the lenders could also elect to declare all amounts outstanding under
the New Credit Facility, together with accrued interest, to be immediately due
and payable. If the Company was unable to repay those amounts, the lenders could
proceed against the collateral granted to them to secure that indebtedness or
against the guarantees of the Guarantors of the New Credit Facility. If the debt
outstanding under the New Credit Facility were to be accelerated, there can be
no assurance that the assets of the Company and its subsidiaries would be
sufficient to repay the obligations under the New Credit Facility, other Senior
Indebtedness, Guarantor Senior Indebtedness or the Notes. Substantially all the
assets of the Company and its subsidiaries secure the New Credit Facility. See
"Description of the New Credit Facility."

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RELIANCE ON SUCCESSFUL EXPANSION; ACQUISITION STRATEGY

The continued growth of the Company's net revenues will depend to a
significant degree upon the successful opening of new stores and the acquisition
of related businesses. Successful expansion depends on the Company's ability to
(i) locate and obtain favorable store sites, (ii) attract, train and retain
competent personnel and (iii) open new stores on a timely and cost-efficient
basis. The opening of new stores in the Company's existing markets may result in
the diversion of customers from the Company's existing stores and thus reduce
sales in those stores. The Company's operating results may fluctuate as a result
of the timing and amount of revenue contributed by new stores and the timing of
costs associated with the selection, leasing, construction and operation of new
stores. There can be no assurance that the Company will be able to realize its
expansion goals or to manage and control either the anticipated growth or the
expanded operations of the larger business profitability. The Company's
operating results may also be affected by changes in economic or competitive
conditions in markets where its stores are located. There can be no assurance
that the Company's existing stores will continue to be profitable or that new
stores will achieve comparable results.

Although the Company has successfully completed a number of acquisitions,
there can be no assurances that the Company will be able to successfully
identify or integrate additional businesses into the Company's operations
without substantial costs, delays or other problems. Additionally, acquisitions
may expose the Company to particular risks, including, without limitation,
diversion of management's attention, assumption of liabilities and amortization
of goodwill and other acquired intangible assets, some or all of which could
have a material adverse effect on the financial condition or results of
operations of the Company. Depending on the value and nature of the
consideration paid by the Company for acquisitions, such acquisitions may
adversely affect the Company's liquidity. In making acquisitions in the future,
the Company anticipates that it may compete for acquisitions with other
companies, some of which are larger and have greater financial resources than
the Company. There can be no assurance that the Company will be successful in
consummating acquisitions and integrating them into the Company's operations.
The Company anticipates that it will finance future acquisitions, through cash
on hand, the issuance of common stock and borrowings under the New Credit
Facility. The Indenture and the New Credit Facility limit the ability of the
Company and its subsidiaries to incur indebtedness to finance acquisitions. See
"Management Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources," "Business," "Description of the
New Credit Facility" and "Description of Exchange Notes -- Certain Covenants."

COMPETITION

The retail optical industry is fragmented and highly competitive. The
Company competes with (i) independent practitioners (including opticians,
optometrists and ophthalmologists), (ii) optical retail chains (including
superstores) and (iii) mass merchandisers and warehouse clubs. From time to
time, competitors have launched aggressive promotional programs which have
temporarily impacted the Company's ability to achieve comparable stores sales
growth and maintain gross margin. Some of the Company's competitors are larger,
have longer operating histories, greater financial resources and greater market
recognition than the Company. There can be no assurance that the Company will be
able to compete successfully against such competition.

GOVERNMENT REGULATION

The Company or its landlord leases a portion of each of the Company's
stores or adjacent space to an independent optometrist. The availability of such
professional services in or adjacent to the Company's stores is critical to the
Company's marketing strategy. The delivery of health care, including the
relationships among health care providers such as optometrists and suppliers
(e.g., providers of eyewear), is subject to extensive federal and state
regulation. The laws of many states prohibit business corporations such as the
Company from practicing medicine or exercising control over the medical
judgments or decisions of physicians and from engaging in certain financial
arrangements, such as splitting fees with physicians. These laws and their
interpretations vary from state to state and are enforced by both courts and
regulatory authorities, each with broad discretion. The Company has designed
certain business arrangements with independent optometrists to avoid such
prohibitions by entering into long-term management contracts with such
independent optometrists
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instead of employing the optometrists directly, including the VisionWorld
Acquisition. Violations of these laws could result in censure or delicensing of
optometrists, civil or criminal penalties, including large civil monetary
penalties, or other sanctions. In addition, a determination in any state that
the Company is engaged in the corporate practice of medicine or any unlawful
fee-splitting arrangement could render any service agreement between the Company
and optometrists located in such state unenforceable or subject to modification,
which could have a material adverse effect on the Company. The Company believes
it is currently in material compliance with each of these laws. See
"Business -- Government Regulation."

As a result of the capitation element of some of its managed care
contracts, the Company is required to obtain insurance licenses in the states of
North Carolina, Texas and California to comply with certain routine insurance
laws and regulations as an insurer in order to offer managed care discount
programs to various employee groups within such states. The cost of such
compliance is minimal. These insurance laws require that the Company make
certain mandatory filings with the state relating to: (i) pertinent financial
information and (ii) quality of care standards maintained by the Company.
Violation of any of these laws or regulations could possibly result in the
Company incurring monetary fines and/or other penalties. The Company is
currently in material compliance with each of these laws and regulations. See
"Business -- Government Regulations."

The fraud and abuse provisions of the Social Security Act and anti-kickback
laws and regulations adopted in many states prohibit the solicitation, payment,
receipt, or offering of any direct or indirect remuneration in return for, or as
an inducement to, certain referrals of patients, items or services. Provisions
of the Social Security Act also impose significant penalties for false or
improper billings to Medicare and Medicaid, and many states have adopted similar
laws applicable to any payor of health care services. In addition, the Stark
Self-Referral Law imposes restrictions on physicians' referrals for designated
health services reimbursable by Medicare or Medicaid to entities with which the
physicians have financial relationships, including the rental of space if
certain requirements have not been satisfied. Many states have adopted similar
self-referral laws which are not limited to Medicare or Medicaid reimbursed
services. Violations of any of these laws may result in substantial civil or
criminal penalties, including double and treble civil monetary penalties, and,
in the case of violations of federal laws, exclusion from participation in the
Medicare and Medicaid programs. Such exclusions and penalties, if applied to the
Company, could have a material adverse effect on the Company. The Company is
currently in material compliance with all of the foregoing laws and no
determination of any violation in any state has been made with respect to the
foregoing laws.

RISKS ASSOCIATED WITH MANAGED CARE CONTRACTS

As an increasing percentage of patients enter into health care coverage
arrangements with managed care payors, the Company believes that its success
will be, in part, dependent upon the Company's ability to negotiate contracts
with health maintenance organizations ("HMOs"), employer groups and other
private third party payors. There is no certainty that the Company will be able
to establish or maintain satisfactory relationships with managed care and other
third party payors, many of which already have existing provider structures in
place and may not be able or willing to change their provider networks. The
inability of the Company to enter into such arrangements in the future could
have a material adverse effect on the Company.

To further the Company's ability to contract with managed care payors, the
Company has begun to establish networks of optometrists and other providers
located in or adjacent to the Company's stores for the purposes of contracting,
in many instances on a capitated or risk basis, with managed care payors for
both the professional and retail eyewear supplies. Occasionally, with respect to
its managed care contracts, the Company incurs utilization risk. The Company
believes that such a risk is likely to be minimal because the number of exam
visits is limited to annual or bi-annual appointments. Moreover, managed care
transactions generally earn comparable operating profit margins as they require
less promotional spending and advertising support. The Company believes that the
increased volume and the monthly membership fee more than offsets any discounts.
Also, there is no other medical risk involved as these programs cover only a
customer's eye examinations and no other medical condition of such customer. See
"Business -- Managed Vision Care."

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The Company's contractual arrangements with managed care companies on the
one hand, and the networks of optometrists and other providers on the other, are
subject to federal and state regulations, including but not limited to the
following:

Insurance Licensure. Most states impose strict licensure requirements on
health insurance companies, HMOs and other companies that engage in the business
of insurance. In most states, these laws do not apply to networks paid on a
discounted fee-for-service arrangements or on a capitated basis. In the event
that the Company is required to become licensed under these laws, the licensure
process can be lengthy and time consuming. In addition, many of the licensing
requirements mandate strict financial and other requirements which the Company
may not be able to meet.

Any Willing Provider Laws. Some states have adopted, and others are
considering, legislation that requires managed care payors to include any
provider who is willing to abide by the terms of the managed care payor's
contracts and/or prohibit termination of providers without cause. Such laws
would limit the ability of the Company to develop effective managed care
provider networks in such states.

Antitrust Laws. The Company and its networks of providers are subject to a
range of antitrust laws that prohibit anti-competitive conduct, including
price-fixing, concerted refusals to deal and divisions of markets. There can be
no assurance that there will not be a challenge to the Company's operations on
the basis of an antitrust violation in the future.

UNCERTAINTIES REGARDING HEALTHCARE REFORM

There have been numerous initiatives at the federal and state levels for
comprehensive reforms affecting the payment for and availability of healthcare
services. The Company believes that such initiatives will continue during the
foreseeable future. Aspects of certain of these reforms as proposed in the past
or others that may be introduced could, if adopted, adversely affect the
Company.

The following, among others, are potential governmental initiatives which
may have an adverse effect on the Company.

Licensure

The Company must obtain licenses or certifications to operate its business
in certain states. To obtain and maintain such licenses, the Company must
satisfy certain licensure standards. Changes in licensure standards could
increase the Company's costs or prevent the Company from providing certain
services, both of which could have a material adverse effect on the Company. See
"Business."

Fraud and Abuse and Stark Laws

The are a variety of federal and state laws that affect financial and
service arrangements between health care providers. The Medicare and Medicare
anti-fraud and abuse laws, as well as the laws of certain states, prohibit
health care providers from offering, paying, soliciting or receiving any
payments, directly or indirectly, in cash or in kind, which are designed to
induce or encourage the referral of patients to, or the recommendation of, a
particular provider for medical products and services.

In addition, federal law, as well as the laws of certain states, prohibit a
physician, including an optometrist or ophthalmologist, who has a financial
relationship through an investment interest or compensation arrangement (or
whose immediate family member has such a financial relationship) with a provider
of designated health services from making referrals to that provider for such
services, unless the financial relationship qualifies for an exception under the
applicable law. The federal law, as well as the laws of certain states, also
prohibit the provider of such services from billing for services provided as the
result of a prohibited referral. Under the federal law, designated health
services in certain instances include eye glasses and lenses. The federal
government has issued proposed regulations which further describe prohibited
referrals, the nature of financial relationships and permitted exceptions. The
Company believes that it is in material compliance with these regulations as
proposed. The federal government has not yet issued final regulations.

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<PAGE> 24

The Company has financial relationships with numerous physicians to which
these laws and regulations apply. While the Company reviews such arrangements
for compliance with applicable laws and regulations, the Company has not
requested, and has not received, from any governmental agency an advisory
opinion finding that such relationships are in compliance with applicable law
and regulations, and all such financial relationships may not be found to comply
with such laws and regulations. It is also possible that future interpretations
of such laws and regulations will require modifications to the Company's
business arrangements.

Violations of these laws and regulations may result in substantial civil or
criminal penalties, including double and treble monetary penalties, and, in the
case of violations of federal laws and regulations, exclusion from the Medicare
and Medicaid programs. Such exclusions and penalties, if applied to the Company,
could have a material adverse effect on the Company.

Changes in Reimbursement.

Government revenue sources are subject to statutory and regulatory changes,
administrative rulings, interpretations of policy, determinations by fiscal
intermediaries and carriers, and government funding limitations, all of which
may materially increase or decrease the rates of payment and cash flow to the
Company. There is no assurance that payments made under such programs will
remain at levels comparable to the present levels or be sufficient to cover all
operating and fixed costs. Government or third party payors may retrospectively
and/or prospectively adjust previous payments to the Company in amounts which
would have a material adverse effect on the Company.

POSSIBLE FRANCHISE CLAIMS

Two optometrists asserted claims arising out of the nonrenewal of their
subleases of office space with the Company and their Trademark License
Agreements with Enclave Advancement Group, Inc., a subsidiary of the Company
("Enclave"). Such optometrists contended that the leasing of space from the
Company, coupled with the license from Enclave of certain trademarks,
constituted a franchise, and such optometrists have alleged various claims
arising out of this contention. This claim was settled in May, 1998. While the
Company believes that the structure of the relationships among the Company,
Enclave and the optometrists were operating near the Company's retail stores
does not constitute a franchise, no assurance can be given that a claim, action
or proceeding will not be brought against the Company or Enclave asserting that
a franchise exists.

DEPENDENCE ON THIRD-PARTY REIMBURSEMENT

The cost of a significant portion of medical care in the United States is
funded by government and private insurance programs, such as Medicare, Medicaid
and corporate health insurance plans. According to governmental projections, it
is expected that more medical beneficiaries who are significant consumers of eye
care services will enroll in management care organizations. The health care
industry is experiencing a trend toward cost-containment with governmental and
private third party payors seeking to impose lower reimbursement, utilization
restrictions and risk-based compensation arrangements. Private third-party
reimbursement plans are also developing increasingly sophisticated methods of
controlling health care costs through redesign of benefits and explorations of
more cost-effective methods of delivering health care. Accordingly, there can be
no assurance that reimbursement for purchase and use of eye care services will
not be limited or reduced and thereby adversely affect future sales by the
Company.

MEDICAL AND TECHNOLOGICAL CHANGES

Corneal refractive surgery procedures such as radial-keratotomy,
photo-refractive keratectomy and future drug development, may change the demand
for the Company's products. Technological developments such as wafer technology
and lens casting may render the Company's current lens manufacturing method
uncompetitive or obsolete. There can be no assurance that medical advances and
technological developments will not have a material adverse effect on the
Company's operations.

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DEPENDENCE ON KEY PERSONNEL

The success of the Company depends in large part on Bernard W. Andrews, the
Company's Chairman and Chief Executive Officer, and the Company's ability to
attract and retain other highly qualified management personnel. The loss of the
services of Mr. Andrews could have a material adverse effect on the Company and
there can be no assurance that the Company will be able to find a replacement
with appropriate business experience and skills. The Company faces competition
for personnel from other companies and other organizations. In addition, the
success of any acquisition by the Company may depend, in part, on the ability of
the Company to retain management personnel of the acquired company. There can be
no assurance that the Company will be successful in hiring or retaining key
personnel. See "Management."

LIMITATIONS ON ABILITY TO MAKE CHANGE OF CONTROL PAYMENT

Upon the occurrence of a Change of Control, subject to certain conditions,
the Company will be required to make an offer to purchase all of the outstanding
Notes at a price equal to 101% of the principal amount thereof at the date of
purchase plus accrued and unpaid interest, if any, to the date of purchase. If a
Change of Control were to occur, there can be no assurance that the Company
would have sufficient funds to pay the repurchase price for all Notes tendered
by the holders thereof; such failure would result in an event of default under
the Indenture. The occurrence of a Change of Control would constitute a default
under the New Credit Facility and might constitute a default under the other
agreements governing indebtedness that the Company or its subsidiaries may enter
into from time to time. In addition, the New Credit Facility prohibits the
purchase of the Notes by the Company in the event of a Change of Control, unless
and until such time as the indebtedness under the New Credit Facility is repaid
in full. The Company's failure to purchase the Notes in such instance would
result in a default under each of the Indenture and the New Credit Facility. The
inability to repay the indebtedness under the New Credit Facility, if
accelerated, could have a material adverse consequences to the Company and to
holders of the Notes. Future indebtedness of the Company may also contain
prohibitions of certain events or transactions that could constitute a Change of
Control or require such indebtedness to be repurchased upon a Change of Control.
See "Description of the New Credit Facility" and "Description of Exchange
Notes -- Change of Control."

CROSS DEFAULT UNDER EXCHANGE NOTES

The failure to pay principal at maturity under the terms of any
Indebtedness, after giving effect to any applicable grace period or extensions
thereof, by the Company, resulting in a default under such Indebtedness, would
result in an Event of Default under the Exchange Notes. If such an Event of
Default were to occur, there can be no assurance that the Company would have
sufficient funds to pay the repurchase price for all Notes tendered by the
holders thereof. Future indebtedness of the Company may also contain
prohibitions of certain events or transactions that would constitute a Change of
Control or require such indebtedness to be repurchased upon a Change of Control.
See "Description of Exchange Notes -- Events of Default."

FRAUDULENT CONVEYANCE AND PREFERENCE CONSIDERATIONS

Under applicable provisions of federal bankruptcy law or comparable
provisions of state fraudulent conveyance law, if, among other things, the
Company or the Guarantors, at the time it incurred the indebtedness evidence by
the Notes or the Guarantees, as the case may be, (i) (a) was or is insolvent or
rendered insolvent by reason of such occurrence of (b) was or is engaged in a
business or transaction of which the assets remaining with the Company or the
Guarantors were unreasonably small or constitute unreasonably small capital or
(c) intended or intends to incur, or believed, believes or should have believed
that it would incur, debts beyond its ability to repay such debts as they mature
and (ii) the Company or the Guarantor received or receives less than the
reasonably equivalent value or fair consideration for the incurrence of such
indebtedness, the Notes and the Guarantees could be invalidated or subordinated
to all other debts of the Company or the Guarantors, as the case may be. The
Notes or Guarantees could also be invalidated or subordinated if it were found
that the Company or the Guarantor, as the case may be, incurred indebtedness in
connection with the Notes or the Guarantees with the intent of hindering,
delaying or defrauding current or future creditors of the Company or the
Guarantors, as the case may be. In addition, the payment of interest
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<PAGE> 26

and principal by the Company pursuant to the Notes or the payment of amounts by
the Guarantors pursuant to the Guarantees could be voided and required to be
returned to the person making such payment, or to a fund for the benefit of the
creditors of the Company or the Guarantors, as the case may be.

The measures of insolvency for purposes of the foregoing considerations
will vary depending upon the law applied in any proceeding with respect to the
foregoing. Generally, however, the Company or the Guarantors would be considered
insolvent if (i) the sum of its debts, including contingent liabilities, were
greater than the sum of all of its assets at a fair valuation or if the present
fair saleable value of its assets were less than the amount that would be
required to pay its probable liability on its existing debts, including
contingent liabilities, as they become absolute and mature or (ii) it could not
pay its debts as they become due.

To the extent the Guarantees were voided as a fraudulent conveyance or held
unenforceable for any other reason, holders of Notes would cease to have any
claim in respect of the Guarantors and would be creditors solely of the Company.
In such event, the claims of holders of Notes against the Guarantors would be
subject to the prior payment of all liabilities and preferred stock claims of
the Guarantors. There can be no assurance that, after providing for all prior
claims and preferred stock interests, if any, there would be sufficient assets
to satisfy the claims of holders of Notes relating to any voided portions of the
Guarantees.

On the basis of its historical financial information and recent operating
history as discussed in "Prospectus Summary," "Unaudited Pro Forma Condensed
Consolidated Financial Statements" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations," the Company believes that, after
giving effect to the indebtedness incurred in connection with the
Recapitalization and the Offering, it will not be insolvent, will not have
unreasonably small assets or capital for the businesses in which it is engaged
and will not incur debts beyond its ability to pay such debts as they mature.
There can be no assurance, however, as to what standard a court would apply in
making such determinations.

CONTROL OF THE COMPANY

THL owns approximately 89.7% of the issued and outstanding Common Stock.
Accordingly, THL controls the Company and has elected a majority of its
directors, appointed new management and approved any action requiring the
approval of the holders of Common Stock, including adopting amendments to the
Company's charter and approving mergers or sales of substantially all of the
Company's assets. The directors elected by THL have the authority to make
decisions affecting the capital structure of the Company, including the issuance
of additional capital stock, the implementation of stock repurchase programs and
the declaration of dividends. There can be no assurance that the interests of
THL does or will not conflict with the interests of the holders of the Notes.
See "Management," "Principal Shareholders" and "Certain Transactions."

SYSTEMS CONVERSION; YEAR 2000 ISSUE

The Company faces "Year 2000" issues. Year 2000 issues exist when dates are
recorded using two digits (rather than four) and are then used for arithmetic
operations, comparisons or sorting. A two-digit recording may recognize a date
using "00" as 1900 rather than 2000, which could cause the Company's computer
systems to perform inaccurate computations. The Company has undertaken
substantial steps to eliminate Year 2000 risk, including determining which of
its systems require replacement or modification, and implementing an action plan
in response thereto, portions of which have been completed to date. The Company
expects to complete the action plan by the summer of 1999 and all costs, both
incurred and estimated, are not expected to be material. The Company's Year 2000
issues relate not only to its own systems but also to those of its customers and
suppliers. It is anticipated that systems replacements and modifications will
resolve the Year 2000 issue with respect to the Company's internal system. There
is no guarantee, however, that such systems replacements and modifications will
be completed on time. In addition, the failure of the Company's suppliers and
customers to address the Year 2000 issue could significantly impact the Company.

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<PAGE> 27

LACK OF PUBLIC MARKET

There is no existing market for the Exchange Notes and there can be no
assurances as to the liquidity of any markets that may develop for the Exchange
Notes, the ability of holders of the Exchange Notes to sell their Exchange
Notes, or the price at which holders would be able to sell their Exchange Notes.
Future trading prices of the Exchange Notes will depend on many factors,
including among other things, prevailing interest rates, the Company's operating
results and the market for similar securities. The Initial Purchasers have
advised the Issuer that they currently intend to make a market in the Exchange
Notes offered hereby. However, the Initial Purchasers are not obligated to do so
and any market making may be discontinued at any time without notice. The Issuer
does not intend to apply for listing of the Exchange Notes offered hereby on any
securities exchange or through the National Association of Securities Dealers
Automated Quotation System.

CONSEQUENCES OF FAILURE TO EXCHANGE

Holders of Initial Notes who do not exchange their Initial Notes for
Exchange Notes, pursuant to the Exchange Offer will continue to be subject to
the restrictions on transfer of Initial Notes set forth in the legend thereon as
a consequence of the issuance of the Initial Notes pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act. In general, the Initial Notes may not be offered or sold, unless
registered under the Securities Act, except pursuant to an exemption from, or in
a transaction not subject to, the Securities Act and applicable state securities
laws. The Issuer does not anticipate registering the Initial Notes under the
Securities Act. Holders of the Initial Notes who do not tender their Notes in
the Exchange Offer will continue to hold such Initial Notes and their rights
under such Initial Notes will not be altered, except for any such rights under
the Registration Rights Agreement, which by their terms terminate or cease to
have further effectiveness as a result of the making of, and the acceptance for
exchange of all validly tendered Initial Notes pursuant to, the Exchange Offer.

THE EXCHANGE OFFER

PURPOSE OF THE EXCHANGE OFFER

The Initial Notes were originally issued and sold on April 24, 1998. Such
sales were not registered under the Securities Act in reliance upon the
exemption provided by Section 4(2) of the Securities Act. In connection with the
sale of the Initial Notes, the Issuer agreed to file with the Commission a
registration statement relating to an exchange offer (the "Exchange Offer
Registration Statement") pursuant to which the Exchange Notes would be offered
in exchange for Initial Notes tendered at the option of the holders thereof or,
if applicable interpretations of the staff of the Commission did not permit the
Issuer to effect such an exchange offer, the Issuer agreed, at its cost, to file
a shelf registration statement covering resales of the Initial Notes (the
"Resale Registration Statement") and to have such Resale Registration Statement
declared effective and kept effective for a period of two years from the
effective date thereof. In the event that (i) the Issuer fails to file the
Exchange Offer Registration Statement, (ii) the Exchange Offer Registration
Statement is not declared effective by the Commission, or (iii) the Exchange
Offer is not consummated or the Resale Registration Statement is not declared
effective by the Commission, in each case within specified time periods, the
interest rate borne by the Initial Notes shall increase, which interest will
accrue and be payable in cash until completion of such filing, declaration of
effectiveness or completion of such exchange. See "Exchange Offer; Registration
Rights Agreement."

The sole purpose of the Exchange Offer is to fulfill obligations of the
Issuer with respect to the foregoing agreement. Following the consummation of
the Exchange Offer, the Issuer does not currently anticipate registering any
untendered Initial Notes under the Securities Act and will not be obligated to
do so.

ACCOUNTING TREATMENT

The Exchange Notes will be recorded at the carrying value of the Initial
Notes that are exchanged. Therefore no gain or loss will be recorded in the
Company's financial statement as a result of the transaction.
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<PAGE> 28

TERMS OF THE EXCHANGE

The Issuer hereby offers to exchange, subject to the conditions set forth
herein and in the Letter of Transmittal accompanying this Prospectus,
$150,000,000 in principal amount of the Exchange Notes for $150,000,000 in
principal amount of the Initial Notes. The terms of the Exchange Notes are
identical in all respects to the terms of the Initial Notes, for which they may
be exchange pursuant to this Exchange Offer, except that the Exchange Notes will
generally be freely transferable by holders thereof and the holders of the
Exchange Notes (as well as remaining holders of any Initial Notes) will not be
entitled to registration rights under the Registration Rights Agreement. See
"Exchange Offer; Registration Rights Agreement." The Exchange Notes will
evidence the same debt as the Initial Notes and will be entitled to the benefits
of the Indenture. See "Description of Exchange Notes."

The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Initial Notes being tendered for exchange.

Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third parties, the Issuer believes the Exchange
Notes issued pursuant to the Exchange Offer in exchange for the Initial Notes
may be offered for sale, resold and otherwise transferred by any holder of such
Exchange Notes (other than any such holder which is an "affiliate" of the Issuer
within the meaning of Rule 405 under the Securities Act) without compliance with
the registration and prospectus delivery provisions of the Securities Act,
provided that such Exchange Notes are acquired in the ordinary course of such
holder's business and such holder has no arrangement or understanding with any
person to participate in the distribution of such Exchange Notes. Any holder who
tenders in the Exchange Offer for the purpose of participating in a distribution
of the Exchange Notes cannot rely on such interpretations by the staff of the
Commission and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any secondary resale
transaction. Each broker-dealer that receives Exchange Notes for its own account
in exchange for Initial Notes, where such Initial Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See "Plan of Distribution."

Interest on the Exchange Notes shall accrue from April 24, 1998 or from the
last Interest Payment Date on which interest was paid on the Initial Notes so
surrendered.

Tendering holders of the Initial Notes will not be required to pay
brokerage commissions or fees or, subject to the instructions on the Letter of
Transmittal, transfer taxes with respect to the exchange of the Initial Notes
pursuant to the Exchange Offer.

EXPIRATION DATE; EXTENSIONS; TERMINATION; AMENDMENTS

The Exchange Offer shall expire on the Expiration Date. The term
"Expiration Date" means 5:00 p.m. New York City time, on , 1998,
unless the Issuer is required to extends the period during which the Exchange
Offer is open under applicable law, in which event the term "Expiration Date"
shall mean the latest time and date on which the Exchange Offer, as so extended
by the Issuer, shall expire. During any extension of the Exchange Offer, all
Initial Notes previously tendered pursuant to the Exchange Offer will remain
subject to the Exchange Offer.

The Exchange Date will be the first business day following the Expiration
Date. The Issuer expressly reserves the right to (i) terminate the Exchange
Offer and not accept for exchange any Initial Notes if either of the events set
forth below under "Conditions to the Exchange Offer" shall have occurred and
shall not have been waived by the Issuer and (ii) amend the terms of the
Exchange Offer in any manner which, in its good faith judgment, is advantageous
to the holders of the Initial Notes, whether before or after any tender of the
Initial Notes. If any such termination or amendment occurs, the Issuer will
notify the Exchange Agent and will either issue a press release or give oral or
written notice to the holders of the Initial Notes as promptly as practicable.
Unless the Issuer terminates the Exchange Offer prior to 5:00 p.m., New York
City time, on the Expiration Date, the Issuer will exchange the Exchange Notes
for the Initial Notes on the Exchange Date.

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<PAGE> 29

HOW TO TENDER

The tender to the Issuer of Initial Notes by a holder thereof pursuant to
one of the procedures set forth below will constitute an agreement between such
holder and the Issuer in accordance with the terms and subject to the conditions
set forth herein and in the Letter of Transmittal.

A holder of an Initial Note may tender the same by (i) properly completing
and signing the Letter of Transmittal or a facsimile thereof (all references in
this Prospectus to the Letter of Transmittal shall be deemed to include a
facsimile thereof) and delivering the same, together with the certificate or
certificates representing the Initial Notes being tendered and any required
signature guarantees, to the Exchange Agent at its address set forth in the
Letter of Transmittal on or prior to the Expiration Date, (ii) complying with
the procedure for book entry transfer described below or (iii) complying with
the guaranteed delivery procedures described below.

If tendered Initial Notes are registered in the name of the signer of the
Letter of Transmittal and the Exchange Notes to be issued in exchange therefor
are to be issued (and any untendered Initial Notes are to be reissued) in the
name of the registered holder (which term, for the purpose described herein,
shall include any participant in The Depository Trust Company ("DTC") (also
referred to as a book-entry transfer facility whose name appears on a security
listing as the owner of the Initial Notes), the signature of such signer need
not be guaranteed. In any other case, the tendered Initial Notes must be
endorsed or accompanied by written instruments of transfer in form satisfactory
to the Issuer and duly executed by the registered holder and the signature on
the endorsement or instrument of transfer must be guaranteed by a commercial
bank or trust company located or having an office or correspondent in the United
States, or by a member firm of a national securities exchange or of the National
Association of Securities Dealers, Inc. (any of the foregoing hereinafter
referred to as an "Eligible Institution"). If the Exchange Notes and/or Initial
Notes not exchanged are to be delivered to an address other than that of the
registered holder appearing on the note register for the Initial Notes, the
signature in the Letter of Transmittal must be guaranteed by an Eligible
Institution.

The method of delivery of Initial Notes and all other documents is at the
election and risk of the holder. If sent by mail, it is recommended that
registered mail, return receipt requested, be used, proper insurance obtained,
and the mailing be made sufficiently in advance of the Expiration Date to permit
delivery to the Exchange Agent on or before the Expiration Date.

The Exchange Agent and DTC have confirmed that any financial institution
that is a participant in DTC's system (a "Participant") may utilize DTC's
Automated Tender Offer Program ("ATOP") to tender Initial Notes.

The Exchange Agent will request that DTC establish an account with respect
to the Initial Notes for purposes of the Exchange Offer within two business days
after the date of this Prospectus. Any Participant may make book-entry delivery
of Initial Notes by causing DTC to transfer such Initial Notes into the Exchange
Agent's account in accordance with DTC's ATOP procedures for transfer. However,
the exchange for the Initial Notes so tendered will only be made after timely
confirmation (a "Book-Entry Confirmation") of such book-entry transfer of
Initial Notes into the Exchange Agent's account, and timely receipt by the
Exchange Agent of an Agent's Message (as such term is defined in the next
sentence) and any other documents required by the Letter of Transmittal. The
term "Agent's Message" means a message, transmitted by DTC and received by the
Exchange Agent and forming part of a Book-Entry Confirmation, which states that
DTC has received an express acknowledgment from a Participant tendering Initial
Notes which are the subject of such Book-Entry Confirmation that such
Participant has received and agrees to be bound by the terms of the Letter of
Transmittal and that the Issuer may enforce such agreement against such
Participant.

If a holder desires to accept the Exchange Offer and time will not permit a
Letter of Transmittal or Initial Notes to reach the Exchange Agent before the
Expiration Date or the procedure for book-entry transfer cannot be completed on
a timely basis, a tender may be effected if the Exchange Agent has received at
its office listed on the back cover hereof on or prior to the Expiration Date a
letter, telegram or facsimile transmission from an Eligible Institution setting
forth the name and address of the tendering holder, the names in which the
Initial Notes are registered and, if possible, the certificate numbers of the
Initial Notes to be

25
<PAGE> 30

tendered, and stating that the tender is being made thereby and guaranteeing
that within five New York Stock Exchange trading days after the date of
execution of such letter, telegram or facsimile transmission by the Eligible
Institution, the Initial Notes, in proper form for transfer (or a confirmation
of book-entry transfer of such Initial Notes into the Exchange Agent's account
at the book-entry transfer facility), will be delivered by such Eligible
Institution together with a properly completed and duly executed Letter of
Transmittal (and any other required documents). Unless Initial Notes being
tendered by the above-described method are deposited with the Exchange Agent
within the time period set forth above (accompanied or preceded by a properly
completed Letter of Transmittal and any other required documents), the Issuer
may, at its option, reject the tender. Copies of a Notice of Guaranteed Delivery
which may be used by Eligible Institutions for the purposes described in this
paragraph are available from the Exchange Agent.

A tender will be deemed to have been received as of the date when (i) the
tendering holder's properly completed and duly signed Letter of Transmittal
accompanied by the Initial Notes is received by the Exchange Agent, (ii) a
confirmation of book-entry transfer of such Initial Notes into the Exchange
Agent's account at the book-entry transfer facility is received by the Exchange
Agent, or (iii) a Notice of Guaranteed Delivery or letter, telegram or facsimile
transmission to similar effect (as provided above) from an Eligible Institution
is received by the Exchange Agent. Issuances of Exchange Notes in exchange for
Initial Notes tendered pursuant to a Notice of Guaranteed Delivery or letter,
telegram or facsimile transmission to similar effect (as provided above) by an
Eligible Institution will be made only against deposit of the Letter of
Transmittal (and any other required documents) and the tendered Initial Notes.

All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of Initial Notes will be
determined by the Issuer, whose determination will be final and binding. The
Issuer reserves the absolute right to reject any or all tenders not in proper
form or the acceptances for exchange of which may, in the opinion of the counsel
of the Issuer, be unlawful. The Issuer also reserves the absolute right to waive
any of the conditions of the Exchange Offer or any defect or irregularity in the
tender of any Initial Notes. None of the Issuer, the Exchange Agent or any other
person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification.

TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL

The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer.

The party tendering Initial Notes for exchange (the "Transferor")
exchanges, assigns and transfers the Initial Notes to the Issuer and irrevocably
constitutes and appoints the Exchange Agent as the Transferor's Agent and
attorney-in-fact to cause the Initial Notes to be assigned, transferred and
exchanged. The Transferor represents and warrants that it has full power and
authority to tender, exchange, assign and transfer the Initial Notes and to
acquire Exchange Notes issuable upon the exchange of such tendered Initial
Notes, and that, when the same are accepted for exchange, the Issuer will
acquire good and unencumbered title to the tendered Initial Notes, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claim. The Transferor also warrants that it will, upon request,
execute and deliver any additional documents deemed by the Issuer to be
necessary or desirable to complete the exchange, assignment and transfer of
tendered Initial Notes or transfer ownership of such Initial Notes on the
account books maintained by a book-entry transfer facility. The Transferor
further agrees that acceptance of any tendered Initial Notes by the Issuer and
the issuance of Exchange Notes in exchange therefor shall constitute performance
in full by the Issuer of its obligations under the Registration Rights Agreement
and that the Issuer shall have no further obligations or liabilities thereunder.
All authority conferred by the Transferor will survive the death or incapacity
of the Transferor and every obligation of the Transferor shall be binding upon
the heirs, legal representatives, successors, assigns, executors and
administrators of such Transferor.

By tendering Initial Notes, the Transferor certifies that it is not an
"affiliate" of the Issuer within the meaning of Rule 405 under the Securities
Act and that it is acquiring the Exchange Notes offered hereby in

26
<PAGE> 31

the ordinary course of such Transferor's business and that such Transferor has
no arrangement with any person to participate in the distribution of such
Exchange Notes.

WITHDRAWAL RIGHTS

Initial Notes tendered pursuant to the Exchange Offer may be withdrawn at
any time prior to the Expiration Date.

For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Exchange Agent at its address set forth on the back cover of this Prospectus.
Any such notice of withdrawal must specify the person named in the Letter of
Transmittal as having tendered Initial Notes to be withdrawn, the certificate
numbers of Initial Notes to be withdrawn, the principal amount of Initial Notes
to be withdrawn, a statement that such holder is withdrawing his election to
have such Initial Notes exchanged, and the name of the registered holder of such
Initial Notes, and must be signed by the holder in the same manner as the
original signature on the Letter of Transmittal (including any required
signature guarantees) or be accompanied by evidence satisfactory to the Issuer
that the person withdrawing the tender has succeeded to the beneficial ownership
of the Initial Notes being withdrawn. The Exchange Agent will return the
properly withdrawn Initial Notes promptly following receipt of notice of
withdrawal. If Initial Notes have been tendered pursuant to the procedures for
book-entry transfer, any notice of withdrawal must specify the name and number
of the account at the book-entry transfer facility to be credited with the
withdrawn Initial Notes or otherwise comply with the book-entry transfer
facility procedure. All questions as to the validity of notices of withdrawals,
including time of receipt, will be determined by the Issuer, and such
determination will be final and binding on all parties.

ACCEPTANCE OF NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES

Upon the terms and subject to the conditions of the Exchange Offer, the
acceptance of Initial Notes validly tendered and not withdrawn and issuance of
the Exchange Notes will be made on the Exchange Date. For the purpose of the
Exchange Offer, the Issuer shall be deemed to have accepted for exchange validly
tendered Initial Notes when, as and if the Issuer has given oral or written
notice thereof to the Exchange Agent.

The Exchange Agent will act as agent for the tendering holders of Initial
Notes for the purpose of receiving Exchange Notes from the Issuer and causing
the Initial Notes to be assigned, transferred and exchanged. Upon the terms and
subject to the conditions of the Exchange Offer, delivery of Exchange Notes to
be issued in exchange for accepted Initial Notes will be made by the Exchange
Agent promptly after acceptance of the tendered Initial Notes. Initial Notes not
accepted for exchange by the Issuer will be returned without expense to the
tendering holders promptly following the Expiration Date or, if the Issuer
terminates the Exchange Offer prior to the Expiration Date, promptly after the
Exchange Offer is so terminated.

CONDITIONS TO THE EXCHANGE OFFER

Notwithstanding any other provision of the Exchange Offer, or any extension
of the Exchange Offer, the Issuer will not be required to issue Exchange Notes
in respect of any properly tendered Initial Notes not previously accepted and
may terminate the Exchange Offer (by oral or written notice to the Exchange
Agent and by timely public announcement communicated, unless otherwise required
by applicable law or regulation, by making a release to the Dow Jones News
Service) or, at its option, modify or otherwise amend the Exchange Offer, if (a)
any action or proceeding is instituted or threatened in any court or by or
before any governmental agency with respect to the Exchange Offer which might
materially impair the ability of the Company to proceed with the Exchange Offer
or any material adverse development has occurred in any existing action or
proceeding with respect to the Company or any of its subsidiaries; or (b) any
law, statute, rule, regulation or interpretation by the staff of the Commission
is proposed, adopted or enacted, which might materially impair the ability of
the Company to proceed with the Exchange Offer or materially impair the
contemplated benefits of the Exchange Offer to the Company; or (c) any
governmental approval has not been

27
<PAGE> 32

obtained, which approval the Company shall deem necessary for the consummation
of the Exchange Offer as contemplated hereby.

In addition, the Issuer will not accept for exchange any Initial Notes
tendered and no Exchange Notes will be issued in exchange for any such Initial
Notes, if at such time any stop order shall be threatened or in effect with
respect to the Registration Statement of which this Prospectus constitutes a
part of qualification of the Indenture under the Trust Indenture Act of 1939
(the "Trust Indenture Act").

The Issuer expressly reserves the right to terminate the Exchange Offer and
not accept for exchange any Initial Notes upon the occurrence of either of the
foregoing conditions (which represent all of the material conditions to the
acceptance by the Issuer of properly tendered Initial Notes). In addition, the
Issuer may amend the Exchange Offer at any time prior to the Expiration Date if
either of the conditions set forth above occur. Moreover, regardless of which
either of such conditions has occurred, the Issuer may amend the Exchange Offer
in any manner which, in its good faith judgment, is advantageous to holders of
the Initial Notes.

The foregoing conditions are for the sole benefit of the Issuer and may be
waived by the Issuer, in whole or in part, if, in its reasonable judgment, such
waiver is not advantageous to holders of the Initial Notes. Any determination
made by the Issuer concerning an event, development or circumstance described or
referred to above will be final and binding on all parties.

EXCHANGE AGENT

United States Trust Company of New York has been appointed as the Exchange
Agent for the Exchange Offer. Letters of Transmittal must be addressed to the
Exchange Agent at its address set forth on the back cover of this Prospectus.

Delivery to an address other than as set forth herein, or transmissions of
instructions via facsimile or telex number other than the ones set forth herein,
will not constitute a valid delivery.

SOLICITATION OF TENDERS; EXPENSES

The Issuer has not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others for soliciting acceptances of this Exchange Offer. The Issuer
will, however, pay the Exchange Agent reasonable and customary fees for its
services and will reimburse it for reasonable out-of-pocket expenses in
connection therewith. The Issuer will also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus and related documents
to the beneficial owners of the Initial Notes and in handling or forwarding
tenders for their customers.

No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those contained
in this Prospectus. If given or made, such information or representations should
not be relied upon as having been authorized by the Issuer. Neither the delivery
of this Prospectus nor any exchange made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Issuer since the respective dates as of which information is
given herein. The Exchange Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders of Initial Notes in any jurisdiction in
which the making of the Exchange Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. However, the Issuer may, at its
discretion, take such action as it may deem necessary to make the Exchange Offer
in any such jurisdiction and extend the Exchange Offer to holders of Initial
Notes in such jurisdiction. In any jurisdiction the securities laws or blue sky
laws of which require the Exchange Offer to be made by a licensed broker or
dealer, the Exchange Offer is being made on behalf of the Issuer by one or more
registered brokers or dealers which are licensed under the laws of such
jurisdiction.

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<PAGE> 33

OTHER

Participation in the Exchange Offer is voluntary and holders should
carefully consider whether to accept. Holders of the Initial Notes are urged to
consult their financial and tax advisors in making their own decisions on what
action to take.

As a result of the making of, and upon acceptance for exchange of all
validly tendered Initial Notes pursuant to the terms of, this Exchange Offer,
the Issuer will have fulfilled a covenant contained in the terms of the Initial
Notes, the Indenture and the Registration Rights Agreement. Holders of the
Initial Notes who do not tender the certificates in the Exchange Offer will
continue to hold such certificates and their rights under such Initial Notes
will not be altered, except for any such rights under the Registration Rights
Agreement, which by their terms terminate or cease to have further effect as a
result of the making of this Exchange Offer. See "Description of the Initial
Notes." All untendered Initial Notes will continue to be subject to the
restrictions on transfer set forth in the Indenture. To the extent that Initial
Notes are tendered and accepted in the Exchange Offer, the trading market for
untendered Initial Notes could be adversely affected.

The Issuer may in the future seek to acquire untendered Initial Notes in
open market or privately negotiated transactions, through subsequent exchange
offers or otherwise. The Issuer has no present plan to acquire any Initial Notes
which are not tendered in the Exchange Offer or to file a registration statement
to permit resales of any Initial Notes which are not tendered pursuant to the
Exchange Offer.

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<PAGE> 34

THE RECAPITALIZATION

On March 6, 1998, Merger Corp. and the Company entered into the
Recapitalization Agreement providing for, among other things, the Merger as well
as the other elements of the Recapitalization. Upon consummation of the Merger
on April 24, 1998, THL Fund IV and other affiliates of THL Co. currently own
approximately 89.7% of the issued and outstanding shares of Common Stock,
existing shareholders (including management) of the Company retained
approximately 7.3% of the issued and outstanding Common Stock and management
purchased additional shares representing approximately 3.0% of the issued and
outstanding Common Stock. The total transaction value of the Recapitalization
was approximately $323.8 million, including related fees and expenses, and the
implied total equity value of the Company following the Recapitalization was
approximately $107.3 million.

The Company financed the Recapitalization with (a) approximately $55.0
million of borrowings under the New Credit Facility, and (b) approximately $99.4
million Equity Contribution from the sale of capital stock to THL, Bernard W.
Andrews and other members of management consisting of (i) approximately $71.6
million from the sale of Common Stock and (ii) approximately $27.8 million from
the sale of New Preferred Stock. The proceeds from such bank borrowings, the
sale of the Initial Notes, and the Equity Contribution were used principally to
finance the conversion into cash of the shares of Common Stock which were not
retained by existing stockholders, to refinance certain existing indebtedness of
the Company, to redeem certain outstanding preferred stock of the Company and to
pay related fees and expenses of the Recapitalization. In connection with the
Recapitalization, the Company defeased the previously issued Senior Notes by
depositing with the trustee for the Senior Notes (i) an irrevocable notice of
redemption of the Senior Notes on October 1, 1998 and (ii) United States
government securities in an amount necessary to yield on October 1, 1998 $78.4
million, which constituted the principal amount, premium and interest payable on
the Senior Notes on the October 1, 1998 redemption date.

The following table sets forth the cash sources and uses of funds in
connection with the financing of the Recapitalization:

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

(1) The New Credit Facility consists of (i) the $55.0 million Term Loan
Facility; (ii) the $35.0 million Revolving Credit Facility and (iii) the
$100.0 million Acquisition Facility, of which $50.0 million was committed at
closing. Approximately $10.0 million of the Revolving Credit Facility is
restricted for the repayment of the capital lease obligation due in February
1999.

(2) Reflects $100.0 million of Fixed Rate Notes, net of discount of $0.5
million, and $50.0 million of Floating Rate Notes.

(3) Does not include Common Stock of $5.6 million retained by existing
shareholders and New Preferred Stock of $2.3 million received by such
shareholders.

(4) Reflects the payment of existing debt of $102.6 million (including $70.0
million in connection with the defeasance of the Senior Notes) and the
payment of $0.3 million of accrued interest payable. In connection with the
Recapitalization, the Company defeased the previously issued Senior Notes by
depositing with the trustee for the Senior Notes (i) an irrevocable notice
of redemption of the Senior Notes on October 1, 1998 and (ii) United States
government securities in an amount necessary to yield on October 1, 1998
$78.4 million, which constitutes the principal amount, premium and interest
payable on such Senior Notes on the October 1, 1998 redemption date. The
Senior Notes continue to be reflected as a liability on the Company's
balance sheet with an offsetting asset representing the deposit of United
States government securities made for defeasance through the second quarter
of fiscal 1998.

For a description of the New Credit Facility and other indebtedness of the
Company, see "Description of the New Credit Facility" and the notes to the
Consolidated Financial Statements included elsewhere herein.

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<PAGE> 35

USE OF PROCEEDS

There will not be any proceeds from the Exchange Offer. The net proceeds to
the Issuer from the sale of the Initial Notes was approximately $144.5 million,
after deducting discounts and commissions and expenses thereof. Such proceeds
were used to fund a portion of the financing for the Recapitalization and
related transactions, including to finance the conversion into cash of shares of
Common Stock which were not retained by existing stockholders, to refinance
certain existing indebtedness of the Company, to redeem certain outstanding
preferred stock of the Company and to pay related fees and expenses of the
Recapitalization. For further discussion of the estimated sources and uses of
funds related to the Recapitalization, see "The Recapitalization."

The existing indebtedness of the Company repaid in connection with the
Recapitalization consisted of certain existing bank facilities, the Senior Notes
of the Company (which were defeased in connection therewith -- see "The
Recapitalization") and other debt of the Company. As of April 4, 1998, the
outstanding balance of such indebtedness amounted to $102.3 million and bore
interest at a weighted average rate of 11.4% per annum.

31
<PAGE> 36

CAPITALIZATION

The following table sets forth the consolidated capitalization of the
Company as of July 4, 1998, and on a pro forma basis to give effect to the
VisionWorld Acquisition. This table should be read in conjunction with "Use of
Proceeds," "Unaudited Pro Forma Condensed Consolidated Financial Statements" and
the notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AS OF JULY 4, 1998(1)
----------------------
ACTUAL PRO FORMA
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................... $ 8,796 $ 8,796
========= ========
Total debt:
Capital lease............................................. $ 9,979 $ 9,979
New Credit Facility(2).................................... 55,000 87,900
Notes(3).................................................. 149,511 149,511
--------- --------
Total debt............................................. 214,490 247,390
--------- --------
Shareholders' equity (deficit):
Preferred stock........................................... 30,761 30,761
Common stock.............................................. 6 6
Additional paid-in capital................................ 62,851 62,851
Accumulated deficit....................................... (155,853) (161,011)
--------- --------
Total shareholders' equity (deficit)................... (62,235) (67,393)
--------- --------
Total capitalization.............................. $ 152,255 $179,997
========= ========
</TABLE>

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

(1) Does not reflect either (i) the liabilities of the Company to pay the
previously issued Senior Notes or (ii) the offsetting asset representing the
deposit made to defease the Senior Notes. In connection with the
Recapitalization, the Company defeased the Senior Notes by depositing with
the trustee for the Senior Notes (i) an irrevocable notice of redemption of
the Senior Notes on October 1, 1998 and (ii) United States government
securities in an amount necessary to yield on October 1, 1998 $78.4 million,
which constitutes the principal amount, premium and interest payable on such
Senior Notes on the October 1, 1998 redemption date. Senior Notes will
continue to be reflected as a liability on the Company's balance sheet with
an offsetting asset representing the deposit of United States government
securities made for defeasance through the second quarter of fiscal 1998.

(2) The New Credit Facility consists of (i) the $55.0 million Term Loan
Facility; (ii) the $35.0 million Revolving Credit Facility and (iii) the
$100.0 million Acquisition Facility. Approximately $10.0 million of the
Revolving Credit Facility will be restricted for the repayment of the
capital lease obligation due in February 1999.

(3) Reflects $100.0 million of Fixed Rate Notes, net of discount of $0.5
million, and $50.0 million of Floating Rate Notes.

32
<PAGE> 37

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

The following Unaudited Pro Forma Condensed Consolidated Financial
Statements have been derived from the Company's historical financial statements.
The Unaudited Pro Forma Condensed Consolidated Balance Sheet gives effect to the
VisionWorld Acquisition as if it occurred on July 4, 1998. The Unaudited Pro
Forma Condensed Consolidated Statements of Operations give effect to the
Exchange Offering, the Recapitalization, the Hour Eyes Acquisition, and the
VisionWorld Acquisition as if they occurred on December 29, 1996.

The information in the columns titled "Actual" is summarized from the
historical Consolidated Financial Statements of the Company included elsewhere
in this Prospectus.

The Unaudited Pro Forma Condensed Consolidated Financial Statements have
been prepared by the Company management and are presented for informational
purposes only. The pro forma adjustments are based on available information and
assumptions that Company management believes are reasonable. These Unaudited Pro
Forma Condensed Consolidated Financial Statements may not be indicative of the
results that actually would have occurred if the Exchange Offering, the
Recapitalization, the Hour Eyes Acquisition, and the VisionWorld Acquisition had
been in effect on the dates indicated or which may be obtained in the future.
The Unaudited Pro Forma Condensed Consolidated Financial Statements should be
read in conjunction with the Company's Consolidated Financial Statements
appearing elsewhere in this Prospectus.

33
<PAGE> 38

EYE CARE CENTERS OF AMERICA, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)

JULY 4, 1998

<TABLE>
<CAPTION>
PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
-------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................... $ 8,796 $ 8,796
Investment securities -- restricted............... 77,258 $ (77,258)(a) --
Accounts and notes receivable, net................ 6,092 1,384(b) 7,476
Inventory......................................... 24,407 1,144(b) 25,551
Prepaid expenses and other........................ 3,173 193(b) 3,366
-------- --------- ---------
Total current assets......................... 119,726 (74,537) 45,189

Property and equipment, net....................... 58,642 2,687(b) 61,329
Intangible assets, net............................ 73,579 28,218(b) 101,797
Other assets...................................... 11,513 11,513
-------- --------- ---------
$263,460 $ (43,632) $ 219,828
======== ========= =========

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable.................................. $ 13,017 $ 328(b) $ 13,345
Deferred revenue.................................. 4,103 4,103
Accrued payroll expense........................... 3,147 398(b) 3,545
Accrued interest.................................. 3,865 3,865
Other accrued expenses............................ 9,487 9,487
In-substance defeased bonds....................... 72,100 (72,100)(a) --
-------- --------- ---------
Total current liabilities....................... 105,719 (71,374) 34,345
Long-term debt.................................... 214,490 32,900(b) 247,390
Deferred rent..................................... 3,205 3,205
Deferred gain..................................... 2,281 -- 2,281
-------- --------- ---------
Total long-term liabilities..................... 219,976 32,900 252,876
-------- --------- ---------

Total liabilities............................... 325,695 (38,474) 287,221

Shareholders' equity (deficit):

Preferred stock................................... 30,761 30,761
Common stock...................................... 6 6
Additional paid-in capital........................ 62,851 62,851
Accumulated deficit............................... (155,853) (5,158)(a) (161,011)
-------- --------- ---------
Total stockholders' equity (deficit)............ (62,235) (5,158) (67,393)
-------- --------- ---------
$263,460 $ (43,632) $ 219,828
======== ========= =========
</TABLE>

See accompanying notes to unaudited pro forma condensed consolidated balance
sheet.
34
<PAGE> 39

EYE CARE CENTERS OF AMERICA, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

The pro forma financial data has been derived by the application of pro
forma adjustments to the Company's historical financial statement for the period
noted. The Merger has been accounted for as a recapitalization and had no impact
on the historical basis of assets and liabilities. The Merger has been reflected
in the actual amounts in the unaudited pro forma condensed consolidated balance
sheet.

(a) In connection with the Recapitalization, the Company in-substance
defeased the previously issued Senior Notes by depositing with the trustee
for the Senior Notes (i) an irrevocable notice of redemption of the Senior
Notes on October 1, 1998 and (ii) United States government securities in an
amount necessary to yield on October 1, 1998 $78.4 million, which
constitutes the principal amount, premium and interest payable on such
Senior Notes on the October 1, 1998 redemption date. The Senior Notes
continue to be reflected as a liability on the Company's balance sheet with
an offsetting asset representing the deposit of United States government
securities made for defeasance through the second quarter of fiscal 1998.
This adjustment removes the United States government securities and the in-
substance defeased bonds and reflects the future extraordinary loss on
defeasement of $4.2 million and additional net interest expense of $1.0
million which will be incurred from July 5, 1998 through October 1, 1998
related to these in-substance defeased bonds.

(b) Reflects the pro forma effects of the VisionWorld Acquisition. The
Company purchased the assets for a total purchase price of $32.9 million
which was funded through the $100.0 Acquisition Facility. The purchase
price was allocated to the estimated fair value of the net assets to be
acquired as of July 4, 1998 with the remainder representing goodwill. The
Company will amortize goodwill over twenty-five years using a straight-line
method.

35
<PAGE> 40

EYE CARE CENTERS OF AMERICA, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
FOR THE TWENTY-SIX WEEKS ENDED JULY 4, 1998

<TABLE>
<CAPTION>
VISIONWORLD PRO FORMA
ACQUISITION RECAPITALIZATION RECAPITALIZATION
ACTUAL ADJUSTMENTS(B) ADJUSTMENTS PRO FORMA
-------- -------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net revenues:
Optical sales............................ $119,075 $19,412 -- $138,487
Management fee........................... 1,184 -- -- 1,184
-------- ------- ------- --------
Total net revenues......................... 120,259 19,412 -- 139,671
Operating costs and expenses:
Cost of goods sold....................... 40,488 4,132 44,620
Selling, general and administrative
expenses.............................. 65,342 13,468 -- 78,810(e)
Amortization of intangibles:
Goodwill.............................. 1,627 565 -- 2,192
Noncompete and other intangibles...... 33 -- -- 33
-------- ------- ------- --------
Total operating costs and expenses......... 107,490 18,165 -- 125,655
-------- ------- ------- --------
Income from operations..................... 12,769 1,247 -- 14,016(e)
Interest expense, net...................... 8,262 1,316 3,477(c) 13,055
-------- ------- ------- --------
Income (loss) before income taxes.......... 4,507 (69) (3,477) 961
Income tax expense (benefit)............... 13 -- (13)(d) --
-------- ------- ------- --------
Income (loss) from continuing operations... $ 4,494 $ (69) $(3,464) $ 961
======== ======= ======= ========
</TABLE>

See the accompanying notes to unaudited pro forma condensed consolidated
statement of operations.
36
<PAGE> 41

EYE CARE CENTERS OF AMERICA, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(DOLLARS IN THOUSANDS)

FOR THE YEAR ENDED JANUARY 3, 1998

<TABLE>
<CAPTION>
HOUR EYES VISIONWORLD PRO FORMA
ACQUISITION ACQUISITION RECAPITALIZATION
ACTUAL ADJUSTMENTS(A) ADJUSTMENTS(B) ADJUSTMENTS PRO FORMA
-------- -------------- -------------- ---------------- ---------
<S> <C> <C> <C> <C> <C>
Net revenues:
Optical sales...................... $218,958 $ 7,086 $34,573 $ -- $260,617
Management fee..................... 653 2,929 -- -- 3,582
-------- ------- ------- ------- --------
Total net revenues................... 219,611 10,015 34,573 -- 264,199
Operating costs and expenses:
Cost of goods sold............... 77,134 2,897 7,119 -- 87,150
Selling, general and
administrative expenses....... 120,319 5,874 24,412 -- 150,605(e)
Amortization of intangibles:
Goodwill...................... 2,722 504 1,129 -- 4,355
Noncompete and other
intangibles................. 148 286 -- -- 434
-------- ------- ------- ------- --------
Total operating costs and expenses... 200,323 9,561 32,660 -- 242,544
-------- ------- ------- ------- --------
Income from operations............... 19,288 454 1,913 -- 21,655(e)
Interest expense, net................ 13,738 638 2,632 7,071(c) 24,079
-------- ------- ------- ------- --------
Income (loss) before income taxes.... 5,550 (184) (719) (7,071) (2,424)
Income tax expense (benefit)......... 335 -- -- (335)(d) --
-------- ------- ------- ------- --------
Net income(loss) from continuing
operations......................... $ 5,215 $ (184) $ (719) $(6,736) $ (2,424)
======== ======= ======= ======= ========
</TABLE>

See the accompanying notes to unaudited pro forma condensed consolidated
statement of operations.
37
<PAGE> 42

EYE CARE CENTERS OF AMERICA, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS

The pro forma financial data has been derived by the application of pro
forma adjustments to the Company's financial statements for the periods noted.
The Merger has been accounted for as a recapitalization which had no impact on
the historical basis of assets and liabilities.

The unaudited pro forma condensed consolidated statement of operations
excludes approximately $25.3 million of non-recurring expenses principally
related to compensation expense to be recorded in connection with the exercise
of employee stock options due to the acceleration of vesting due to the
Recapitalization, an extraordinary charge of $4.2 million related to the
write-off of unamortized financing fees, and $1.5 million of interest expense,
net of interest income, related to the in-substance defeased bonds.
Additionally, the Company will incur an additional extraordinary charge of $4.2
million on October 1, 1998 upon defeasement of the previously issued Senior
Notes. The Company will also record additional net interest expense through
October 1, 1998 of approximately $1 million on the previously issued Senior
Notes which will be defeased on October 1, 1998.

(a) The pro forma adjustments give effect to the Hour Eyes Acquisition,
completed on September 30, 1997, as if it occurred on December 29, 1996. The
pro forma adjustments reflect the following adjustments to the consolidated
and combined statement of income of The Samit Organization for the
nine-month period January 1, 1997 through September 30, 1997:

<TABLE>
<CAPTION>
FOR THE NINE-MONTH PERIOD JANUARY 1, 1997
THROUGH SEPTEMBER 30, 1997
-----------------------------------------------------------------
ELIMINATION OF PRO FORMA
THE DR. SAMIT'S HOUR FOR THE
SAMIT EYES OPTOMETRIST, P.C. HOUR EYES
ORGANIZATION (VIRGINIA)(1) ADJUSTMENTS ACQUISITION
------------ ---------------------- ----------- -----------
<S> <C> <C> <C> <C>
Net revenues:
Optical sales........................... $19,559 $(12,473) $ -- $ 7,086
Management fee.......................... -- -- 2,929(2) 2,929
------- -------- ------- -------
Total net revenues.......................... 19,559 (12,473) 2,929 10,015
Operating costs and expenses:
Cost of goods sold...................... 5,787 (2,890) 2,897
Selling, general and administrative
expenses(5)........................... 11,892 (6,018) -- 5,874
Amortization of intangibles:
Goodwill........................... -- -- 504(3) 504
Noncompete and other intangibles... -- -- 286(3) 286
------- -------- ------- -------
Total operating costs and expenses.......... 17,679 (8,908) 790 9,561
------- -------- ------- -------
Income from operations...................... 1,880 (3,565) 2,139 454
Interest expense, net....................... 129 -- 509(4) 638
------- -------- ------- -------
Income (loss) before income taxes........... 1,751 (3,565) 1,630 (184)
Income tax expense (benefit)................ 110 -- (110) --
------- -------- ------- -------
Net income (loss) from continuing
operations(5)............................. $ 1,641 $ (3,565) $ 1,740 $ (184)
======= ======== ======= =======
</TABLE>

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

(1) Reflects the exclusion from the consolidated and combined statement of
income of The Samit Organization of the revenues and expenses for the
stores not acquired by the Company in the Hour Eyes Acquisition.

(2) Reflects the inclusion of management fees related to the Hour Eyes
stores managed by the Company.

(3) The Company initially recorded approximately $17.0 million of goodwill,
$1.0 million of a noncompete asset and $0.2 million of other intangibles
related to the Hour Eyes Acquisition. Goodwill is amortized on a
straight-line basis over twenty-five years; the noncompete asset is
amortized on a straight-line basis over the life of the noncompete or
three years, and the other intangibles are amortized over five years on
a straight-line basis. The adjustment to amortization of goodwill
reflect nine-months of amortization and the adjustment to noncompete and
other intangibles reflect nine months of amortization for these items.

38
<PAGE> 43

(4) The pro forma adjustment to interest expense reflects the following (in
thousands):

<TABLE>
<CAPTION>
NINE MONTHS
ENDING
SEPTEMBER 30,
RATE 1997
---- -------------
<S> <C> <C>
Interest expense on $9.0 million borrowed to acquire Hour
Eyes...................................................... 9.000% $ 608
Amortization of capitalized financing fees on debt.......... 30
-----
Pro forma interest expense for the Hour Eyes
Acquisition........................................... $ 638
Removal of historical net interest expense reported by The
Samit Organization........................................ (129)
-----
Adjustment.............................................. $ 509
=====
</TABLE>

Included in historical net interest expense reported by The Samit
Organization is interest expense of $192 net of interest income of $63.
Upon acquisition of Hour Eyes by the Company the debt owed by The Samit
Organization was paid and canceled. As the Company incurred debt to
acquire Hour Eyes, the Company has presumed no excess cash is available
for investment in interest bearing assets. As such, no interest income
has been included in the pro forma interest expense for the Hour Eyes
Acquisition.

(5) Pro forma selling, general and administrative expenses do not reflect
certain known benefits related to the elimination of certain costs
totaling $1,941 related to the Hour Eyes Acquisition. The elimination of
the costs are related to the closure of the Hour Eyes headquarters,
elimination of the previous owners salaries and perquisites and the
elimination of certain employees who have not been replaced by the
Company. Considering the benefit of these eliminated costs, on a pro
forma basis for the Hour Eyes Acquisition, selling, general and
administrative expense would be $3,933 and income from operations would
be $2,395.

(b) The pro forma adjustments give effect to the VisionWorld Acquisition as if
it occurred on December 29, 1996. The pro forma adjustments reflect the
following adjustments to the Combined Statement of Earnings for the
six-months ended July 4, 1998 and the fiscal year ended December 31, 1997.

<TABLE>
<CAPTION>
FOR THE SIX-MONTH PERIOD ENDING
JUNE 30, 1998
------------------------------------------
DR. BIZER'S PRO FORMA
VISIONWORLD, FOR THE
PLLC AND VISIONWORLD
AFFILIATES ADJUSTMENTS ACQUISITION
------------ ----------- -----------
<S> <C> <C> <C>
Optical sales............................................... $19,412 $ -- $19,412
Operating costs and expenses:
Cost of goods sold...................................... 4,132 -- 4,132
Selling, general and administrative expenses............ 13,468 13,468
Amortization of intangibles:
Goodwill.............................................. -- 565(1) 565
------- ------- -------
Total operating costs and expenses.......................... 17,600 (565) 18,165
------- ------- -------
Income (loss) from operations............................... 1,812 (565) 1,247
Interest expense, net....................................... 48 1,268(2) 1,316
Income (loss) before income taxes........................... 1,764 (1,833) (69)
Income tax expense (benefit)................................ -- -- --
------- ------- -------
Net income (loss) from continuing operations................ $ 1,764 $(1,833) $ (69)
======= ======= =======
</TABLE>

39
<PAGE> 44

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------------
DR. BIZER'S PRO FORMA
VISIONWORLD, FOR THE
PLLC AND VISIONWORLD
AFFILIATES ADJUSTMENTS ACQUISITION
------------ ----------- -----------
<S> <C> <C> <C>
Optical sales.......................................... $34,573 $ -- $34,573
Operating costs and expenses:
Cost of goods sold................................. 7,119 -- 7,119
Selling, general and administrative expenses(3).... 24,412 24,412
Amortization of intangibles:
Goodwill......................................... -- 1,129(1) 1,129
------- ------- -------
Total operating costs and expenses..................... 31,531 (1,129) 32,660
------- ------- -------
Income (loss) from operations.......................... 3,042 (1,129) 1,913
Interest expense, net.................................. 128 2,504(3) 2,632
------- ------- -------
Income (loss) before income taxes...................... 2,914 (3,633) (719)
Income tax expense (benefit)........................... -- -- --
------- ------- -------
Income (loss) from continuing operations(3)............ $ 2,914 $(3,633) $ (719)
======= ======= =======
</TABLE>

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

(1) Reflects amortization of goodwill of $28.2 million on a straight-line basis
over twenty-five years.

(2) The pro forma adjustment to interest expense reflects the following (in
thousands):

<TABLE>
<CAPTION>
YEAR SIX MONTHS
ENDED ENDED
DECEMBER 31, JUNE 30,
RATE 1997 1998
----- ------------ ----------
<S> <C> <C> <C>
Interest expense on $32.9 million drawn under Acquisition
Facility.................................................. 8.000% $2,632 $1,316
Removal of historical net interest expense reported by Dr.
Bizer's VisionWorld PLLC and Affiliates................... (128) (48)
------ ------
Adjustment.................................................. $2,504 $1,268
====== ======
</TABLE>

Included in historical net interest expense reported by Dr. Bizer's
VisionWorld PLLC and Affiliates for the year ended December 31, 1997 is
interest expense of $150 net of interest income of $22. Included in
historical net interest expense for the six months ended June 30, 1998 is
interest expense of $48. Upon acquisition of VisionWorld by the Company the
debt owed by Dr. Bizer's VisionWorld PLLC and Affiliates was paid and
canceled. As the Company incurred debt to acquire VisionWorld, the Company
has presumed no excess cash is available for investment in interest bearing
assets. As such, no interest income has been included in the pro forma
interest expense for the VisionWorld Acquisition.

(3) Pro forma selling, general and administrative expenses do not reflect
certain known benefits related to the elimination of certain costs totaling
$677 and $1,354 for the six months ended June 30, 1998 and for the year
ended December 31, 1997, respectively, related to the VisionWorld
Acquisition. The elimination of the costs are related to the closure of the
Vision World headquarters and the elimination of certain employees who have
not been replaced by the Company. Considering the benefit of these
eliminated costs, on a pro forma basis for the VisionWorld Acquisition,
selling, general and administrative expense for the six-months ended June
30, 1998 and for the year ended December 31, 1997 would be $12,791 and
$24,412, respectively, and income from operations for the six months ended
June 30, 1998 and for the year ended December 31, 1997 would be $1,924 and
$3,267, respectively.

<TABLE>
<CAPTION>
FISCAL YEAR TWENTY-SIX
ENDED WEEKS ENDED
JANUARY 3, JULY 4,
RATE 1998 1998
---- ----------- -----------
<S> <C> <C> <C>
Interest expense on the New Credit Facility............ 8.000% $ 4,400 $ 2,200
Interest expense on the Floating Rate Notes............ 9.700% 4,850 2,425
Interest expense on the Fixed Rate Notes............... 9.125% 9,125 4,562
Amortization of capitalized financing fees............. 1,375 688
Commitment fees on unused available credit............. 425 213
Interest expense on debt refinanced.................... (13,746) (6,873)
Exclusion of interest income........................... 642 262
-------- -------
Total adjustment.................................. $ 7,071 $ 3,477
======== =======
</TABLE>

The interest rates on the New Credit Facility and the Fixed Rate Notes are
based on the stated interest rates set forth in each of the respective
agreements. The interest rate on the Floating Rate Notes was

40
<PAGE> 45

estimated to be 50 basis points higher than the effective yield on the Fixed
Rate Notes. A 0.125% increase or decrease in the assumed interest rate on
the New Credit Facility and Notes would change the pro forma interest
expense by $131,000 and $66,000 for the period ending January 3, 1998 and
July 4, 1998, respectively.

(d) The adjustment reverses the historical tax expense as the Company will incur
significant tax losses as a result of the Recapitalization. Under the
criteria set forth under FASB Statement No. 109, uncertainties exist as to
the future utilization of the Company's net operating losses and resulting
deferred tax assets, and accordingly, the Company has established and
assumed a valuation allowance to fully reserve the net deferred tax asset
existing, and that will be created as a result of the Recapitalization.

(e) The Company has not reflected certain known benefits achieved through the
closure of the Hour Eyes headquarters, the VisionWorld headquarters and the
elimination of certain former employees of Hour Eyes and VisionWorld who
were not replaced by the Company. Additionally, as part of the
Recapitalization, the Company no longer pays annually a $144 consulting fee
to Desai Capital Management Incorporated and $56 of consulting fees that
were paid to certain Directors of the Company. The Company has agreed to pay
an annual management fee of $500 to THL Co. The net annual impact of the
change between the fees previously paid to Desai Capital Management
Incorporated and certain Directors of the Company and the annual management
fee to be paid to THL Co. is an increase in selling, general and
administrative expenses of $300. After considering the benefits related to
the Hour Eyes Acquisition and VisionWorld Acquisition and the net increase
in management fees paid to THL Co., on a pro forma basis, selling, general
and administrative expenses for the six months ended June 30, 1998 and the
year ended January 3, 1998 would be $78,283 and $147,610.

41
<PAGE> 46

SELECTED HISTORICAL FINANCIAL DATA

The selected table sets forth selected financial data and other operating
information of the Company. The selected financial data in the table are derived
from the audited Consolidated Financial Statements of the Company. The following
selected financial data should be read in conjunction with the Consolidated
Financial Statements, the related notes thereto and other financial information
included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
TWENTY-SIX WEEKS
YEAR ENDED ENDED
---------------------------------------------------------------------- -------------------
DECEMBER 31, DECEMBER 31, DECEMBER 30, DECEMBER 28, JANUARY 3, JUNE 28, JULY 4,
1993(A) 1994 1995 1996 1998 1997 1998
------------ ------------ ------------ ------------ ---------- -------- --------
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues...................... $118,701 $130,673 $140,198 $ 158,224 $ 219,611 $111,972 $120,259
Operating costs and expenses:
Cost of goods sold.............. 38,676 45,240 47,525 51,884 77,134 38,445 40,488
Selling, general and
administrative expenses(b).... 73,117 81,434 87,402 91,897 120,319 60,769 65,342
Recapitalization expenses....... -- -- -- -- -- -- 25,263
Amortization of intangibles..... 3,622 10,542 5,551 2,938 2,870 1,306 1,660
-------- -------- -------- --------- --------- -------- --------
Total operating costs and
expenses........................ 115,415 137,216 140,478 146,719 200,323 100,520 132,753
-------- -------- -------- --------- --------- -------- --------
Income (loss) from operations..... 3,286 (6,543) (280) 11,505 19,288 11,452 (12,494)
Interest expense, net............. 3,106 9,072 8,839 9,899 13,738 6,629 8,262
In-substance defeased bonds
interest expense, net........... -- -- -- -- -- -- 1,460
-------- -------- -------- --------- --------- -------- --------
Income (loss) before income
taxes........................... 180 (15,615) (9,119) 1,606 5,550 4,632 (22,229)
-------- -------- -------- --------- --------- -------- --------
Extraordinary item................ -- -- -- -- -- -- 4,155
Net income (loss)................. $ (2,111) $(15,615) $ (9,119) $ 1,418 $ 5,215 $ 4,632 $(26,384)
======== ======== ======== ========= ========= ======== ========

BALANCE SHEET DATA:
Net working capital............... $ 7,406 $ 5,315 $ 6,954 $ 8,633 $ 4,100 $ 10,243 $ 14,007
Total assets...................... 123,970 100,516 94,617 167,980 180,144 173,289 263,460
Total debt........................ 71,206 71,253 71,183 120,610 122,389 118,087 214,490
Shareholders' equity (deficit).... 26,294 10,290 1,331 3,532 8,128 7,807 (62,235)

OTHER FINANCIAL DATA:
Income (loss) from operations..... $ 3,286 $ (6,543) $ (280) $ 11,505 $ 19,288 $ 11,452 $(12,494)
EBITDA(c)......................... 16,672 14,132 14,949 23,954 34,289 18,729 20,340
Depreciation and
amortization(d)................. 13,386 20,675 15,229 12,449 15,001 7,277 7,571
Capital expenditures.............. 14,449 5,367 6,765 4,233 9,470 7,010 8,632
Gross margin...................... 67.4% 65.4% 66.1% 67.2% 64.9% 65.7% 66.3%
EBITDA margin..................... 14.0 10.8 10.7 15.1 15.6 16.7 16.9
Ratio of earnings to fixed
charges(e)...................... 1.0x -- 0.3x 1.1x 1.3x 1.6x 1.5x

STORE DATA:
Beginning of period stores........ 123 146 162 152 218 218 239
Opened.......................... 23 17 17 6 6 4 5
Acquired........................ -- 4 -- 60 22 -- --
Closed.......................... -- (5) (27) -- (7) 3 1
-------- -------- -------- --------- --------- -------- --------
End of period stores.............. 146 162 152 218 239 219 243
======== ======== ======== ========= ========= ======== ========
Comparable store sales
growth(f)....................... 0.3% 1.1% 4.2% 3.5% 3.8% 2.8% 1.2%
Sales per store(g)................ $ 913 $ 878 $ 904 $ 935 $ 995 -- --
Sales per square foot(h).......... 204 202 210 214 214 -- --
</TABLE>

(see footnotes on following page)
42
<PAGE> 47

(a) The Company was purchased by Desai Capital Management Incorporated on
October 7, 1993 and fiscal 1993 presented herein represents results of
operations both after and before the acquisition date.

(b) The Company recorded a $0.7 million non-cash impairment charge related to
its investment in its subsidiary in Mexico, which is included in selling,
general and administrative expenses for 1996.

(c) EBITDA represents consolidated net income (loss) before interest expense,
income taxes, depreciation and amortization (other than amortization of
store pre-opening costs) and recapitalization expenses. The Company has
included information concerning EBITDA because it believes that EBITDA is
used by certain investors as one measure of a company's historical ability
to fund operations and meet its financial obligations. EBITDA should not be
considered as an alternative to, or more meaningful than, operating income
(loss) or net income (loss) in accordance with generally accepted
accounting principals as an indicator of the Company's operating
performance or cash flow as a measure of liquidity. Additionally, EBITDA
presented may not be comparable to similarly titled measures reported by
other companies.

(d) Depreciation and amortization shown here does not include the amortization
of store pre-opening costs, which is included in selling, general and
administrative expenses.

(e) In computing the ratio of earnings to fixed charges, "earnings" represents
income (loss) before income tax plus fixed charges. "Fixed charges"
consists of interest, amortization of debt issuance costs and a portion of
rent, which is representative of interest factor (approximately one-third
of rent expense). For the years ended December 31, 1994 and December 30,
1995, earnings were insufficient to cover fixed charges by $15.6 million
and $9.1 million, respectively. On a pro forma basis, the ratios of
earnings to fixed charges for the year ended January 3, 1998 and the
twenty-six weeks ended July 4, 1998 are 1.0 and 1.1, respectively.

(f) Comparable store sales growth increase is calculated comparing net revenues
for the period to net revenues of the prior period for all stores open at
least twelve months prior to each such period.

43
<PAGE> 48

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

OVERVIEW

In early 1996, Bernard W. Andrews joined the Company as President and Chief
Executive Officer and has built a management team with extensive operating,
merchandising and marketing experience in the optical and retail industries.
This management team has focused on improving operating efficiencies and growing
the business through both strategic acquisitions and new store openings.

The industry is highly fragmented and is undergoing significant
consolidation. Under the current management team, the Company has successfully
acquired and integrated two acquisitions. On September 27, 1996, the Company
acquired all of the outstanding shares of the capital stock of Visionworks for
$61.5 million (the "Visionworks Acquisition"). At the time of the Visionworks
Acquisition, Visionworks was a sixty store optical retailer located along the
Atlantic Coast from Florida to Washington, D.C. with forty-nine superstores and
eleven optical stores located near Eckerd Corporation stores. On September 30,
1997, the Company acquired TSGI for $22.3 million less acquisition date
liabilities. Simultaneously with the acquisition of TSGI, the Company entered
into a long-term business management agreement with Hour Eyes Doctors of
Optometry, P.C., a Virginia professional corporation, to manage an additional
twelve Hour Eyes optical stores in Virginia. As a result of the long-term
business management agreement with Hour Eyes Doctors of Optometry, P.C., the
Company records a management fee but does not include the results of operations
from the twelve Virginia stores in the Company's consolidated results of
operations.

Management believes that optical retail sales through managed vision care
programs will continue to increase over the next several years. As a result,
management has made a strategic decision to pursue managed care contracts
aggressively in order to help the Company's retail business grow and over the
past three years has devoted significant management resources to the development
of its managed care business. While the average ticket price on products
purchased under managed care reimbursement plans is typically lower, managed
care transactions generally earn comparable operating profit margins as they
require less promotional spending and advertising support. The Company believes
that the increased volume resulting from managed care contracts more than
offsets the lower average ticket price. During fiscal year 1997, approximately
20% of the Company's total revenues were derived from managed care programs.
Management believes that the increasing role of managed vision care will
continue to benefit the Company and other large retail optical chains with
strong local markets shares, broad geographic coverage and sophisticated
information management and billing systems.

Historically, the Company has operated on a calendar year basis. Effective
January 1, 1994, the Company began reporting using a fifty-two or fifty-three
week fiscal year ending on the Saturday closest to December 31, with monthly
results on a four-four-five week basis each quarter. Fiscal 1997 was a
fifty-three week fiscal year with monthly results on a four-four-five week basis
for each of the first three quarters and a four-five-five week basis for the
fourth quarter.

In connection with the Recapitalization, the Company defeased its
previously issued 12% Senior Notes due 2003 (the "Senior Notes") and has
deposited with the trustee for the Senior Notes (i) an irrevocable notice of
redemption of the Senior Notes on October 1, 1998 and (ii) United States
government securities in an amount necessary to yield on October 1, 1998 $78.4
million, which constitutes the principal amount, premium and interest payable on
the Senior Notes on the October 1, 1998 redemption date. The Senior Notes
44
<PAGE> 49

continue to be reflected as a liability on the Company's balance sheet with an
offsetting asset representing the deposit of United States government securities
made for defeasance. It is anticipated that during the third quarter of fiscal
1998, the Company will record an extraordinary charge of $4.2 million on the
statement of operations for defeasance costs.

RESULTS OF OPERATIONS

The following table sets forth the percentage relationship of certain items
in the Company's income statement to net revenues.

<TABLE>
<CAPTION>
TWENTY-SIX
WEEKS ENDED
FISCAL YEAR ENDED ------------------
--------------------- JUNE 28, JULY 4,
1995 1996 1997 1997 1998
----- ----- ----- -------- -------
<S> <C> <C> <C> <C> <C>
Net revenues:
Optical sales............................................. 100.0% 100.0% 100.0% 100.0% 99.0%
Management fee............................................ -- -- -- -- 1.0
----- ----- ----- ----- -----
Total net revenues.......................................... 100.0 100.0 100.0 100.0 100.0
Operating costs and expenses:
Cost of goods sold........................................ 33.9 32.8 35.1 34.3 34.0*
Selling, general and administrative expenses.............. 62.3 58.1 54.8 54.4 54.9*
Recapitalization expenses................................. -- -- -- -- 21.0
Amortization of intangibles............................... 4.0 1.9 1.3 1.1 1.4
----- ----- ----- ----- -----
Total operating costs and expenses.......................... -- -- -- 89.8 110.4
Income (loss) from operations............................... (0.2) 7.3 8.8 10.2 (10.4)
Interest expense, net....................................... 6.3 6.3 6.3 6.0 6.9
In-substance defeased bonds interest
expense, net.............................................. -- -- -- -- 1.2
Income (loss) before income taxes........................... (6.5) 1.0 2.5 -- --
----- ----- ----- ----- -----
Income tax expense.......................................... -- (0.1) (0.2) 0.1 0.0
Net income (loss) before extraordinary
loss...................................................... -- -- -- 4.1 (18.5)
Extraordinary loss on early extinguishment of long-term
debt...................................................... -- -- -- -- 3.5
----- ----- ----- ----- -----
Net income/(loss)........................................... (6.5)% 0.9% 2.4% 4.1% (22.0)%
===== ===== ===== ===== =====
EBITDA margin............................................... 10.7% 15.1% 15.6% 16.7% 16.9%
</TABLE>

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

(*) Percentages based on optical sales only.

The following is a discussion of certain factors affecting the Company's
results of operations from fiscal 1995 to fiscal 1997 and the twenty-six weeks
ended June 28, 1997 and July 4, 1998. This discussion should be read in
conjunction with the Consolidated Financial Statements and notes thereto
included elsewhere in this document.

THE TWENTY-SIX WEEKS ENDED JULY 4, 1998 COMPARED TO THE TWENTY-SIX WEEKS ENDED
JUNE 28, 1997

Net Revenues. The increase in net revenues to $120.3 million for the
twenty-six weeks ended July 4, 1998 from $112.0 million for the twenty-six weeks
ended June 28, 1997 was largely the result of the TSGI Acquisition and an
increase in comparable store sales of 1.2%. The TSGI Acquisition resulted in an
increase in net revenues of $5.5 million during the first twenty-six weeks of
fiscal 1998.

Gross Profit. Gross profit increased to $78.6 million for the twenty-six
weeks ended July 4, 1998 from $73.5 million for the twenty-six weeks ended June
28, 1997. Gross profit as a percentage of optical sales increased to 66.0% for
the twenty-six weeks ended July 4, 1998 as compared to 65.7% for the twenty-six
weeks ended June 28, 1997. This percentage increase was primarily due to stores
acquired in the TSGI Acquisition ("TSGI Stores") which perform at a higher
margin than the stores owned by the Company prior to the TSGI Acquisition. This
is primarily due to the doctor examination revenues and expenses at the TSGI
Stores, which are not earned at the Company's other locations.

Selling General & Administrative Expenses (SG&A). SG&A increased to $65.3
million for the twenty-six weeks ended July 4, 1998 from $60.8 million for the
twenty-six weeks ended June 28, 1997. SG&A as a percentage of optical sales
increased to 54.9% for the twenty-six weeks ended July 4, 1998 from 54.4% for
the twenty-six weeks ended June 28, 1997. This percentage increase was due
primarily to increases in operating

45
<PAGE> 50

lease expenditures and payroll expenses related to doctors at the TSGI Stores
which are not a component of the cost structure at the Company's other
locations. These increased costs were partially offset by savings realized
through economies of scale achieved in advertising and depreciation.

Recapitalization Expense. As a result of the Recapitalization, the Company
has incurred approximately $25.3 million of non-recurring expenses. These
expenses consisted of compensation expense recorded in connection with the
exercise of employee stock options and other transaction related expenses.

Amortization Expense. Amortization expense (excluding the amortization of
store pre-opening costs) increased to $1.7 million for the twenty-six weeks
ended July 4, 1998 from $1.3 million for the twenty-six weeks ended June 28,
1997. This increase was due to amortization of the goodwill related to the TSGI
Acquisition, which was recorded during the fourth quarter of 1997.

Income Tax Expense. Deferred tax assets and liabilities are determined
based on differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse. The Company currently
has a net deferred tax asset related to its temporary differences. Based upon
the weight of available evidence allowed under the criteria set forth under FAS
Statement No. 109, including the lack of carryback potential and an anticipated
tax loss for the fiscal year ending January 2, 1999, uncertainties exist as to
the future realization of the deferred tax asset. These uncertainties include
lack of carryback potential as the Company has incurred taxable losses in each
of the past four years. Further, the Company does not anticipate that it will
produce taxable income during the carryforward period. Therefore, the Company
has established a full valuation allowance for its deferred tax assets.

Although the Company does not anticipate that it will produce taxable
income, the Company does expect to generate positive cash flows which will
enable it to meet its obligations. See "Liquidity and Capital Resources" for
further discussion of cash flows.

Net Interest Expense. Net interest expense increased to $8.3 million for
the twenty-six weeks ended July 4, 1998 from $6.6 million for the twenty-six
weeks ended June 28, 1997. This increase was due to the increased borrowings
related to the Recapitalization.

In-substance Defeased Bonds Net Interest Expense. Net interest expense
related to the in-substance defeased bonds was $1.5 million for the twenty-six
weeks ended July 4, 1998 and reflects the net amount of interest expense related
to the in-substance defeased bonds and the interest income related to the
investment securities-restricted.

Extraordinary Item. An extraordinary loss of $4.2 million due to the
write-off of deferred financing fees related to the early extinguishment of debt
was recorded during the twenty-six weeks ended July 4, 1998.

Net Income (Loss). Net loss decreased to $26.4 million for the twenty-six
weeks ended July 4, 1998 from net income of $4.6 million for the twenty-six
weeks ended June 28, 1997.

1997 COMPARED TO 1996

Net Revenues. The increase in net revenues of 38.8% to $219.6 million in
1997 from $158.2 million in 1996 was primarily the result of the $52.2 million
in sales attributable to a full year of Visionworks and three months of Hour
Eyes stores in the Company's 1997 results and an increase in comparable store
sales of 3.8% in 1997. In addition, 1997 was a fifty-three week year and 1996
was a fifty-two week year.

Gross Profit. Gross profit as a percentage of net revenues decreased by
3.4% to 64.9% in 1997 as compared to 67.2% in 1996. Gross profit was $142.5
million in 1997 compared to $106.3 million in 1996. This percentage decrease was
primarily due to the inclusion of a complete year of the Visionworks stores in
the Company's 1997 results. Visionworks stores operate at a lower gross margin
primarily due to the sale of contact lenses, which have lower gross margins and
are not sold at a majority of the Company's other locations.

46
<PAGE> 51

Selling, General and Administrative Expenses. SG&A increased by 30.9% to
$120.3 million in 1997 as compared to 1996. SG&A as a percentage of net revenues
decreased by 5.7% to 54.8% in 1997 from 58.1% for the same period of 1996. This
percentage decrease was due primarily to savings realized through more efficient
payroll management and increased leveraging of advertising expenditures due to
the inclusion of a complete year of the Visionworks stores in the Company's 1997
results.

Amortization Expense. Amortization expense (excluding the amortization of
store pre-opening costs) remained at $2.9 million in 1997.

Net Interest Expense. Net interest expense in 1997 increased by 38.4% to
$13.7 million as compared to $9.9 million in 1996. This increase was due to the
interest expense associated with the $49.0 million which the Company borrowed to
purchase Visionworks and Hour Eyes and the interest on the $10.0 million capital
lease which the Company assumed as a result of the Visionworks Acquisition.

1996 COMPARED TO 1995

Net Revenues. The increase in net revenues of 12.8% to $158.2 million in
1996 from $140.2 million in 1995 was largely the result of the $14.1 million in
sales attributable to Visionworks. In addition, comparable store sales increased
by 3.5% in 1996 due to more effective advertising and improved store operations.

Gross Profit. Gross profit as a percentage of net revenues increased to
67.2% in 1996 as compared to 66.1% in 1995. Gross profit was $106.3 million in
1996 compared to $92.7 million in 1995. This increase in gross profit was
primarily due to efficiencies realized in lab operating activities.

Selling, General and Administrative Expenses. SG&A increased by 5.1% to
$91.9 million in 1996 as compared to 1995. SG&A as a percentage of net revenues
decreased by 6.7% to 58.1% in 1996 from 62.3% for the same period of 1995. This
percentage decrease was due primarily to savings realized through more efficient
payroll management and increased efficiency in both advertising expenditures and
overhead support.

Amortization Expense. Amortization expense (excluding the amortization of
store pre-opening costs) decreased by 48.2% to $2.9 million in 1996 from $5.6
million in 1995. This $2.7 million decrease was due to the accelerated
amortization (60% in year one, 30% in year two and 10% in year three) of the
$18.0 million non-competition agreement and SearsCard Agreement entered into
with Sears in 1993. These agreements were fully amortized during the fourth
quarter of 1996.

47
<PAGE> 52

over the past years. The Company also does not anticipate taxable income during
the carryforward period. Therefore, the Company has established a full valuation
allowance for its deferred tax assets.

Net Interest Expense. Net interest expense in 1996 increased by 12.5% to
$9.9 million as compared to $8.8 million in 1995. This increase was due to the
interest expense associated with the $40.0 million which the Company borrowed to
purchase Visionworks and the interest on the $10.0 million capital lease which
the Company assumed as a result of the Visionworks Acquisition.

NEW ACCOUNTING PRONOUNCEMENTS

As of January 4, 1998, the Company adopted SFAS No. 130, Reporting
Comprehensive Income ("Statement 130"). Statement 130 establishes new rules for
the reporting and display of comprehensive income and its components; however,
the adoption of Statement 130 had no impact on the Company's net income or
stockholders' equity. For the second quarter of 1998 and 1997, total
comprehensive income/(loss) amounted to ($30.3) million and $1.7 million,
respectively, and for the twenty-six weeks ended July 4, 1998 and June 28, 1997,
comprehensive income/(loss) was ($26.4) million and $4.6 million, respectively.
There were no other components of comprehensive income other than net income.

In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information ("Statement
131"). This statement establishes standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports. It also establishes standards
for related disclosures about products and services, geographic areas, and major
customers. The provisions of Statement 131 are effective for financial
statements for fiscal years beginning after December 15, 1997. Adoption in
interim financial statements is not required until the year after initial
adoption; however, comparative prior year information is required. The Company
is currently evaluating the impact of this statement on the disclosures included
in its annual and interim period financial statements.

In February 1998, the Financial Accounting Standards Board issued SFAS No.
132, Employers' Disclosures about Pensions and Other Postretirement Benefits,
which is required to be adopted in years beginning after December 15, 1998. As
the Company has no pension plans or postretirement benefits, the adoption of
this statement will not have an effect on earnings or the financial position of
the Company.

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, which is required
to be adopted in years beginning after June 15, 1999. The statement permits
early adoption as of the beginning of any fiscal quarter after its issuance. The
statement will require the Company to recognize all derivatives on the balance
sheet at fair value. Derivatives that are not hedges must be adjusted to fair
value through income. If the derivative is a hedge, depending on the nature of
the hedge, changes in the fair value of derivatives will either be offset
against the change in fair value of the hedged assets, liabilities, or firm
commitments through earnings or recognized in other comprehensive income until
the hedged item is recognized in earnings. The ineffective portion of a
derivative's change in fair value will be immediately recognized in earnings.
The Company has not yet determined what the effect of SFAS No. 133 will be on
the earnings and financial position of the Company.

In April 1998, the AICPA issued Statement of Position 98-5, Reporting on
the Costs of Start-Up Activities ("SOP 98-5"). SOP 98-5 requires that start-up
costs, including organizational costs, be expensed as incurred. The SOP broadly
defines start-up activities as those one-time activities related to opening a
new facility, introducing a new product or services, conducting business in a
new territory, conducting business with a new class of customer or beneficiary,
initiating a new process in an existing facility, or commencing some new
operation. The SOP is effective for most entities for fiscal years beginning
after December 15, 1998. As such, the Company will be required to adopt this SOP
for fiscal year 1999. Initial application will require most

48
<PAGE> 53

companies to write off as the cumulative effect of a change in accounting
principle any previously capitalized start-up or organization costs. The effect
of the adoption of the SOP on the Company's results of operations is expected to
be a write off of previously capitalized pre-opening and organization costs of
approximately $300,000, in addition to annual charges to earnings of
approximately $200,000.

LIQUIDITY AND CAPITAL RESOURCES

Historically, the Company has utilized internally generated funds and
borrowings under credit facilities to meet ongoing working capital and capital
expenditure requirements. In connection with the Recapitalization, the Company
incurred new indebtedness aggregating approximately $204.5 million and has total
indebtedness of approximately $214.5 million. Substantially all of the proceeds
of such new indebtedness were used to refinance certain existing indebtedness of
the Company, to finance the conversion into cash of the shares of Common Stock
which are not retained by existing shareholders, to redeem certain preferred
stock of the Company and to pay fees and expenses relating to the
Recapitalization. See "The Recapitalization."

The existing indebtedness of the Company has been refinanced including the
Senior Notes which were defeased as described in "The Recapitalization." The
Senior Notes will be reflected as a liability on the Company's balance sheet
with an offsetting asset representing the deposit made for defeasance in the
Company's financial statements through the second quarter of fiscal 1998.

During 1996, the Company issued 110,000 shares of Series A Cumulative
Mandatorily Redeemable Exchangeable Pay-in-Kind Preferred Stock ("Preferred
Stock"). In conjunction with the Recapitalization, the Company repurchased the
Preferred Stock, canceled it and issued 300,000 shares of a new series of
preferred stock (the "New Preferred Stock"), par value $.01 per share. Dividends
on shares of New Preferred Stock will be cumulative from the date of issue and
will be payable when and as may be declared from time to time by the Board of
Directors of the Company. Such dividends will accrue on a daily basis from the
original date of issue at an annual rate per share equal to 13% of the original
purchase price per share, with such amount to be compounded quarterly. The New
Preferred Stock will be redeemable at the option of the Company, in whole or in
part, at $100 per share plus (i) the per share dividend rate and (ii) all
accumulated and unpaid dividends, if any, to the date of redemption, upon
occurrence of an offering of equity securities, a change of control or certain
sales of assets.

The New Credit Facility consists of (i) the $55.0 million Term Loan
Facility; (ii) the $35.0 million Revolving Credit Facility; and (iii) the $100.0
million Acquisition Facility, of which $50.0 million is currently committed.
Approximately $10.0 million of the Revolving Credit Facility is restricted for
the repayment of the capital lease obligation due in February 1999. The Term
Loan Facility matures five years from the closing date of the New Credit
Facility and will amortize quarterly in aggregate annual principal amounts of
$0.0 million, $4.0 million, $12.0 million, $18.0 million, and $21.0 million,
respectively, for years one through five after the closing of the New Credit
Facility. See "Description of New Credit Facility."

The Company has significantly increased cash requirements for debt service
relating to the Notes and the New Credit Facility. The Company relies on
internally generated funds and, to the extent necessary, on borrowings under the
Revolving Credit Facility to meet its liquidity needs. At July 4, 1998, the
Company had long-term debt outstanding of approximately $214.5 million, net of a
discount of $0.5 million, and up to $35.0 million available under the Revolving
Credit Facility (approximately $10.0 million is restricted for the repayment of
the capital lease obligation due in February 1999) and the $100.0 million
Acquisition Facility, of which $50.0 million is committed initially.

Based upon current operations, anticipated cost savings and future growth,
the Company believes that its cash flow from operations, together with available
borrowings under the Revolving Credit Facility, will be adequate to meet its
anticipated requirements for working capital, capital expenditures and scheduled
principal and interest payments, although the Company believes that its ability
to repay the Notes and amounts outstanding under the Revolving Credit Facility
and the Acquisition Facility at maturity may require additional financing. The
ability of the Company to meet its debt service obligations and reduce its debt
will be dependent on the future performance of the Company, which in turn, will
be subject to general economic conditions and to financial, business, and other
factors, including factors beyond the Company's control. A

49
<PAGE> 54

portion of the Company's debt bears interest at floating rates; therefore, its
financial condition is and will continue to be affected by changes in prevailing
interest rates.

Cash flows from operating activities have used net cash for the twenty-six
weeks ended July 4, 1998 of $9.9 million as compared to providing $13.8 million
for the twenty-six weeks ended June 28, 1997. As of July 4, 1998, the Company
had $8.8 million of cash available to meet the Company's obligations. Cash flows
from operating activities provided net cash for 1997, 1996 and 1995 of $15.5
million, $14.0 million and $8.5 million, respectively. As of January 3, 1998,
the Company had $7.2 million of cash available to meet the Company's
obligations.

Capital expenditures are related to the construction of new stores,
repositioning of existing stores in some markets, new computer systems for the
stores and maintenance of existing facilities. Capital expenditures for the
twenty-six weeks ended July 4, 1998 were $8.6 million. Capital expenditures for
1997, 1996 and 1995 were $9.5 million, $4.2 million and $6.8 million,
respectively. Of these amounts, capital expenditures associated with new stores
for 1997, 1996 and 1995 were $2.5 million, $2.3 million and $5.5 million,
respectively. Other capital expenditures for 1997, 1996 and 1995 were $7.0
million, $1.9 million, and $1.3 million, respectively. Approximately $3.1
million of 1997 capital expenditures were related to lab equipment upgrades and
the installation of a new point-of-sale system, which are investment programs
that management believes are non-recurring in nature and should be substantially
completed by the end of fiscal 1998. Capital expenditures for 1998 are
anticipated to be approximately $20 million. Of the 1998 capital expenditures,
approximately $12 million are expected to be related to new stores,
approximately $4 million are expected to be for maintenance of existing
facilities and the remaining approximately $4 million represents the funds
necessary to complete the Company's point-of-sale and equipment upgrade
programs, which management believes are non-recurring in nature.

In connection with the Visionworks Acquisition, the Company assumed an
agreement to sublease land, buildings and equipment at eight operating
locations. Under the terms of the agreement, the Company committed to repay the
capital lease obligation on February 1, 1999 for approximately $10.0 million and
to pay Eckerd Corporation an annual rent of $1.3 million until February 1, 1999
for the subleases. The use of $10.0 million of the Revolving Credit Facility
will be restricted to repayment of such capital lease.

In August 1997, the Company sold, for net proceeds of $4.8 million, the
building in which its corporate headquarters is located. The Company entered
into a fifteen year operating lease with the new owners and will maintain its
current location. As a result of this transaction, the Company recorded a
deferred gain which will be amortized over the life of the lease.

INFLATION

The impact of inflation on the Company's operations has not been
significant to date. While the Company does not believe its business is highly
sensitive to inflation, there can be no assurance that a high rate of inflation
would not have an adverse impact on the Company's operations.

SEASONALITY AND QUARTERLY RESULTS

The Company's sales fluctuate seasonally. Historically, the Company's
highest sales and earnings occur in the first and third quarters. In addition,
quarterly results are affected by the opening of new stores; therefore, the
Company's growth, the Visionworks Acquisition and the TSGI Acquisition may
affect seasonal fluctuations. Hence, quarterly results are not necessarily
indicative of results for the entire year.

50
<PAGE> 55

INDUSTRY

OVERVIEW

The following chart sets forth expenditures (based upon products sold) in
the optical retail market over the past seven years according to a leading
industry publication.

U.S. OPTICAL RETAIL SALES BY SECTOR 1991 - 1997
(DOLLARS IN BILLIONS)

<TABLE>
<CAPTION>
1997
1991 1992 1993 1994 1995 1996 1997 SHARE
----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lenses/treatments......... $ 5.2 $ 5.6 $ 6.0 $ 6.5 $ 6.8 $ 7.2 $ 7.6 49.5%
Frames.................... 3.9 4.0 4.1 4.1 4.4 4.6 5.0 32.2
Sunglasses(a)............. 0.5 0.5 0.5 0.5 0.7 0.8 0.9 5.8
Contact lenses............ 1.8 1.8 1.7 1.8 1.9 1.9 1.9 12.5
----- ----- ----- ----- ----- ----- ----- -----
$11.5 $11.9 $12.3 $12.9 $13.8 $14.6 $15.4 100.0%
===== ===== ===== ===== ===== ===== ===== =====
</TABLE>

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

(a) Does not include sales through specialty optical retailers or general retail
channels.

DISTRIBUTION

Eye care services in the United States are delivered by local providers
consisting of approximately 65,000 opticians, 31,000 optometrists and 16,500
ophthalmologists. The optical retail industry in the United States is highly
fragmented and consists of (i) independent practitioners (including opticians,
optometrists and ophthalmologists), (ii) optical retail chains and (iii)
warehouse clubs and mass merchandisers. In 1997, optical retail chains accounted
for approximately 32.5% of the total market, while independent practitioners
comprised approximately 61.5% and other distribution channels represented
approximately 6.0%. Optical retail chains have begun consolidating the optical
retail market at the expense of independent practitioners. Independent
practitioners' market share dropped from 63.0% to 61.5% between 1996 and 1997,
while optical retail chains' market share increased over the same period from
31.3% to 32.5%.

INDEPENDENT PRACTITIONERS

In 1997, independent practitioners represented $9.5 billion of eyewear
retail sales, or 61.5% of the industry's total optical retail sales volume of
$15.4 billion. Independent practitioners typically cannot provide quick
turnaround of eyeglasses because they do not have laboratories on site and
generally charge higher prices than other competitors. Moreover, their eyewear
product assortment is usually narrow, although a growing portion includes some
designer or branded products. Prior to 1974, independent practitioners
benefitted from regulatory and other factors which inhibited commercial
retailing of prescription eyewear. In 1974, the Federal Trade Commission began
requiring doctors to provide their patients with copies of their prescriptions,
enabling sophisticated retailers to implement retail marketing concepts which
gave way to a more competitive marketplace. Independent practitioners' market
share has declined from approximately 100% in 1974 to 61.5% in 1997, dropping
1.5% from 1996. Management believes that independent practitioners will continue
to lose market share over the next several years.

OPTICAL RETAIL CHAINS

Optical retail chains represented 32.5% of the total optical retail market
in 1997. Over the past three years, the top one hundred optical retail chains
(in terms of net revenues) have grown at a rate faster than the overall market.
Optical retail chains include both superstores and conventional optical stores.
Optical retail

51
<PAGE> 56

chains offer quality service provided by on-site optometrists and also carry a
wide product line, emphasizing the fashion element of eyewear, although
lower-priced lenses and frames are also available. In addition, the retail
optical chains, particularly the superstores, are generally able to offer better
value and service through a reduced cost structure, sophisticated merchandising
and display, economies of scale and greater volume. Furthermore, they can
generate greater market awareness than can fragmented independent practitioners
as optical retail chains usually invest more in advertising and promotions.
Management believes that large optical chains are best positioned to benefit
from industry consolidation trends including the growth in managed vision care.

WAREHOUSE CLUBS AND MASS MERCHANDISERS

Warehouse clubs and mass merchandisers usually provide eyewear in a host
environment which is typically a larger general merchandise store. This segment
typically provides some of the service elements of retail optical chains, but
competes primarily on price. As a result, its eyewear selection tends to focus
on lower-priced optical products. Moreover, this segment's "Every Day Low Price"
strategy is generally incompatible with the pricing structure required by the
managed vision care model. Warehouse clubs and mass merchandisers' market share
declined from 4.2% in 1996 to 4.0% in 1997.

OTHER

Other participants in the optical retail market include HMOs and
school-controlled dispensaries. In 1997, other participants represented
approximately 2.0% of the total optical retail market.

TRENDS

Management believes that growth and consolidation in the optical retail
market is being driven by the following trends:

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<PAGE> 57

(i) the importance of scale to managed care programs which require
providers with strong store brand awareness, multiple locations and
sophisticated information management and billing systems, (ii) efficiencies
of scale in merchandising, marketing, manufacturing and sourcing product,
(iii) the significant capital required to build lens processing
laboratories on premises and (iv) the desire of small regional chains and
independent practitioners to achieve liquidity by selling to larger optical
retail chains. Management believes that the large optical retail chains are
better positioned than mass merchandisers and warehouse clubs to benefit
from this consolidation trend and that such chains will continue to gain
market share from the independent practitioners over the next several
years.

GREATER FREQUENCY OF PURCHASE. Since 1983, the frequency of eyewear
purchases has increased over 45%, from an average purchase of new eyewear
every 2.2 years to every 1.5 years. Management believes that managed care
has contributed to this trend and is likely to serve as a continuing
catalyst to further increases in the frequency of eyewear purchases, as
plan participants are encouraged to have their eyes examined more
frequently. In addition, consumers are currently purchasing multiple
eyewear products for distinct occasions (work, casual, fashion, driving,
sun, sport, etc.), driven, in part, by the growing consumer perception of
eyewear as a fashion accessory.

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<PAGE> 58

BUSINESS

GENERAL

Eye Care Centers of America, Inc. is the third largest retail optical chain
in the United States as measured by net revenues, operating 243 stores, 214 of
which are optical superstores. The Company operates predominately under the
trade name "EyeMasters," and in certain geographical regions under the trade
names "Binyon's," "Visionworks" and "Hour Eyes." The Company utilizes a strategy
of clustering its stores within its targeted markets in order to build local
market leadership and strong consumer brand awareness, as well as to achieve
economies of scale in advertising, management and field overhead. Management
believes that the Company has the number one or two superstore market share
position in fourteen of its top fifteen markets, including Washington, D.C.,
Houston, Dallas, Tampa/St. Petersburg, Phoenix, Miami/Ft. Lauderdale, Portland
and San Antonio. Based on a 1997 survey conducted annually on behalf of the
Company in seven of its top markets, the Company has average total brand
awareness of 90% and a reputation for quality service and value. The Company has
achieved positive same store sales growth in each of the past five years and
generated net revenues and EBITDA for the fiscal year ended January 3, 1998, pro
forma for the Hour Eyes Acquisition and the VisionWorld Acquisition, of $264.2
million and $42.6 million, respectively.

The Company's stores, which average approximately 4,600 square feet, carry
a broad selection of branded frames at competitive prices, including designer
eyewear such as Armani, Laura Ashley, Calvin Klein and Polo/Ralph Lauren, as
well as its own proprietary brands. In addition, the Company's superstores offer
customers "one-hour service" on most prescriptions, utilizing on-site processing
laboratories to grind, coat and edge lenses. Moreover, independent optometrists,
located inside or adjacent to all of the Company's stores, offer customers
convenient eye exams and provide a consistent source of retail business. In the
Company's experience, over 80% of such ODs' regular eye exam patients purchase
eyewear from the Company.

Since joining the Company as President and Chief Executive Officer in early
1996, Bernard W. Andrews has built a management team with extensive operating,
merchandising and marketing experience in the optical and retail industries.
This management team has focused on improving operating efficiencies and growing
the business through both strategic acquisitions and new store openings. Under
current management, the Company's EBITDA margin has increased from 10.7% in 1995
to 16.1% in 1997 (pro forma for the Hour Eyes Acquisition and the VisionWorld
Acquisition), while the Company's store base increased from 152 to 239
(excluding stores added in connection with the VisionWorld Acquisition) over the
same period, primarily as a result of two acquisitions. The Company's senior
management team owns or has the right to acquire approximately 15% of the
Company's common stock on a fully diluted basis, through direct ownership and
incentive option plans.

BUSINESS STRATEGY

The Company plans to capitalize on the favorable industry trends discussed
in "Industry" by building local market leadership through the implementation of
the following key elements of its business strategy.

approximately two-thirds of these new stores currently expected to be
opened in existing markets. Management believes that the Company has in
place the systems and infrastructure to execute its expanded new store
opening plan. The Company uses a sophisticated site selection model
utilizing proprietary software which incorporates industry and internally
generated data (such as competitive market factors, demographics and
customer specific information) to evaluate the attractiveness of new store
openings. The Company invests approximately $500,000 in capital
expenditures, inventory and pre-opening costs per new store, and generally
expects its new stores to generate positive cash flow by the sixth month of
operation.

PURSUE ACQUISITION OPPORTUNITIES. The Company has successfully
acquired and integrated two acquisitions over the last two years: (i) in
September 1996, Visionworks Holdings, Inc., a sixty store optical retailer
located along the Atlantic Coast from Florida to Washington, D.C. and (ii)
in September 1997, The Samit Group, Inc., with ten Hour Eyes stores in
Maryland and Washington, D.C. Simultaneously with the acquisition of TSGI,
the Company entered into a long-term business management agreement with a
private optometrist to manage an additional twelve Hour Eyes stores located
in Virginia. In addition, in September 1998, the Company acquired the
assets of VisionWorld, a nineteen store optical retailer located primarily
in Kentucky and Tennessee. Simultaneously with the VisionWorld Acquisition,
the Company entered into a long-term business management agreement with a
private optometrist to manage the stores. See "Recent Developments."
Management believes that it has the experience, internal resources and
information systems to continue to identify and integrate acquisitions
successfully. Acquisition candidates typically would be independent
practitioners and smaller chains, which face increasing difficulties
competing with larger, more efficient chains, particularly in a managed
care environment. In addition, acquisition candidates generally would have
significant market share in a given geographic region and offer the Company
opportunities to increase revenues, generate cost savings and extend
managed care coverage.

CAPITALIZE ON MANAGED VISION CARE. Management has made a strategic
decision to pursue managed care contracts aggressively in order to help
grow the Company's retail business and over the past three years has
devoted significant management resources to the development of its managed
care business. As part of its effort, the Company has: (i) implemented
direct marketing programs and information systems necessary to compete for
managed care contracts with large employers, groups of employers and other
third party payers, (ii) developed significant relationships with certain
HMOs and insurance companies (e.g., Kaiser Permanente and Humana), which
have strengthened the Company's ability to secure managed care contracts,
(iii) entered into a strategic relationship with Vision Twenty-One, Inc. to
be the principal optical retail center of its total eye care delivery
systems and (iv) obtained a single service HMO license in Texas to target
additional managed care contracts with large employers and groups of
employers. While the average ticket price on products purchased under
managed care reimbursement plans is typically lower, managed care
transactions generally earn comparable operating profit margins as they
require less promotional spending and advertising support. The Company
believes that the increased volume resulting from managed care contracts
more than offsets the lower average ticket price. As of January 3, 1998,
the Company participated in managed vision care programs covering
approximately 2.5 million lives, with retail sales from managed care lives
totaling approximately 20% of fiscal 1997 net revenues. Management believes
that the increasing role of managed vision care will continue to benefit
the Company and other large retail optical chains with strong local market
shares, broad geographic coverage and sophisticated information management
and billing systems.

ACQUISITION HISTORY

The Company was incorporated in Texas in 1984, acquired by Sears, Roebuck
and Co. in 1987 and by Desai Capital Management Incorporated in 1993. From its
organization through 1988, the Company expanded its business through the
acquisition of:(i) a thirteen store Phoenix-based chain named 20/20 Eye Care in
1986, (ii) a twelve store Texas and Louisiana-based chain named EyeMasters in
1986, (iii) five stores in Phoenix from EyeCo. in 1988 and (iv) a twenty store
Portland-based chain named Binyon's in 1988.

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<PAGE> 60

Since the current management team implemented a strategy focused on
improving operating efficiencies and increasing the store base in early 1996,
the Company has successfully acquired and integrated two acquisitions. In
September 1996, the Company acquired Visionworks Holdings Inc., a sixty store
optical retailer located along the Atlantic Coast from Florida to Washington,
D.C., with forty-nine superstores and eleven optical stores located near Eckerd
Corporation stores. In September 1997, the Company acquired The Samit Group
Inc., with ten Hour Eyes stores in Maryland and Washington, D.C. operated under
the trade name of Hour Eyes. Simultaneously with such acquisition, the Company
entered into a long-term business management agreement with a private
optometrist to manage an additional twelve Hour Eyes stores located in Virginia.
In September 1998, the Company acquired the assets of Dr. Bizer's VisionWorld,
PLLC, a nineteen store optical retailer located primarily in Kentucky and
Tennessee. Simultaneously with the VisionWorld Acquisition, the Company entered
into a long-term business management agreement with a private optometrist to
manage the stores.

The following table sets forth a summary of the Company's stores, as of
June 1, 1998, ranked by number of stores by trade name:

<TABLE>
<CAPTION>
NUMBER OF GEOGRAPHIC AVERAGE STORE
TRADE NAME STORES FOCUS FORMAT BUSINESS MIX
---------- --------- -------------- ------------- ------------
<S> <C> <C> <C> <C>
EyeMasters....................... 149 Southwest, Superstores Glasses
Midwest, Sq. Ft. 4,200 Managed Care
Southeast Lab
OD Subleases
Visionworks...................... 58 Mid Atlantic, Superstores Glasses
Southeast Sq. Ft. 6,700 Contacts
Lab Managed Care
OD Subleases
Hour Eyes........................ 22 Mid Atlantic Conventional Glasses
Sq. Ft. 2,200 Contacts
Lab Managed Care

Binyon's......................... 14 Pacific Superstores Glasses
---
Northwest Sq. Ft. 4,200 Managed Care
Lab
OD Subleases
Total.................. 243
===
</TABLE>

STORE OPERATIONS

OVERVIEW. The Company believes that the location of its stores is an
essential element of its strategy to compete effectively in the optical retail
market. The Company emphasizes locations within regional shopping malls, power
centers, strip shopping centers and free-standing locations. The Company
generally targets retail space that is close to high volume retail anchor stores
frequented by middle to high income clientele. In order to generate economies of
scale in advertising, management and field overhead expenses, the Company
attempts to cluster its stores within a direct marketing area.

56
<PAGE> 61

The following table sets forth as of January 3, 1998 the Company's top
fifteen markets and management's estimate of the Company's superstore market
share rank in each of these markets as measured by sales.

<TABLE>
<CAPTION>
NUMBER OF MARKET
DESIGNATED MARKET AREA SUPERSTORES SHARE RANK
---------------------- ----------- ----------
<S> <C> <C>
Washington, D.C............................................. 25 1
Houston..................................................... 18 1
Dallas...................................................... 17 1
Tampa/St. Petersburg........................................ 12 1
Phoenix..................................................... 12 1
Portland.................................................... 12 1
Cleveland/Akron............................................. 10 2
Miami/Ft. Lauderdale........................................ 9 2
Kansas City................................................. 8 2
San Antonio................................................. 7 1
Charlotte................................................... 5 2
Oklahoma City............................................... 5 1
Austin...................................................... 5 2
Waco........................................................ 4 1
Orlando..................................................... 4 3
---
Total of Top Fifteen Markets...................... 153
===
</TABLE>

LOCATIONS. The Company operates 243 stores, 214 of which are superstores,
located primarily in the Southwest, Midwest, Southeast, along the Gulf Coast and
Atlantic Coast and in the Pacific Northwest regions of the United States. Of the
Company's stores, 137 are located in enclosed regional malls, fifty-two are in
strip shopping centers, forty-seven are freestanding locations and seven are
located near Eckerd Corporation stores.

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<PAGE> 62

The following table sets forth by location, ranked by number of stores, the
Company's store base as of June 1, 1998.

<TABLE>
<CAPTION>
LOCATION EYEMASTERS VISIONWORKS HOUR EYES BINYON'S TOTAL
-------- ---------- ----------- --------- -------- -----
<S> <C> <C> <C> <C> <C>
Texas........................... 68 -- -- -- 68
Florida......................... 3 37 -- -- 40
Louisiana....................... 13 -- -- -- 13
Virginia........................ -- 1 12 -- 13
Oregon.......................... -- -- -- 13 13
Arizona......................... 12 -- -- -- 12
North Carolina.................. -- 11 -- -- 11
Ohio............................ 10 -- -- -- 10
Maryland........................ -- 1 7 -- 8
Oklahoma........................ 7 -- -- -- 7
Washington, D.C................. -- 4 3 -- 7
Tennessee....................... 7 -- -- -- 7
Missouri........................ 5 -- -- -- 5
Kansas.......................... 5 -- -- -- 5
Alabama......................... 4 -- -- -- 4
South Carolina.................. -- 4 -- -- 4
New Mexico...................... 3 -- -- -- 3
Mississippi..................... 3 -- -- -- 3
Idaho........................... 3 -- -- -- 3
Nebraska........................ 3 -- -- -- 3
Washington...................... 1 -- -- 1 2
Iowa............................ 1 -- -- -- 1
Mexico.......................... 1 -- -- -- 1
--- -- -- -- ---
Total................. 149 58 22 14 243
=== == == == ===
</TABLE>

STORE LAYOUT AND DESIGN. The average size of the Company's stores is
approximately 4,600 square feet. In the last two years, the Company has
developed and implemented a smaller and more efficient new store prototype which
averages approximately 3,500 square feet in size. The Company plans to utilize
its new store prototype as it opens new stores in 1998. This new store prototype
typically has approximately 450 square feet dedicated to the in-house lens
processing area and 1,750 square feet devoted to product display and fitting
areas. The optometrist's office is generally 1,300 square feet and is, depending
on state regulation, either in or adjacent to the store. Each store follows a
uniform merchandise layout plan which is designed to emphasize fashion, invite
customer browsing and enhance the customer's shopping experience. Frames are
displayed in self-serve cases along the walls and on table tops located
throughout the store and are organized by gender suitability and frame style.
The Company believes its self-serve displays are more effective than the less
customer friendly locked glass cases or "under the shelf" trays used by some of
its competitors. Above the display racks are photographs of men and women which
are designed to help customers coordinate frame shape and color with their
facial features. In-store displays and signs are rotated periodically to
emphasize key vendors and new styles.

IN-HOUSE LENS PROCESSING. Most stores have an on-site lens processing
laboratory of approximately 450 square feet in which most prescriptions can be
prepared in one hour or less. Lens processing involves grinding, coating and
edging lenses. Unusual or difficult prescriptions are sent to the Company's main
laboratory in San Antonio, Texas, which has a typical turnaround of two to four
days.

ON-SITE OPTOMETRIST. All stores have an OD located in or adjacent to the
store who performs eye examinations, and in some cases dispenses contact lenses.
The ODs are generally available during the same \hours as the Company's store
hours. The ODs offer customers convenient eye exams and provide a consistent
58
<PAGE> 63

source of retail business. In the Company's experience, over 80% of such ODs'
regular eye exam patients purchase eyewear from the Company. In addition, the
Company believes ODs help to generate repeat customers and reinforce the quality
and professionalism of each store. Due to state regulations, ODs are independent
business persons who lease space inside or adjacent to each store from the
Company or the landlord. Most ODs pay the Company monthly rent consisting of a
percentage of gross receipts, base rental or a combination of both.

STORE MANAGEMENT. Each store has a strategic operating plan which maps out
appropriate staffing levels to maximize store profitability. In addition, each
store is run by a general manager who is responsible for its day-to-day
operations. A retail manager supervises the merchandising area and the eyewear
specialists. A lab manager trains the lab technicians and supervises eyewear
manufacturing. Sales personnel are trained to assist customers effectively in
making purchase decisions. A portion of store managers' and territory directors'
compensation is based on sales, profitability and customer service scores at
their particular stores. The stores are open during normal retail hours,
typically 10 a.m. to 9 p.m., six days a week, and typically 12:00 p.m. to 6:00
p.m. on Sundays.

MERCHANDISING

The Company's merchandising strategy is to offer its customers a wide
selection of high quality and fashionable frames at various price points, with
particular emphasis on offering a broad selection of competitively priced
designer and branded frames. The Company's product offering is supported by
strong customer service and advertising. The key elements of the Company's
merchandising strategy are described below.

BREADTH AND DEPTH OF SELECTION. The Company offers its customers high
quality frames, lenses, accessories and sunglasses, including designer and
private label frames. Frame assortments are tailored to match the demographic
composition of each store's market area. On average, each store contains between
1,500 and 2,000 frame stock keeping units in 350 to 400 different styles of
frames. This represents two to three times the assortment provided by
conventional chains or independent retailers. Approximately 25% of the frames
carry designer names such as Polo, Armani, Gucci, Liz Claiborne, Laura Ashley
and Calvin Klein. In 1997, over 50% of the Company's frames were supplied by
other well-known frame manufacturers and about 14% of the Company's frames were
manufactured specifically for the Company under private labels. The Company
plans to increase its offering of private label products imported directly from
manufacturers in Europe and Asia. The Company believes that a broader selection
of high-quality, lower-priced private label frames will allow it to offer more
value to customers while improving the Company's gross margin. In addition, the
Company also offers customers a wide variety of value-added eyewear features and
services on which it realizes a higher gross margin. These include thinner and
lighter lenses, progressive lenses and custom lens features, such as tinting,
anti-reflecting coatings, scratch-resistant coatings, ultra-violet protection
and edge polishing.

PROMOTIONAL STRATEGY. The Company's frames and lenses are generally
comparably priced or priced lower than its direct superstore competitors, with
prices varying based on geographic region. The Company employs a comprehensive
promotional strategy on a wide selection of frames and/or lenses, offering
discounts and "two for one" promotions. These promotions are highly effective at
attracting customers to shop the Company's stores. While the promotional
strategy is fairly common for optical retail chains, independents tend to offer
fewer promotions in order to guard their margins and mass merchandisers tend to
generally adhere to an "Every Day Low Pricing" strategy.

EFFECTIVE PRODUCT DISPLAY. The Company employs an "easy-to-shop" store
layout. Merchandise in each store is organized by gender suitability, frame
style and brand. Sales personnel are trained to assist customers in selecting
frames which complement an individual's attributes such as facial features, face
shape and skin tone. See "-- Store Layout and Design." In-store displays focus
customer attention on premium priced products, such as designer frames and
thinner and lighter lenses.

59
<PAGE> 64

MARKETING

The Company actively supports its stores by aggressive local advertising in
individual geographical markets. Advertising expenditures totalled $24.6
million, or 11.2% of sales, in 1997. The Company utilizes a variety of
advertising media and promotions in order to establish the Company's image as a
high quality, cost competitive eyewear provider with a broad product offering.
The Company's brand positioning is supported by a new marketing campaign which
features the tagline "See Better, Look Better." Through this campaign, the
Company has recognized an increase in top of mind brand awareness with consumers
in the past year. In addition, the Company's strategy of clustering stores in
each targeted market area allows it to maximize the benefit of its advertising
expenditures. As managed care becomes a larger part of the Company's business in
certain local markets, advertising expenditures as a percentage of sales are
likely to decrease in those markets, since managed care programs tend to reduce
the need for marketing expenditures to attract customers to shop the Company's
stores.

STORE EXPANSION

The Company's business strategy is to continue to grow through the opening
of additional locations through selected store acquisitions. The Company has an
aggressive but disciplined new store expansion strategy. The Company currently
plans to open between twenty to thirty new stores per year over the next three
years, with approximately two-thirds of these new stores currently expected to
be opened in existing markets. The new stores are expected to have an on-site OD
and a lens processing laboratory. The Company uses a sophisticated site
selection model utilizing proprietary software which incorporates industry and
internally generated data (such as competitive market factors, demographics and
customer specific information) to evaluate the attractiveness of new store
openings. The Company has reduced the new store site development costs of
opening a new store from approximately $450,000 in 1993 to $425,000 in 1997, by
utilizing a smaller store format averaging approximately 3,500 square feet and
by equipping each new store with standardized fixtures and equipment. In
addition, pre-opening costs average $18,000 and initial inventory requirements
for new stores average $85,000, of which approximately 40% is typically financed
by vendors. The Company generally expects its new stores to generate positive
cash flow by the sixth month of operation.

EMPLOYEE TRAINING

The Company believes that its dedication to employee training has improved
customer service, increased morale among its employees and contributed to the
Company's increased productivity levels. Each new employee with no prior
experience in the optical industry receives approximately eighty hours of
initial training. New employees with previous optical experience receive
approximately forty hours of initial training. Store managers participate in
approximately fifty hours of annual training. The American Board of Opticianry
("ABO") has certified the Company to offer up to seventy hours of ABO continuing
education credits to maintain opticianary licensing requirements. Employee
training emphasizes customer service, thorough product and service knowledge,
optical knowledge, lab skills, selling techniques and the utilization of store
performance data to better manage day-to-day store operations. Store level
employees may also be cross trained in sales and lab-related skills to promote
increased staffing flexibility. Ongoing training is conducted periodically to
familiarize management and employees with new products and services, to improve
the level of understanding of store operations and productivity and to maintain
the Company's overall high quality standards.

COMPETITION

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<PAGE> 65

VENDORS

The Company purchases a majority of its lenses from three principal vendors
and purchases frames from over twenty different vendors. In 1997, three vendors
collectively supplied approximately 40% of the frames purchased by the Company.
Two vendors supplied over 54% of the Company's lens materials during the same
period. While such vendor supplied a significant share of the lenses used by the
Company, lenses are a generic product and can be purchased from a number of
other vendors on comparable terms. The Company therefore does not believe that
it is dependent on such vendor or any other single vendor for frames or lenses.
The Company believes that its relationships with its existing vendors are
satisfactory. The Company believes that significant disruption in the delivery
of merchandise from one or more of its current principal vendors would not have
a material adverse effect on the Company's operations because multiple vendors
exist for all of the Company's products.

MANAGED VISION CARE

In recent years, managed vision care has grown in importance in the eyewear
market as health insurers have sought to gain a competitive advantage by
offering a full range of health insurance options, including coverage of primary
eye care. Managed vision care, including the benefits of routine annual eye
examinations and eyewear discounts, is being utilized by a growing number of
managed care participants. Since regular eye examinations may assist in the
identification and prevention of more serious conditions, managed care programs
encourage members to have their eyes examined more regularly, which in turn
typically results in more frequent eyewear replacement.

While the average ticket price on products purchased under managed care
reimbursement plans is typically lower, managed care transactions generally earn
comparable operating profit margins as they require less promotional spending
and advertising support. The Company believes that the increased volume
resulting from managed care contracts more than offsets the lower average ticket
price.

While managed vision care encompasses many of the conventional attributes
of managed care, there are significant differences. For example, there is no
medical risk involved, as these programs cover only a customer's eye examination
and no medical condition of such customer. Moreover, less than 1% of the
Company's total revenues are derived from traditional capitated managed care
programs. In capitated programs, the Company is compensated by a third party on
a per member per month flat fee basis. These fees are used to reimburse both the
OD for eye examinations performed and the Company for eyewear purchased. Since
the number of visits to an OD is limited to annual or bi-annual appointments,
exam utilization is more predictable, so costs to insurers are easier to
quantify, generally resulting in lower capitation risk. Even though managed
vision care programs typically limit coverage to a certain dollar amount or
discount for an eyewear purchase, the member's eyewear benefit generally allows
the member to "trade up." Management believes that the growing consumer
perception of eyewear as a fashion accessory as well as the consumer's
historical practice of paying for eyewear purchases out-of-pocket contributes to
the frequency of "trading-up." The Company has historically found that managed
care participants who take advantage of the eye exam benefit under the managed
care program in turn have typically had their prescriptions filled at adjacent
optical stores.

Management has made a strategic decision to pursue managed care contracts
aggressively in order to help grow the Company's retail business and over the
past three years has devoted significant management resources to the development
of this business. As part of its effort, the Company has: (i) implemented direct
marketing programs and information systems necessary to compete for managed care
contracts with large employers, groups of employers and other third party
payers, (ii) developed significant relationships by entering into managed care
contracts with certain HMOs and insurance companies (e.g., Kaiser Permanente and
Humana) in various markets, which have strengthened the Company's ability to
secure managed care contracts in other markets with the same HMOs and insurance
companies by virtue of their relationship with the Company in existing markets,
(iii) entered into a strategic relationship with Vision Twenty-One, Inc. to be
the principal optical retail center of its total eye care delivery systems and
(iv) obtained a single service HMO license in Texas to target additional managed
care contracts with large employers and groups of employers.

VTO provides a wide range of management and administrative services to
local area delivery systems ("LADS") which are integrated networks of
optometrists, ophthalmologists, ambulatory surgical centers and

61
<PAGE> 66

retail optical centers. The integrated networks are designed to offer complete
eye care services to managed care administrators in local markets. The Company's
strategic relationship with VTO means that the Company will be the retail
optical center segment of the LADS as VTO develops LADS in the Company's
existing markets. In addition, VTO provides consulting services to the Company
relating to securing managed care contracts and efficiently providing services
to its already existing managed care customers. As a result, the Company expects
to gain additional customers as VTO obtains managed care contracts.

As of January 3, 1998, the Company participated in managed vision care
programs covering approximately 2.5 million lives, with retail sales from
managed care lives totaling approximately 20% of fiscal 1997 sales. Management
believes that the increasing role of managed vision care will continue to
benefit the Company and other large retail optical chains. Managed care is
likely to accelerate industry consolidation as payers look to contract with
large retail optical chains who deliver superior customer service, have strong
local brand awareness, offer competitive prices, provide multiple convenient
locations and hours of operation, and possess sophisticated information
management and billing systems. Large optical retail chains are likely to be the
greatest beneficiaries of this trend as independents cannot satisfy the scale
requirements of managed care programs and mass merchandisers' "Every Day Low
Price" strategy is generally incompatible with the price structure required by
the managed vision care model. See "Risk Factors -- Risks Associated with
Managed Care Contracts."

GOVERNMENT REGULATION

The Company or its landlord leases a portion of each of the Company's
stores or adjacent space to an independent optometrist. The availability of such
professional services in or adjacent to the Company's stores is critical to the
Company's marketing strategy. The delivery of health care, including the
relationships among health care providers such as optometrists and suppliers
(e.g., providers of eyewear), is subject to extensive federal and state
regulation. The laws of many states prohibit business corporations such as the
Company from practicing medicine or exercising control over the medical
judgments or decisions of physicians and from engaging in certain financial
arrangements, such as splitting fees with physicians. The Company's structure
and its operation are currently in material compliance with these laws and the
Company has not been notified that it is in violation of any of these laws in
any state. The Company has designed certain business arrangements with
independent optometrists to avoid such prohibitions by entering into long-term
management contracts with such independent optometrists instead of employing the
optometrists directly. Under these contracts, independent optometrists are not
employees of the Company or its Subsidiaries and they are compensated directly
from patients and their third-party payors and the Company earns a management
fee for its services.

Other than local and state business licenses, the Company is not currently
required to maintain any licenses or certifications to operate its business in
any state. However, as a result of the capitation element of some of its managed
care contracts, the Company is required in the states of North Carolina, Texas
and California to obtain insurance licenses and to comply with certain routine
insurance laws and regulations as an insurer in order to offer managed care
discount programs to various employee groups within such states. The cost of
such compliance is minimal. These insurance laws require that the Company make
certain mandatory filings with the state relating to: (i) pertinent financial
information; and (ii) quality of care standards. Violation of any of these laws
or regulations could possibly result in the Company incurring monetary fines
and/or other penalties. The Company is currently in material compliance with
each of these laws and regulations.

which are not limited to Medicare or Medicaid reimbursed services. The Company
is in material compliance with these laws and the Company has not been notified
that it is in violation of any of these laws. See "Risk Factors -- Government
Regulations, Risks Associated with Managed Care Contracts, and Uncertainties
Regarding Healthcare Reform."

TRADEMARK AND TRADE NAMES

The Company's superstores operate under the trade names "EyeMasters,"(R)
"Binyon's,"(R) "Visionworks" and "Hour Eyes". In addition, "SlimLite" is the
Company's trademark for its line of lightweight plastic lenses and "SunMasters"
is the trade name for the sunglass kiosk within the "EyeMasters" superstore.
Other trademarks and trade names used by the Company are "Master Eye
Associates," "Master Eye Exam," "EyeMasters" and the "eyeball" trademark used in
conjunction with the trade name "EyeMasters."

PROPERTIES

As of June 1, 1998, the Company operated 243 retail locations in the United
States and one store in Mexico. The Company believes its properties are adequate
and suitable for its purposes. The Company leases all its retail locations, the
majority of which are under triple net leases that require payment by the
Company of its pro rata share of real estate taxes, utilities, and common area
maintenance charges. These leases range in terms of up to sixteen years. Certain
leases require percentage rent based on gross receipts in excess of a base rent.
The Company subleases a portion of substantially all of the stores, or the
landlord leases an adjacent space, to an independent optometrist or a
corporation controlled by an independent optometrist. The terms of these leases
or subleases range from one to fifteen years, with rentals consisting of a
percentage of gross receipts, a base rent, or a combination of both. In
connection with the Visionworks Acquisition, the Company assumed an agreement to
sublease land, buildings and equipment at eight operating locations. Under the
terms of the agreement, the Company committed to repay the capital lease
obligation on February 1, 1999 for approximately $10.0 million and to pay Eckerd
Corporation annual interest of $1.3 million until February 1, 1999 for the
subleases. The use of $10.0 million of the Revolving Credit Facility will be
restricted to repayment of such capital lease due in February 1999. See
"Description of New Credit Facility."

The Company leases combined corporate offices and a retail location in San
Antonio, Texas, pursuant to a fifteen year lease. In addition, the Company
leases a combined distribution center and central laboratory in San Antonio,
pursuant to a seven year lease. The Company believes central distribution
improves efficiency through better inventory management and streamlined
purchasing.

EMPLOYEES

As of June 8, 1998, the Company employed approximately 2,965 employees. The
Company's employees are not covered by any collective bargaining agreements, and
the Company considers its relations with its employees to be good.

LEGAL PROCEEDINGS

The Company is a party to routine litigation in the ordinary course of its
business. Except for the matters set forth below, no such pending matters,
individually or in the aggregate, are deemed to be material to the business or
financial condition of the Company.

The Government of the District of Columbia, Office of Corporate Counsel
(the "OCC") is currently conducting an investigation relating to Medicaid claims
submitted for reimbursement by certain optometrists who provided services from
(i) one Hour Eyes store located in Washington, D.C. which was acquired by the
Company in connection with the Hour Eyes Acquisition and (ii) one other Hour
Eyes store located in Washington, D.C. which was not acquired by the Company but
which was under common control with the corporation which sold certain Hour Eyes
stores to the Company in 1997. The Company is entitled to certain rights of
indemnification with respect to matters arising out of this investigation under
the stock purchase agreement relating to the Hour Eyes Acquisition, and a
limited dollar amount has been set aside in an escrow account to secure the
sellers' indemnification obligations. In light of the early stage of the
government's investigation, the Company at this time is unable to determine
whether the OCC will bring any action or claim

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<PAGE> 68

against the Company or, if brought, the precise nature or extent of any such
action or claim. No assurance can be given that the OCC or any other
governmental body will not bring an action, assert one or more claims or seek
material damages, interest, fines and/or penalties, including criminal
penalties, against the Company for matters arising out of this investigation.
The Company believes the indemnification arrangement under this agreement is
reasonably adequate to satisfy any assessed penalties

Two optometrists asserted claims arising out of the non-renewal of their
subleases of office space with the Company and their trademark license
agreements with Enclave. Such optometrists contended that the leasing of space
from the Company, coupled with the license from Enclave of certain trademarks,
constituted a franchise, and such optometrists have alleged various claims
arising out of this contention. This claim was settled in May, 1998. While the
Company believes that the structure of the relationships among the Company,
Enclave and the optometrists who operate near the Company's retail stores does
not constitute a franchise, no assurance can be given that a claim, action or
proceeding will not be brought against the Company or Enclave asserting that a
franchise exists.

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<PAGE> 69

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

The following table provides information concerning the directors and
executive officers of the Company. All directors will hold office until the next
annual meeting of shareholders of the Company and until their successors have
been duly elected and qualified. All officers will serve at the discretion of
the Board of Directors.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Bernard W. Andrews........................ 56 Chairman and Chief Executive Officer
David E. McComas.......................... 55 President and Chief Operating Officer
Alan E. Wiley............................. 51 Executive Vice President and Chief Financial Officer
George E. Gebhardt........................ 47 Executive Vice President of Merchandising,
Construction and Design
Michele M. Benoit......................... 42 Senior Vice President of Human Resources
Gary D. Hahs.............................. 49 Senior Vice President, Marketing and Real Estate
William A. Shertzer....................... 38 Senior Vice President of Managed Vision Care and
Professional Services
Norman S. Matthews........................ 65 Director
Antoine G. Treuille....................... 49 Director
Anthony J. DiNovi......................... 36 Director
Warren C. Smith, Jr....................... 42 Director
Charles A. Brizius........................ 29 Director
</TABLE>

Directors of the Company are elected at the annual shareholders' meeting
and hold office until their successors have been elected and qualified. The
officers of the Company are chosen by the Board of Directors and hold office
until they resign or are removed by the Board of Directors.

Bernard W. Andrews has been Chairman since the consummation of the
Recapitalization. Mr. Andrews joined the Company as Director and Chief Executive
Officer in March 1996. From January 1994 to April 1995, Mr. Andrews was
President and Chief Operating Officer, as well as a Director, of Montgomery
Ward -- Retail. He was Executive Vice President and a Director of Circuit City
Stores, Inc. from October 1990 to January 1994. Mr. Andrews was with Montgomery
Ward -- Retail from October 1983 to May 1990, serving as President-Hardlines,
Executive Vice President-Marketing and Vice President-Home Fashions. Prior to
that, Mr. Andrews spent twenty years with Sears, Roebuck & Co. in a number of
merchandising, marketing and operating positions.

David E. McComas has served as the Company's President and Chief Operating
Officer since July 1998. Prior to that, Mr. McComas was Western Region President
and Corporate Vice President, Circuit City Stores, Inc. Responsible for 8
Western States and Hawaii since 1994. Prior to 1994, Mr. McComas was General
Manager of Circuit City Stores, Inc. Mr. McComas has over 30 years of store
management and operations experience including stints at Montgomery Ward Holding
Corporation and Sears, Roebuck & Co.

Alan E. Wiley has served as Executive Vice President and Chief Financial
Officer of the Company since November 1998. Prior to that, since 1992, Mr. Wiley
served as the Senior Executive Vice President, Secretary, Chief Financial and
Administrative Officer and a director of The Cato Corporation. From 1981 through
1990, Mr. Wiley held senior administrative and financial positions with British
American Tobacco, U.S. in various companies of their specialty retail division.

George E. Gebhardt has served as the Company's Executive Vice President of
Merchandising, Construction and Design since September 1996 when the Company
purchased his former employer, Visionworks. Mr. Gebhardt was with Visionworks
from February 1994 to September 1996 serving in various positions, most recently
Senior Vice President of Merchandising and Marketing. Prior to that, Mr.
Gebhardt spent over thirteen years with Eckerd Corporation in various
operational positions including Senior Vice President, General Manager of Eckerd
Vision Group. Mr. Gebhardt also spent seven years working for Procter &

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<PAGE> 70

Gamble serving in various positions including Unit Sales Manager of Procter &
Gamble's Health and Beauty Care Division.

Michele M. Benoit has served as the Company's Senior Vice President of
Human Resources since April 1997. From 1995 until joining ECCA, she was Vice
President, Human Resources for Ben Franklin Retail Stores, Inc. Prior to that,
Ms Benoit was a Vice President and Managing Director with Kennedy and Company, a
retail executive search firm based in Chicago, Illinois. She also spent fourteen
years with Montgomery Ward and Company where she held a variety of human
resources and operational positions. Ms. Benoit began her career in 1978 as a
financial analyst with NCH Corporation in Irving, Texas. Ms Benoit has an MBA
from the University of Miami in Coral Gables, Florida.

Gary D. Hahs has served as the Company's Senior Vice President of Marketing
since August 1990 and Real Estate since 1996. From January 1988 until August
1990, Mr. Hahs served as Vice President of Marketing. Mr. Hahs has spent twenty
years in marketing and advertising management for major corporations including
Genesco, Inc., Consolidated Aluminum Corporation, Seattle First National Bank,
and Sears, Roebuck & Co.

William A. Shertzer has served as Senior Vice President of the Company's
Managed Vision Care and Professional Services since January 1995. From June 1994
to January 1995, Mr. Shertzer was Vice President of Managed Care Services,
Merchandising, and Professional Services. From April 1992 to June 1993, he
served as Vice President responsible for various departments including
Merchandising, and Professional and Technical Services. Mr. Shertzer was
involved in operations and served as Vice President in charge of Operations
Services, and Professional and Technical Services from September 1991 to April
1992 and as Regional Director for the Company from November 1989 to September
1991. Prior to joining the Company in November 1989, he was employed by Pearle
Vision Inc. for five years.

Norman S. Matthews has served as a director since October 1993 and served
as Chairman since December 1996. Mr. Matthews is Chairman of the Executive
Committee of the Company's Board of Directors. From 1988 to the present, Mr.
Matthews has been an independent retail consultant and venture capitalist. Mr.
Matthews was President of Federated Department Stores from 1987 to 1988, and
served as Vice Chairman from 1983 to 1987. He is also a director of Finlay Fine
Jewelry Corporation, Toys "R" Us, Inc. The Progressive Corporation, Loehmann's,
Inc. and Lechters, Inc.

Antoine G. Treuille has served as a director since October 1993. In March
1998, Mr. Treuille became managing director of Financo, Inc., an investment
bank. Mr. Treuille has served as President of Charter Pacific Corp. since May
1996. Prior to his current position, Mr. Treuille served as Senior Vice
President of DCMI. From September 1985 to April 1992, he served as Executive
Vice President with the investment firm of Entrecanales, Inc. Mr. Treuille also
serves as a director of Societe BIC S.A. and Special Metals Corp.

Anthony J. DiNovi has served as a Director since the consummation of the
Recapitalization. Mr. DiNovi has been employed by Thomas H. Lee Company since
1988 and currently serves as a Managing Director. Mr. DiNovi is a Managing
Director and Member of THL Equity Advisors IV, LLC, the general partner of
Thomas H. Lee Equity Fund IV, LP and Vice President of Thomas H. Lee Advisors I
and T.H. Lee Mezzanine II, affiliates of ML-Lee Acquisition Fund, L.P., ML-Lee
Acquisition Fund II, L.P. and ML-Lee Acquisition Fund II (Retirement Accounts),
L.P., respectively. Mr. DiNovi also serves as a director of Safelite Glass
Corp., The Learning Company, Inc. and Fisher Scientific International, Inc.

Warren C. Smith, Jr. has served as a Director since the consummation of the
Recapitalization. Mr. Smith has been employed by Thomas H. Lee Company since
1990 and currently serves as a Managing Director. Mr. Smith is a Managing
Director and Member of THL Equity Advisors IV, LLC, the general partner of
Thomas H. Lee Equity Fund IV, LP and Vice President of Thomas H. Lee Advisors I
and T.H. Lee Mezzanine II, affiliates of ML-Lee Acquisition Fund, L.P., ML-Lee
Acquisition Fund II, L.P. and ML-Lee Acquisition Fund II (Retirement Accounts),
L.P., respectively. Mr. Smith also serves as a director of Rayovac Corporation
and Finlay Fine Jewelry Corporation.

Charles A. Brizius has served as a Director since the consummation of the
Recapitalization. Mr. Brizius worked at Thomas H. Lee Company from 1993 to 1995,
rejoined in 1997 and currently serves as an Associate.

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<PAGE> 71

Mr. Brizius is a Member of THL Equity Advisors IV, LLC, the general partner of
Thomas H. Lee Equity Fund IV, LP. From 1991 to 1993, Mr. Brizius worked at
Morgan Stanley & Co. Incorporated in the Corporate Finance Department. Mr.
Brizius received a B.B.A in Finance and Accounting from Southern Methodist
University and an M.B.A. from the Harvard Graduate School of Business
Administration in 1997.

COMPENSATION OF EXECUTIVE OFFICERS

The following summary compensation table sets forth the compensation for
the Company's Chief Executive Officer and the other four most highly compensated
executive officers of the Company who earned in excess of $100,000 in salary and
bonus for the fiscal year ended January 3, 1998 (each a "Named Executive
Officer").

<TABLE>
<CAPTION>
ANNUAL
COMPENSATION
------------ LONG-TERM
COMPENSATION
AWARDS/
OTHER ANNUAL SECURITIES ALL OTHER
SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(A) ($)(B) ($)(C) OPTIONS(#) ($)(d)
- --------------------------- ---- ------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Bernard W. Andrews....................... 1997 398,567 -- -- -- 4,591
President, Chief Executive 1996 289,902 325,000 137,439 75,000 4,200
Officer and Director 1995 -- -- -- -- --
Kent M. Keish(e)......................... 1997 195,385 -- -- -- --
Executive Vice President of 1996 57,692 60,000 29,359 13,000 --
Operations 1995 -- -- -- -- --
George E. Gebhardt....................... 1997 188,231 -- 49,166 -- --
Executive Vice President of 1996 39,846 17,444 -- 13,000 --
Merchandising, Construction 1995 -- -- -- -- --
and Design
Gary D. Hahs............................. 1997 146,813 -- -- -- 57
Senior Vice President of 1996 141,033 59,193 -- 10,000 38
Marketing and Real Estate 1995 136,925 -- -- -- --
Mark T. Pearson(f)....................... 1997 145,192 -- -- -- --
Senior Vice President and Chief 1996 117,769 78,566 -- 10,000 --
Financial Officer 1995 73,030 5,000 42,526 3,292 --
</TABLE>

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

(a) Represents annual salary, including any compensation deferred by the Named
Executive Officer pursuant to the Company's 401(k) defined contribution
plan or the Company's deferred stock plan.

(b) Represents annual bonus earned by the Named Executive Officer for the
relevant fiscal year.

(c) Except with respect to Mr. George E. Gebhardt for 1997, Mr. Bernard W.
Andrews and Mr. Kent M. Keish for 1996 and Mr. Mark T. Pearson for 1995,
the dollar value of the perquisites and other personal benefits, securities
or property paid to each Named Executive Officer did not exceed the lesser
of $50,000 or 10% of reported annual salary and bonus received by the Named
Executive Officer. Of the total other annual compensation received by Mr.
Gebhardt in 1997, $41,966 related to relocation expenses paid by the
Company on behalf of Mr. Gebhardt. Of the total other annual compensation
received by Mr. Andrews in 1996, $131,861 related to relocation expenses
paid by the Company on behalf of Mr. Andrews. Of the total other annual
compensation received by Mr. Keish in 1996, $27,302 related to relocation
expenses paid by the Company on behalf of Mr. Keish. Of the total other
annual compensation received by Mr. Pearson in 1995, $39,064 related to
relocation expenses paid by the Company on behalf of Mr. Pearson.

(d) During 1997 and 1996, the Company paid $4,591 and $4,200, respectively, for
premiums for term life insurance for Mr. Andrews. The remaining amounts in
this column relate to contributions made by the Company to the Company's
401(k) defined contribution plan on behalf of the respective Named Executive
Officer.

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<PAGE> 72

(e) Mr. Keish resigned his position with the Company effective July 7, 1998.

(f) Mr. Pearson resigned his position with the Company effective June 5, 1998.

OPTION GRANTS AND EXERCISES

The following table sets forth information with respect to the Named
Executive Officers concerning unexercised options held as of April 4, 1998. No
options were granted or exercised during fiscal 1997. The Named Executive
Officers have not been granted any SARs.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
AT FY-END (#) AT FY-END($)
SHARES ------------- ----------------------
ACQUIRED ON VALUED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE(a)
- ---- ----------- ----------- ------------- ----------------------
<S> <C> <C> <C> <C>
Bernard W. Andrews............. -- -- 38,333/36,667 $4,599,960/$4,400,040
Kent M. Keish.................. -- -- 1,300/11,700 156,000/1,404,000
George E. Gebhardt............. -- -- 1,300/11,700 156,000/1,404,000
Gary D. Hahs................... -- -- 3,952/9,340 474,240/1,120,800
Mark T. Pearson................ -- -- 3,469/9,823 416,280/1,178,760
</TABLE>

- ---------------
(a) Market value of the options was calculated on the basis of fair market value
of the underlying securities at January 3, 1998 of approximately $120 per
share, as determined by the Company's Board of Directors in its business
judgment based upon current market conditions, minus aggregate option
prices.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has an Executive Committee of which Norman S.
Matthews is chairman and, as of the date hereof, the sole member.

The Board of Directors has a Compensation Committee currently consisting of
Messrs. Matthews, DiNovi and Smith. The Compensation Committee makes
recommendations concerning the salaries and incentive compensation of employees
of and consultants to the Company.

The Board of Directors has an Audit Committee currently consisting of
Messrs. DiNovi, Smith, Treuille and Brizius. The Audit Committee is responsible
for reviewing the results and scope of audits and other services provided by the
Company's independent auditors.

DIRECTOR COMPENSATION

The Company may compensate its directors for services rendered in such
capacity.

The Company entered into a three year consulting agreement (the "Consulting
Agreement"), effective as of the closing of the Recapitalization, with Norman S.
Matthews, which provides for the payment of an annual consulting fee of $50,000.
The Consulting Agreement provides for the grant to Mr. Matthews, concurrently
with the closing of the Recapitalization, of an option to purchase up to 1.5% of
the fully diluted Common Stock or approximately 110,000 shares as of the closing
of the Recapitalization, subject to a vesting schedule which will be one-half
time based and one-half performance based, at an exercise price equal to
approximately $10.41 per share, the same price paid by THL in connection with
the Recapitalization.

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<PAGE> 73

EMPLOYMENT AGREEMENT

Bernard W. Andrews entered into an employment agreement with the Company,
effective as of the closing of the Recapitalization, which provides for his
employment with the Company for an initial term of three years, and will
thereafter be renewed for consecutive one year terms unless terminated by either
party. Mr. Andrews is entitled to a base salary of $500,000 during the first
year following the Recapitalization, $550,000 during the second year and
$600,000 during the third year. Mr. Andrews will be eligible to receive an
annual performance bonus upon the achievement by the Company of certain EBITDA
targets as determined from year to year by the Board of Directors.

Under the terms of his employment agreement, Mr. Andrews purchased $1.0
million of Common Stock at the same price that THL paid in connection with the
Recapitalization. Mr. Andrews paid for these shares by delivering a promissory
note with an original purchase amount of $1.0 million, which shall accrue
interest at a fixed rate equal to the Company's initial borrowing rate. The
repayment of such note is secured by Mr. Andrews' shares of Common Stock.

Mr. Andrews is entitled to receive severance of two times his base salary
upon termination by the Company without cause or by Mr. Andrews for good reason.
Severance shall be paid over twelve months. Mr. Andrews also will be subject to
a standard restrictive covenants agreement (including non-competition,
non-solicitation, and non-disclosure covenants) during the term of his
employment and for a period of three years following termination for any reason.

STOCK OPTION PLAN

The Company will offer senior management options to purchase up to an
aggregate of 12% of the fully diluted Common Stock as of the closing of the
Recapitalization at an exercise price equal to the fair market value per share,
which initially shall be equal to the price per share paid by THL in connection
with the Recapitalization. Of the total number of options available for grant,
the Company granted options to purchase 5% of the fully diluted Common Stock as
of the closing of the Recapitalization to Mr. Andrews and a portion of the
remaining options have been granted to certain employees, with the remainder to
be granted to such other employees and in such amounts (not to exceed the total
cost described above) as determined by Mr. Andrews in his reasonable discretion
from time to time. The options to purchase shares of Common Stock will be
subject to vesting schedules, which may be time or performance based.

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<PAGE> 74

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Common Stock concerning each person who is a beneficial owner
of more than 5% of the outstanding Common Stock and beneficial ownership of
Common Stock by each director, Named Executive Officer and all director and
executive officers as a group:

<TABLE>
<CAPTION>
SHARES OF PERCENTAGE
NAME OF BENEFICIAL OWNER(A) COMMON STOCK OF CLASS
--------------------------- ------------ ----------
<S> <C> <C>
Thomas H. Lee Equity Fund IV, L.P. (and affiliates of THL
Co.)(b)................................................... 6,664,800 89.7%
Equity-Linked Investors-II (c)(d)........................... 383,616 5.2
Indosuez Eye Care Partners (e).............................. 34,464 *
Bernard W. Andrews.......................................... 192,120 2.6
Norman S. Matthews.......................................... 19,692 *
Antoine G. Treuille......................................... 6,528 *
George E. Gebhardt.......................................... 19,212 *
Gary D. Hahs................................................ 19,212 *
Anthony J. DiNovi (b)....................................... 6,664,800 89.7
Warren C. Smith (b)......................................... 6,664,800 89.7
Charles A. Brizius (b)...................................... 6,664,800 89.7
All directors and executive officers of the Company as a
group (11)(f)............................................. 6,921,564 93.2
</TABLE>

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

(a) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and reflects general voting power and/or
investment power with respect to securities.

(b) The business address for such person(s) is c/o Thomas H. Lee Company, 75
State Street, Suite 2600, Boston, Massachusetts 02109. All such voting
securities may be deemed to be beneficially owned by THL Equity Advisors
IV, LLC ("Advisors"), the general partner of THL Fund IV, Thomas H. Lee,
Messrs. DiNovi, Smith and the other managing directors and by Mr. Brizius
and the other officers of THL Co., in each case pursuant to the definition
of beneficial ownership provided in footnote (a). Each of such persons
disclaims beneficial ownership of such shares.

(d) The business address for such person is c/o Desai Capital Management
Incorporated, 540 Madison Avenue, New York, New York 10022.

(e) The business address for such person is 1211 Avenue of Americas, New York,
New York 10036.

(f) Includes 6,664,800 shares beneficially owned by THL described in footnote
(b).

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CERTAIN TRANSACTIONS

MANAGEMENT AGREEMENT

The Company and THL Co. entered into a management agreement as of the
closing date of the Recapitalization (the "Management Agreement"), pursuant to
which THL Co. received a financial advisory fee of $6.0 million in connection
with structuring, negotiating and arranging the Recapitalization and
structuring, negotiating and arranging the debt financing. In addition, pursuant
to the Management Agreement, THL Co. initially receives $500,000 per year plus
expenses for management and other consulting services provided to the Company,
including one percent (1%) of the gross purchase price for acquisitions for its
participation in the negotiation and consummation of any such acquisition. See
"Description of Exchange Notes -- Certain Covenants -- Limitation on
Transactions with Affiliates." The Management Agreement continues unless and
until terminated by mutual consent of the parties in writing, for so long as THL
Co. provides management and other consulting services to the Company. The
Company believes that the terms of the Management Agreement are comparable to
those that would have been obtained from unaffiliated sources.

SHAREHOLDERS' AGREEMENT

The Company entered into a Shareholders' Agreement (the "Shareholders'
Agreement") among THL and the other stockholders of the Company upon the
consummation of the Recapitalization. Pursuant to the Shareholders' Agreement,
the shareholders are required to vote their shares of capital stock of the
Company to elect a Board of Directors of the Company consisting of directors
designated by THL. The Shareholders' Agreement also grants THL the right to
require the Company to effect the registration of shares of Common Stock they
hold for sale to the public, subject to certain conditions and limitations. If
the Company proposes to register any of its securities under the Securities Act
of 1933, as amended, whether for its own account or otherwise, the shareholders
are entitled to notice of such registration and are entitled to include their
shares in such registration, subject to certain conditions and limitations. All
fees, costs and expenses of any registration effected on behalf of such
shareholders under the Shareholders' Agreement (other than underwriting
discounts and commissions) will be paid by the Company.

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DESCRIPTION OF THE NEW CREDIT FACILITY

The New Credit Facility consists of (i) a $55.0 million term loan facility
(the "Term Loan Facility"); (ii) a $35.0 million revolving credit facility (the
"Revolving Credit Facility"); and (iii) a $100.0 million acquisition facility
(the "Acquisition Facility"), of which $50.0 million has been committed.
Approximately $10.0 million of the Revolving Credit Facility is restricted for
the repayment of the capital lease obligation due in February 1999. Bankers
Trust Company acts as administrative agent for the syndicate of lenders
providing the New Credit Facility and Merrill Lynch Capital Corporation will act
as syndication agent for the New Credit Facility. The Revolving Credit Facility
includes a sub-limit for the issuance of letters of credit.

Borrowings made under the New Credit Facility bear interest at a rate equal
to, at the Company's option, LIBOR plus 2.25%, or the Base Rate (as defined in
the New Credit Facility) plus 1.25%.

The LIBOR and Base Rate margins are subject to reductions, based on various
tests of the Company's financial performance. Base Rate interest will be payable
quarterly in arrears. LIBOR interest will be payable in arrears at the earlier
of (i) the end of the applicable interest periods and (ii) every three months.
LIBOR borrowings are available in one, two, three or six month interest periods.

The Revolving Credit Facility expires six years after the closing date of
the New Credit Facility. The Term Loan Facility matures five years from the
closing of the New Credit Facility and will amortize quarterly in aggregate
annual principal amounts of approximately $0.0 million, $4.0 million, $12.0
million, $18.0 million and $21.0 million, respectively, for years one through
five after the closing of the New Credit Facility. Loans may be borrowed under
the Acquisition Facility for three years after the closing date of the New
Credit Facility; provided that in the fourth year after the closing date of the
New Credit Facility, 50% of any remaining availability under the Acquisition
Facility may be borrowed. Loans outstanding at the end of such periods shall
amortize quarterly with the final such payment due six years after the closing
date of the New Credit Facility. Amounts under the New Credit Facility are also
subject to mandatory prepayments in certain circumstances as provided therein.

The obligations of the Company under the New Credit Facility is secured by
substantially all assets of the Company and each of its direct and indirect
domestic subsidiaries, as well as a pledge of the capital stock of each such
subsidiary of the Company (but not to exceed 65% of the voting stock of foreign
subsidiaries) and is guaranteed by each such domestic subsidiary.

The New Credit Facility agreement contains certain covenants, including,
without limitation, restrictions on (i) indebtedness and liens, (ii) the sale of
assets, (iii) mergers, acquisitions and other business combinations, (iv)
voluntary prepayment of certain debt of the Company (including the Notes), (v)
transactions with affiliates, (vi) capital expenditures and (vii) loans and
investments, as well as prohibitions on the payment of cash dividends to, or the
repurchase of redemption of stock from, shareholders, and various financial
covenants. Pursuant to the terms of the New Credit Facility, and subject to
applicable grace periods, in certain circumstances, the Company would be in
default upon the non-payment of principal or interest when due under such
agreement, or upon the non-fulfillment of the covenants described above, certain
changes in control of the ownership of the Company or various other defaults to
be described therein. "Change of Control" as defined under the New Credit
Facility references and encompasses the definition of "Change of Control" under
the Indenture. The Holders' rights to payments in the event of a Change of
Control may be affected by the fact that the New Credit Facility prohibits the
purchase of the Exchange Notes by the Company in the event of a Change of
Control, unless and until such time as the Indebtedness under the New Credit
Facility is repaid in full. The Company's failure to purchase the Notes in such
instance would result in a default under each of the Indenture and the New
Credit Facility. As such, the inability to repay the Indebtedness under the New
Credit Facility, if accelerated, could have material adverse consequences to the
Company and to Holders of the Notes. If such a default occurs, the lenders under
the New Credit Facility would be entitled to take various actions, including all
actions permitted to be taken by a secured creditor under the Uniform Commercial
Code, the acceleration of amounts due under the New Credit Facility and
requiring that all such amounts to be immediately paid in full.

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DESCRIPTION OF EXCHANGE NOTES

The Exchange Notes will be treated as a single class of securities and will
be issued under a single indenture (the "Indenture"), dated as of April 24,
1998, by and among the Company, the Guarantors and United States Trust Company
of New York, as trustee (the "Trustee"). The following summary of certain
provisions of the Indenture does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, the Trust Indenture Act of
1939, as amended (the "TIA"), and to all of the provisions of the Indenture,
including the definitions of certain terms therein and those terms made a part
of the Indenture by reference to the TIA as in effect on the date of the
Indenture. A copy of the Indenture may be obtained from the Company or the
Initial Purchasers. The definitions of certain capitalized terms used in the
following summary relating solely to the Floating Rate Exchange Notes are set
forth below under "-- Principal, Maturity and Interest -- Floating Rate Exchange
Notes," and the definitions of certain other capitalized terms used in the
following summary relating to the Exchange Notes are set forth below under "--
Certain Definitions." For purposes of this section, references to the "Company"
include only Eye Care Centers of America, Inc. and not its subsidiaries.

The Exchange Notes will be unsecured obligations of the Company, ranking
subordinate in right of payment to all Senior Indebtedness of the Company to the
extent set forth in the Indenture.

The Exchange Notes will be issued in fully registered form only, without
coupons, in denominations of $1,000 and integral multiples thereof. Initially,
the Trustee will act as Paying Agent and Registrar for the Exchange Notes. The
Exchange Notes may be presented for registration of transfer and exchange at the
offices of the Registrar, which initially will be the Trustee's corporate trust
office. The Company may change any Paying Agent and Registrar without notice to
holders of the Exchange Notes (the "Holders"). The Company will pay principal
(and premium, if any) on the Exchange Notes at the Trustee's corporate office in
New York, New York. At the Company's option, interest may be paid at the
Trustee's corporate trust office or by check mailed to the registered address of
Holders.

Any Initial Notes that remain outstanding after the completion of the
Exchange Offer, together with the Exchange Notes issued in connection with the
Exchange Offer, will be treated as a single class of securities under the
Indenture.

PRINCIPAL, MATURITY AND INTEREST

The Exchange Notes will be limited to $150,000,000 aggregate principal
amount, consisting of $100,000,000 principal amount of Fixed Rate Exchange Notes
and $50,000,000 principal amount of Floating Rate Exchange Notes. Interest on
the Exchange Notes will be payable semiannually in cash on each May 1 and
November 1, commencing on November 1, 1998, to the Persons who are registered
Holders at the close of business on the April 15 and October 15 immediately
preceding the applicable interest payment date. Interest on the Exchange Notes
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of issuance.

The Exchange Notes will not be entitled to the benefit of any mandatory
sinking fund.

Fixed Rate Exchange Notes

Interest on the Fixed Rate Exchange Notes will accrue at the rate of 9 1/8%
per annum.

Floating Rate Exchange Notes

The Floating Rate Exchange Notes will bear interest at a rate per annum,
reset semiannually, equal to LIBOR (as defined) plus 3.98%, as determined by the
Calculation Agent (the "Calculation Agent"), which shall initially be the
Trustee. The interest rate on the Floating Rate Exchange Notes during the
current Interest Period is 9.625%, since LIBOR, calculated as set forth below as
of April 24, 1998, the Determination Date, equalled 5.645%.

"LIBOR," with respect to an Interest Period, will be the rate (expressed as
a percentage per annum) for deposits in United States dollars for a six-month
period beginning on the second London Banking Day after

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<PAGE> 78

the Determination Date that appears on Telerate Page 3750 as of 11:00 a.m.,
London time, on the Determination Date. If Telerate Page 3750 does not include
such a rate or is unavailable on a Determination Date, LIBOR for the Interest
Period shall be the arithmetic mean of the rates (expressed as a percentage per
annum) for deposits in a Representative Amount in United States dollars for a
six-month period beginning on the second London Banking Day after the
Determination Date that appears on Reuters Screen LIBO Page as of 11:00 a.m.,
London time, on the Determination Date. If Reuters Screen LIBO Page does not
include two or more rates or is unavailable on a Determination Date, the
Calculation Agent will request the principal London office of each of four major
banks in the London interbank market, as selected by the Calculation Agent, to
provide such bank's offered quotation (expressed as a percentage per annum), as
of approximately 11:00 a.m., London time, on such Determination Date, to prime
banks in the London interbank market for deposits in a Representative Amount in
United States dollars for a six-month period beginning on the second London
Banking Day after the Determination Date. If at least two such offered
quotations are so provided, LIBOR for the Interest Period will be the arithmetic
mean of such quotations. If fewer than two such quotations are so provided, the
Calculation Agent will request each of three major banks in New York City, as
selected by the Calculation Agent, to provide such bank's rate (expressed as a
percentage per annum), as of approximately 11:00 a.m., New York City time, on
such Determination Date, for loans in a Representative Amount in United States
dollars to leading European banks for a six-month period beginning on the second
London Banking Day after the Determination Date. If at least two such rates are
so provided, LIBOR for the Interest Period will be the arithmetic mean of such
rates. If fewer than two such rates are so provided, then LIBOR for the Interest
Period will be LIBOR in effect with respect to the immediately preceding
Interest Period.

"Interest Period" means the period commencing on and including an interest
payment date and ending on and including the day immediately preceding the next
succeeding interest payment date, with the exception that the first Interest
Period shall commence on and include April 24, 1998 and end on and include
October 31, 1998.

"Determination Date," with respect to an Interest Period, will be the
second London Banking Day preceding the first day of the Interest Period.

"London Banking Day" is any day in which dealings in United States dollars
are transacted or, with respect to any future date, are expected to be
transacted in the London interbank market.

"Representative Amount" means a principal amount of not less than U.S.
$1,000,000 for a single transaction in the relevant market at the relevant time.

"Telerate Page 3750" means the display designated as "Page 3750" on the Dow
Jones Telerate Service (or such other page as may replace Page 3750 on that
service).

"Reuters Screen LIBO Page" means the display designated as page "LIBO" on
The Reuters Monitor Money Rates Service (or such other page as may replace the
LIBO page on that service).

The amount of interest for each day that the Floating Rate Exchange Notes
are outstanding (the "Daily Interest Amount") will be calculated by dividing the
interest rate in effect for such day by 360 and multiplying the result by the
principal amount of the Floating Rate Exchange Notes. The amount of interest to
be paid on the Floating Rate Exchange Notes for each Interest Period will be
calculated by adding the Daily Interest Amounts for each day in the Interest
Period.

All percentages resulting from any of the above calculations will be
rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point being rounded upwards
(e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)) and all
dollar amounts used in or resulting from such calculations will be rounded to
the nearest cent (with one-half cent being rounded upwards).

The interest rate on the Floating Rate Exchange Notes will in no event be
higher than the maximum rate permitted by New York law as the same may be
modified by United States law of general application. Under current New York
law, the maximum rate of interest is 25% per annum on a simple interest basis.
This limit may not apply to Floating Rate Exchange Notes in which $2,500,000 or
more has been invested.

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The Calculation Agent will, upon the request of the holder of any Floating
Rate Note, provide the interest rate then in effect with respect to the Floating
Rate Exchange Notes. All calculations made by the Calculations Agent in the
absence of manifest error will be conclusive for all purposes and binding on the
Company, the Guarantors and the Holders of the Floating Rate Exchange Notes.

REDEMPTION

Optional Redemption. The Fixed Rate Exchange Notes will be redeemable, at
the Company's option, in whole at any time or in part from time to time, on and
after May 1, 2003, upon not less than 30 nor more than 60 days' notice, at the
following redemption prices (expressed as percentages of the principal amount
thereof) if redeemed during the twelve-month period commencing on May 1 of the
year set forth below, plus, in each case, accrued interest to the date of
redemption:

<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2003........................................................ 104.563%
2004........................................................ 103.042%
2005........................................................ 101.521%
2006 and thereafter......................................... 100.000%
</TABLE>

The Floating Rate Exchange Notes will be redeemable, at the Company's
option, in whole or in part from time to time, upon not less than 30 nor more
than 60 days' notice, at the following redemption prices (expressed as
percentages of the principal amount thereof) if redeemed during the twelve-month
period commencing on May 1 of the year set forth below, plus, in each case,
accrued interest to the date of redemption:

<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
1998........................................................ 105.000%
1999........................................................ 104.000%
2000........................................................ 103.000%
2001........................................................ 102.000%
2002........................................................ 101.000%
2003 and thereafter......................................... 100.000%
</TABLE>

Optional Redemption of Fixed Rate Exchange Notes upon Equity Offerings. At
any time, or from time to time, on or prior to May 1, 2001, the Company may, at
its option, use the net cash proceeds of one or more Equity Offerings (as
defined below) to redeem up to 35% of the aggregate principal amount of Fixed
Rate Exchange Notes originally issued at a redemption price equal to 109.125% of
the principal amount thereof plus accrued interest to the date of redemption;
provided that at least 65% of the original principal amount of Fixed Rate
Exchange Notes remains outstanding immediately after any such redemption
(excluding any of Fixed Rate Exchange Notes owned by the Company). In order to
effect the foregoing redemption with the proceeds of any Equity Offering, the
Company must mail a notice of redemption no later than 60 days after the related
Equity Offering and must consummate such redemption within 90 days of the
closing of the Equity Offering. "Equity Offering" means a sale of Qualified
Capital Stock of the Company.

SELECTION AND NOTICE

In case of a partial redemption, selection of the Exchange Notes or
portions thereof for redemption shall be made by the Trustee by lot, pro rata or
in such manner as it shall deem appropriate and fair and in such manner as
complies with any applicable legal requirements; provided, however, that if a
partial redemption is made with the proceeds of an Equity Offering, selection of
the Fixed Rate Exchange Notes or portion thereof for redemption shall be made by
the Trustee only on a pro rata basis, unless such method is otherwise
prohibited. Exchange Notes may be redeemed in part in multiples of $1,000
principal amount only. Notice of redemption will be sent, by first class mail,
postage prepaid, at least 30 days and not more than 60 days prior to the date
fixed for redemption to each Holder whose Exchange Notes are to be redeemed at
the last address for

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<PAGE> 80

such Holder then shown on the registry books. If any Exchange Note is to be
redeemed in part only, the notice of redemption that relates to such Exchange
Note shall state the portion of the principal amount thereof to be redeemed. A
new Exchange Note in principal amount equal to the unredeemed portion thereof
will be issued in the name of the Holder thereof upon cancellation of the
original Exchange Note. On and after any redemption date, interest will cease to
accrue on the Exchange Notes or part thereof called for redemption as long as
the Company has deposited with the Paying Agent funds in satisfaction of the
redemption price pursuant to the Indenture.

RANKING OF EXCHANGE NOTES

The indebtedness evidenced by the Exchange Notes will be unsecured Senior
Subordinated Indebtedness of the Company, will be subordinated in right of
payment, as set forth in the Indenture, to all existing and future Senior
Indebtedness of the Company, will rank pari passu in right of payment with all
existing and future Senior Subordinated Indebtedness of the Company and will be
senior in right of payment to all existing and future Subordinated Obligations
of the Company. The Exchange Notes will also be effectively subordinated to any
Secured Indebtedness of the Company to the extent of the value of the assets
securing such Indebtedness. See "Risk Factors -- Subordination of Notes and
Guarantees; Asset Encumbrances." However, payment from the money or the proceeds
of U.S. government obligations held in any defeasance trust described under "--
Legal Defeasance and Covenant Defeasance" below is not subordinated to any
Senior Indebtedness or subject to the restrictions described above if the
deposit to such trust which is used to fund such payment was permitted at the
time of such deposit.

As of July 4, 1998, the Company had approximately $66.0 million of Senior
Indebtedness outstanding (including a $1.0 million guarantee by the Company but
exclusive of unused commitments), $65.0 million of which was Secured
Indebtedness. Although the Indenture contains limitations on the amount of
additional Indebtedness which the Company and its Restricted Subsidiaries may
incur, under certain circumstances the amount of such Indebtedness could be
substantial and, in any case, such Indebtedness may be Senior Indebtedness,
Guarantor Senior Indebtedness or Secured Indebtedness. See "--Certain
Covenants--Limitation on Incurrence of Additional Indebtedness" below.

Only Indebtedness of the Company that is Senior Indebtedness will rank
senior in right of payment to the Exchange Notes in accordance with the
provisions of the Indenture. The Exchange Notes will in all respects rank pari
passu in right of payment with all other Senior Subordinated Indebtedness of the
Company. The Company has agreed in the Indenture that it will not incur,
directly or indirectly, any Indebtedness which is expressly subordinate in right
of payment to Senior Indebtedness unless such Indebtedness is Senior
Subordinated Indebtedness or is expressly subordinated in right of payment to
Senior Subordinated Indebtedness. Without limiting the foregoing, unsecured
Indebtedness is not deemed to be subordinate or junior to Secured Indebtedness
merely because it is unsecured.

The Company may not pay principal of, premium (if any) or interest on, or
any other amount in respect of, the Exchange Notes or make any deposit pursuant
to the provisions described under "--Legal Defeasance and Covenant Defeasance"
below and may not otherwise purchase, redeem or otherwise retire any Exchange
Notes (collectively, "pay the Exchange Notes") if any amount due in respect of
any Senior Indebtedness (including, without limitation, any amount due as a
result of acceleration of the maturity thereof by reason of default or
otherwise) has not been paid in full in cash or Cash Equivalents unless the
default has been cured or waived and any such acceleration has been rescinded or
such Senior Indebtedness has been paid in full in cash or Cash Equivalents.
However, the Company may pay the Exchange Notes without regard to the foregoing
if the Company and the Trustee receive written notice approving such payment
from the Representative of the holders of the Senior Indebtedness with respect
to which the events set forth in the immediately preceding sentence have
occurred and are continuing.

In addition, during the continuance of any default (other than a payment
default described in the first sentence of the immediately preceding paragraph)
with respect to any Designated Senior Indebtedness pursuant to which the
maturity thereof may be accelerated immediately without further notice (except
such notice as may be required to effect such acceleration) or the expiration of
any applicable grace periods, the

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<PAGE> 81

Company may not pay the Exchange Notes for a period (a "Payment Blockage
Period") commencing upon the receipt by the Trustee (with a copy to the Company)
of written notice (a "Blockage Notice") of such default from the Representative
of the holders of such Designated Senior Indebtedness specifying an election to
effect a Payment Blockage Period and ending 179 days thereafter (or earlier if
such Payment Blockage Period is terminated (i) by written notice to the Trustee
and the Company from the Person or Persons who gave such Blockage Notice, (ii)
because the default giving rise to such Blockage Notice and all other defaults
with respect to such Designated Senior Indebtedness shall have been cured or
shall have ceased to exist or (iii) because such Designated Senior Indebtedness
has been repaid in full in cash or Cash Equivalents).

Notwithstanding the provisions described in the immediately preceding
paragraph, unless any payment default described in the first sentence of the
second immediately preceding paragraph has occurred and is then continuing, the
Company may resume payments on the Exchange Notes after the end of such Payment
Blockage Period, including any missed payments. Not more than one Blockage
Notice may be given in any consecutive 360-day period, irrespective of the
number of defaults with respect to Designated Senior Indebtedness during such
period. However, if any Blockage Notice within such 360-day period is given by
or on behalf of any holders of Designated Senior Indebtedness other than the
Bank Indebtedness, a Representative of holders of Bank Indebtedness may give
another Blockage Notice within such period. In no event, however, may the total
number of days during which any Payment Blockage Period or Periods is in effect
exceed 179 days in the aggregate during any 360 consecutive day period.

Upon any payment or distribution of the assets or securities of the Company
to creditors upon a total or partial liquidation or dissolution or
reorganization or winding up of or similar proceeding relating to the Company or
its property or in a bankruptcy, insolvency, receivership or similar proceeding
relating to the Company or its property, or in an assignment for the benefit of
creditors or any marshalling of the assets and liabilities of the Company,
whether voluntary or involuntary, the holders of Senior Indebtedness will be
entitled to receive payment in full in cash or Cash Equivalents of all amounts
owing with respect to the Senior Indebtedness (including all interest accruing
on or after the filing of any petition in bankruptcy or for reorganization
relating to the Company at the relevant contractual rate provided in the
respective issue of Senior Indebtedness, whether or not a claim for such
post-filing interest is allowed in such proceeding) before the holders of the
Exchange Notes are entitled to receive any payment or distribution of any
character and, until all amounts owing with respect to the Senior Indebtedness
are paid in full in cash or Cash Equivalents, any payment or distribution to
which holders of the Exchange Notes would be entitled but for the subordination
provisions of the Indenture will be made to holders of the Senior Indebtedness
as their interests may appear. If a payment or distribution is made to holders
of the Exchange Notes that due to the subordination provisions should not have
been made to them, such holders of the Exchange Notes are required to hold it in
trust for the holders of Senior Indebtedness and pay it over to them as their
interests may appear.

If the Company fails to make any payment on the Exchange Notes when due or
within any applicable grace period, whether or not on account of the payment
blockage provisions referred to above, such failure would constitute an Event of
Default under the Indenture and would enable the holders of the Exchange Notes
to accelerate the maturity thereof. See "-- Events of Default" below.

If payment of the Exchange Notes is accelerated because of an Event of
Default, the Company or the Trustee shall promptly notify the holders of the
Designated Senior Indebtedness or the Representative of such holders of the
acceleration. The Company may not pay the Exchange Notes until the earlier of
five business days after such holders or the Representative of the holders of
Designated Senior Indebtedness receive notice of such acceleration or the date
of acceleration of such Designated Senior Indebtedness and, thereafter, may pay
the Exchange Notes only if the subordination provisions of the Indenture
otherwise permit payment at that time.

By reason of such subordination provisions contained in the Indenture, in
the event of insolvency, creditors of the Company who are holders of Senior
Indebtedness may recover more, ratably, than the holders of the Exchange Notes,
and creditors of the Company who are not holders of Senior Indebtedness or of
Senior Subordinated Indebtedness (including the Exchange Notes) may recover
less, ratably, than holders of Senior Indebtedness and may recover more than the
holders of Senior Subordinated Indebtedness.

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EXCHANGE GUARANTEES

Each Guarantor unconditionally guarantees, on a senior subordinated basis,
jointly and severally, to each Holder and the Trustee, the full and prompt
performance of the Company's obligations under the Indenture and the Exchange
Notes, including the payment of principal of and interest on the Exchange Notes.
The Exchange Note Guarantees will be subordinated to Guarantor Senior
Indebtedness on the same basis as the Exchange Notes are subordinated to Senior
Indebtedness. The obligations of each Guarantor are limited to the maximum
amount which, after giving effect to all other contingent and fixed liabilities
of such Guarantor (including without limitation its guarantees of Bank
Indebtedness and any other Senior Indebtedness) and after giving effect to any
collections from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under its Exchange Note
Guarantee or pursuant to its contribution obligations under the Indenture, will
result in the obligations of such Guarantor under the Exchange Note Guarantee
not constituting a fraudulent conveyance or fraudulent transfer under federal or
state law. Each Guarantor that makes a payment or distribution under a Exchange
Note Guarantee shall be entitled to a contribution from each other Guarantor in
an amount pro rata, based on the net assets of each Guarantor, determined in
accordance with GAAP.

Each Guarantor may consolidate with or merge into or sell its assets to the
Company or another Guarantor that is a Wholly Owned Restricted Subsidiary of the
Company without limitation, or with other Persons upon the terms and conditions
set forth in the Indenture. See "-- Certain Covenants -- Merger, Consolidation
and Sale of Assets." In the event all of the Capital Stock of a Guarantor owed
by the Company and its Restricted Subsidiaries (other than the respective
Guarantor) is sold by the Company and/or such Restricted Subsidiaries and the
sale complies with the provisions set forth in "-- Certain Covenants --
Limitation on Asset Sales," the Guarantor's Exchange Note Guarantee will be
released.

Separate financial statements of the Guarantors are not included herein
because such Guarantors are jointly and severally liable with respect to the
Company's obligations pursuant to the Exchange Notes, and the aggregate net
assets, earnings and equity of the Guarantors and the Company are substantially
equivalent to the net assets, earnings and equity of the Company on a
consolidated basis.

CHANGE OF CONTROL

The Indenture will provide that upon the occurrence of a Change of Control
Triggering Event, each Holder will have the right to require that the Company
purchase for cash all or a portion of such Holder's Exchange Notes pursuant to
the offer described below (the "Change of Control Offer"), at a purchase price
in cash equal to 101% of the principal amount thereof plus accrued interest to
the date of purchase.

The Indenture will provide that, prior to the mailing of the notice
referred to below, but in any event within 30 days following the date the
Company obtains actual knowledge of any Change of Control Triggering Event, the
Company covenants to (i) repay in full and terminate all commitments under the
Bank Indebtedness or offer to repay in full and terminate all commitments under
all Bank Indebtedness and to repay the Bank Indebtedness owed to each holder of
Bank Indebtedness which has accepted such offer or (ii) obtain the requisite
consents under the New Credit Facility to permit the repurchase of the Exchange
Notes as provided below. The Company shall first comply with the covenant in the
immediately preceding sentence before it shall be required to repurchase
Exchange Notes pursuant to the provisions described below. The Company's failure
to comply with this covenant shall constitute an Event of Default described in
clause (iv) and not in clause (ii) under "--Events of Default" below.

Within 30 days following the date upon which the Company obtains actual
knowledge that a Change of Control Triggering Event has occurred, the Company
must send, by first class mail, a notice to each Holder, with a copy to the
Trustee, which notice shall govern the terms of the Change of Control Offer.
Such notice shall state, among other things, the purchase date, which must be no
earlier than 30 days nor later than 45 days from the date such notice is mailed,
other than as may be required by law (the "Change of Control Payment Date").
Holders electing to have an Exchange Note purchased pursuant to a Change of
Control Offer will be required to surrender the Exchange Note, with the form
entitled "Option of Holder to Elect

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<PAGE> 83

Purchase" on the reverse of the Exchange Note completed, to the Paying Agent at
the address specified in the notice prior to the close of business on the third
business day prior to the Change of Control Payment Date.

If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
purchase price for all the Exchange Notes that might be delivered by Holders
seeking to accept the Change of Control Offer. In the event the Company is
required to purchase outstanding Exchange Notes pursuant to a Change of Control
Offer, the Company expects that it would seek third party financing to the
extent it does not have available funds to meet its purchase obligations.
However, there can be no assurance that the Company would be able to obtain such
financing.

The definition of Change of Control includes a phrase relating to the sale,
lease, exchange or other transfer of "all or substantially all" of the Company's
assets as such phrase is defined in the Revised Model Business Corporation Act.
Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise definition of the phrase under
applicable law. Accordingly, in certain circumstances there may be a degree of
uncertainty in ascertaining whether a particular transaction would involve a
disposition of "all or substantially all" of the assets of the Company, and
therefore it may be unclear as to whether a Change of Control has occurred and
whether the Holders have the right to require the Company to repurchase such
Exchange Notes.

Neither the Board of Directors of the Company nor the Trustee may waive the
covenant relating to a Holder's right to redemption upon a Change of Control
Triggering Event. Restrictions in the Indenture described herein on the ability
of the Company and its Restricted Subsidiaries to incur additional Indebtedness,
to grant Liens on their properties, to make Restricted Payments and to make
Asset Sales may also make more difficult or discourage a takeover of the
Company, whether favored or opposed by the management of the Company.
Consummation of any such transaction in certain circumstances may require
redemption or repurchase of the Exchange Notes, and there can be no assurance
that the Company or the acquiring party will have sufficient financial resources
to effect such redemption or repurchase. Such restrictions and the restrictions
on transactions with Affiliates may, in certain circumstances, make more
difficult or discourage any leveraged buyout of the Company or any of its
Subsidiaries by the management of the Company. While such restrictions cover a
wide variety of arrangements which have traditionally been used to effect highly
leveraged transactions, the Indenture may not afford the Holders of Exchange
Notes protection in all circumstances from the adverse aspects of a highly
leveraged transaction, reorganization, restructuring, merger or similar
transaction.

The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Exchange Notes pursuant to a Change of Control Offer. To the
extent that the provisions of any securities laws or regulations conflict with
the "Change of Control" provisions of the Indenture, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under the "Change of Control" provisions of the
Indenture by virtue thereof.

CERTAIN COVENANTS

The Indenture contains, among others, the following covenants:

Limitation on Restricted Payments. The Company will not, and will not
cause or permit any of its Restricted Subsidiaries to, directly or indirectly,
(a) declare or pay any dividend or make any distribution (other than dividends
or distributions payable in Qualified Capital Stock) on or in respect of shares
of Capital Stock of the Company to holders of such Capital Stock, (b) purchase,
redeem or otherwise acquire or retire for value any Capital Stock of the Company
or any warrants, rights or options to purchase or acquire shares of any class of
such Capital Stock, other than the exchange of such Capital Stock for Qualified
Capital Stock, (c) make any principal payment on, purchase, defease, redeem,
prepay, decrease or otherwise acquire or retire for value, prior to any
scheduled final maturity, scheduled repayment or scheduled sinking fund payment,
any Indebtedness of the Company that is subordinate or junior in right of
payment to the Exchange Notes, or (d) make any Investment (other than Permitted
Investments) in any other Person (each of the foregoing

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actions set forth in clauses (a), (b), (c) and (d) (other than the exceptions
thereto) being referred to as a "Restricted Payment"), if at the time of such
Restricted Payment or immediately after giving effect thereto, (i) a Default or
an Event of Default shall have occurred and be continuing, (ii) the Company is
not able to incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) in compliance with the "Limitation on Incurrence of
Additional Indebtedness" covenant or (iii) the aggregate amount of Restricted
Payments made subsequent to the Issue Date shall exceed the sum of: (w) 50% of
the cumulative Consolidated Net Income (or if cumulative Consolidated Net Income
shall be a loss, minus 100% of such loss) of the Company earned subsequent to
the Issue Date and on or prior to the date the Restricted Payment occurs (the
"Reference Date") (treating such period as a single accounting period); plus (x)
100% of the aggregate net cash proceeds received by the Company from any Person
(other than a Subsidiary of the Company) from the issuance and sale subsequent
to the Issue Date and on or prior to the Reference Date of Qualified Capital
Stock of the Company (including Qualified Capital Stock issued upon the
conversion of convertible Indebtedness or in exchange for outstanding
Indebtedness but excluding net cash proceeds from the sale of Qualified Capital
Stock to the extent used to repurchase or acquire shares of Capital Stock of the
Company pursuant to clause (2)(ii) of the next succeeding paragraph); plus (y)
without duplication of any amounts included in clause (iii) (x) above, 100% of
the aggregate net cash proceeds of any equity contribution received by the
Company from a holder of the Company's Capital Stock; plus (z) to the extent
that any Investment (other than a Permitted Investment) that was made after the
Issue Date is sold for cash or otherwise liquidated or repaid for cash, the
lesser of (A) the cash received with respect to such sale, liquidation or
repayment of such Investment (less the cost of such sale, liquidation or
repayment, if any) and (B) the initial amount of such Investment, but only to
the extent not included in the calculation of Consolidated Net Income. Any net
cash proceeds included in the foregoing clauses (iii)(x) or (iii)(y) shall not
be included in clause (x)(A) or clause (x)(B) of the definition of "Permitted
Investments" to the extent actually utilized to make a Restricted Payment under
this paragraph.

Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph will not prohibit: (1) the payment of any dividend or the
consummation of any irrevocable redemption within 60 days after the date of
declaration of such dividend or notice of such redemption if the dividend or
payment of the redemption price, as the case may be, would have been permitted
on the date of declaration or notice; (2) if no Default or Event of Default
shall have occurred and be continuing as a consequence thereof, the acquisition
of any shares of Capital Stock of the Company, either (i) solely in exchange for
shares of Qualified Capital Stock of the Company, or (ii) through the
application of net proceeds of a substantially concurrent sale (other than to a
Subsidiary of the Company) of shares of Qualified Capital Stock of the Company;
(3) so long as no Default or Event of Default shall have occurred or be
continuing, payments for the purpose of and in an amount equal to the amount
required to permit the Company to redeem or repurchase shares of its Capital
Stock or options in respect thereof, in each case in connection with the
repurchase provisions under employee stock option or stock purchase agreements
or other agreements to compensate management employees; provided that such
redemptions or repurchases pursuant to this clause (3) shall not exceed $5.0
million in the aggregate since the Issue Date (which amount shall be increased
by the amount of any cash proceeds to the Company from (x) sales of its Capital
Stock to management employees subsequent to the Issue Date and (y) any "key-man"
life insurance policies which are used to make such redemptions or repurchases);
(4) the payment of fees and compensation as permitted under clause (i) of
paragraph (b) of the "Limitation on Transactions with Affiliates" covenant; (5)
repurchases of Capital Stock deemed to occur upon the exercise of stock options
if such Capital Stock represents a portion of the exercise price thereof; (6)
Restricted Payments made pursuant to the Recapitalization Agreement; (7) so long
as no Default or Event of Default shall have occurred or be continuing, payments
in respect of any redemption, repurchase, acquisition, cancellation or other
retirement for value of shares of Capital Stock of the Company or options, stock
appreciation or similar securities, in each case held by then current or former
officers, directors or employees of the Company or any of its Subsidiaries (or
their estates or beneficiaries under their estates) or by an employee benefit
plan, upon death, disability, retirement or termination of employment, not to
exceed $2.5 million in the aggregate in any fiscal year or $10.0 million in the
aggregate since the Issue Date; (8) repurchases of Preferred Stock; provided
that such repurchases do not exceed $5.0 million in the aggregate since the
Issue Date; (9) purchases of all (but not less than all), excluding directors'
qualifying shares, of the Capital Stock or other ownership interests

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in a Subsidiary of the Company which Capital Stock or other ownership interests
were not theretofore owned by the Company or a Subsidiary of the Company, such
that after giving effect to such purchase such Subsidiary becomes a Restricted
Subsidiary of the Company; and (10) so long as no Default or Event of Default
shall have occurred or be continuing, payments not to exceed $100,000 in the
aggregate since the Issue Date to enable the Company to make payments to holders
of its Capital Stock in lieu of issuance of fractional shares of its Capital
Stock. In determining the aggregate amount of Restricted Payments made
subsequent to the Issue Date in accordance with clause (iii) of the immediately
preceding paragraph, (a) amounts expended (to the extent such expenditure is in
the form of cash or other property other than Qualified Capital Stock) pursuant
to clauses (1), (3), (7) and (8) of this paragraph shall be included in such
calculation, provided that such expenditures pursuant to clause (3) or (7) shall
not be included to the extent of cash proceeds received by the Company from any
"key man" life insurance policies, and (b) amounts expended pursuant to clauses
(2), (4), (5), (6), (9) and (10) shall be excluded from such calculation.

Limitation on Incurrence of Additional Indebtedness. The Company will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, create, incur, assume, guarantee, acquire, become liable,
contingently or otherwise, with respect to, or otherwise become responsible for
payment of (collectively, "incur") any Indebtedness (other than Permitted
Indebtedness); provided, however, that if no Default or Event of Default shall
have occurred and be continuing at the time or as a consequence of the
incurrence of any such Indebtedness, the Company and its Restricted Subsidiaries
which are Guarantors may incur Indebtedness (including, without limitation,
Acquired Indebtedness) and Restricted Subsidiaries of the Company may incur
Acquired Indebtedness, in each case if on the date of the incurrence of such
Indebtedness, after giving effect to the incurrence thereof, the Consolidated
Fixed Charge Coverage Ratio of the Company is greater than 2.0 to 1.0.

Limitation on Transactions with Affiliates. (a) The Company will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
enter into or permit to exist any transaction or series of related transactions
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with, or for the benefit of, any of
its Affiliates (an "Affiliate Transaction"), other than (x) Affiliate
Transactions permitted under paragraph (b) below and (y) Affiliate Transactions
entered into on terms that are no less favorable than those that might be
reasonably obtained in a comparable transaction at such time on an arm's-length
basis from a Person that is not an Affiliate of the Company or such Restricted
Subsidiary; provided, however, that for a transaction or series of related
transactions with an aggregate value of $5.0 million or more, at the Company's
option (i) such determination shall be made in good faith by a majority of the
disinterested members of the Board of the Directors of the Company or (ii) the
Board of Directors of the Company or any such Restricted Subsidiary party to
such Affiliate Transaction shall have received a favorable opinion from an
independent nationally recognized investment banking firm that such Affiliate
Transaction is fair from a financial point of view to the Company or such
Restricted Subsidiary; provided, further, that for a transaction or series of
related transactions with an aggregate value of $10.0 million or more, the Board
of Directors of the Company shall have received a favorable opinion from an
independent nationally recognized investment banking firm that such Affiliate
Transaction is fair from a financial point of view to the Company or such
Restricted Subsidiary.

(b) The foregoing restrictions shall not apply to (i) reasonable fees and
compensation paid to, and indemnity provided on behalf of, officers, directors,
employees or consultants of the Company or any Subsidiary of the Company as
determined in good faith by the Company's Board of Directors; (ii) transactions
exclusively between or among the Company and any of its Restricted Subsidiaries
or exclusively between or among such Restricted Subsidiaries, provided such
transactions are not otherwise prohibited by the Indenture; (iii) transactions
effected as part of a Qualified Receivables Transaction; (iv) any agreement as
in effect as of the Issue Date or any amendment thereto or any transaction
contemplated thereby (including pursuant to any amendment thereto) in any
replacement agreement thereto so long as any such amendment or replacement
agreement is not more disadvantageous to the Holders in any material respect
than the original agreement as in effect on the Issue Date; (v) Restricted
Payments permitted by the Indenture; (vi) any Permitted Investment; (vii)
transactions permitted by, and complying with, the provisions of the covenant
described under "Merger, Consolidation and Sale of Assets"; (viii) any payment,

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issuance of securities or other payments, awards or grants, in cash or
otherwise, pursuant to, or the funding of, employment arrangements and Plans
approved by the Board of Directors of the Company; (ix) the grant of stock
options or similar rights to employees and directors of the Company and its
Subsidiaries pursuant to Plans and employment contracts approved by the Board of
Directors of the Company; (x) loans or advances to officers, directors or
employees of the Company or its Restricted Subsidiaries not in excess of $3.0
million at any one time outstanding; (xi) the granting or performance of
registration rights under a written registration rights agreement approved by
the Board of Directors of the Company; (xii) transactions with Persons solely in
their capacity as holders of Indebtedness or Capital Stock of the Company or any
of its Restricted Subsidiaries, where such Persons are treated no more favorably
than holders of Indebtedness or Capital Stock of the Company or such Restricted
Subsidiary generally; (xiii) any agreement to do any of the foregoing; (xiv) the
payment, on a quarterly basis, of management fees to THL Co. and/or any
Affiliate of THL Co. in accordance with the management arrangement entered into
in April 1998 between THL Co. and/or any Affiliate of THL Co. and the Company in
an aggregate amount (for all such Persons taken together) not to exceed $125,000
in any fiscal quarter of the Company; provided, however, the Company or any
Restricted Subsidiary may make any such payment greater than $125,000 but not to
exceed $250,000 in any fiscal quarter if, both before and after giving effect
thereto, the Company could incur $1.00 of additional indebtedness (other than
Permitted Indebtedness) in compliance with the "Limitation on Incurrence
Additional Indebtedness" covenant; (xv) reimbursement of THL Co. and/or any
Affiliate of THL Co. for their reasonable out-of-pocket expenses incurred by
them in connection with performing management services for the Company and its
Subsidiaries; (xvi) the payment of one time fees to THL Co. and/or Affiliates of
THL Co. in connection with each acquisition of a company or a line of business
by the Company or its Subsidiaries, such fees to be payable at the time of each
such acquisition and not to exceed 1% of the aggregate consideration paid by the
Company and its Subsidiaries for any such acquisition; (xvii) the payment of
consulting fees to Norman Matthews pursuant to a consulting arrangement entered
into on or prior to the Issue Date in an aggregate amount not to exceed $50,000
in any fiscal year of the Company; and (xviii) transactions entered into on the
Issue Date in connection with the Recapitalization and the financing therefor.

Limitation on Liens. The Company will not, and will not permit any of its
Restricted Subsidiaries to, create, incur, assume or suffer to exist any Liens
(other than Permitted Liens) of any kind against or upon any of their respective
property or assets, or any proceeds, income or profit therefrom which secure
Senior Subordinated Indebtedness or Subordinated Obligations, unless (i) in the
case of Liens securing Subordinated Obligations, the Exchange Notes are secured
by a Lien on such property, assets, proceeds, income or profit that is senior in
priority to such Liens and (ii) in the case of Liens securing Senior
Subordinated Indebtedness, the Exchange Notes are equally and ratably secured by
a Lien on such property, assets, proceeds, income or profit.

Prohibition on Incurrence of Senior Subordinated Indebtedness. Neither the
Company nor any Guarantor will incur or suffer to exist Indebtedness that is
senior in right of payment to the Exchange Notes or such Guarantor's Exchange
Note Guarantee and subordinate in right of payment to any other Indebtedness of
the Company or such Guarantor, as the case may be.

Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary to (a) pay dividends or make any other
distributions on or in respect of its Capital Stock; (b) make loans or advances
or to pay any Indebtedness or other obligation owed to the Company or any other
Restricted Subsidiary of the Company; or (c) transfer any of its property or
assets to the Company or any other Restricted Subsidiary of the Company, except
for such encumbrances or restrictions existing under or by reason of: (1)
applicable law; (2) the Indenture; (3) non-assignment provisions of any contract
or any lease entered into in the ordinary course of business; (4) any instrument
governing Acquired Indebtedness, which encumbrance or restriction is not
applicable to the Company or any Restricted Subsidiary of the Company, or the
properties or assets of any such Person, other than the Person or the properties
or assets of the Person so acquired; provided, however, that such Acquired
Indebtedness was not incurred in connection with, or in anticipation or
contemplation of an acquisition by the Company or the Restricted Subsidiary; (5)
agreements

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existing on the Issue Date (including, without limitation, the New Credit
Facility and the Recapitalization Agreement); (6) restrictions on the transfer
of assets subject to any Lien permitted under the Indenture imposed by the
holder of such Lien; (7) restrictions imposed by any agreement to sell assets
permitted under the Indenture to any Person pending the closing of such sale;
(8) any agreement or instrument governing Capital Stock of any Person that is
acquired after the Issue Date; (9) Indebtedness or other contractual
requirements of a Receivables Entity in connection with a Qualified Receivables
Transaction; provided that such restrictions apply only to such Receivables
Entity and such Restricted Subsidiary is engaged in the Qualified Receivables
Transaction; (10) an agreement effecting a refinancing, replacement or
substitution of Indebtedness issued, assumed or incurred pursuant to an
agreement referred to in clause (2), (4) or (5) above; provided, however, that
the provisions relating to such encumbrance or restriction contained in any such
refinancing, replacement or substitution agreement are no less favorable to the
Company or the Holders in any material respect as determined by the Board of
Directors of the Company in good faith than the provisions relating to such
encumbrance or restriction contained in agreements referred to in such clause
(2), (4) or (5); or (11) any agreement evidencing, or relating to, any
Indebtedness incurred after the Issue Date which are not more restrictive than
those contained in the New Credit Facility as in effect on the Issue Date.

Limitation on Preferred Stock of Restricted Subsidiaries. The Company will
not permit any of its Restricted Subsidiaries to issue any Preferred Stock
(other than to the Company or to a Restricted Subsidiary of the Company) or
permit any Person (other than the Company or a Restricted Subsidiary of the
Company) to own any Preferred Stock of any Restricted Subsidiary of the Company.

Merger, Consolidation and Sale of Assets. The Company will not, in a
single transaction or a series of related transactions, consolidate with or
merge with or into, or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its assets to, another Person or Persons
unless (i) either (A) the Company shall be the survivor of such merger or
consolidation or (B) the surviving Person is a corporation existing under the
laws of the United States, any state thereof or the District of Columbia and
such surviving Person shall expressly assume all the obligations of the Company
under the Exchange Notes, the Indenture and the Registration Rights Agreement;
(ii) immediately after giving effect to such transaction (on a pro forma basis,
including any Indebtedness incurred or anticipated to be incurred in connection
with such transaction and the other adjustments referred to in the definition of
"Consolidated Fixed Charge Coverage Ratio"), the Company or the surviving Person
is able to incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with the "Limitation on Incurrence of Additional
Indebtedness" covenant; (iii) immediately before and immediately after giving
effect to such transaction (including any Indebtedness incurred or anticipated
to be incurred in connection with the transaction), no Default or Event of
Default shall have occurred and be continuing; and (iv) the Company has
delivered to the Trustee an officers' certificate and opinion of counsel, each
stating that such consolidation, merger or transfer complies with the Indenture,
that the surviving Person agrees to be bound thereby and by the Exchange Notes
and the Registration Rights Agreement, and that all conditions precedent in the
Indenture relating to such transaction have been satisfied. For purposes of the
foregoing, the transfer (by lease, assignment, sale or otherwise, in a single
transaction or series of transactions) of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, the Capital
Stock of which constitutes all or substantially all of the properties and assets
of the Company, shall be deemed to be the transfer of all or substantially all
of the properties and assets of the Company. Notwithstanding the foregoing
clauses (ii) and (iii) of the preceding sentence, (a) any Restricted Subsidiary
of the Company may consolidate with, merge into or transfer all or part of its
properties and assets to the Company and (b) the Company may merge with an
Affiliate that is (x) a corporation that has no material assets or liabilities
and which was incorporated solely for the purpose of reincorporating the Company
in another jurisdiction or (y) a Restricted Subsidiary of the Company so long as
all assets of the Company and the Restricted Subsidiaries immediately prior to
such transaction are owned by such Restricted Subsidiary and its Restricted
Subsidiaries immediately after the consummation thereof.

The Indenture will provide that upon any consolidation, combination or
merger or any transfer of all or substantially all of the assets of the Company
in accordance with the foregoing, the surviving entity shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
the Indenture and the Exchange Notes with the same effect as if such surviving
entity had been named as such.

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Each Guarantor (other than any Guarantor whose Exchange Note Guarantee is
to be released in accordance with the terms of the Exchange Note Guarantee and
the Indenture in connection with any transaction complying with the provisions
of "--Limitation on Asset Sales") will not, and the Company will not cause or
permit any Guarantor to, consolidate with or merge with or into any Person other
than the Company or any other Guarantor unless: (i) the entity formed by or
surviving any such consolidation or merger (if other than the Guarantor) or to
which such sale, lease, conveyance or other disposition shall have been made is
a corporation organized and existing under the laws of the United States or any
State thereof or the District of Columbia; (ii) such entity (if other than the
Guarantor) assumes by supplemental indenture all of the obligations of the
Guarantor on the Exchange Note Guarantee; (iii) immediately before and
immediately after giving effect to such transaction (including any Indebtedness
incurred or anticipated to be incurred in connection with the transaction), no
Default or Event of Default shall have occurred and be continuing; and (iv)
immediately after giving effect to such transaction on a pro forma basis
(including any Indebtedness incurred or anticipated to be incurred in connection
with the transaction), the Company could satisfy the provisions of clause (ii)
of the first paragraph of this covenant. Any merger or consolidation of a
Guarantor with and into the Company (with the Company being the surviving
entity) or another Guarantor that is a Restricted Subsidiary of the Company need
only comply with clause (iv) of the first paragraph of this covenant.

Limitation on Asset Sales. The Company will not, and will not permit any
of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the
Company or the applicable Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets sold or otherwise disposed of (as determined in good faith
by the Company's Board of Directors); (ii) at least 75% of the consideration
received by the Company or such Restricted Subsidiary, as the case may be, from
such Asset Sale shall be cash or Cash Equivalents and is received at the time of
such disposition; provided that the amount of (x) any liabilities (as shown on
the Company's or such Restricted Subsidiary's most recent balance sheet or in
the notes thereto) of the Company or such Restricted Subsidiary (other than
liabilities that are by their terms subordinated to the Exchange Notes) that are
assumed by the transferee of any such assets and from which the Company and its
Restricted Subsidiaries are unconditionally released and (y) any notes or other
obligations received by the Company or such Restricted Subsidiary from such
transferee that are promptly, but in no event more than 60 days after receipt,
converted by the Company or such Restricted Subsidiary into cash or Cash
Equivalents (to the extent of the cash or Cash Equivalents received) shall be
deemed to be cash for purposes of this provision; and (iii) upon the
consummation of an Asset Sale, the Company shall apply, or cause such Restricted
Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale within
365 days of receipt thereof either (A) to prepay Senior Indebtedness or
Guarantor Senior Indebtedness and, in the case of any Senior Indebtedness or
Guarantor Senior Indebtedness under any revolving credit facility, effect a
permanent reduction in the availability under such revolving credit facility,
(B) to reinvest in Productive Assets, or (C) a combination of prepayment and
investment permitted by the foregoing clauses (iii) (A) and (iii) (B). On the
366th day after an Asset Sale or such earlier date, if any, as the Board of
Directors of the Company or of such Restricted Subsidiary determines not to
apply the Net Cash Proceeds relating to such Asset Sale as set forth in clauses
(iii) (A), (iii) (B) and (iii) (C) of the immediately preceding sentence (each,
a "Net Proceeds Offer Trigger Date"), such aggregate amount of Net Cash Proceeds
which have not been applied on or before such Net Proceeds Offer Trigger Date as
permitted in clauses (iii) (A), (iii) (B) and (iii) (C) of the immediately
preceding sentence (each a "Net Proceeds Offer Amount") shall be applied by the
Company or such Restricted Subsidiary to make an offer to purchase for cash (the
"Net Proceeds Offer") on a date (the "Net Proceeds Offer Payment Date") not less
than 30 nor more than 45 days following the applicable Net Proceeds Offer
Trigger Date, from all Holders on a pro rata basis at least that amount of
Exchange Notes equal to the Note Offer Amount at a price in cash equal to 100%
of the principal amount of the Exchange Notes to be purchased, plus accrued and
unpaid interest thereon, if any, to the date of purchase; provided, however,
that if at any time any non-cash consideration received by the Company or any
Restricted Subsidiary of the Company, as the case may be, in connection with any
Asset Sale is converted into or sold or otherwise disposed of for cash (other
than interest received with respect to any such non-cash consideration), then
such conversion or disposition shall be deemed to constitute an Asset Sale
hereunder and the Net Cash Proceeds thereof shall be applied in accordance with
this covenant. Any offer to

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purchase with respect to Other Debt shall be made and consummated concurrently
with any Net Proceeds Offer.

"Other Debt" shall mean other Indebtedness of the Company that ranks pari
passu with the Exchange Notes and requires that an offer to purchase such Other
Debt be made upon consummation of an Asset Sale.

"Note Offer Amount" means (i) if an offer to purchase Other Debt is not
being made, the amount of the Net Proceeds Offer Amount and (ii) if an offer to
purchase Other Debt is being made, an amount equal to the product of (x) the Net
Proceeds Offer Amount and (y) a fraction the numerator of which is the aggregate
amount of Exchange Notes tendered pursuant to such offer to purchase and the
denominator of which is the aggregate amount of Exchange Notes and Other Debt
tendered pursuant to such offer to purchase.

Notwithstanding the foregoing, if a Net Proceeds Offer Amount is less than
$10 million, the application of the Net Cash Proceeds constituting such Net
Proceeds Offer Amount to a Net Proceeds Offer may be deferred until such time as
such Net Proceeds Offer Amount plus the aggregate amount of all Net Proceeds
Offer Amounts arising subsequent to the Net Proceeds Offer Trigger Date relating
to such initial Net Proceeds Offer Amount from all Asset Sales by the Company
and its Restricted Subsidiaries aggregates at least $10 million, at which time
the Company or such Restricted Subsidiary shall apply all Net Cash Proceeds
constituting all Net Proceeds Offer Amounts that have been so deferred to make a
Net Proceeds Offer (the first date the aggregate of all such deferred Net
Proceeds Offer Amounts is equal to $10 million or more shall be deemed to be a
"Net Proceeds Offer Trigger Date").

Notwithstanding the immediately preceding paragraphs of this covenant, the
Company and its Restricted Subsidiaries will be permitted to consummate an Asset
Sale without complying with such paragraphs to the extent (i) at least 75% of
the consideration for such Asset Sale constitutes Productive Assets and (ii)
such Asset Sale is for at least fair market value (as determined in good faith
by the Company's Board of Directors); provided that any consideration not
constituting Productive Assets received by the Company or any of its Restricted
Subsidiaries in connection with any Asset Sale permitted to be consummated under
this paragraph shall to the extent constituting Net Cash Proceeds, be subject to
the provisions of the immediately preceding paragraphs; provided that at the
time of entering into such transaction or immediately after giving effect
thereto, no Default or Event of Default shall have occurred or be continuing or
would occur as a consequence thereof.

In the event of the transfer of substantially all (but not all) of the
property and assets of the Company and its Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under "--Merger, Consolidation
and Sale of Assets," the successor corporation shall be deemed to have sold the
properties and assets of the Company and its Restricted Subsidiaries not so
transferred for purposes of this covenant, and shall comply with the provisions
of this covenant with respect to such deemed sale as if it were an Asset Sale.
In addition, the fair market value of such properties and assets of the Company
or its Restricted Subsidiaries deemed to be sold shall be deemed to be Net Cash
Proceeds for purposes of this covenant; provided, however, that this paragraph
shall not apply if, both immediately before and immediately after giving effect
to any such transaction, both the transferor and transferee are obligors under
the Indenture.

Each Net Proceeds Offer will be mailed to the record Holders as shown on
the register of Holders within 25 days following the Net Proceeds Offer Trigger
Date, with a copy to the Trustee, and shall comply with the procedures set forth
in the Indenture. Upon receiving notice of the Net Proceeds Offer, Holders may
elect to tender their Exchange Notes in whole or in part in integral multiples
of $1,000 in exchange for cash. To the extent Holders properly tender Exchange
Notes in an amount exceeding the Exchange Note Offer Amount, Exchange Notes of
tendering Holders will be purchased on a pro rata basis (based on amounts
tendered). A Net Proceeds Offer shall remain open for a period of 20 business
days or such longer period as may be required by law. To the extent that the
aggregate amount of Exchange Notes tendered pursuant to a Net Proceeds Offer is
less than the Net Proceeds Offer Amount, the Company may use any remaining Net
Proceeds Offer Amount for general corporate purposes. Upon completion of any
such Net Proceeds Offer, the Net Proceeds Offer Amount shall be reset at zero.

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The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Exchange Notes pursuant to a Net Proceeds Offer. To the extent
that the provisions of any securities laws or regulations conflict with the
"Asset Sale" provisions of the Indenture, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the "Asset Sale" provisions of the Indenture by
virtue thereof.

Additional Subsidiary Exchange Note Guarantees. The Company will not
permit any of its Restricted Subsidiaries that is not a Guarantor (whether
formed or acquired before or after the Issue Date), directly or indirectly, to
guarantee the payment of any Indebtedness under the New Credit Facility, unless
such Restricted Subsidiary, the Company and the Trustee execute and deliver a
supplemental indenture evidencing such Restricted Subsidiary's Exchange Note
Guarantee of the Exchange Notes pursuant to the terms of the Indenture, such
Exchange Note Guarantee to be a senior subordinated unsecured obligation of such
Subsidiary; provided that if any such Guarantor is released from its guarantee
with respect to Indebtedness outstanding under the New Credit Facility, such
Guarantor shall automatically be released from its obligations as a Guarantor.
Nothing in this covenant shall be construed to permit any Restricted Subsidiary
of the Company to incur Indebtedness otherwise prohibited by the "Limitation on
Incurrence of Additional Indebtedness" covenant.

Conduct of Business. The Company and its Restricted Subsidiaries will not
engage in any businesses which are not the same, similar, related or ancillary
to the businesses in which the Company and its Restricted Subsidiaries are
engaged on the Issue Date.

EVENTS OF DEFAULT

The following events are defined in the Indenture as "Events of Default":
(i) the failure to pay interest (including additional interest, if any, under
the Registration Rights Agreement) on any Exchange Notes when the same becomes
due and payable and the default continues for a period of 30 days (whether or
not such payment shall be prohibited by the subordination provisions of the
Indenture); (ii) the failure to pay the principal on any Exchange Notes, when
such principal becomes due and payable, at maturity, upon redemption or
otherwise (including the failure to make a payment to purchase Exchange Notes
tendered pursuant to a Change of Control Offer or a Net Proceeds Offer) (whether
or not such payment shall be prohibited by the subordination provisions of the
Indenture); (iii) a default in the observance or performance of the covenant set
forth under "Certain Covenants--Merger, Consolidation and Sale of Assets" above;
(iv) a default in the observance or performance of any other covenant or
agreement contained in the Indenture which default continues for a period of 30
days after the Company receives written notice specifying the default (and
demanding that such default be remedied) from the Trustee or the Holders of at
least 25% of the outstanding principal amount of the Exchange Notes; (v) the
failure to pay at final maturity (giving effect to any applicable grace periods
and any extensions thereof) the principal amount of any Indebtedness of the
Company or any Restricted Subsidiary (other than a Receivables Entity) of the
Company, or the acceleration of the final stated maturity of any such
Indebtedness if the aggregate principal amount of such Indebtedness, together
with the principal amount of any other such Indebtedness in default for failure
to pay principal at final maturity or which has been accelerated, aggregates
$10.0 million or more at any time; (vi) one or more judgments in an aggregate
amount in excess of $10.0 million shall have been rendered against the Company
or any of its Significant Subsidiaries and such judgments remain undischarged,
unpaid and unstayed for a period of 60 days after such judgment or judgments
become final and non-appealable, and in the event such judgment is covered by
insurance, an enforcement proceeding has been commenced by any creditor upon
such judgment, which is not promptly stayed; (vii) certain events of bankruptcy
affecting the Company or any of its Significant Subsidiaries; and (viii) any of
the Exchange Note Guarantees ceases to be in full force and effect or any of the
Exchange Note Guarantees is declared to be null and void and unenforceable or
any of the Exchange Note Guarantees is found to be invalid or any of the
Guarantors denies its liability under its Exchange Note Guarantee (other than by
reason of release of a Guarantor in accordance with the terms of the Indenture).

Upon the happening of any Event of Default specified in the Indenture, the
Trustee or the Holders of at least 25% in principal amount of outstanding
Exchange Notes may declare the principal of and accrued

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interest on all the Exchange Notes to be due and payable by notice in writing to
the Company and the Trustee specifying the respective Event of Default and that
it is a "notice of acceleration," and upon receipt of such notice the same shall
become due and payable upon the first to occur of an acceleration under any
issue of then outstanding Designated Senior Indebtedness or five Business Days
after receipt by the Company and each Representative of holders of Designated
Senior Indebtedness then outstanding of such notice of acceleration, unless all
Events of Default specified in their respective notice of acceleration have been
cured within said five Business Day period. If an Event of Default with respect
to bankruptcy proceedings of the Company occurs and is continuing, then such
amount shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any holder of Exchange
Notes.

The Indenture will provide that, at any time after a declaration of
acceleration with respect to the Exchange Notes as described in the preceding
paragraph, the Holders of a majority in principal amount of the Exchange Notes
may rescind and cancel such declaration and its consequences (i) if the
rescission would not conflict with any judgment or decree, (ii) if all existing
Events of Default have been cured or waived except nonpayment of principal or
interest that has become due solely because of the acceleration, (iii) to the
extent the payment of such interest is lawful, interest on overdue installments
of interest and overdue principal, which has become due otherwise than by such
declaration of acceleration, has been paid, (iv) if the Company has paid the
Trustee its reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (v) in the event of the cure or waiver of an
Event of Default of the type described in clause (vi) or (vii) of the
description above of Events of Default, the Trustee shall have received an
officers' certificate and an opinion of counsel that such Event of Default has
been cured or waived. The holders of a majority in principal amount of the
Exchange Notes may waive any existing Default or Event of Default under the
Indenture, and its consequences, except a default in the payment of the
principal of or interest on any Exchange Notes.

NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS

No director, officer, employee, incorporator or stockholder of the Company
shall have any liability for any obligations of the Company under the Exchange
Notes or the Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder of Exchange Notes by
accepting an Exchange Note waives and releases all such liability. The waiver
and release are part of the consideration for issuance of the Exchange Notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

The Company may, at its option and at any time, elect to have its
obligations and the obligations of the Guarantors discharged with respect to the
outstanding Exchange Notes ("Legal Defeasance"). Such Legal Defeasance means
that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Exchange Notes, except for (i) the
rights of holders of the Exchange Notes to receive payments in respect of the
principal of, premium, if any, and interest on the Exchange Notes when such
payments are due, (ii) the Company's obligations with respect to the Exchange
Notes concerning issuing temporary Exchange Notes, registration of Exchange
Notes, mutilated, destroyed, lost or stolen Exchange Notes and the maintenance
of an office or agency for payments, (iii) the rights, powers, trust, duties and
immunities of the Trustee and the Company's obligations in connection therewith
and (iv) the Legal Defeasance provisions of the Indenture. In addition, the
Company may, at its option and at any time, elect to have the obligations of the
Company released with respect to certain covenants that are described in the
Indenture ("Covenant Defeasance") and thereafter any omission to comply with
such obligations shall not constitute a Default or Event of Default with respect
to the Exchange Notes. In the event Covenant Defeasance occurs, certain events
(not including non-payment, bankruptcy, receivership, reorganization and
insolvency events) described under "Events of Default" will no longer constitute
an Event of Default with respect to the Exchange Notes.

In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the holders of the Exchange Notes cash in U.S. dollars,

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non-callable U.S. government obligations, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any, and
interest on the Exchange Notes on the stated date for payment thereof or on the
applicable redemption date, as the case may be; (ii) in the case of Legal
Defeasance, the Company shall have delivered to the Trustee an opinion of
counsel in the United States reasonably acceptable to the Trustee confirming
that (A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date of the Indenture, there
has been a change in the applicable federal income tax law, in either case to
the effect that, and based thereon such opinion of counsel shall confirm that,
the holders of the Exchange Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred; (iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that the holders of the Exchange Notes will
not recognize income, gain or loss for federal income tax purposes as a result
of such Covenant Defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been the
case if such Covenant Defeasance had not occurred; (iv) no Default or Event of
Default shall have occurred and be continuing on the date of such deposit (other
than a Default or Event of Default with respect to the Indenture resulting from
the incurrence of Indebtedness, all or a portion of which will be used to
defease the Exchange Notes concurrently with such incurrence); (v) such Legal
Defeasance or Covenant Defeasance shall not result in a breach or violation of,
or constitute a default under, the Indenture or any other material agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound; (vi) the Company shall
have delivered to the Trustee an officers' certificate stating that the deposit
was not made by the Company with the intent of preferring the holders of the
Exchange Notes over any other creditors of the Company or with the intent of
defeating, hindering, delaying or defrauding any other creditors of the Company
or others; (vii) the Company shall have delivered to the Trustee an officers'
certificate and an opinion of counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with; (viii) the Company shall have delivered to
the Trustee an opinion of counsel to the effect that (A) the trust funds will
not be subject to any rights of holders of Indebtedness of the Company other
than the Exchange Notes and (B) assuming no intervening bankruptcy of the
Company between the date of deposit and the 91st day following the deposit and
that no Holder of the Exchange Notes is an insider of the Company, after the
91st day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally; and (i) certain other customary
conditions precedent are satisfied. Notwithstanding the foregoing, the opinion
of counsel required by clause (ii) above with respect to a Legal Defeasance need
not be delivered if all Exchange Notes not therefore delivered to the Trustee
for cancellation (x) have become due and payable, or (y) will become due and
payable within one year (whether by redemption or otherwise) under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company.

SATISFACTION AND DISCHARGE

The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of the
Exchange Notes, as expressly provided for in the Indenture) as to all
outstanding Exchange Notes when (i) either (a) all the Exchange Notes
theretofore authenticated and delivered (except lost, stolen or destroyed
Exchange Notes which have been replaced or paid and Exchange Notes for whose
payment money has theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or discharged from
such trust) have been delivered to the Trustee for cancellation or (b) all
Exchange Notes not theretofore delivered to the Trustee for cancellation have
become due and payable and the Company has irrevocably deposited or caused to be
deposited with the Trustee funds in an amount sufficient to pay and discharge
the entire Indebtedness on the Exchange Notes not theretofore delivered to the
Trustee for cancellation, for principal of, premium, if any, and interest on the
Exchange Notes to the date of deposit together with irrevocable instructions
from the Company directing the

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Trustee to apply such funds to the payment thereof at maturity or redemption, as
the case may be; (ii) the Company has paid all other sums payable under the
Indenture by the Company; and (iii) the Company has delivered to the Trustee an
officers' certificate and an opinion of counsel stating that all conditions
precedent under the Indenture relating to the satisfaction and discharge of the
Indenture have been complied with.

MODIFICATION OF THE INDENTURE

From time to time, the Company, the Guarantors and the Trustee, without the
consent of the Holders of the Exchange Notes, may amend the Indenture for
certain specified purposes, including curing ambiguities, defects or
inconsistencies, so long as such change does not, in the opinion of the Trustee,
adversely affect the rights of any of the Holders in any material respect. In
formulating its opinion on such matters, the Trustee will be entitled to rely on
such evidence as it deems appropriate, including, without limitation, solely on
an opinion of counsel. Other modifications and amendments of the Indenture may
be made with the consent of the Holders of a majority in principal amount of the
then outstanding Exchange Notes issued under the Indenture, except that, without
the consent of each holder of the Exchange Notes affected thereby, no amendment
may: (i) reduce the amount of Exchange Notes whose holders must consent to an
amendment; (ii) reduce the rate of or change or have the effect of changing the
time for payment of interest, including defaulted interest, on any Exchange
Notes; (iii) reduce the principal of or change or have the effect of changing
the fixed maturity of any Exchange Notes, or change the date on which any
Exchange Notes may be subject to redemption or repurchase, or reduce the
redemption or repurchase price therefor; (iv) make any Exchange Notes payable in
money other than that stated in the Exchange Notes; (v) make any change in
provisions of the Indenture protecting the right of each holder of a Note to
receive payment of principal of and interest on such Exchange Note on or after
the due date thereof or to bring suit to enforce such payment, or permitting
holders of a majority in principal amount of the Exchange Notes to waive
Defaults or Events of Default (other than Defaults or Events of Default with
respect to the payment of principal of or interest on the Exchange Notes); (vi)
amend, change or modify in any material or substantial respect, in the opinion
of the Trustee, the obligation of the Company to make and consummate a Change of
Control Offer or make and consummate a Net Proceeds Offer with respect to any
Asset Sale that has been consummated or modify any of the provisions or
definitions with respect thereto; (vii) modify the subordination provisions
(including the related definitions) of the Indenture to adversely affect the
holders of Exchange Notes in any material respect; or (ix) release any Guarantor
from any of its obligations under its Exchange Note Guarantee or the Indenture
otherwise than in accordance with the Indenture. Any amendment or modification
of the subordination provisions of the Indenture shall not be effective as to
any holder of the then outstanding Senior Indebtedness without the written
consent of such holder.

ADDITIONAL INFORMATION

The Indenture provides that the Company will deliver to the Trustee within
15 days after the filing of the same with the Commission copies of the quarterly
and annual reports and of the information, documents and other reports, if any,
which the Company is required to file with the Commission pursuant to Section 13
or 15(d) of the Exchange Act. The Indenture further provides that,
notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company will file
with the Commission, to the extent permitted, and provide the Trustee and
Holders with such annual reports and such information, documents and other
reports specified in Sections 13 and 15(d) of the Exchange Act. The Company will
also comply with the other provisions of the Trust Indenture Act sec. 314(a).

CERTAIN DEFINITIONS

Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the definition of other terms
used herein for which no definition is provided.

"Acquired Indebtedness" means Indebtedness (i) of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of
the Company or (ii) assumed in connection with the acquisition of assets from
such Person, in each case whether or not incurred by such Person in connection
with, or in anticipation or contemplation of, such Person becoming a Restricted
Subsidiary of the Company or

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such acquisition. Acquired Indebtedness shall be deemed to have been incurred,
with respect to clause (i) of the preceding sentence, on the date such Person
becomes a Restricted Subsidiary of the Company and, with respect to clause (ii)
of the preceding sentence, on the date of consummation of such acquisition of
assets.

"Affiliate" means a Person who directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
the Company. The term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise. Notwithstanding the foregoing, no Person (other than the Company or
any Subsidiary of the Company) in whom a Receivables Entity makes an Investment
in connection with a Qualified Receivables Transaction shall be deemed to be an
Affiliate of the Company or any of its Subsidiaries solely by reason of such
Investment.

"all or substantially all" shall have the meaning given such phrase in the
Revised Model Business Corporation Act.

"Asset Acquisition" means (a) an Investment by the Company or any
Restricted Subsidiary of the Company in any other Person pursuant to which such
Person shall become a Restricted Subsidiary of the Company or any Restricted
Subsidiary of the Company, or shall be merged with or into the Company or any
Restricted Subsidiary of the Company; or (b) the acquisition by the Company or
any Restricted Subsidiary of the Company of the assets of any Person which
constitute all or substantially all of the assets of such Person, any division
or line of business of such Person or any other properties or assets of such
Person other than in the ordinary course of business.

"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any of
its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to
any Person other than the Company or a Restricted Subsidiary of the Company of
(a) any Capital Stock of any Restricted Subsidiary of the Company; or (b) any
other property or assets of the Company or any Restricted Subsidiary of the
Company other than in the ordinary course of business; provided, however, that
Asset Sales shall not include (i) any transaction or series of related
transactions for which the Company or its Restricted Subsidiaries receive
aggregate consideration of less than $2.0 million, (ii) the sale, lease,
conveyance, disposition or other transfer of all or substantially all of the
assets of the Company as permitted under "Merger, Consolidation and Sale of
Assets," (iii) the sale or discount, in each case without recourse, of accounts
receivable arising in the ordinary course of business, but only in connection
with the compromise or collection thereof, (iv) the factoring of accounts
receivable arising in the ordinary course of business pursuant to arrangements
customary in the industry, (v) the licensing of intellectual property, (vi)
disposals or replacements of obsolete equipment in the ordinary course of
business, (vii) the sale, lease, conveyance, disposition or other transfer by
the Company or any Restricted Subsidiary of assets or property in transactions
constituting Investments that are not prohibited under the "Limitation on
Restricted Payments" covenant, (viii) leases or subleases to third persons not
interfering in any material respect with the business of the Company or any of
its Restricted Subsidiaries, (ix) the sale of properties (in one transaction or
a series of related transactions) to be acquired by the Company on or about
February 1, 1999 related to the Company's acquisition of Visionworks Holdings,
Inc., or the capital lease in respect of such properties prior to the
acquisition thereof, to the extent that the consideration to be received by the
Company or any of its Restricted Subsidiaries in any such transaction or series
of related transactions does not exceed $10.0 million, (x) sales of accounts
receivable and related assets of the type specified in the definition of
"Qualified Receivables Transaction" to a Receivables Entity, or (xi) transfers
of accounts receivable and related assets of the type specified in the
definition of "Qualified Receivables Transaction" (or a fractional undivided
interest therein) by a Receivables Entity in a Qualified Receivables
Transaction.

"Bank Indebtedness" means any and all amounts, whether outstanding on the
Issue Date or thereafter incurred, payable under or in respect of the New Credit
Facility and any related notes, collateral documents, letters of credit and
guarantees, including principal, premium (if any), interest (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company at the relevant contractual rate provided
in the New Credit Facility whether or not a claim for post-filing interest is
allowed in

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such proceedings), fees, charges, expenses, indemnities, reimbursement
obligations, guarantees and all other amounts payable thereunder or in respect
thereof.

"Board of Directors" means, as to any Person, the board of directors of
such Person or any duly authorized committee thereof.

"Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at any date shall be the capitalized amount of
such obligations at such date, determined in accordance with GAAP.

"Capital Stock" means (i) with respect to any Person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated) of corporate stock, including each class of common stock and
preferred stock of such Person and (ii) with respect to any Person that is not a
corporation, any and all partnership or other equity interests of such Person.

"Cash Equivalents" means (i) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either S&P or Moody's; (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv)
certificates of deposit or bankers' acceptances (or, with respect to foreign
banks, similar instruments) maturing within one year from the date of
acquisition thereof issued by any bank organized under the laws of the United
States of America or any state thereof or the District of Columbia or any U.S.
branch of a foreign bank having at the date of acquisition thereof combined
capital and surplus of not less than $200 million; (v) certificates of deposit
or bankers' acceptances or similar instruments maturing within one year from the
date of acquisition thereof issued by any foreign bank that is a lender under
the New Credit Facility having at the date of acquisition thereof combined
capital and surplus of not less than $500 million; (vi) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (iv) or clause (v) above; and (vii)
investments in money market funds which invest substantially all their assets in
securities of the types described in clauses (i) through (vi) above.

"Change of Control" means the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all of the assets of the
Company to any Person or group of related Persons (other than one or more
Permitted Holders) for purposes of Section 13(d) of the Exchange Act (a
"Group"), together with any Affiliates thereof (whether or not otherwise in
compliance with the provisions of the Indenture); (ii) the approval by the
holders of Capital Stock of the Company of any plan or proposal for the
liquidation or dissolution of the Company (whether or not otherwise in
compliance with the provisions of the Indenture); (iii) any Person or Group
(other than one or more Permitted Holders) shall become the owner, directly or
indirectly, beneficially or of record, of shares representing 50% or more of the
aggregate ordinary voting power represented by the issued and outstanding
Capital Stock of the Company; or (iv) the first day on which a majority of the
members of the Board of Directors of the Company are not Continuing Directors.

"Change of Control Triggering Event" means the occurrence of a Change of
Control and the failure of the Exchange Notes to have a Minimum Rating on the
30th day after the occurrence of such Change of Control.

"Company" means Eye Care Centers of America, Inc., a Texas corporation.

"Consolidated EBITDA" means, with respect to any Person, for any period,
the sum (without duplication) of (i) Consolidated Net Income and (ii) to the
extent Consolidated Net Income has been reduced thereby, (A) all income taxes of
such Person and its Restricted Subsidiaries paid or accrued in

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accordance with GAAP for such period, (B) Consolidated Interest Expense, (C)
Consolidated Non-cash Charges and (D) (i) cash charges attributable to the
exercise of employee options vesting upon the consummation of the
Recapitalization and (ii) for any four quarter period that includes one or more
fiscal quarters ending within the period from the Issue Date to the first
anniversary of the Issue Date, cash restructuring or nonrecurring charges
incurred in connection with the Recapitalization; provided, however, that the
cash charges in (i) and (ii) shall not exceed $2.0 million in the aggregate
since the Issue Date.

"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
Person, the ratio of Consolidated EBITDA of such Person during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of
such Person for the Four Quarter Period. In addition to and without limitation
of the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
forma basis for the period of such calculation to (i) the incurrence of any
Indebtedness of such Person or any of its Restricted Subsidiaries (and the
application of the proceeds thereof) giving rise to the need to make such
calculation and any incurrence or repayment of other Indebtedness (and the
application of the proceeds thereof) occurring during the Four Quarter Period or
at any time subsequent to the last day of the Four Quarter Period and on or
prior to the Transaction Date, as if such incurrence or repayment, as the case
may be (and the application of the proceeds thereof), occurred on the first day
of the Four Quarter Period, (ii) any Asset Sales or Asset Acquisitions
(including, without limitation, any Asset Acquisition giving rise to the need to
make such calculation as a result of such Person or one of its Restricted
Subsidiaries (including any Person who becomes a Restricted Subsidiary as a
result of the Asset Acquisition) incurring, assuming or otherwise being liable
for Acquired Indebtedness and also including any Consolidated EBITDA (including
pro forma adjustments for cost savings ("Cost Savings Adjustments") that the
Company reasonably believes in good faith could have been achieved during the
Four Quarter Period as a result of such acquisition or disposition (provided
that both (A) such cost savings were identified and quantified in an Officers'
Certificate delivered to the Trustee at the time of the consummation of the
acquisition or disposition and (B) with respect to each acquisition or
disposition completed prior to the 90th day preceding such date of
determination, actions were commenced or initiated by the Company within 90 days
of such acquisition or disposition to effect such cost savings identified in
such Officers' Certificate and with respect to any other acquisition or
disposition, such Officers' Certificate sets forth the specific steps to be
taken within the 90 days after such acquisition or disposition to accomplish
such cost savings) attributable to the assets which are the subject of the Asset
Acquisition or Asset Sale during the Four Quarter Period) occurring during the
Four Quarter Period or at any time subsequent to the last day of the Four
Quarter Period and on or prior to the Transaction Date, as if such Asset Sale or
Asset Acquisition (including the incurrence, assumption or liability for any
such Indebtedness or Acquired Indebtedness) occurred on the first day of the
Four Quarter Period, and (iii) with respect to any such Four Quarter Period
commencing prior to the Recapitalization, the Recapitalization (including any
Cost Savings Adjustments), which shall be deemed to have taken place on the
first day of such Four Quarter Period, and (iv) any asset sales or asset
acquisitions (including any Consolidated EBITDA (including any Cost Savings
Adjustments) attributable to the assets which are the subject of the asset
acquisition or asset sale during the Four Quarter Period) that have been made by
any Person that has become a Restricted Subsidiary of the Company or has been
merged with or into the Company or any Restricted Subsidiary of the Company
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date that would have
constituted Asset Sales or Asset Acquisitions had such transactions occurred
when such Person was a Restricted Subsidiary of the Company or subsequent to
such Person's merger into the Company, as if such asset sale or asset
acquisition (including the incurrence, assumption or liability for any
Indebtedness or Acquired Indebtedness in connection therewith) occurred on the
first day of the Four Quarter Period; provided that to the extent that clause
(ii) or (iv) of this sentence requires that pro forma effect be given to an
asset sale or asset acquisition, such pro forma calculation shall be based upon
the four full fiscal quarters, immediately preceding the Transaction Date of the
Person, or division or line of business of the Person, that is acquired or
disposed of for which financial information is available. If such Person or any
of its Restricted Subsidiaries directly or indirectly guarantees Indebtedness of
a third Person, the preceding sentence shall give effect to the incurrence of
such guaranteed Indebtedness as if such Person or

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any Restricted Subsidiary of such Person had directly incurred or otherwise
assumed such guaranteed Indebtedness. Furthermore, in calculating "Consolidated
Fixed Charges" for purposes of determining the denominator (but not the
numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1) interest on
outstanding Indebtedness determined on a fluctuating basis as of the Transaction
Date and which will continue to be so determined thereafter shall be deemed to
have accrued at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Transaction Date; (2) if interest on any
Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rates, then the interest rate in
effect on the Transaction Date will be deemed to have been in effect during the
Four Quarter Period; and (3) notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Swap Obligations, shall be deemed to
accrue at the rate per annum resulting after giving effect to the operation of
such agreements.

"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense
(excluding amortization or write-off of debt issuance costs relating to the
Recapitalization and the financing therefor or relating to retired or existing
Indebtedness and amortization or write-off of customary debt issuance costs
relating to future Indebtedness incurred in the ordinary course of business)
plus (ii) the product of (x) the amount of all dividend payments on any series
of Preferred Stock of such Person (other than dividends paid in Qualified
Capital Stock) times (y) a fraction, the numerator of which is one and the
denominator of which is one minus the then current effective consolidated
Federal, state and local tax rate of such Person expressed as a decimal.

"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum of, without duplication, (i) the aggregate of all cash and
non-cash interest expense with respect to all outstanding Indebtedness of such
Person and its Restricted Subsidiaries, including the net costs associated with
Interest Swap Obligations, for such period determined on a consolidated basis in
conformity with GAAP, and (ii) the interest component of Capitalized Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by such Person
and its Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP.

"Consolidated Net Income" of the Company means, for any period, the
aggregate net income (or loss) of the Company and its Restricted Subsidiaries
for such period on a consolidated basis, determined in accordance with GAAP;
provided that there shall be excluded therefrom (a) gains and losses from Asset
Sales (without regard to the $2.0 million limitation set forth in the definition
thereof) or abandonments or reserves relating thereto and the related tax
effects according to GAAP, (b) gains and losses due solely to fluctuations in
currency values and related tax effects according to GAAP, (c) items classified
as extraordinary, unusual or nonrecurring gains and losses, and the related tax
effects according to GAAP, (d) the net income (or loss) of any Person acquired
in a pooling of interests transaction accrued prior to the date it becomes a
Restricted Subsidiary of the Company or is merged or consolidated with the
Company or any Restricted Subsidiary of the Company, (e) the net income of any
Restricted Subsidiary of the Company to the extent that the declaration of
dividends or similar distributions by that Restricted Subsidiary of that income
is restricted by contract, operation of law or otherwise, (f) the net loss of
any Person other than a Restricted Subsidiary of the Company, (g) the net income
of any Person, other than a Restricted Subsidiary, except to the extent of cash
dividends or distributions paid to the Company or a Restricted Subsidiary of the
Company by such Person unless (and to the extent), in the case of a Restricted
Subsidiary of the Company who receives such dividends or distributions, such
Restricted Subsidiary is subject to clause (e) above, (h) one time non-cash
compensation charges, including any arising from existing stock options
resulting from the Recapitalization, and (i) bonus payments to be paid to senior
management of the Company in connection with the Recapitalization within 90 days
of the Issue Date in an aggregate amount not to exceed $1.0 million.
Notwithstanding the foregoing, it is understood that the payment of dividends on
Preferred Stock shall not reduce Consolidated Net Income.

"Consolidated Non-cash Charges" means, with respect to any Person for any
period, the aggregate depreciation, amortization and other non-cash expenses of
such Person and its Restricted Subsidiaries

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reducing Consolidated Net Income of such Person and its Restricted Subsidiaries
for such period, determined on a consolidated basis in accordance with GAAP
(excluding any such charges which require an accrual of or a reserve for cash
charges for any future period).

"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the Issue Date, (ii) was nominated for election or elected to such
Board of Directors with, or whose election to such Board of Directors was
approved by, the affirmative vote of a majority of the Continuing Directors who
were members of such Board of Directors at the time of such nomination or
election or (iii) is any designee of a Permitted Holder or was nominated by a
Permitted Holder or any designees of a Permitted Holder on the Board of
Directors.

"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any Restricted Subsidiary of the Company against fluctuations in
currency values.

"Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of Default.

"Designated Senior Indebtedness" means (i) the Bank Indebtedness and (ii)
any other Senior Indebtedness which, at the date of determination, has an
aggregate principal amount outstanding of, or under which, at the date of
determination, the holders thereof, are committed to lend up to, at least $25
million and is specifically designated by the Company in the instrument
evidencing or governing such Senior Indebtedness or another writing as a
"Designated Senior Indebtedness" for purposes of the Indenture.

"Disqualified Capital Stock" means that portion of any Capital Stock which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event (other than an
event which would constitute a Change of Control Triggering Event), matures
(excluding any maturity as the result of an optional redemption by the issuer
thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the sole option of the holder thereof (except, in
each case, upon the occurrence of a Change of Control Triggering Event) on or
prior to the final maturity date of the Exchange Notes; provided that Capital
Stock of the Company that is held by a current or former employee of the Company
subject to a put option and/or a call option with the Company triggered by the
termination of such employee's employment with the Company and/or the Company's
performance shall not be deemed to be Disqualified Capital Stock solely by
virtue of such call option and/or put option.

"Fair Market Value" means, unless otherwise specified, with respect to any
asset or property, the price which could be negotiated in an arm's-length, free
market transaction, for cash, between a willing seller and a willing and able
buyer, neither of whom is under undue pressure or compulsion to complete the
transaction. Fair market value shall be determined by the Board of Directors of
the Company acting reasonably and in good faith and shall be evidenced by a
resolution of the Board of Directors of the Company delivered to the Trustee.

"GAAP" means generally accepted accounting principles in the United States
of America as in effect on the Issue Date, including, without limitation, those
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession.

"Guarantor" means (i) each of Enclave Advancement Group, Inc., a Texas
corporation, ECCA Managed Vision Care, Inc., a Texas corporation, Visionworks
Holdings, Inc., a Florida corporation, Visionworks, Inc., a Florida corporation,
Visionworks Properties, Inc., a Florida corporation, Eye Care Holdings, Inc., a
Delaware corporation, Visionary Retail Management, Inc., a Delaware corporation,
Visionary Properties, Inc., a Delaware corporation, Visionary MSO, Inc., a
Delaware corporation, The Samit Group, Inc., a Delaware corporation, Hour Eyes,
Inc., a Maryland corporation, Skylab Optical, Inc., a Virginia corporation, and
Metropolitan Vision Services, Inc., a Virginia corporation and (ii) each of the
Company's Restricted Subsidiaries that in the future executes a supplemental
indenture in which such Restricted Subsidiary agrees to be bound by the terms of
the Indenture as a Guarantor; provided that any
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Person constituting a Guarantor as described above shall cease to constitute a
Guarantor when its respective Exchange Note Guarantee is released in accordance
with the terms of the Indenture.

"Guarantor Senior Indebtedness" means with respect to a Guarantor, (i) the
Bank Indebtedness and (ii) all Indebtedness of such Guarantor including interest
thereon (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to such Guarantor at the relevant
contractual rate provided in the documentation relating thereto whether or not a
claim for post-filing interest is allowed in such proceedings), whether
outstanding on the Issue Date or thereafter incurred, unless in the instrument
creating or evidencing the same or pursuant to which the same is outstanding it
is expressly provided that such obligations are not superior in right of payment
to the Exchange Note Guarantee of such Guarantor; provided, however, that
Guarantor Senior Indebtedness shall not include (1) any obligation of such
Guarantor to any Subsidiary of such Guarantor, (2) any liability for Federal,
state, local or other taxes owed or owing by such Guarantor, (3) any accounts
payable or other liability to trade creditors arising in the ordinary course of
business (including guarantees thereof or instruments evidencing such
liabilities), (4) any Indebtedness of such Guarantor which is expressly
subordinate in right of payment to any other Indebtedness of such Guarantor,
including any Senior Subordinated Indebtedness and any Subordinated Obligations,
(5) any obligations to repurchase, redeem or make payments owing with respect to
any Capital Stock or (6) that portion of any Indebtedness incurred in violation
of the Indenture provisions set forth under "Limitation on Incurrence of
Additional Indebtedness" (but, as to any such obligation, no such violation
shall be deemed to exist for purposes of this clause (6) if the holder(s) of
such obligation or their representative and the Trustee shall have received an
Officers' Certificate of the Company to the effect that the incurrence of such
Indebtedness does not (or, in the case of revolving credit Indebtedness, that
the incurrence of the entire committed amount thereof at the date on which the
initial borrowing thereunder is made would not) violate such provisions of the
Indenture).

"Indebtedness" means with respect to any Person, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all Capitalized Lease Obligations of such Person, (iv) all obligations of such
Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all obligations under any title retention
agreement (but excluding trade accounts payable arising in the ordinary course
of business), (v) all obligations for the reimbursement of any obligor on any
letter of credit, banker's acceptance or similar credit transaction, (vi)
guarantees and other contingent obligations in respect of Indebtedness referred
to in clauses (i) through (v) above and clause (viii) below, (vii) all
obligations of any other Person of the type referred to in clauses (i) through
(vi) which are secured by any lien on any property or asset of such Person but
which obligations are not assumed by such Person, the amount of such obligation
being deemed to be the lesser of the fair market value of such property or asset
or the amount of the obligation so secured, (viii) all obligations under
currency swap agreements and interest swap agreements of such Person and (ix)
all Disqualified Capital Stock issued by such Person with the amount of
Indebtedness represented by such Disqualified Capital Stock being equal to the
greater of its voluntary or involuntary liquidation preference and its maximum
fixed repurchase price, but excluding accrued dividends, if any. For purposes
hereof, (x) the "maximum fixed repurchase price" of any Disqualified Capital
Stock which does not have a fixed repurchase price shall be calculated in
accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture, and if such price
is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value shall be determined reasonably and in good
faith by the Board of Directors of the issuer of such Disqualified Capital Stock
and (y) any transfer of accounts receivable or other assets which constitute a
sale for purposes of GAAP shall not constitute Indebtedness hereunder.

"Interest Swap Obligations" means the obligations of any Person, pursuant
to any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated by
applying a fixed or a floating rate of interest on the same notional amount.

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"Investment" by any Person in any other Person means, with respect to any
Person, any direct or indirect loan or other extension of credit (including,
without limitation, a guarantee) or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition by
such Person of any Capital Stock, bonds, notes, debentures or other securities
or evidences of Indebtedness issued by, such other Person. "Investment" shall
exclude extensions of trade credit by the Company and its Restricted
Subsidiaries on commercially reasonable terms in accordance with normal trade
practices of the Company or such Restricted Subsidiary, as the case may be. For
the purposes of the "Limitation on Restricted Payments" covenant, (i) the
Company shall be deemed to have made an "Investment" equal to the fair market
value of the net assets of any Restricted Subsidiary at the time that such
Restricted Subsidiary is designated an Unrestricted Subsidiary and the aggregate
amount of Investments made on the Issue Date shall exclude (to the extent the
designation as an Unrestricted Subsidiary was included as a Restricted Payment)
the fair market value of the net assets of any Unrestricted Subsidiary at the
time that such Unrestricted Subsidiary is designated a Restricted Subsidiary,
not to exceed the amount of the Investment deemed made at the date of
designation thereof as an Unrestricted Subsidiary, and (ii) the amount of any
Investment shall be the original cost of such Investment plus the cost of all
additional Investments by the Company or any of its Restricted Subsidiaries,
without any adjustments for increases or decreases in value, or write-ups,
writedowns or write-offs with respect to such Investment, reduced by the payment
of dividends or distributions (including tax sharing payments) in connection
with such Investment or any other amounts received in respect of such
Investment, provided that no such payment of dividends or distributions or
receipt of any such other amounts shall reduce the amount of any Investment if
such payment of dividends or distributions or receipt of any such amounts would
be included in Consolidated Net Income. If the Company or any Restricted
Subsidiary of the Company sells or otherwise disposes of any Common Stock of any
direct or indirect Restricted Subsidiary of the Company such that, after giving
effect to any such sale or disposition, the Company no longer owns, directly or
indirectly, 100% (or 80% in the case of clause (ix) of the definition of
"Permitted Investments") of the outstanding Common Stock of such Restricted
Subsidiary, the Company shall be deemed to have made an Investment on the date
of any such sale or disposition equal to the fair market value of the Common
Stock of such Restricted Subsidiary not sold or disposed of.

"Issue Date" means the date of original issuance of the Initial Notes.

"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof and any agreement to give
any security interest).

"Minimum Rating" means (i) a rating of at least BBB- (or equivalent
successor rating) by S&P and (ii) a rating of at least Baa3 (or equivalent
successor rating) by Moody's.

"Moody's" means Moody's Investors Service, Inc. and its successors.

"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents (other
than the portion of any such deferred payment constituting interest) received by
the Company or any of its Restricted Subsidiaries from such Asset Sale net of
(a) out-of-pocket expenses and fees relating to such Asset Sale (including,
without limitation, legal, accounting and investment banking fees and sales
commissions), (b) taxes paid or payable after taking into account any reduction
in consolidated tax liability due to available tax credits or deductions and any
tax sharing arrangements, (c) repayment of Senior Indebtedness that is required
to be repaid in connection with such Asset Sale, (d) any portion of cash
proceeds which the Company determines in good faith should be reserved for
post-closing adjustments, it being understood and agreed that on the day that
all such post-closing adjustments have been determined, the amount (if any) by
which the reserved amount in respect of such Asset Sale exceeds the actual
post-closing adjustments payable by the Company or any of its Subsidiaries shall
constitute Net Cash Proceeds on such date; provided that, in the case of the
sale by the Company of an asset constituting an Investment made after the Issue
Date (other than a Permitted Investment), the "Net Cash Proceeds" in respect of
such Asset Sale shall not include the lesser of (x) the cash received with
respect to such Asset Sale and (y) the initial amount of such Investment, less,
in the case of clause (y), all amounts (up to an amount not to exceed the
initial

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amount of such Investment) received by the Company with respect to such
Investment, whether by dividend, sale, liquidation or repayment, in each case
prior to the date of such Asset Sale.

"New Credit Facility" means (i) the credit agreement dated as of the Issue
Date, among the Company, the lenders party thereto from time to time and Bankers
Trust Corporation, as administrative agent, and Merrill Lynch Capital
Corporation, as syndication agent, and (ii) the guarantee by the Company of the
Poth Loan, in each case together with the related documents thereto (including,
without limitation, any guarantee agreements, promissory notes and collateral
documents), as such agreements may be amended, supplemented or otherwise
modified from time to time, or refunded, refinanced, restructured, replaced,
renewed, repaid or extended from time to time (whether in whole or in part and
whether with the original agents and lenders or other agents and lenders or
otherwise, and whether provided under the original New Credit Facility or one or
more other credit agreements or otherwise) including, without limitation, to
increase the amount of available borrowings thereunder or to add Restricted
Subsidiaries as additional borrowers or guarantors or otherwise.

"Permitted Holder" means and includes (i) the Principal or any of its
Affiliates, (ii) any corporation the outstanding voting power of the capital
stock of which is beneficially owned, directly or indirectly, by the Principal
or any of its Affiliates in substantially the same proportions as their
ownership of the voting power of the capital stock of the Company, or (iii) any
underwriter during the period engaged in a firm commitment underwriting on
behalf of the Company with respect to the shares of capital stock being
underwritten.

"Permitted Indebtedness" means, without duplication, (i) the Exchange Notes
and the Exchange Note Guarantees, (ii) Indebtedness incurred pursuant to the New
Credit Facility in an aggregate outstanding principal amount at any time not to
exceed the maximum aggregate amount of the commitments in effect on the Issue
Date and permitted in the future pursuant to the New Credit Facility as in
effect on the Issue Date (without giving effect to any reductions of term loan
commitments on the Issue Date), plus $1.0 million in connection with the
guarantee by the Company of the Poth Loan (A) less the amount of all mandatory
principal payments actually made in respect of the Term Loan Facility (excluding
any such repayment to the extent refinanced and replaced at the time of payment)
and (B) reduced by any required permanent repayments actually made (which are
accompanied by a corresponding permanent commitment reduction) in respect of the
Revolving Credit Facility(excluding any such repayment and commitment reductions
to the extent refinanced and replaced at the time of payment) in each case
pursuant to this clause (B), actually effected in satisfaction of the Net Cash
Proceeds requirement described under "Certain Covenants--Limitation on Asset
Sales" (it being recognized that a reduction in any borrowing base thereunder in
and of itself shall not be deemed a required permanent repayment), (iii) other
Indebtedness of the Company and its Restricted Subsidiaries outstanding on the
Issue Date reduced by the amount of any scheduled amortization payments or
mandatory prepayments when actually paid or permanent reductions thereon, (iv)
Interest Swap Obligations of the Company or any of its Restricted Subsidiaries
covering Indebtedness of the Company or any of its Restricted Subsidiaries;
provided that any Indebtedness to which any such Interest Swap Obligations
correspond is otherwise permitted to be incurred under the Indenture; provided,
further, that such Interest Swap Obligations are entered into, in the judgment
of the Company, to protect the Company and its Restricted Subsidiaries from
fluctuation in interest rates on their respective outstanding Indebtedness, (v)
Indebtedness of the Company or any of its Restricted Subsidiaries under Currency
Agreements entered into, in the judgment of the Company, to protect the Company
or such Restricted Subsidiary from foreign currency exchange rates, (vi)
intercompany Indebtedness owed by any Restricted Subsidiary of the Company to
the Company or any Restricted Subsidiary of the Company or by the Company to any
Restricted Subsidiary, (vii) Acquired Indebtedness of the Company or any
Restricted Subsidiary of the Company to the extent the Company could have
incurred such Indebtedness in accordance with the "Limitation on Incurrence of
Additional Indebtedness" covenant (without giving effect to the exception for
Permitted Indebtedness) on the date such Indebtedness became Acquired
Indebtedness; provided that, in the case of Acquired Indebtedness of a
Restricted Subsidiary of the Company, such Acquired Indebtedness was not
incurred in connection with, or in anticipation or contemplation of, such Person
becoming a Restricted Subsidiary of the Company, (viii) Indebtedness arising
from the honoring by a bank or other financial institution of a check, draft or
other similar instrument inadvertently drawn against insufficient funds in the
ordinary course of business; provided that such Indebtedness is extinguished
within five business days of its incurrence, (ix) any refinancing, modification,
replacement, renewal, restatement, refunding, deferral, extension, substitution,

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supplement, reissuance or resale of existing or future Indebtedness, including
any additional Indebtedness incurred to pay interest or premiums required by the
instruments governing such existing or future Indebtedness as in effect at the
time of issuance thereof ("Required Premiums") and fees in connection therewith;
provided that any such event shall not (1) result in an increase in the
aggregate principal amount of Permitted Indebtedness (except to the extent such
increase is a result of a simultaneous incurrence of additional Indebtedness (A)
to pay Required Premiums and related fees or (B) otherwise permitted to be
incurred under the Indenture) of the Company and its Restricted Subsidiaries and
(2) create Indebtedness with a Weighted Average Life to Maturity at the time
such Indebtedness is incurred that is less than the Weighted Average Life to
Maturity at such time of the Indebtedness being refinanced, modified, replaced,
renewed, restated, refunded, deferred, extended, substituted, supplemented,
reissued or resold (except that this subclause (2) will not apply in the event
the Indebtedness being refinanced, modified, replaced, renewed, restated,
refunded, deferred, extended, substituted, supplemented, reissued or resold was
originally incurred in reliance upon clauses (vi) or (xv) of this definition);
provided that no Restricted Subsidiary of the Company may refinance any
Indebtedness pursuant to this clause (ix) other than its own Indebtedness, (x)
Indebtedness (including Capitalized Lease Obligations) incurred by the Company
or any Restricted Subsidiary to finance the purchase, lease or improvement of
property (real or personal) or equipment (whether through the direct purchase of
assets or the Capital Stock of any Person owning such assets) in an aggregate
principal amount outstanding not to exceed $10.0 million at the time of any
incurrence thereof (which amount may, but shall not be required to be incurred
pursuant to the New Credit Facility, but shall be deemed not to include any such
Indebtedness incurred in whole or in part under the New Credit Facility to the
extent permitted by clause (ii) above or clause (xvi) below or pursuant to the
proviso to the "Limitation on Incurrence of Additional Indebtedness" covenant),
(xi) Indebtedness incurred by the Company or any of its Restricted Subsidiaries
constituting reimbursement obligations with respect to letters of credit issued
in the ordinary course of business, including, without limitation, letters of
credit in respect of workers' compensation claims or self-insurance, or other
Indebtedness with respect to reimbursement type obligations regarding workers'
compensation claims, (xii) Indebtedness arising from agreements of the Company
or a Restricted Subsidiary of the Company providing for indemnification,
adjustment of purchase price, earn out or other similar obligations, in each
case, incurred or assumed in connection with the disposition of any business,
assets or a Restricted Subsidiary of the Company, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or Restricted Subsidiary for the purpose of financing such
acquisition, provided that the maximum assumable liability in respect of all
such Indebtedness shall at no time exceed the gross proceeds actually received
by the Company and its Restricted Subsidiaries in connection with such
disposition, (xiii) the incurrence by a Receivables Entity of Indebtedness in a
Qualified Receivables Transaction that is not recourse to the Company or any
Restricted Subsidiary of the Company (except for Standard Securitization
Undertakings), (xiv) obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or any Restricted Subsidiary of
the Company in the ordinary course of business, (xv) Indebtedness consisting of
guarantees (x) by the Company of Indebtedness, leases and any other obligation
or liability permitted to be incurred under the Indenture by Restricted
Subsidiaries of the Company, and (y) by Restricted Subsidiaries of the Company
that are Guarantors of Indebtedness, leases and any other obligation or
liability permitted to be incurred under the Indenture by the Company or other
Restricted Subsidiaries of the Company, and (xvi) additional Indebtedness of the
Company or any Restricted Subsidiary of the Company that is a Guarantor in an
aggregate principal amount not to exceed $10.0 million at any one time
outstanding (which amount may, but shall not be required to, be incurred
pursuant to the New Credit Facility, but shall not be deemed to include any such
Indebtedness incurred in whole or in part under the New Credit Facility to the
extent permitted by clause (ii) or clause (x) above or pursuant to the proviso
to the "Limitation on Incurrence of Additional Indebtedness" covenant).

"Permitted Investments" means (i) Investments by the Company or any
Restricted Subsidiary of the Company in any Restricted Subsidiary of the Company
(whether existing on the Issue Date or created thereafter) and Investments in
the Company by any Restricted Subsidiary of the Company; (ii) cash and Cash
Equivalents; (iii) Investments existing on the Issue Date and Investments made
on the Issue Date pursuant to the Recapitalization Agreement; (iv) loans and
advances to employees, officers and directors of the Company and its Restricted
Subsidiaries not in excess of $3.0 million at any one time outstanding;

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(v) accounts receivable owing to the Company or any Restricted Subsidiary
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; provided, however that
such trade terms may include such concessionary trade terms as the Company or
such Restricted Subsidiary deems reasonable under the circumstances; (vi)
Currency Agreements and Interest Swap Obligations entered into by the Company or
any of its Restricted Subsidiaries for bona fide business reasons and not for
speculative purposes, and otherwise in compliance with the Indenture; (vii)
Investments in securities of trade creditors or customers received pursuant to
any plan of reorganization or similar arrangement upon the bankruptcy or
insolvency of such trade creditors or customers; (viii) guarantees by the
Company or any of its Restricted Subsidiaries of Indebtedness otherwise
permitted to be incurred by the Company or any of its Restricted Subsidiaries
under the Indenture; (ix) Investments by the Company or any Restricted
Subsidiary of the Company in a Person, if as a result of such Investment (A)
such Person becomes a Restricted Subsidiary of the Company or (B) such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys all or
substantially all of its assets to, or is liquidated into, the Company or a
Restricted Subsidiary of the Company; (x) additional Investments having an
aggregate fair market value, taken together with all other Investments made
pursuant to this clause (x) that are at the time outstanding, not exceeding $5.0
million at the time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving effect to
subsequent changes in value), plus an amount equal to (A) 100% of the aggregate
net cash proceeds received by the Company from any Person (other than a
Subsidiary of the Company) from the issuance and sale subsequent to the Issue
Date of Qualified Capital Stock of the Company (including Qualified Capital
Stock issued upon the conversion of convertible Indebtedness or in exchange for
outstanding Indebtedness or as capital contributions to the Company (other than
from a Subsidiary) ) and (B) without duplication of any amounts included in
clause (x) (A) above, 100% of the aggregate net cash proceeds of any equity
contribution received by the Company from a holder of the Company's Capital
Stock, that in the case of amounts described in clause (x) (A) or (x) (B) are
applied by the Company within 180 days after receipt, to make additional
Permitted Investments under this clause (x) (such additional Permitted
Investments being referred to collectively as "Stock Permitted Investments");
(xi) any Investment by the Company or a Restricted Subsidiary of the Company in
a Receivables Entity or any Investment by a Receivables Entity in any other
Person in connection with a Qualified Receivables Transaction, including
investments of funds held in accounts permitted or required by the arrangements
governing such Qualified Receivables Transaction or any related Indebtedness;
provided that any Investment in a Receivables Entity is in the form of a
Purchase Money Note, contribution of additional Receivables or an equity
interest; (xii) Investments received by the Company or its Restricted
Subsidiaries as consideration for asset sales, including Asset Sales; provided
in the case of an Asset Sale, (A) such Investment does not exceed 25% of the
consideration received for such Asset Sale and (B) such Asset Sale is otherwise
effected in compliance with the "Limitation on Asset Sales" covenant; (xiii)
Investments by the Company or its Restricted Subsidiaries in joint ventures in
an aggregate amount not in excess of $5.0 million at any time outstanding; and
(xiv) that portion of any Investment where the consideration provided by the
Company is Capital Stock of the Company (other than Disqualified Capital Stock).
Any net cash proceeds that are used by the Company or any of its Restricted
Subsidiaries to make Stock Permitted Investments pursuant to clause (x) of this
definition shall not be included in subclauses (x) and (y) of clause (iii) of
the first paragraph of the "Limitation on Restricted Payments" covenant.

"Permitted Liens" means the following types of Liens:

(i) Liens securing the Exchange Notes;

(ii) Liens securing Acquired Indebtedness incurred in reliance on
clause (vii) of the definition of Permitted Indebtedness; provided that
such Liens do not extend to or cover any property or assets of the Company
or of any of its Restricted Subsidiaries other than the property or assets
that secured the Acquired Indebtedness prior to the time such Indebtedness
became Acquired Indebtedness of the Company or a Restricted Subsidiary of
the Company;

(iii) Liens existing on the Issue Date, together with any Liens
securing Indebtedness incurred in reliance on clause (ix) of the definition
of Permitted Indebtedness in order to refinance the Indebtedness secured by
Liens existing on the Issue Date; provided that the Liens securing the
refinancing
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Indebtedness shall not extend to property other than that pledged under the
Liens securing the Indebtedness being refinanced;

(iv) Liens in favor of the Company on the property or assets, or any
proceeds, income or profit therefrom, of any Restricted Subsidiary; and

(v) other Liens securing Senior Subordinated Indebtedness of the
Company or any Restricted Subsidiary that is a Guarantor, provided that the
maximum aggregate amount of outstanding obligations secured thereby shall
not at any time exceed $5.0 million.

"Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof or any other entity.

"Poth Loan" shall mean the loan in an initial aggregate principal amount of
$1.0 million to Dr. Daniel Poth in connection with his previous purchase of the
stock of Dr. Samit Hour Eyes Optometrist, P.C., as the same may be amended or
modified from time to time pursuant to the terms thereof.

"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.

"Principal" means Thomas H. Lee Company and its Affiliates.

"Productive Assets" means assets (including Capital Stock of a Person that
directly or indirectly owns assets) of a kind used or usable in the businesses
of the Company and its Restricted Subsidiaries as, or related to such business,
conducted on the date of the relevant Asset Sale.

"Purchase Money Note" means a promissory note of a Receivables Entity
evidencing a line of credit, which may be irrevocable, from the Company or any
Subsidiary of the Company in connection with a Qualified Receivables Transaction
to a Receivables Entity, which note (a) shall be repaid from cash available to
the Receivables Entity other than (i) amounts required to be established as
reserves pursuant to agreements, (ii) amounts paid to investors in respect of
interest, (iii) principal and other amounts owing to such investors and (iv)
amounts paid in connection with the purchase of newly generated receivables and
(b) may be subordinated to the payments described in (a).

"Qualified Capital Stock" means any stock that is not Disqualified Capital
Stock.

"Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by the Company or any of its Subsidiaries
pursuant to which the Company or any or its Subsidiaries may sell, convey or
otherwise transfer to (a) a Receivables Entity (in the case of a transfer by the
Company or any of its Subsidiaries) and (b) any other Person (in the case of a
transfer by a Receivables Entity), or may grant a security interest in, any
accounts receivable (whether now existing or arising in the future) of the
Company or any of its Subsidiaries, and any assets related thereto, including,
without limitation, all collateral securing such accounts receivable, all
contracts and all guarantees or other obligations in respect of such accounts
receivable, proceeds of such accounts receivable and other assets which are
customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving accounts receivable. The grant of a security interest in any accounts
receivable of the Company or any of its Restricted Subsidiaries to secure Bank
Indebtedness shall not be deemed a Qualified Receivables Transaction.

"Recapitalization" means the transactions contemplated by the
Recapitalization Agreement, together with the financings therefor.

"Recapitalization Agreement" means the Recapitalization Agreement dated as
of March 6, 1998 by and between ECCA Merger Corp., a Delaware corporation, and
the Company, as in effect on the Issue Date.

"Receivables Entity" means a Wholly Owned Subsidiary of the Company (or
another Person in which the Company or any Subsidiary of the Company makes an
Investment and to which the Company or any Subsidiary of the Company transfers
accounts receivable and related assets) which engages in no activities other
than in connection with the financing of accounts receivable, all proceeds
thereof and all rights

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(contractual or other), collateral and other assets relating thereto, and any
business or activities incidental or related to such business, and which is
designated by the Board of Directors of the Company (as provided below) as a
Receivables Entity (a) no portion of the Indebtedness or any other Obligations
(contingent or otherwise) of which (i) is guaranteed by the Company or any
Subsidiary of the Company (excluding guarantees of Obligations (other than the
principal of, and interest on, Indebtedness) pursuant to Standard Securitization
Undertakings), (ii) is recourse to or obligates the Company or any Subsidiary of
the Company in any way other than pursuant to Standard Securitization
Undertakings or (iii) subjects any property or asset of the Company or any
Subsidiary of the Company, directly or indirectly, contingently or otherwise, to
the satisfaction thereof, other than pursuant to Standard Securitization
Undertakings, (b) with which neither the Company nor any Subsidiary of the
Company has any material contract, agreement, arrangement or understanding other
than on terms which the Company reasonably believes to be no less favorable to
the Company or such Subsidiary than those that might be obtained at the time
from Persons that are not Affiliates of the Company, other than fees payable in
the ordinary course of business in connection with servicing accounts
receivable, and (c) to which neither the Company nor any Subsidiary of the
Company has any obligation to maintain or preserve such entity's financial
condition or cause such entity to achieve certain levels of operating results
other than through the contribution of additional Receivables, related security
and collections thereto and proceeds of the foregoing. Any such designation by
the Board of Directors of the Company shall be evidenced to the Trustee by
filing with the Trustee a certified copy of the resolution of the Board of
Directors of the Company giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions.

"Representative" means the indenture trustee or other trustee, agent or
representative in respect of any Designated Senior Indebtedness; provided that
if, and for so long as, any Designated Senior Indebtedness lacks such a
representative, then the Representative for such Designated Senior Indebtedness
shall at all times constitute the holders of a majority in outstanding principal
amount of such Designated Senior Indebtedness in respect of any Designated
Senior Indebtedness.

"Restricted Subsidiary" of any Person means any Subsidiary of such Person
which at the time of determination is not an Unrestricted Subsidiary.

"Revolving Credit Facility" means the Revolving Credit Facility under the
New Credit Facility.

"S&P" means Standard & Poor's Ratings Service, a division of The
McGraw-Hill Companies, Inc., and its successors.

"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to the Company or a Restricted Subsidiary of any property, whether owned
by the Company or any Restricted Subsidiary at the Issue Date or later acquired,
which has been or is to be sold or transferred by the Company or such Restricted
Subsidiary to such Person or to any other Person from whom funds have been or
are to be advanced by such Person on the security of such Property.

"Secured Indebtedness" means any Indebtedness of the Company or any
Guarantor secured by a Lien.

"Senior Indebtedness" means (i) the Bank Indebtedness and (ii) all
Indebtedness of the Company, including interest thereon (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company at the relevant contractual rate provided
in the documentation relating thereto whether or not a claim for post-filing
interest is allowed in such proceedings), whether outstanding on the Issue Date
or thereafter incurred, unless in the instrument creating or evidencing the same
or pursuant to which the same is outstanding it is expressly provided that such
obligations are not superior in right of payment to the Exchange Notes;
provided, however, that Senior Indebtedness shall not include (1) any obligation
of the Company to any Subsidiary of the Company, (2) any liability for Federal,
state, local or other taxes owed or owing by the Company, (3) any accounts
payable or other liability to trade creditors arising in the ordinary course of
business (including guarantees thereof or instruments evidencing such
liabilities), (4) any Indebtedness of the Company which is expressly subordinate
in right of payment to any other Indebtedness of the Company, including any
Senior Subordinated Indebtedness and any Subordinated

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Obligations, (5) any obligations to repurchase, redeem or make payments owing
with respect to any Capital Stock or (6) that portion of any Indebtedness
incurred in violation of the Indenture provisions set forth under "Limitation on
Incurrence of Additional Indebtedness" (but, as to any such obligation, no such
violation shall be deemed to exist for purposes of this clause (6) if the
holder(s) of such obligation or their representative and the Trustee shall have
received an Officers' Certificate of the Company to the effect that the
incurrence of such Indebtedness does not (or, in the case of revolving credit
Indebtedness, that the incurrence of the entire committed amount thereof at the
date on which the initial borrowing thereunder is made would not) violate such
provisions of the Indenture).

"Senior Subordinated Indebtedness" means, with respect to the Company or
any Guarantor, the Exchange Notes or the Exchange Note Guarantee of such
Guarantor, as applicable, and any other Indebtedness of the Company or such
Guarantor, as applicable, that specifically provides that such Indebtedness is
to rank pari passu with the Exchange Notes or the Exchange Note Guarantee of
such Guarantor, as applicable, and is not by its express terms subordinate in
right of payment to any Indebtedness of the Company or such Guarantor, as
applicable, which is not Senior Indebtedness or Guarantor Senior Indebtedness,
as applicable.

"Significant Subsidiary" means, as of any date of determination, for any
Person, each Restricted Subsidiary of such Person which (i) for the most recent
fiscal year of such Person accounted for more than 10% of consolidated revenues
or consolidated net income of such Person or (ii) as at the end of such fiscal
year, was the owner of more than 10% of the consolidated assets of such Person.

"Standard Securitization Undertakings" means representations, warranties,
covenants and indemnities entered into by the Company or any Subsidiary of the
Company which the Company reasonably believes to be customary in an accounts
receivable transaction.

"Subordinated Obligation" means, with respect to the Company or any
Guarantor, any Indebtedness of the Company or such Guarantor, as applicable
(whether outstanding on the Issue Date or thereafter incurred), which is
expressly subordinate in right of payment to the Exchange Notes or the Exchange
Note Guarantee of such Guarantor, as applicable, pursuant to a written
agreement.

"Subsidiary" means, with respect to any Person, (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.

"Term Loan Facility" means the Term Loan Facility under the New Credit
Facility.

"Unrestricted Subsidiary" of any Person means (i) any Subsidiary of such
Person that at the time of determination shall be or continue to be designated
an Unrestricted Subsidiary by the Board of Directors of such Person in the
manner provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The
Board of Directors may designate any Subsidiary (including any newly acquired or
newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary
owns any Capital Stock of, or owns or holds any Lien on any property of, the
Company or any other Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated; provided that (x) the Company certifies to the
Trustee that such designation complies with the "Limitation on Restricted
Payments" covenant and (y) each Subsidiary to be so designated and each of its
Subsidiaries has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to any Indebtedness pursuant to which the lender
has recourse to any of the assets of the Company or any of its Restricted
Subsidiaries. The Board of Directors may designate any Unrestricted Subsidiary
to be a Restricted Subsidiary only if (x) immediately after giving effect to
such designation and treating all Indebtedness of such Unrestricted Subsidiary
as being incurred on such date, the Company is able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) in compliance with
the "Limitation on Incurrence of Additional Indebtedness" covenant and (y)
immediately before and immediately after giving effect to such designation, no
Default or Event of Default shall have occurred and be continuing. Any such
designation by

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the Board of Directors shall be evidenced to the Trustee by promptly filing with
the Trustee a copy of the resolution giving effect to such designation and an
officers' certificate certifying that such designation complied with the
foregoing provisions.

"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the sum of the total of
the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (i) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.

"Wholly Owned Subsidiary" means any Restricted Subsidiary of the Company
all the outstanding voting securities of which (other than directors' qualifying
shares or an immaterial amount of shares required to be owned by other Persons
pursuant to applicable law) are owned, directly or indirectly, by the Company.

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DESCRIPTION OF INITIAL NOTES

The terms of the Initial Notes are substantially identical in all respects
(including principal amount, interest rate and maturity) to the terms of the
Exchange Notes for which they may be exchanged pursuant to this Exchange Offer,
except that the Initial Notes are not freely transferable by holders thereof and
were issued subject to certain covenants regarding registration as provided
therein and in the Registration Rights Agreement (which covenants will terminate
and be of no further force or effect upon completion of this Exchange Offer).
See "Exchange Offer; Registration Rights Agreement."

DESCRIPTION OF NEW PREFERRED STOCK

In connection with the Recapitalization, the Company issued 300,000 shares
of New Preferred Stock, par value $.01 per share (the "New Preferred Stock").
See "The Recapitalization."

The liquidation preference of the New Preferred Stock is $100 per share
plus accrued but unpaid dividends. Holders of the New Preferred Stock will be
entitled, subject to the rights of creditors, in the event of any voluntary or
involuntary liquidation of the Company, to an amount in cash equal to $100 for
each share outstanding plus all accrued and unpaid dividends. The rights of the
holders of the New Preferred Stock upon liquidation of the Company rank prior to
those of the holders of Common Stock.

Dividends on shares of New Preferred Stock is cumulative from the date of
issue and payable when and as may be declared from time to time by the Board of
Directors of the Company. Such dividends will accrue on a daily basis (whether
or not declared) from the original date of issue at an annual rate per share
equal to 13% of the original purchase price per share, with such amount to be
compounded quarterly. The annual dividend obligation of the Company relating to
the New Preferred Stock for the first year is $4,094,000.

The New Preferred Stock is redeemable at the option of the Company, in
whole or in part, at $100 per share plus (i) the per share dividend rate and
(ii) all accumulated and unpaid dividends, if any, to the date of redemption,
upon the occurrence of an offering of equity securities, a change of control or
certain sales of assets. Under the New Preferred Stock, the term "Change of
Control" shall mean a transaction, or a series of related transactions, which
results in holders of 10% or less of the Company's Common Stock (including
shares of Common Stock issuable upon exercise of vested stock options and upon
conversion of all securities then convertible into shares of Common Stock)
immediately prior to such transaction or series of related transactions, holding
in excess of 50% of the Company's Common Stock (including shares of Common Stock
issuable upon exercise of vested stock options and upon conversion of all
securities then convertible into shares of Common Stock) immediately following
such transaction, or series of related transactions. "Change of Control" under
the Indenture encompasses any transaction which constitutes a "Change of
Control" under the New Preferred Stock, and, in addition, "Change of Control" as
defined under the Indenture includes (i) a sale or transfer of substantially all
the assets of the Company, (ii) approval of a plan of liquidation, and (iii) the
first day on which a majority of the Company's Board of Directors are not
Continuing Directors.

The holders of New Preferred Stock do not have voting rights with respect
to their New Preferred Stock except as may be required by applicable law.

To the extent the holders of the New Preferred Stock transfer their shares
to one or more unaffiliated third parties, the transferees will have the option,
subject to the Company's consent to such transfer which it may withhold in its
sole discretion, to modify the terms of their shares to provide as follows (the
"Modified Preferred Stock"). The Modified Preferred Stock will be mandatorily
redeemable by the Company on the twelfth anniversary of the date of modification
at $100 per share plus all accumulated and unpaid dividends, if any, to the date
of redemption. The Company also will be required to make an offer to purchase
all outstanding shares of Modified Preferred Stock in connection with a Change
of Control Triggering Event (as defined in the Indenture) at a purchase price of
$101 per share plus all accumulated and unpaid dividends, if any, to the date of
purchase. In addition, the Modified Preferred Stock will be redeemable in
certain events at the option of the Company at $100 per share plus certain
redemption premiums and all accumulated and unpaid dividends, if any, to the
date of redemption. Dividends will continue to accrue (whether or not declared)
on the Modified Preferred Stock at the same rate as specified above, provided
that if the Company
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fails to declare and pay dividends in cash on the Modified Preferred Stock after
the fifth anniversary of the date of modification, then dividends on the
Modified Preferred Stock will accrue at an annual rate equal to the indicated
rate plus 200 basis points, compounded quarterly, until such time as the Company
pays such dividends in cash. The Company also will have the option at any time,
subject to compliance by the Company with its then existing debt instruments
(including the Indenture), to exchange all, but not less than all, of the
outstanding shares of Modified Preferred Stock for subordinated debentures (the
"Exchange Debentures") with an aggregate original principal amount equal to the
aggregate original purchase price of the shares that are exchanged plus all
accumulated and unpaid dividends thereon, if any, to the date of exchange. The
Exchange Debentures will be due and payable in full in one installment on the
twelfth anniversary of the date of modification of the New Preferred Stock, will
be entitled to the benefit of certain additional restrictive covenants, and will
bear interest at an annual rate equal to the dividend rate applicable to the
Modified Preferred Stock, with such amount to be compounded quarterly. In all
other material respects, the terms of the Exchange Debentures will be
substantially similar to the terms of the Modified Preferred Stock, and the
terms of the Modified Preferred Stock will be substantially similar to the terms
of the New Preferred Stock.

EXCHANGE OFFER; REGISTRATION RIGHTS

The Company, the Guarantors and the Initial Purchasers entered into a
registration rights agreement (the "Registration Rights Agreement"), dated as of
April 24, 1998, pursuant to which each of the Company and the Guarantors agreed
that they would, at their expense, for the benefit of the holders of the Notes
(the "Holders"), (i) within 60 days after the Issue Date (the "Filing Date"),
file a registration statement on an appropriate registration form (the "Exchange
Offer Registration Statement") with respect to a registered offer (the "Exchange
Offer") to exchange the Initial Notes for the Exchange Notes, guaranteed on a
senior subordinated basis by the Guarantors, which Exchange Notes will have
terms substantially identical in all material respects to the Fixed Rate Notes
and Floating Rate Notes, respectively (except that the Exchange Notes will not
contain terms with respect to transfer restrictions) and (ii) cause the Exchange
Offer Registration Statement to be declared effective under the Securities Act
within 135 days after the Issue Date. Upon the Exchange Offer Registration
Statement being declared effective, the Company will offer the Exchange Notes
(and the related guarantees) in exchange for surrender of the Notes. The Company
will keep the Exchange Offer open for not less than 30 days (or longer if
required by applicable law) after the date notice of the Exchange Offer is
mailed to the Holders. For each of the Fixed Rate Notes and the Floating Rate
Notes surrendered to the Company pursuant to the Exchange Offer, the Holder who
surrendered such Notes will receive a Fixed Rate Exchange Note or Floating Rate
Exchange Note, as applicable, having a principal amount equal to that of the
surrendered Notes. Interest on each Exchange Note will accrue (A) from the later
of (i) the last interest payment date on which interest was paid on the Note
surrendered in exchange therefor, or (ii) if the Note is surrendered for
exchange on a date in a period which includes the record date for an interest
payment date to occur on or after the date of such exchange and as to which
interest will be paid, the date of such interest payment date or (B) if no
interest has been paid on the Notes, from the Issue Date.

Under existing interpretations of the Commission contained in several
no-action letters to third parties, the Exchange Notes and the related
Guarantees are freely transferable by holders thereof (other than affiliates of
the Company) after the Exchange Offer without further registration under the
Securities Act; provided, however, that each Holder that wishes to exchange its
Notes for Exchange Notes are required to represent (i) that any Exchange Notes
to be received by it will be acquired in the ordinary course of its business,
(ii) that it has no arrangement or understanding with any person to participate
in the distribution (within the meaning of Securities Act) of the Exchange Notes
in violation of the Securities Act, (iii) that it is not an "affiliate" (as
defined in Rule 405 promulgated under Securities Act) of the Company, (iv) if
such Holder is not a broker-dealer, that it is not engaged in, and does not
intend to engage in, the distribution of Exchange Notes and (v) if such Holder
is a broker-dealer (a "Participating Broker-Dealer") that will receive Exchange
Notes for its own account in exchange for Notes that were acquired as a result
of market-making or other trading activities, that it will deliver a prospectus
in connection with any resale of such Exchange Notes. The Company agreed to make
available, during the period required by the Securities Act, a prospectus
meeting the

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requirements of the Securities Act for use by Participating Broker-Dealers and
other persons, if any, with similar prospectus delivery requirements for use in
connection with any resale of Exchange Notes. Broker-dealers who did not acquire
their Initial Notes as a result of market-making or other trading activities may
not participate in the Exchange Offer.

If, (i) because of any change in law or in currently prevailing
interpretations of the staff of the Commission, the Company is not permitted to
effect an Exchange Offer, (ii) the Exchange Offer is not consummated within 165
days of the Issue Date, (iii) in certain circumstances, certain holders of
unregistered Exchange Notes so request, or (iv) in the case of any Holder that
participates in the Exchange Offer, such Holder does not receive Exchange Notes
on the date of the exchange that may be sold without restriction under state and
federal securities laws (other than due solely to the status of such Holder as
an affiliate of the Company or within the meaning of the Securities Act), then
in each case, the Company will (x) promptly deliver to the Holders and the
Trustee written notice thereof and (y) at their sole expense, (a) as promptly as
practicable, file a shelf registration statement covering resales of the Notes
(the "Shelf Registration Statement"), (b) use their best efforts to keep
effective the Shelf Registration Statement until the earlier of two years after
its effective date or such time as all of the applicable Notes have been sold
thereunder. The Company will, in the event that a Shelf Registration Statement
is filed, provide to each Holder copies of the prospectus that is a part of the
Shelf Registration Statement, notify each such Holder when the Shelf
Registration Statement for the Notes has become effective and take certain other
actions as are required to permit unrestricted resales of the Notes. A Holder
that sells Notes pursuant to the Shelf Registration Statement will be required
to be named as a selling security holder in the related prospectus and to
deliver a prospectus to purchasers, will be subject to certain of the civil
liability provisions under Securities Act in connection with such sales and will
be bound by the provisions of the Registration Rights Agreement that are
applicable to such a Holder (including certain indemnification rights and
obligations).

If the Company fails to comply with the above provision or if the Exchange
Offer Registration Statement or the Shelf Registration Statement fails to become
effective, then, as liquidated damages, additional interest (the "Additional
Interest") shall become payable in respect of the Notes as follows:

(i) if (A) neither the Exchange Offer Registration Statement or Shelf
Registration Statement is filed with the Commission on or prior to the
Filing Date or (B) notwithstanding that the Company has consummated or will
consummate an Exchange Offer, the Company is required to file a Shelf
Registration Statement and such Shelf Registration Statement is not filed
on or prior to the date required by the Registration Rights Agreement, then
commencing on the day after either such required filing date, Additional
Interest shall accrue on the principal amount of the Notes at a rate of
0.25% per annum for the first 90 days immediately following each such
filing date, such Additional Interest rate increasing by an additional
0.25% per annum at the beginning of each subsequent 90 day period; or

(ii) if (A) neither the Exchange Offer Registration Statement nor a
Shelf Registration Statement is declared effective by the Commission on or
prior to 135 days after the Issue Date or (B) notwithstanding that the
Company has consummated or will consummate an Exchange Offer, the Company
is required to file a Shelf Registration Statement and such Shelf
Registration Statement is not declared effective by the Commission on or
prior to the date required by the Registration Rights Agreement, then,
commencing on the day after either such required effectiveness date,
Additional Interest shall accrue on the principal amount of the Notes at a
rate of 0.25% per annum for the first 90 days immediately following such
date, such Additional Interest rate increasing by an additional 0.25% per
annum at the beginning of each subsequent 90 day period; or

(iii) if (A) the Company has not exchanged Exchange Notes for all
Notes validly tendered in accordance with the terms of the Exchange Offer
on or prior to the 30th day after the date on which the Exchange Offer
Registration Statement was declared effective or (B) if applicable, the
Shelf Registration Statement has been declared effective and such Shelf
Registration Statement ceases to be effective at any time prior to the
second anniversary of its effective date (other than after such time as all
Notes have been disposed of thereunder), then Additional Interest shall
accrue on the principal amount of the Notes at a rate of 0.25% per annum,
for the first 90 days commencing on (x) the 31st the day after such
effective date, in the case of (A) above, or (y) the day such Shelf
Registration Statement ceases to be

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effective in the case of (B) above, such Additional Interest rate
increasing by an additional 0.25% per annum at the beginning of each
subsequent 90 day period;

provided, however, that the Additional Interest rate on the Notes may not
exceed in the aggregate 1.0% per annum; provided, further, however, that (1)
upon the filing of the Exchange Offer Registration Statement or a Shelf
Registration Statement (in the case of clause (i) above), (2) upon the
effectiveness of the Exchange Offer Registration Statement or a Shelf
Registration Statement (in the case of clause (ii) above), or (3) upon the
exchange of Exchange Notes for all Notes tendered (in the case of clause (iii)
(A) above), or upon the effectiveness of the Shelf Registration Statement which
had ceased to remain effective (in the case of clause (iii) (B) above),
Additional Interest on the Notes as a result of such clause (or the relevant
subclause thereof), as the case may be, shall cease to accrue.

Any amounts of Additional Interest due pursuant to clause (i), (ii) or
(iii) above will be payable in cash on the same original interest payment dates
as the Notes.

The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by, all the provisions of the Registration Rights Agreement, a copy
of which will be available upon request to the Company.

INCOME TAX CONSIDERATIONS

The following is the opinion of the Company's counsel, Hutchins, Wheeler &
Dittmar, A Professional Corporation, as to the material United States federal
income tax consequences expected to apply to the exchange of Initial Notes for
Exchange Notes and the ownership and disposition of Exchange Notes under
currently applicable law. The discussion does not cover all aspects of federal
taxation that will be relevant to, or the actual tax effect that any of the
matters described herein will have on, particular holders (including insurance
companies, tax-exempt organizations, financial institutions, broker-dealers,
taxpayers subject to the alternative minimum tax and foreign persons) and does
not address state, local, foreign or other tax laws. The description assumes
that holders of the Initial Notes and the Exchange Notes will hold the Initial
Notes and the Exchange Notes as "capital assets" within the meaning of Section
1221 of the Code.

THE EXCHANGE

An exchange of Initial Notes for Exchange Notes will be treated as a
"non-event" for federal income tax purposes because the Exchange Notes will not
be considered to differ materially in kind or extent from the Initial Notes. As
a result, no federal income tax consequences will result to holders exchanging
Initial Notes or Exchange Notes.

THE EXCHANGE NOTES

Interest Payments on the Exchange Notes. The Initial Notes and the
Exchange Notes are debt for federal income tax purposes. The Initial Notes were
not issued with original issue discount. The stated interest on the Initial
Notes and Exchange Notes will be considered to be "qualified stated interest"
and, therefore, will be includible in a holder's gross income (except to the
extent attributable to accrued interest at the time of purchase) as ordinary
income for federal income tax purposes in accordance with a holder's tax method
of accounting.

Tax Basis. A holder's adjusted tax basis (determined by taking into
account accrued interest at the time of purchase) in an Exchange Note received
in exchange for an Initial Note will equal the cost of the Initial Note to such
holder, increased by the amounts of market discount previously included in
income by the holder and reduced by any principal payments received by such
holder with respect to the Exchange Notes and by amortized bond premium. A
holder's adjusted tax basis in an Exchange Note purchased by such holder will be
equal to the price paid for such an Exchange Note (determined by taking into
account accrued interest at the time of purchase), increased by market discount
previously included in income by the holder and reduced by any principal
payments received by such holder with respect to an Exchange Note and by
amortized bond premium. See "Market Discount and Bond Premium" below.

107
<PAGE> 112

Sale, Exchange or Retirement. Upon the sale, exchange or retirement of an
Exchange Note, a holder will recognize taxable gain or loss, if any, equal to
the difference between the amount realized on the sale, exchange or retirement
and such holder's adjusted tax basis in such Exchange Note. Such gain or loss
will be a capital gain or loss (except to the extent of any accrued market
discount), and will be a long-term capital gain or loss if the Exchange Note has
been held for more than one year at the time of such sale, exchange or
retirement.

Market Discount and Bond Premium. The market discount provisions of the
Code will affect the Exchange Notes as a holder who purchases Exchange Notes for
an amount which is less than their principal amount will be considered to have
purchased the Exchange Notes at a "market discount" equal to the amount of such
difference. Such holder will be required to treat any gain realized upon the
disposition of the Exchange Note as interest income to the extent of the market
discount that is treated as having accrued during the period that such holder
held such Exchange Note, unless an election is made to include such market
discount in income on a current basis. A holder of an Exchange Note who acquires
the Exchange Note at a market discount and who does not elect to include market
discount in income on a current basis will (subject to certain exceptions) also
be required to defer the deduction of a portion of the interest on any
indebtedness incurred or continued to purchase or carry the Exchange Note until
the holder disposes of such Exchange Note in a taxable transaction.

If a holder's tax basis in an Exchange Note immediately after acquisition
exceeds the stated redemption price at maturity of such Exchange Note, such
holder may be eligible to elect to deduct such excess as amortizable bond
premium pursuant to Section 171 of the Code.

HOLDERS OF THE INITIAL NOTES ARE URGED TO CONSULT THEIR TAX ADVISORS
REGARDING THE PARTICULAR TAX CONSEQUENCES TO THEM OF ACQUIRING, OWNING OR
DISPOSING OF THE INITIAL NOTES AND THE EXCHANGE NOTES, INCLUDING THE APPLICATION
OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS, AND POSSIBLE FUTURE CHANGES IN
SUCH TAX LAWS.

PLAN OF DISTRIBUTION

Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be
issued by a broker-dealer in connection with resales of Exchange Notes received
in exchange for Initial Notes where such Notes were acquired as a result of
market-making activities or other trading activities. The Issuer has agreed that
for a period of 180 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until , 1998, all
dealers effecting transactions in the Exchange Notes may be required to deliver
a prospectus.

The Issuer will not receive any proceeds from any sale of Exchange Notes by
broker-dealers. Exchange Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the Exchange Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such market prices or negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such Exchange Notes. Any broker-dealer that resells Exchange
Notes that were received by it for its own account pursuant to the Exchange
Offer and any broker or dealer that participates in a distribution of such
Exchange Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of Exchange Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.

108
<PAGE> 113

For a period of 180 days after the Expiration Date the Issuer will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any broker-dealer that requests such documents in the Letter
of Transmittal. The Issuer has agreed to pay all expenses incident to the
Exchange Offer other than commissions or concessions of any brokers or dealers
and will indemnify the holders of the Notes (including any broker-dealers)
against certain liabilities, including liabilities under the Securities Act.

LEGAL MATTERS

Certain legal matters in connection with the Exchange Notes offered hereby
will be passed upon for the Company by Hutchins, Wheeler & Dittmar, A
Professional Corporation, Boston, Massachusetts.

EXPERTS

The consolidated financial statements of Eye Care Centers of America, Inc.
and Subsidiaries as of January 3, 1998 and December 28, 1996, and for the fiscal
years ended January 3, 1998, December 28, 1996, and December 30, 1995, appearing
in this Prospectus and Registration Statement have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon appearing
elsewhere herein and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.

The consolidated and combined financial statements of The Samit
Organization as of September 30, 1997 and December 31, 1996 and for the period
January 1, 1997 through September 30, 1997 and the year ended December 31, 1996,
appearing in this Prospectus and Registration Statement have been audited by
Beers & Cutler PLLC, independent auditors, as set forth in their report thereon
appearing elsewhere herein are included in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.

The consolidated financial statements of Visionworks Holdings, Inc. as of
August 31, 1996, February 3, 1996, and January 28, 1995, and for the seven month
period ended August 31, 1996 and the fiscal years ended February 3, 1996 and
January 28, 1995, have been included herein and in the Prospectus in reliance
upon the report of KPMG Peat Marwick LLP, independent certified public
accountants appearing elsewhere herein, and upon the authority of said firm as
experts in accounting and auditing.

The combined financial statements of Dr. Bizer's VisionWorld, PLLC, and
Affiliates as of December 31, 1997 and December 31, 1996, and for fiscal years
ended December 31, 1997, December 31, 1996 and December 31, 1995, appearing in
this Prospectus and Registration Statement have been audited by Welenken
Himmelfarb & Co., independent auditors, as set forth in their report thereon
appearing elsewhere herein are included in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.

109
<PAGE> 114

INDEX TO DEFINED TERMS

The following list provides the page on which the following defined terms
used in this Registration Statement are defined.

<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
ABO......................................................... 60
Acquisition Facility........................................ 72
Additional Interest......................................... 106
Affiliate Transaction....................................... 81
Agent's Message............................................. 25
Assets...................................................... 14
ATOP........................................................ 25
Blockage Notice............................................. 77
Book-Entry Confirmation..................................... 25
Calculation Agent........................................... 73
Change of Control Offer..................................... 78
Change of Control Payment Date.............................. 78
Change of Control........................................... 78
Commission.................................................. Front Cover
Common Stock................................................ 4
Companies................................................... 14
Company..................................................... Front Cover
Consulting Agreement........................................ 68
Covenant Defeasance......................................... 87
Daily Interest Amount....................................... 74
Determination Date.......................................... 74
DTC......................................................... 25
ECCA........................................................ 1
Eligible Institution........................................ 22
Enclave..................................................... 20
Equity Contribution......................................... 4
Events of Default........................................... 86
Exchange Debentures......................................... 105
Exchange Date............................................... Front Cover
Exchange Offer Registration Statement....................... 23
Exchange Notes.............................................. Front Cover
Exchange Offer.............................................. Front Cover
Exchange Notes Guarantees................................... 6
Exchange Offer Registration Statement....................... 22
Expiration Date............................................. Front Cover
Filing Date................................................. 105
Fixed Rate Exchange Notes................................... Front Cover
Fixed Rate Notes............................................ Front Cover
Floating Rate Notes......................................... Front Cover
Floating Rate Exchange Notes................................ Front Cover
Guarantors.................................................. Front Cover
HMOs........................................................ 18
Holders..................................................... 73
Hour Eyes Acquisition....................................... 3
Incur....................................................... 81
Indenture................................................... i
Initial Notes............................................... Front Cover
</TABLE>

110
<PAGE> 115

<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
Initial Purchasers.......................................... 7
Initial Offering............................................ Front Cover
Interest Period............................................. 74
Interest Payment Date....................................... Front Cover
Issue Date.................................................. Front Cover
Issuer...................................................... Front Cover
LADS........................................................ 61
Legal Defeasance............................................ 87
Limitation on Asset Sales................................... 84
London Banking Day.......................................... 74
Loss........................................................ 46
Management Agreement........................................ 71
Market Discount............................................. 108
Merger...................................................... 4
Merger Corp................................................. 4
Modified Premium Stock...................................... 104
Named Executive Officer..................................... 67
Net Proceeds Offer Payment Date............................. 84
Net Proceeds Offer Amount................................... 84
Net Proceeds Offer Trigger Date............................. 84
Net Proceeds Offer.......................................... 84
New Preferred Stock......................................... 4
Note Offer Amount........................................... 85
Note Guarantees............................................. Front Cover
Notes....................................................... Front Cover
OCC......................................................... 63
OD's........................................................ 1
Participant................................................. 25
Participating Broker-Dealer................................. 105
Pay the Exchange Notes...................................... 76
Payment Blockage Period..................................... 77
Preferred Stock............................................. 49
Qualified Stated interest................................... 107
Recapitalization Agreement.................................. 4
Recapitalization............................................ 4
Reference Date.............................................. 80
Registration Statement...................................... i
Registration Rights Agreement............................... 7
Representative Amount....................................... 74
Resale Registration Statement............................... 23
Restricted Payment.......................................... 80
Reuters Screen LIBO Page.................................... 74
Revolving Credit Facility................................... 72
Securities Act.............................................. Front Cover
Senior Notes................................................ 4
SG&A........................................................ 45
Shareholders Agreement...................................... 71
Shelf Registration Statement................................ 106
SOP 98-5.................................................... 48
Statement 130............................................... 48
Statement 131............................................... 48
</TABLE>

111
<PAGE> 116

<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
Telerate Page 3750.......................................... 73
Term Loan Facility.......................................... 72
THL......................................................... 4
THL Co...................................................... 4
THL Fund IV................................................. 4
TIA......................................................... 73
Transferor.................................................. 26
Trust Indenture Act......................................... 28
Trustee..................................................... 73
TSGI........................................................ 3
Underwriter................................................. 108
VisionWorld Acquisition..................................... 3
Visionworks Acquisition..................................... 44
VTO......................................................... 4
For a summary of additional defined terms used in the
Indenture, see "Description of Exchange Notes -- Certain
Definitions" on page 86.
</TABLE>

112
<PAGE> 117

EYE CARE CENTERS OF AMERICA, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Financial Statements:

Eye Care Centers of America, Inc. and Subsidiaries
Consolidated Financial Statements
Condensed Consolidated Balance Sheets at January 3, 1998
and July 4, 1998 (Unaudited)........................... F-2
Condensed Consolidated Statements of Operations for the
Twenty-Six Weeks Ended June 28, 1997 (Unaudited) and
July 4, 1998 (Unaudited)............................... F-3
Condensed Consolidated Statements of Cash Flows for the
Twenty-Six Weeks Ended June 28, 1997 (Unaudited) and
July 4, 1998 (Unaudited)............................... F-4
Notes to Condensed Consolidated Financial Statements...... F-5
Report of Independent Auditors............................ F-9
Consolidated Balance Sheets at December 28, 1996 and
January 3, 1998........................................ F-10
Consolidated Statements of Operations for the Years Ended
December 30, 1995, December 28, 1996 and January 3,
1998................................................... F-11
Consolidated Statements of Stockholders' Equity as of
December 30, 1995, December 28, 1996 and January 3,
1998................................................... F-12
Consolidated Statements of Cash Flows as of December 30,
1995, December 28, 1996 and January 3, 1998............ F-13
Notes to Consolidated Financial Statements................ F-15

Dr. Bizer's VisionWorld, PLLC and Affiliates
Condensed Consolidated Balance Sheets at December 31, 1997
and June 30, 1998 (Unaudited).......................... F-30
Condensed Consolidated Statements of Operations for the
Six Months Ended June 30, 1997 (Unaudited) and June 30,
1998 (Unaudited)....................................... F-31
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1997 (Unaudited) and June 30,
1998 (Unaudited)....................................... F-32
Notes to Condensed Consolidated Financial Statements...... F-33
Independent Auditors' Report.............................. F-34
Combined Balance Sheet at December 31, 1997 and 1996...... F-35
Combined Statement of Earnings for the Years Ended
December 31, 1997, 1996 and 1995....................... F-36
Combined Statement of Equity for the Years Ended December
31, 1997, 1996 and 1995................................ F-37
Combined Statement of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995....................... F-38
Notes to Combined Financial Statements.................... F-39

The Samit Organization
Independent Auditors Report............................... F-45
Consolidated and Combined Balance Sheet................... F-46
Consolidated and Combined Statement of Income............. F-48
Consolidated and Combined Statement of Changes in
Stockholders' Equity................................... F-49
Consolidated and Combined Statement of Cash Flows......... F-50
Notes to the Consolidated and Combined Financial
Statements............................................. F-51

VisionWorks Holdings, Inc.
Report of Independent Auditors............................ F-58
Consolidated Balance Sheets at January 28, 1995, February
3, 1996, and August 31, 1996........................... F-59
Consolidated Statements of Earnings for the Periods Ended
January 28, 1995, February 3, 1996, and August 31,
1996................................................... F-60
Consolidated Statements of Stockholders' Equity as of
January 28, 1995, February 3, 1996, and August 31,
1996................................................... F-61
Consolidated Statements of Cash Flows as of January 28,
1995, February 3, 1996, and August 31, 1996............ F-62
Notes to Consolidated Financial Statements................ F-63
</TABLE>

F-1

<PAGE> 118

EYE CARE CENTERS OF AMERICA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
JANUARY 3, JULY 4,
1998 1998
---------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 7,172 $ 8,796
Investment securities - restricted..................... -- 77,258
Accounts and notes receivable, net..................... 5,722 6,092
Inventory.............................................. 26,007 24,407
Prepaid expenses and other............................. 3,566 3,173
Deferred income taxes.................................. 386 --
-------- --------
Total current assets........................................ 42,853 119,726

Property and equipment, net................................. 57,212 58,642
Intangible assets, net...................................... 75,279 73,579
Other assets................................................ 4,800 11,513
-------- --------
$180,144 $263,460
======== ========

LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)
Current liabilities:
Accounts payable....................................... $ 12,801 $ 13,017
Deferred revenue....................................... 3,804 4,103
Current portion of long-term debt...................... 7,003 --
Accrued payroll expense................................ 2,969 3,147
Accrued interest....................................... 2,976 3,865
Other accrued expenses................................. 9,200 9,487
In-substance defeased bonds............................ -- 72,100
-------- --------
Total current liabilities................................... 38,753 105,719
Long-term debt, less current maturities..................... 115,386 214,490
Deferred income taxes....................................... 384 --
Deferred rent............................................... 3,042 3,205
Deferred gain............................................... 2,334 2,281
-------- --------
Total liabilities........................................... 159,899 325,695
-------- --------
Redeemable preferred stock.................................. 12,117 --
Shareholders' equity (deficit):
Common stock........................................... 10 6
Preferred stock........................................ -- 30,761
Additional paid-in capital............................. 31,245 62,851
Accumulated deficit.................................... (23,127) (155,853)
-------- --------
Total shareholders' equity (deficit)........................ 8,128 (62,235)
-------- --------
$180,144 $263,460
======== ========
</TABLE>

See Notes to Condensed Consolidated Financial Statements.
F-2
<PAGE> 119

EYE CARE CENTERS OF AMERICA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
THIRTEEN WEEKS TWENTY-SIX WEEKS
ENDED ENDED
-------------------------- --------------------------
JUNE 29, JULY 4, JUNE 29, JULY 4,
1997 1998 1997 1998
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net revenues:
Optical sales............................. $54,093 $ 57,717 $111,972 $119,075
Management fee............................ -- 523 -- 1,184
------- -------- -------- --------
Total net revenues.......................... 54,093 58,240 111,972 120,259
Operating costs and expenses:
Cost of goods sold........................ 18,514 19,989 38,445 40,488
Selling, general and administrative
expenses............................... 29,896 32,126 60,769 65,342
Recapitalization expenses................. -- 25,216 -- 25,263
Amortization of intangibles............... 604 746 1,306 1,660
------- -------- -------- --------
Total operating costs and expenses.......... 49,014 78,077 100,520 132,753
------- -------- -------- --------
Income(loss) from operations................ 5,079 (19,837) 11,452 (12,494)
Interest expense, net....................... 3,245 4,868 6,629 8,262
In-substance defeased bonds interest
expense, net................................ -- 1,460 -- 1,460
Income tax expense(benefit)................. 91 (54) 191 13
------- -------- -------- --------
Net income(loss) before extraordinary
item........................................ 1,743 (26,111) 4,632 (22,229)
Extraordinary loss on early extinguishment
of long-term debt......................... -- 4,155 -- 4,155
------- -------- -------- --------
Net income(loss)............................ $ 1,743 $(30,266) $ 4,632 $(26,384)
======= ======== ======== ========
</TABLE>

See Notes to Condensed Consolidated Financial Statements.
F-3
<PAGE> 120

EYE CARE CENTERS OF AMERICA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
TWENTY-SIX TWENTY-SIX
WEEKS ENDED WEEKS ENDED
JUNE 28, 1997 JULY 4 1998
------------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)......................................... $ 4,632 $(26,384)
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation......................................... 5,971 5,910
Amortization of intangibles.......................... 1,796 2,309
Deferred revenue..................................... (33) 299
Deferred rent and other.............................. 219 (19)
Loss on disposition of property and equipment........ 10 55
Extraordinary loss on early extinguishment of
long-term debt...................................... -- 4,155
Changes in operating assets and liabilities:
Accounts and notes receivable........................ (868) (463)
Inventory............................................ 464 1,600
Prepaid expenses and other........................... (56) 301
Accounts payable and accrued liabilities............. 1,714 2,321
-------- --------
Net cash provided by (used for) operating activities........ 13,849 (9,916)
-------- --------
Cash flows from investing activities:
Acquisition of property and equipment..................... (7,010) (8,632)
Proceeds from sale of property and equipment.............. 42 763
Collections from notes receivable......................... 188 85
-------- --------
Net cash used for investing activities...................... (6,780) (7,784)
-------- --------
Cash flows from financing activities:
Proceeds (payments) from deferred stock compensation
plan................................................... 179 (10)
Payments on debt.......................................... (2,556) (42,780)
Proceeds from issuance of long-term debt.................. -- 204,511
Proceeds from the issuance of common stock................ -- 71,689
Proceeds from the issuance of preferred stock............. -- 27,750
Payments to retire redeemable preferred stock............. -- (12,385)
Redemption of common stock................................ -- (128,365)
Purchase of investment securities-restricted.............. -- (76,618)
Expenses to affect recapitalization....................... -- (23,849)
Other financing activities................................ (133) (619)
-------- --------
Net cash provided by (used for) financing activities........ (2,510) 19,324
-------- --------
Net increase in cash........................................ 4,559 1,624
Cash and cash equivalents, beginning of period.............. 10,644 7,172
-------- --------
Cash and cash equivalents, end of period.................... $ 15,203 $ 8,796
======== ========
</TABLE>

See Notes to Condensed Consolidated Financial Statements.
F-4
<PAGE> 121

EYE CARE CENTERS OF AMERICA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Eye Care
Centers of America, Inc. and its wholly owned subsidiaries (the "Company"). All
significant intercompany balances and transactions have been eliminated.

The accompanying unaudited Condensed Consolidated Financial Statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with 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 considered
necessary for a fair presentation have been included and are of a normal,
recurring nature. Operating results for the thirteen week and twenty-six week
periods ended July 4, 1998 are not necessarily indicative of the results that
may be expected for the fiscal year ended January 2, 1999. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Eye Care Centers of America, Inc.'s annual report on
Form 10-K for the year ended January 3, 1998.

RELATED PARTY TRANSACTIONS

Prior to the Recapitalization (defined herein), the Company was party to an
agreement with Desai Capital Management, Inc. ("DCMI"), a majority shareholder,
whereby the Company paid DCMI $144,000 per year as an advisory fee for
consulting and strategic advice and $56,000 per year for the consulting services
of certain Board of Directors members who are also employees and/or officers of
DCMI. For the thirteen week periods ended July 4, 1998, and June 28, 1997,
$11,000 and $50,000, respectively, related to these agreements. As a result of
the Recapitalization, the agreement with DCMI has been canceled, and DCMI is no
longer a majority shareholder of the Company.

The Company and Thomas H. Lee Company ("THL Co.") entered into a management
agreement as of the closing date of the Recapitalization (as such term is
defined below) (the "Management Agreement"), pursuant to which THL Co. received
a financial advisory fee of $6.0 million in connection with structuring,
negotiating and arranging the Recapitalization and related debt financing. In
addition, pursuant to the Management Agreement, THL Co. will initially receive
$500,000 per year plus expenses for management and other consulting services
provided to the Company. The Management Agreement continues in effect unless and
until terminated by mutual consent of the parties, in writing, for so long as
THL Co. provides management and other consulting services.

INCOME TAXES

The Company accounts for income taxes under the liability method required
by the Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting
for Income Taxes." As of July 4, 1998, the Company had a net deferred tax asset,
which was fully reserved by a valuation allowance. The expected tax expense
differs from the actual tax expense due to the change in the valuation
allowance. Based upon the weight of available evidence allowed under the
criteria set forth under FAS Statement No. 109, uncertainties exist as to the
future realization of the deferred tax asset. These uncertainties include lack
of carryback potential as the Company has incurred taxable losses in each of the
past four years. Further, the Company does not anticipate that it will produce
taxable income during the carryforward period. Therefore, the Company has
established a full valuation allowance for its deferred tax assets.

F-5
<PAGE> 122
EYE CARE CENTERS OF AMERICA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
TWENTY-SIX TWENTY-SIX
WEEKS ENDED WEEKS ENDED
JUNE 28, JULY 4,
1997 1998
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash paid for interest........................ $6,930 $6,994
Dividends accrued on redeemable preferred
stock....................................... $ 440 $ 268
Rollover of preferred stock by management..... $ -- $2,250
Rollover of common stock by management........ $ -- $5,625
Dividends accrued on preferred stock.......... $ -- $ 761
</TABLE>

THE RECAPITALIZATION

On March 6, 1998, ECCA Merger Corp. ("Merger Corp."), a Delaware
corporation formed by THL Co., and the Company entered into a recapitalization
agreement (the "Recapitalization Agreement") providing for, among other things,
the merger of such corporation with and into the Company (the "Merger" and,
together with the financing of the recapitalization and related transactions
described below, the "Recapitalization"). Upon consummation of the Merger on
April 24, 1998, Thomas H. Lee Equity Fund IV, L.P. ("THL Fund IV") and other
affiliates of THL Co. (collectively with THL Fund IV and THL Co., "THL")
currently owns approximately 89.7% of the issued and outstanding shares of
common stock of the Company ("Common Stock"), existing shareholders (including
management) of the Company retained approximately 7.3% of the issued and
outstanding Common Stock and management purchased additional shares representing
approximately 3.0% of the issued and outstanding Common Stock.

The Company financed the Recapitalization with (a) the proceeds from the
offering of $150.0 million aggregate principal amount of its senior subordinated
notes due 2008, consisting of $100.0 million aggregate principal amount of its
9 1/8% Senior Subordinated Notes due 2008 (the "Fixed Rate Notes") and $50.0
million aggregate principal amount of its Floating Interest Rate Subordinated
Term Securities due 2008 (the "Floating Rate Notes" and, together with the Fixed
Rate Notes, the "Notes") (b) approximately $55.0 million of borrowings under the
New Credit Facility (defined herein) and (c) approximately $99.4 million from
the sale of capital stock to THL, Bernard W. Andrews and other members of
management (the "Equity Contribution") consisting of (i) approximately $71.7
million from the sale of Common Stock and (ii) approximately $27.7 million from
the sale of shares of a newly created series of preferred stock of the Company
("New Preferred Stock"). Additionally, existing stockholders rolled over $7.9
million in Common Stock and New Preferred Stock. The proceeds from such bank
borrowings, the sale of the Notes, and the Equity Contribution was used
principally to finance the conversion into cash of the shares of Common Stock
which were not retained by existing stockholders, to refinance certain existing
indebtedness of the Company, to redeem certain outstanding preferred stock of
the Company and to pay related fees and expenses of the Recapitalization.

In connection with the Recapitalization, the Company in-substance defeased
its previously issued 12% Senior Notes due 2003 (the "Senior Notes") by
depositing with the trustee for the Senior Notes (i) an irrevocable notice of
redemption of the Senior Notes on October 1, 1998 and (ii) United States
government securities in an amount necessary to yield on October 1, 1998 $78.4
million, which constitutes the principal amount, premium and interest payable on
the Senior Notes on the October 1, 1998 redemption date. The Senior Notes
continue to be reflected as a liability ("In-substance defeased bonds") on the
Company's balance sheet with an offsetting asset ("Investment
securities-restricted") representing the deposit of United States government
securities needed for defeasance. The Company expects to record an extraordinary
charge of $4.2 million on the statement of operations for defeasance costs
during the third quarter related to the call premium on the bonds.

F-6
<PAGE> 123
EYE CARE CENTERS OF AMERICA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

As a result of the Recapitalization, the Company has incurred approximately
$25.3 million of non-recurring expenses. These expenses consisted of
compensation expense recorded in connection with the exercise of employee stock
options and other transaction related fees. Additionally, an extraordinary loss
of $4.2 million related to the write-off of unamortized deferred loan costs
related to the early extinguishment of debt was recorded as part of the
Recapitalization.

Effective April 24, 1998, the Board of Directors of the Company authorized
a twelve-for-one stock split to shareholders of record on that date. The par
value of the Common Stock remained at $0.01. The stock split had no effect on
the percentage ownership of stockholders.

INTEREST RATE SWAPS

The Company does not hold or issue financial instruments for trading
purposes nor is it a party to leveraged derivatives. The Company uses interest
rate swaps that are "vanilla" and involve little complexity as hedge instruments
to manage interest rate risk.

The counter parties to the Company's derivatives consist of major
international financial institutions. Because of the number of these
institutions and their high credit ratings, management believes these
derivatives do not present significant credit risk to the Company.

<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
AVERAGE AVERAGE
NOTIONAL AMOUNTS MATURITY FIXED PAY FLOATING RECEIVE
JULY 4, 1998 DATE RATE RATE
---------------- -------- --------- ----------------
<S> <C> <C> <C>
$33.3 million............................ 1999 5.9% 5.75%
$33.3 million............................ 2000 5.9% 5.75%
$33.3 million............................ 2001 5.9% 5.75%
</TABLE>

Interest rate swap agreements effectively convert floating rates on
long-term debt to fixed rates. The Company's intent is to reduce overall
interest expense while maintaining an acceptable level of risk to interest rate
fluctuations. The swap agreements specifically hedge the Floating Rate Notes and
$50.0 million of the New Credit Facility. As market interest rates fluctuate,
the unrealized gain or loss on the swap portfolio moves in relationship to the
fair value of the underlying debt. The Company had an unrealized loss on the
interest rate swap portfolio of $237,000 as of July 4, 1998. The change in the
market value of these interest rate swaps is not recorded in the financial
position or operations of the Company. Interest to be paid or received is
accrued as an adjustment to interest expense. Upon termination of interest rate
swaps, the fair value of the swaps is recorded through operations. If the hedged
item is repaid early, the Company will evaluate if the swap agreement is to be
redesignated or exited.

NEW ACCOUNTING PRONOUNCEMENTS

As of January 4, 1998, the Company adopted SFAS No. 130, Reporting
Comprehensive Income ("Statement 130"). Statement 130 establishes new rules for
the reporting and display of comprehensive income and its components; however,
the adoption of Statement 130 had no impact on the Company's net income or
stockholders' equity. For the second quarter of 1998 and 1997, total
comprehensive income/(loss) amounted to ($30,266,000) and $1,743,000,
respectively, and for the twenty-six weeks ended July 4, 1998 and June 28, 1997,
comprehensive income/(loss) was ($26,384,000) and $4,632,000, respectively.
There were no other components of comprehensive income other than net income.

F-7
<PAGE> 124
EYE CARE CENTERS OF AMERICA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

areas, and major customers. The provisions of Statement 131 are effective for
financial statements for fiscal years beginning after December 15, 1997.
Adoption in interim financial statements is not required until the year after
initial adoption; however, comparative prior year information is required. The
Company is currently evaluating the impact of this statement on the disclosures
included in its annual and interim period financial statements.

F-8
<PAGE> 125

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
Eye Care Centers of America, Inc.
San Antonio, Texas

We have audited the accompanying consolidated balance sheets of Eye Care
Centers of America, Inc. and Subsidiaries as of January 3, 1998 and December 28,
1996, and the related consolidated statements of operations, stockholders'
equity, and cash flows for the fiscal years ended January 3, 1998, December 28,
1996, and December 30, 1995. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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
Eye Care Centers of America, Inc. and Subsidiaries at January 3, 1998 and
December 28, 1996, and the consolidated results of their operations and their
cash flows for the fiscal years ended January 3, 1998, December 28, 1996, and
December 30, 1995 in conformity with generally accepted accounting principles.

/s/ ERNST & YOUNG LLP

San Antonio, Texas
March 2, 1998, except for Note 15
as to which the date is March 6, 1998

F-9
<PAGE> 126

EYE CARE CENTERS OF AMERICA, INC.

CONSOLIDATED BALANCE SHEETS

(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 28, JANUARY 3,
1996 1998
------------ ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 10,644 $ 7,172
Accounts and notes receivable, less allowance for
doubtful accounts of $251 in 1996 and $318 in 1997.... 3,644 5,722
Inventory, less reserves of $561 in 1996 and 1997...... 26,175 26,007
Prepaid expenses and other............................. 1,064 3,566
Deferred income taxes.................................. 823 386
-------- --------
Total current assets........................................ 42,350 42,853
Property and equipment, net of accumulated depreciation and
amortization of $31,061 in 1996 and $41,766 in 1997....... 56,222 57,212
Intangibles, net of accumulated amortization of $21,708 in
1996 and $6,578 in 1997................................... 63,663 75,279
Other assets................................................ 5,745 4,800
-------- --------
$167,980 $180,144
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable....................................... $ 12,693 $ 12,801
Current portion of long-term debt...................... 3,864 7,003
Deferred revenue....................................... 3,572 3,804
Accrued payroll expense................................ 3,955 2,969
Accrued interest....................................... 3,017 2,976
Other accrued expenses................................. 6,616 9,200
-------- --------
Total current liabilities................................... 33,717 38,753
Deferred income taxes....................................... 823 384
Long-term debt, less current maturities..................... 116,746 115,386
Deferred rent............................................... 1,942 3,042
Deferred gain............................................... -- 2,334
-------- --------
Total liabilities........................................... 153,228 159,899
-------- --------
Mandatorily Redeemable Cumulative Preferred Stock........... 11,220 12,117
Commitments and contingencies
Stockholders' equity:
Common stock, par value $.01 per share; 2,000,000
shares authorized, issued and outstanding 1,008,548 in
1996 and 1,011,548 in 1997............................ 10 10
Additional paid-in capital............................. 31,864 31,245
Accumulated deficit.................................... (28,342) (23,127)
-------- --------
Total stockholders' equity.................................. 3,532 8,128
-------- --------
$167,980 $180,144
======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-10
<PAGE> 127

EYE CARE CENTERS OF AMERICA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(DOLLAR AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------------
DECEMBER 30, DECEMBER 28, JANUARY 3,
1995 1996 1998
------------ ------------ ----------
<S> <C> <C> <C>
Optical Sales........................................... $140,198 $158,224 $218,958
Management Fees......................................... -- -- 653
-------- -------- --------
Net revenues............................................ 140,198 158,224 219,611
Operating costs and expenses:
Cost of goods sold................................. 47,525 51,884 77,134
Selling, general and administrative expenses....... 87,402 91,897 120,319
Amortization of intangibles:
Goodwill...................................... 995 1,424 2,722
Noncompete and other intangibles.............. 4,556 1,514 148
-------- -------- --------
Total operating costs and expenses...................... 140,478 146,719 200,323
-------- -------- --------
Income (loss) from operations........................... (280) 11,505 19,288
Interest expense, net................................... 8,839 9,899 13,738
-------- -------- --------
Income (loss) before income taxes....................... (9,119) 1,606 5,550
Income tax expense...................................... -- 188 335
-------- -------- --------
Net income (loss)....................................... $ (9,119) $ 1,418 $ 5,215
======== ======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements
F-11
<PAGE> 128

EYE CARE CENTERS OF AMERICA, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(DOLLAR AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL CUMULATIVE ACCUMULATED TOTAL
------------------ PAID-IN TRANSLATION (DEFICIT) STOCKHOLDERS'
SHARES AMOUNT CAPITAL ADJUSTMENT EARNINGS EQUITY
------ ------ ---------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994................. 996,774 $10 $31,516 $(595) $(20,641) $10,290
Proceeds from deferred stock compensation
plan................................... -- -- 244 -- -- 244
Cumulative translation adjustment........ -- -- -- (84) -- (84)
Net loss................................. -- -- -- -- (9,119) (9,119)
--------- --- ------- ----- -------- -------
Balance at December 30, 1995................. 996,774 $10 $31,760 $(679) $(29,760) $ 1,331
Proceeds from deferred stock compensation
plan................................... -- -- 158 -- -- 158
Purchase of deferred stock shares........ -- -- (182) -- -- (182)
Purchase of common stock................. (6,452) -- (200) -- -- (200)
Issuance of common stock................. 10,000 -- 310 -- -- 310
Stock options exercised.................. 8,226 -- 238 -- -- 238
Dividends accrued on redeemable preferred
stock.................................. -- -- (220) -- -- (220)
Translation and other.................... -- -- -- 679 -- 679
Net income............................... -- -- -- -- 1,418 1,418
--------- --- ------- ----- -------- -------
Balance at December 28, 1996................. 1,008,548 $10 $31,864 $ -- $(28,342) $ 3,532
========= === ======= ===== ======== =======
Proceeds from deferred stock compensation
plan................................... -- -- 179 -- -- 179
Purchase of deferred stock shares........ -- -- (96) -- -- (96)
Stock options exercised.................. 3,000 -- 195 -- -- 195
Dividends accrued on redeemable preferred
stock.................................. -- -- (897) -- -- (897)
Net income............................... -- -- -- -- 5,215 5,215
--------- --- ------- ----- -------- -------
Balance at January 3, 1998................... 1,011,548 $10 $31,245 $ -- $(23,127) $ 8,128
========= === ======= ===== ======== =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-12
<PAGE> 129

EYE CARE CENTERS OF AMERICA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLAR AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------------
DECEMBER 30, DECEMBER 28, JANUARY 3,
1995 1996 1998
------------ ------------ ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss).................................. $(9,119) $ 1,418 $ 5,215
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation.................................. 9,678 9,646 12,131
Amortization of intangibles................... 6,000 3,483 3,675
Amortization of pre-opening costs............. 370 126 178
Amortization of deferred gain................. -- -- (53)
Deferred revenue.............................. (168) (378) 232
Deferred rent................................. 495 417 602
Other......................................... (14) 217 (125)
(Gain) loss on disposition of property and
equipment................................... 96 80 (120)
Changes in operating assets and liabilities:
Accounts and notes receivable...................... (1,833) (23) (1,667)
Inventory.......................................... 1,425 325 951
Prepaid expenses and other......................... (136) 194 (2,848)
Accounts payable and accrued liabilities........... 1,690 (1,542) (2,655)
------- -------- --------
Net cash provided by operating activities............... 8,484 13,963 15,516
------- -------- --------
Cash flows from investing activities:
Acquisition of property and equipment.............. (6,765) (4,233) (9,470)
Net outflow for Visionworks Holdings, Inc. common
stock............................................ -- (53,521) --
Proceeds from sale of property and equipment....... 1,698 -- 5,731
Payment received on notes receivable............... 101 17 375
Net outflow for The Samit Group, Inc............... -- -- (17,462)
------- -------- --------
Net cash used in investing activities................... $(4,966) $(57,737) $(20,826)
======= ======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
F-13
<PAGE> 130

EYE CARE CENTERS OF AMERICA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLAR AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------------
DECEMBER 30, DECEMBER 28, JANUARY 3,
1995 1996 1998
------------ ------------ ----------
<S> <C> <C> <C>
Cash flows from financing activities:
Payments related to deferred compensation............. $ -- $ (382) $ (96)
Proceeds from issuance of long-term debt.............. -- 40,000 9,000
Proceeds from the stock option exercises.............. -- 238 195
Proceeds from the issuance of common stock............ -- 310 --
Proceeds from issuance of preferred stock............. 11,000 --
Payments related to debt issuance..................... -- (1,350) --
Payments of organization costs........................ (259) -- --
Proceeds from deferred stock compensation plan........ 244 158 179
Payments on debt and capital leases................... (115) (500) (7,440)
------ ------- -------
Net cash (used in) provided by financing activities........ (130) 49,474 1,838
------ ------- -------
Effect of exchange rate changes on cash and cash
equivalents.............................................. 29 577 --
------ ------- -------
Net increase (decrease) in cash and cash equivalents....... 3,417 6,277 (3,472)
Cash and cash equivalents at beginning of period........... 950 4,367 10,644
------ ------- -------
Cash and cash equivalents at end of period................. $4,367 $10,644 $ 7,172
====== ======= =======
Supplemental cash flow disclosures:
Cash paid during the period for:
Interest......................................... $8,603 $ 8,885 $13,580
Taxes............................................ $ -- $ 163 $ 160
Noncash investing and financing activities:
Additions of property and equipment.............. $1,152 $ 214 $ 495
Dividends accrued on redeemable preferred
stock.......................................... $ -- $ 220 $ 897
Adjustment of Visionworks property and equipment
to fair market value........................... $ -- $ -- $ 4,684
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements
F-14
<PAGE> 131

EYE CARE CENTERS OF AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS UNLESS INDICATED OTHERWISE)

1. DESCRIPTION OF BUSINESS AND ORGANIZATION

Description of business. Eye Care Centers of America, Inc. (the "Company")
operates super optical retail stores which sell prescription eyewear, sunglasses
and ancillary optical products, and feature on-site laboratories. The Company's
operations in the United States are located in the Southwest, Midwest,
Southeast, along the Gulf Coast in the Mid-Atlantic states and in the Pacific
Northwest. At the end of fiscal 1995, 1996, and 1997, the Company operated 152,
218 and 239 stores, respectively.

Organization. The Company was incorporated in Texas in 1984 and acquired
by Sears, Roebuck and Co. ("Sears"), effective December, 1987. Sears applied
"push down" accounting to record the acquisition of the Company. Assets and
liabilities were recorded at the historical basis, which approximated their fair
market value. The excess of the purchase price over acquired net assets was
recorded as goodwill. This goodwill was eliminated in recording the purchase
transaction described below.

On August 4, 1993, the Company, Sears and Eye Care Holdings, Inc.
("Holdings") entered into a Stock Purchase Agreement pursuant to which, on
October 7, 1993 (the "Desai Acquisition Date"), Sears sold 100 percent of the
common stock of the Company to Holdings (the "Desai Acquisition"). Holdings was
controlled by investment partnerships managed by Desai Capital Management
Incorporated ("DCMI"), a privately held investment management company. On the
Acquisition Date, Holdings merged into the Company, with the Company being the
surviving entity. Holdings was initially capitalized in 1993 through the
issuance of $70 million of 12 percent senior notes and $31 million of common
stock. The proceeds of this capitalization were used as follows (in millions):

<TABLE>
<S> <C>
Consideration to Sears for the Company's common stock....... $ 72.3
Consideration paid for a Noncompete and SearsCard credit
card agreement............................................ 18.0
Acquisition expenses........................................ 6.9
Working capital............................................. 3.8
------
$101.0
======
</TABLE>

On the Desai Acquisition Date, the purchase method of accounting was used
to record the assets acquired and liabilities assumed by the Company. Under
purchase accounting, a new historical cost basis was established for these
assets and liabilities and for accounting purposes a new entity was created. The
difference between the purchase price and the fair market value of the
identifiable assets acquired and liabilities assumed was recorded as goodwill.

On September 27, 1996 ("Visionworks Acquisition") the Company acquired all
of the outstanding shares of the capital stock of Visionworks Holdings, Inc.
("VHI"). At the time of the acquisition, VHI was a 60 store optical retailer
located along the Atlantic Coast from Florida to Washington, D.C. with 49
superstores and 11 optical centers located near Eckerd Corporation drug stores.
The Visionworks Acquisition price of $61.5 million was financed through (i) the
issuance of $11.0 million in mandatorily redeemable preferred stock plus
nondetachable warrants to purchase 150,000 shares of common stock of the
Company, (ii) borrowing under an amended and restated credit facility agreement
of $40.0 million, (iii) existing cash from the Company and (iv) the assumption
of a capital lease with Eckerd Corporation.

The Visionworks Acquisition was accounted for using the purchase method of
accounting. Accordingly, a portion of the purchase price was allocated to the
identifiable net assets acquired based on their estimated fair values with the
balance of the purchase price, $38.6 million, included in goodwill. The cost in
excess of net assets of the business acquired is being amortized over 25 years.
Results of operations for this acquired entity were included in the Company's
operating results from the date of acquisition.

F-15
<PAGE> 132
EYE CARE CENTERS OF AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(DOLLAR AMOUNTS IN THOUSANDS UNLESS INDICATED OTHERWISE)

Effective September 30, 1997, the company acquired all of the outstanding
capital stock of The Samit Group, Inc. ("TSGI") (the "Hour Eyes Acquisition").
The acquisition cost to the Company was $22.25 million less TSGI's acquisition
date liabilities. Included in this acquisition cost is an earn-out provision of
$2.25 million payable to the sellers based upon certain 1997 financial
performance criteria, which were achieved. TSGI, through its subsidiaries, has
ten optical retail locations in Maryland and Washington, D.C. In addition,
subsidiaries of the Company entered into a long-term business management
agreement with Hour Eyes Doctors of Optometry, P.C., a Virginia professional
corporation which purchased the Virginia assets (twelve optical retail
locations) of Dr. Samit's Hour Eyes Optometrist, P.C. The Hour Eyes Acquisition
was financed through (i) borrowing under the Amended Credit Facility (defined
herein) of $9.0 million and (ii) existing cash from the Company.

The Hour Eyes Acquisition, which occurred during the fourth quarter of
1997, was accounted for using the purchase method of accounting. Accordingly, a
portion of the purchase price has been preliminarily allocated to the
identifiable net assets acquired based on their estimated fair values with the
balance of the purchase price included in goodwill. The cost in excess of
identifiable net assets of the business acquired will be amortized over 25
years.

Results of operations for this acquired entity were included in the
Company's operating results from the date of acquisition. As a result of the
long-term business management agreement with Hour Eyes Doctor of Optometry,
P.C., the Company records a management fee but does not include the results of
operations from the twelve Virginia stores in the Company's consolidated results
of operations. Assuming the acquisition of TSGI had occurred at the beginning of
fiscal year 1997 the consolidated pro forma results of operations (unaudited)
would have shown the following results:

<TABLE>
<CAPTION>
FISCAL
--------------------
1996 1997
---- ----
<S> <C> <C>
Revenues................................................ $217,029 $229,626
Net income.............................................. $ 953 $ 6,984
</TABLE>

Such pro forma amounts are not necessarily indicative of what actual
consolidated results of operations might have been if the acquisition had been
effective at the beginning of such fiscal years nor should such results be
deemed predictive of future results of operations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation. The financial statements include the accounts of
the Company and its wholly owned subsidiaries, Enclave Advancement Group, Inc.,
Eye Care Centers de Mexico, S.A. De C.V., ECCA Managed Vision Care, Inc.,
Visionworks Holdings, Inc., Visionworks, Inc., Visionworks Properties, Inc. and
Eye Care Holdings, Inc. All significant intercompany accounts and transactions
have been eliminated in consolidation. Certain reclassifications have been made
to the prior period statements to conform to the current period presentation.

Use of Estimates. In preparing financial statements in conformity with
generally accepted accounting principles, management is required to make
estimates and assumptions. These estimates and assumptions affect the reported
amount of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and revenues and expenses
during the reporting period. Actual results could differ from these estimates.

Reporting Periods. The Company uses a 52/53-week reporting format. The
fiscal years ended 1995 and 1996 consisted of 52 weeks. The fiscal year ended
1997 consisted of 53 weeks.

F-16
<PAGE> 133
EYE CARE CENTERS OF AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(DOLLAR AMOUNTS IN THOUSANDS UNLESS INDICATED OTHERWISE)

Foreign Currency Translation. Prior to December 1996, the financial
position and results of operations of the Company's subsidiary in Mexico were
measured using the local currency as the functional currency. Assets and
liabilities denominated in foreign currencies were translated into U.S. dollars
at exchange rates in effect at year-end, while revenues and expenses were
translated at average exchange rates prevailing during the year. During fiscal
year 1995 and through the third quarter of 1996, the resulting translation gains
and losses were charged directly to cumulative translation adjustment, a
component of stockholders' equity. During the fourth quarter of 1996, the
Mexican economy was assessed by management to be highly inflationary based on
the decline of the peso to the U.S. dollar and therefore, impacted the Company's
investment in its subsidiary in Mexico. As such the cumulative translation
adjustment as of December 28, 1996 of $560 was recorded through the results of
operations. During fiscal year 1997, the U.S. dollar represented the functional
currency of the Mexico subsidiary. During fiscal year 1997, translation gains
and losses are included in determining net income and foreign currency
transaction gains and losses are included in net income.

Cash and Cash Equivalents. All short-term investments that mature in less
than 90 days when purchased are considered cash equivalents for purposes of
disclosure in the consolidated balance sheets and consolidated statements of
cash flows. Cash equivalents are stated at cost, which approximates market
value.

Accounts and Notes Receivable. Accounts and notes receivable include
receivables from credit card companies, insurance reimbursements, merchandise,
rent, license fee receivables and notes receivable from certain optometrists
which have purchased optical equipment from the Company. Merchandise receivables
result from product returned to vendors pending credit or exchange for new
product.

Inventory. Inventory consists principally of eyeglass frames, ophthalmic
lenses and contact lenses and is stated at the lower of cost or market. Cost is
determined using the weighted average method which approximates the first-in,
first-out (FIFO) method.

The Company purchases approximately 54% of its lenses from two principal
vendors and while these suppliers provide a significant share of the lenses used
by the Company, lenses are considered a commodity product and can be purchased
from a number of other vendors on comparable terms. The Company believes its
relationships with its existing vendors are satisfactory.

Prepaid Expenses -- Store Preopening Costs. Preopening costs directly
associated with store openings are capitalized and amortized using the
straight-line method over one year following each store's opening. Amortization
expense of store preopening costs for fiscal 1995, 1996 and 1997 was
approximately $370, $126 and $178, respectively. Store preopening costs of $67,
$130 and $156 are included in prepaid expenses and other as of December 30,
1995, December 28, 1996 and January 3, 1998, respectively.

Income Taxes. The Company records income taxes under Financial Accounting
Standards Board Statement ("FASB") No. 109 using the liability method. Under
this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse.

Property and Equipment. Property and equipment is recorded at cost. On the
Desai Acquisition Date, property and equipment balances were adjusted to reflect
their fair market value, as determined by an independent appraisal. For
financial statement purposes, depreciation of building, furniture and equipment
is calculated using the straight-line method over the estimated useful lives of
the assets. Leasehold improvements are amortized on a straight-line method over
the shorter of the life of the lease or the estimated useful lives of the
assets. Depreciation of capital leases is calculated using the straight-line
method over the term of the lease.

F-17
<PAGE> 134
EYE CARE CENTERS OF AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(DOLLAR AMOUNTS IN THOUSANDS UNLESS INDICATED OTHERWISE)

Estimated useful lives are as follows:

<TABLE>
<S> <C>
Building.................................................... 20 years
Furniture and equipment..................................... 3 to 10 years
Leasehold improvements...................................... 5 to 10 years
</TABLE>

In accordance with purchase accounting, the financial statements for fiscal
1995, 1996 and 1997 reflect depreciation accumulated only since the Desai,
Visionworks and Hour Eyes Acquisition dates and depreciation has been recorded
based on the estimated remaining useful lives of the assets as of the Desai,
Visionworks and Hour Eyes Acquisition dates.

Maintenance and repair costs are charged to expense as incurred.
Expenditures for significant betterments are capitalized.

Intangibles. Intangibles principally consist of the amounts of excess
purchase price over the market value of acquired net assets ("goodwill") and a
noncompete agreement. Goodwill established on the Acquisition Date is being
amortized on a straight-line basis over a period of 25 years. The noncompete
agreement intangible, which is related to the Hour Eyes Acquisition, is being
amortized over three years on a straight-line basis. In connection with the Hour
Eyes Acquisition, the Company entered into a long-term agreement which is being
amortized over 25 years. The 1996 Intangibles balance included the fully
amortized Sears noncompete agreement and SearsCard credit card agreement. These
two agreements were amortized over three years beginning on the Desai
Acquisition Date at a rate of 60 percent, 30 percent and 10 percent,
respectively.

Other Assets. Other assets consist primarily of deferred debt financing
costs associated with the Desai, Visionworks and Hour Eyes Acquisitions. These
costs are being amortized into expense using the effective interest method over
the life of the associated debt.

Long-Lived Assets. Periodically, the Company evaluates the realizability
of long-lived assets based upon expectations of nondiscounted cash flows and
operating income. Based upon its most recent analysis, the Company believes that
no impairment of long-lived assets exists at January 3, 1998.

Deferred Revenue -- Replacement Certificates and Warranty Contracts. At
the time of a frame sale, some customers purchase a warranty contract covering
frame defects or damage during the 12-month period subsequent to the date of the
sale. Revenue relating to these contracts is deferred and recognized on a
straight-line basis over the life of the warranty contract (one year). Costs
incurred to fulfill the warranty are expensed when incurred. Certain frame
purchases include a one-year warranty period without requiring the separate
purchase of a warranty contract. Reserves are established for the expected cost
of repair related to these frame sales. At the end of fiscal 1996 and 1997, the
Company has established a reserve of approximately $100 related to these
warranties which is included in other accrued expenses on the accompanying
balance sheet.

Revenue Recognition. Sales and related costs are recognized by the Company
upon the sale of products at company-owned retail locations. Licensing fees
collected from independent optometrists for using the Company's trade name
"Master Eye Associates" are recognized ratably for the period of the license.
Managed care revenues are derived from monthly capitation payments from health
benefit payors which contract with the Company. The Company records this revenue
at contractually agreed upon rates. Historically, the Company's highest sales
occur in the first and third quarters.

Advertising Costs. Advertising costs of the Company include costs related
to broadcast and print media advertising expenses. The Company expenses
production costs and media advertising costs the first time the

F-18
<PAGE> 135
EYE CARE CENTERS OF AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(DOLLAR AMOUNTS IN THOUSANDS UNLESS INDICATED OTHERWISE)

advertising takes place. For the fiscal years ended 1995, 1996 and 1997,
advertising costs amounted to approximately $21,865, $21,779 and $24,613
respectively.

Interest Expense, net. Interest expense, net consists of the following:

<TABLE>
<CAPTION>
YEAR-ENDED
------------------------------------------
DECEMBER 30, DECEMBER 28, JANUARY 3,
1995 1996 1998
------------ ------------ ----------
<S> <C> <C> <C>
Interest expense......................... $9,046 $10,342 $14,380
Interest income.......................... (207) (443) (642)
------ ------- -------
Interest expense, net.................... $8,839 $ 9,899 $13,738
====== ======= =======
</TABLE>

Stock Based Compensation. The Company grants stock options for a fixed
number of shares to employees with an exercise price equal to the fair value of
the shares at the date of grant. During the first quarter of 1996, the Company
adopted Financial Accounting Boards Statement ("FASB") No. 123, "Accounting for
Stock-Based Compensation". In accordance with FASB No. 123, the Company has
continued to account for stock option grants in accordance with APB Opinion No.
25, Accounting for Stock Issues to Employees, and, accordingly, recognized no
compensation expense for the stock option grants.

3. TRANSACTION WITH DCMI AND OTHER RELATED PARTIES

In connection with the Desai Acquisition, the Company paid approximately
$1,322 to DCMI, or partnerships controlled by DMCI, for consulting fees and
expense reimbursements related to the associated debt and equity offerings. The
Company has entered into an agreement with DCMI whereby the Company pays DCMI
$144 per year as an advisory fee for consulting and strategic advice and $56 per
year for the consulting services of three Board of Directors members who are
also employees and/or officers of DCMI. For fiscal 1995, 1996 and 1997, the
Company has expensed $200 each year related to these agreements. During 1996,
the Company paid a fee to DCMI of $615,000 related to consulting services in
conjunction with the acquisition of the capital stock of Visionworks Holdings,
Inc.

The Company maintains an amended credit agreement with a foreign bank that
is also a minority stockholder of the Company. The credit agreement provides up
to $5 million in revolving loans and $49 million in term loans.

4. PREPAID EXPENSES AND OTHER

Prepaid expenses and other consists of the following:

<TABLE>
<CAPTION>
DECEMBER 28, JANUARY 3,
1996 1998
------------ ----------
<S> <C> <C>
Prepaid insurance..................................... $ 95 $ 102
Prepaid store supplies................................ 778 927
Prepaid rentals....................................... 10 2,282
Other................................................. 181 255
------ ------
$1,064 $3,566
====== ======
</TABLE>

F-19
<PAGE> 136
EYE CARE CENTERS OF AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(DOLLAR AMOUNTS IN THOUSANDS UNLESS INDICATED OTHERWISE)

5. PROPERTY AND EQUIPMENT

Property and equipment, net consists of the following:

<TABLE>
<CAPTION>
DECEMBER 28, JANUARY 3,
1996 1998
------------ ----------
<S> <C> <C>
Land................................................ $ 6,500 $ 6,000
Building............................................ 5,427 3,144
Furniture and equipment............................. 47,776 57,737
Leasehold improvements.............................. 27,580 32,097
-------- --------
87,283 98,978
Less accumulated depreciation and amortization...... (31,061) (41,766)
-------- --------
Property and equipment, net......................... $ 56,222 $ 57,212
======== ========
</TABLE>

6. INTANGIBLE ASSETS

The following is a summary of the components of intangible assets along
with the related accumulated amortization for the fiscal years then ended.

<TABLE>
<CAPTION>
DECEMBER 28, JANUARY 3,
1996 1998
------------ ----------
<S> <C> <C>
Goodwill and other.................................. $ 67,371 $ 72,869
Management Agreement................................ -- 7,988
Less accumulated amortization....................... (3,708) (6,495)
-------- --------
Net............................................ 63,663 74,362
-------- --------
Noncompetes and SearsCard agreement................. 18,000 1,000
Less accumulated amortization....................... (18,000) (83)
-------- --------
Net............................................ -- 917
-------- --------
Intangibles, net.................................... $ 63,663 $ 75,279
======== ========
</TABLE>

7. OTHER ACCRUED EXPENSES

Other accrued expenses consists of the following:

<TABLE>
<CAPTION>
DECEMBER 28, JANUARY 3,
1996 1998
------------ ----------
<S> <C> <C>
Property taxes......................................... $1,002 $1,266
Professional fees...................................... 883 489
Payroll and sales/use taxes............................ 846 573
Store expenses......................................... 807 1,198
Insurance.............................................. 500 354
Construction........................................... 285 495
Acquisition liability.................................. -- 2,250
Other.................................................. 2,293 2,575
------ ------
Other accrued expenses................................. $6,616 $9,200
====== ======
</TABLE>

8. LONG-TERM DEBT

Amended Credit Facility. In September 1997, the Company amended its
existing credit agreement to provide for $49 million in term loans and $5
million in revolving loans (collectively, the "Amended Credit Facility"),
subject to certain customary conditions including a borrowing base condition. In
addition, the

F-20
<PAGE> 137
EYE CARE CENTERS OF AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(DOLLAR AMOUNTS IN THOUSANDS UNLESS INDICATED OTHERWISE)

Company has agreed to guarantee a $1 million loan that is related to the
long-term business agreement entered into at the time of the Hour Eyes
Acquisition. Any loans outstanding under the Amended Credit Facility are
scheduled to bear interest at (i) a rate which is the higher of the Federal
Funds Rate as published by the Federal Reserve Bank of New York plus 0.5% or the
prime commercial lending rate of the bank, in each case plus an interest margin
of 1.5% or (ii) an adjusted LIBOR, plus an interest margin of three percent.
Upon the occurrence and during the continuance of any payment default or any
breach of negative or financial covenants and after the lapse of any applicable
grace periods, a two percent per annum penalty in excess of the rate otherwise
applicable is due upon demand. Outstanding amounts are secured by substantially
all of the Company's accounts receivable, inventory and other assets (such as
tradenames and subsidiary stock). All loans under the Amended Credit Facility
mature on September 15, 2002. Term loan amounts mature on a scheduled basis that
commenced on December 31, 1996.

Senior Notes. On the Desai Acquisition Date, the Company issued $70
million 12 percent senior notes with detachable warrants to acquire common stock
(the "Warrants"). The senior notes and the Warrants were offered as Units (the
"Units") consisting of $1,000 principal amount of senior notes and one Warrant
to acquire 0.4522 share of common stock of the Company for no additional
consideration. The senior notes and the Warrants may be traded separately. The
fair value of the Warrants as of the Desai Acquisition Date was $600 and this
value was recorded in stockholders' equity with a corresponding discount from
the face value of the senior notes. This discount is being accreted to interest
expense using the effective interest method over the life of the debt.

In June 1994, the senior notes discussed above were exchanged for $70
million of publicly registered 12 percent Senior Notes (the "Senior Notes"). The
Senior Notes contain substantially the same provisions as the senior notes
issued on the Desai Acquisition Date.

The Senior Notes mature on October 1, 2003. The Senior Notes bear interest
at 12 percent and interest is payable semiannually on April 1 and October 1 of
each year. The Senior Notes are redeemable at the option of the Company in whole
or in part, on or after October 1, 1998, at the redemption prices set forth in
the offering, plus accrued and unpaid interest. The Senior Notes will be
redeemed pursuant to mandatory sinking fund payments of $17.5 million each
October 1 commencing October 1, 2000. Upon a change of control, as defined, each
holder of the Senior Notes will have the right to require the Company to
repurchase such notes at 101 percent of the principal amount thereof, plus
accrued and unpaid interest.

The Senior Notes are senior uncollateralized obligations of the Company and
will rank pari passu with all other indebtedness of the Company that by its
terms other indebtedness is not subordinate to the Senior Notes. In connection
with the issuance of the Senior Notes, the Company incurred approximately $4.6
million in debt issuance costs. These amounts are classified within other assets
in the accompanying balance sheets and are being amortized using the effective
interest method over the life of the Senior Notes. The unamortized amount of
debt issuance costs as of December 28, 1996 and January 3, 1998 related to the
Senior Notes was $3.4 million and $2.9 million, respectively.

The Senior Notes contain various restrictive covenants, including
limitations on additional indebtedness, restriction on dividends and sale of
assets other than in the normal course of business. The Amended Credit Facility
contains additional restrictive covenants including a pledge of any initial
public offering proceeds, a limitation on capital requirements, minimum net
worth and working capital requirements. As of December 28, 1996 and January 3,
1998 the Company was in compliance with the financial reporting covenants.

Capital Lease. In connection with the purchase of the capital stock of
Visionworks Holdings, Inc., the Company assumed an agreement to sublease land,
buildings and equipment at eight operating locations. Under the terms of the
agreement, the Company committed to purchase such properties on February 1, 1999
for $10.0 million and to pay Eckerd Corporation an annual interest amount of
$1.3 million until February 1,

F-21
<PAGE> 138
EYE CARE CENTERS OF AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(DOLLAR AMOUNTS IN THOUSANDS UNLESS INDICATED OTHERWISE)

1999 for the subleases. The Company has accounted for this transaction as a
capital lease and has recorded the assets, as shown below, and the future
obligation on the balance sheet at $10.0 million.

<TABLE>
<CAPTION>
DECEMBER 28, JANUARY 3,
1996 1998
------------ ----------
<S> <C> <C>
Land................................................... $6,000 $6,000
Buildings and equipment................................ 3,979 3,979
------ ------
$9,979 $9,979
====== ======
</TABLE>

Long-term debt outstanding, including capital lease obligations, consists
of the following:

<TABLE>
<CAPTION>
DECEMBER 28, JANUARY 3,
1996 1998
------------ ----------
<S> <C> <C>
Senior Notes payable, face amount of $70,000, net of
unamortized debt discount of $436 and $370
respectively........................................... $ 69,564 $ 69,630
Amended Credit Facility.................................. 39,500 42,645
Mortgage Note............................................ 1,567 --
Doctor Notes............................................. -- 135
Capital lease obligations................................ 9,979 9,979
-------- --------
120,610 122,389
Less current portion..................................... (3,864) (7,003)
-------- --------
$116,746 $115,386
======== ========
</TABLE>

Future principal maturities for long-term debt and capital lease
obligations are as follows:

<TABLE>
<S> <C>
1998........................................................ $ 7,003
1999........................................................ 18,872
2000........................................................ 27,413
2001........................................................ 27,840
2002........................................................ 24,131
Beyond 2002................................................. 17,500
--------
Total future principal payments on debt..................... 122,759
Less unamortized discount on Senior Notes................... (370)
--------
Carrying value of long-term debt............................ $122,389
========
</TABLE>

As of the end of fiscal 1996 and 1997 the fair value of the Company's
Senior Notes were approximately $75.6 and $75.6 million, respectively. As of
January 3, 1998 the fair value of the capital lease obligation was approximately
$10.0 million. These fair values were estimated using quoted market prices and
the present value of estimated future cash flows. The carrying amount of the
variable rate Amended Credit Facility approximates its fair value.

9. MANDATORILY REDEEMABLE PREFERRED STOCK

During 1996, the Company issued 110,000 shares of Series A Cumulative
Mandatorily Redeemable Exchangeable Pay-In-Kind Preferred Stock ("Preferred
Stock"). Cumulative dividends of eight percent per annum applied to the amount
of $100 per share are payable quarterly when declared by the Board of Directors.
These dividends are charged to additional paid-in capital. A non-detachable
warrant to purchase 1.3636 shares of Common Stock was attached to each share of
Preferred Stock. On September 30, 2004, each share of Preferred Stock shall be
redeemed at $100 per share together with accumulated and unpaid dividends. The
shares of preferred stock have no voting rights. At the option of the Company
the Preferred Stock may be exchanged for subordinated notes with eight percent
per annum interest, due September 2004.

F-22
<PAGE> 139
EYE CARE CENTERS OF AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(DOLLAR AMOUNTS IN THOUSANDS UNLESS INDICATED OTHERWISE)

10. STOCKHOLDERS' EQUITY

Warrants. As discussed in Note 7, the Senior Notes were issued with
detachable warrants entitling the holder to acquire, for no additional
consideration, .4522 shares of common stock. Warrant holders also have a
contractual right to receive their pro rata share of dividends. Prior to their
expiration on October 1, 2003, the Warrants will be exercisable at any time on
or after October 1, 1998, or prior to such date upon the occurrence of certain
triggering events (as defined in the Warrant Agreement). Upon exercise, the
Warrant holders will be entitled, in the aggregate, to 31,654 shares of common
stock.

Senior Officers' Stock Options. On the Desai Acquisition Date, the Company
entered into employment agreements with certain senior officers (the "Senior
Officers"). In connection with these employment agreements, each Senior Officer
also entered into a non-qualified stock option agreement whereby each Senior
Officer was granted stock options to purchase common stock of the Company at
$31.00 per share. Certain of these options vested as of the Desai Acquisition
Date while others vest over time or upon the Company reaching certain
profitability levels for fiscal years 1995 through 1998. If the profitability
levels are not reached for a given year, certain options fail to become
exercisable and are terminated. The other remaining unexercisable options are
carried forward to the next succeeding vesting period. The options expire no
later than ten years after the date of the grant.

Following is a summary of activity in the plan for the fiscal years ended
1995, 1996 and 1997.

<TABLE>
<CAPTION>
AVG. OPTION
PRICE OPTIONS OPTIONS
PER SHARE($) OUTSTANDING EXERCISABLE
------------ ----------- -----------
<S> <C> <C> <C>
Outstanding -- December 31, 1994.......... 106,348 27,699
Became exercisable................... -- --
Canceled or expired.................. 31.00 (5,540) (5,540)
-------- -------
Outstanding -- December 30, 1995.......... 100,808 22,159
Granted.............................. 31.00 75,000 --
Became Exercisable................... 31.00 -- 14,748
Canceled or expired.................. 31.00 (100,808) (26,907)
-------- -------
Outstanding -- December 28, 1996.......... 75,000 10,000
Granted.............................. 31.00 -- --
Became Exercisable................... 31.00 -- 28,333
Canceled or expired.................. -- --
-------- -------
Outstanding -- January 3, 1998....... 75,000 38,333
======== =======
</TABLE>

The weighted average fair market value and weighted average contractual
life of options outstanding as of January 3, 1998 was $31.00 and 9 years;
respectively. The weighted average exercise price of options exercisable as of
January 3, 1998 was $31.00.

1993 Executive Stock Option Plan. On the Desai Acquisition Date the
Company authorized a non-qualified stock option plan whereby key executives
(other than the Senior Officers) may be offered options to purchase the
Company's common stock. Under the plan, the exercise price set by the Board of
Directors of the Company must at least equal the fair market value of the
Company's common stock at the date of grant. The options vest in four equal
annual installments provided the Optionee is an employee of the Company on the
anniversary date and shall expire 10 years after the date of grant. Under
certain specified conditions the vesting schedule may be altered.

F-23
<PAGE> 140
EYE CARE CENTERS OF AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(DOLLAR AMOUNTS IN THOUSANDS UNLESS INDICATED OTHERWISE)

Following is a summary of activity in the plan for the years 1995, 1996 and
1997.

<TABLE>
<CAPTION>
AVG. OPTION
PRICE OPTIONS OPTIONS
PER SHARE($) OUTSTANDING EXERCISABLE
------------ ----------- -----------
<S> <C> <C> <C>
Outstanding -- December 31, 1994...... 27,414 4,354
Granted.......................... 31.00 13,168 --
Became exercisable............... 31.00 -- 1,750
Canceled or expired.............. 31.00 (8,769) (1,449)
------- ------
Outstanding -- December 30, 1995...... 31,813 4,655
Granted.......................... -- --
Became exercisable............... 31.00 -- 6,461
Canceled or expired.............. 31.00 (13,168) (3,438)
------- ------
Outstanding -- December 28, 1996...... 18,645 7,678
Granted.......................... -- --
Became exercisable............... 31.00 -- 8,584
Canceled or expired.............. -- --
------- ------
Outstanding -- January 3, 1998........ 18,645 16,262
======= ======
</TABLE>

The weighted average fair market value and weighted average contractual
life of options outstanding as of January 3, 1998 was $31.00 and 6.7 years;
respectively. The weighted average exercise price of options exercisable as of
January 3, 1998 was $31.00.

1996 Executive Stock Option Plan. On September 5, 1996, the Company
authorized a non-qualified stock option plan whereby key executives (other than
the Senior Officers) may be offered options to purchase the Company's common
stock. Under the plan, the exercise price set by the Board of Directors of the
Company must at least equal the fair market value of the Company's common stock
at the date of grant. The options begin vesting one year after the date of grant
in four installments of 10%, 15%, 25% and 50% provided the Optionee is an
employee of the Company on the anniversary date and shall expire 10 years after
the date of grant. Under certain specified conditions the vesting schedule may
be altered. During 1996, the Company granted options to purchase 91,000 shares
under this plan at an option price of $31 to $65 per share. During 1997, the
Company granted options to purchase 26,000 shares under this plan.

<TABLE>
<CAPTION>
AVG. OPTION
PRICE OPTIONS OPTIONS
PER SHARE($) OUTSTANDING EXERCISABLE
------------ ----------- -----------
<S> <C> <C> <C>
Outstanding -- December 30, 1995... -- --
Granted....................... 31.00 to 65.00 91,000 --
Became exercisable............ -- --
Canceled or expired........... -- --
------- -----
Outstanding -- December 28, 1996... 91,000 --
Granted....................... 70.00 to 105.00 26,000 --
Became exercisable............ 31.00 to 65.00 -- 6,450
Canceled or expired........... 31.00 (7,500) (200)
------- -----
Outstanding -- January 3, 1998..... 109,500 6,250
======= =====
</TABLE>

F-24
<PAGE> 141
EYE CARE CENTERS OF AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(DOLLAR AMOUNTS IN THOUSANDS UNLESS INDICATED OTHERWISE)

The weighted average fair market value and weighted average contractual
life of options outstanding as of January 3, 1998 was $45.00 and 9 years;
respectively. The weighed average exercise price of options exercisable as of
January 3, 1998 was $31.00.

Other Stock Options and Warrants. In November 1993, the Company granted
stock options to two directors to purchase 3,000 and 6,000 shares, respectively,
of the Company's common stock. Each option is exercisable at $31.00 per share to
be vested in equal installments on December 31, of each of 1994, 1995, and 1996
with such options expiring 10 years from the date of grant. Additionally, in
December 1995 the Company granted stock options to a director to purchase 4,000
shares of the Company's common stock. The option is exercisable at $31.00 per
share to vest upon the date of grant and expire 10 years from the date of grant.
In December 1996, the Company granted stock options to three directors to
purchase shares of the Company's common stock. Each option vests in four equal
installments starting on December 5, 1997 and expires ten years from the date of
grant. One director was granted stock options of 5,000, 4,000 and 4,000 shares
exercisable at $70, $90 and $110 per share, respectively. Another director was
granted 1,000 shares at $70 per share. A third director was granted 1,000 and
3,000 shares at $70 and $65 per share, respectively. Also, the third director
was granted 3,000 shares at $70 per share.

In November 1993, the Company granted a warrant to a foreign bank to
purchase a total of 3,000 shares of the Company's common stock. The warrant is
vested in full at the earlier of October 1, 1998 or after the occurrence of a
"Triggering Event." The "Triggering Event" shall be either of the following
events: (i) the sale of 51 percent or more of the common stock of the Company to
a third party in one or a series of transactions; or (ii) voluntary or
involuntary bankruptcy or insolvency of the Company or the approval of its
stockholders of its dissolution, liquidation or winding up. The warrant is
exercisable at $31.00 per share with such warrant expiring on October 1, 2003.

In May 1994, the Board of Directors authorized the sale of up to $200 of
common stock of the Company, at $31.00 per common share to two directors ($100
each). As of January 3, 1998, one director has 226 shares of common stock
related to this authorization.

The Company has elected to follow Accounting Principles Board Opinion No.
25 "Accounting for Stock Issued to Employees" ("APB 25") and related
interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under FASB
Statement No. 123 "Accounting for Stock-Based Compensation," requires use of
option valuation models that were not developed for use in valuing employee
stock options of privately held companies. Under APB 25, because the exercise
price of the Company's employee stock options equals the estimated fair value of
the underlying stock on the date of grant, no compensation expense is
recognized.

Pro forma information regarding net income and earnings per share is
required by FASB Statement No. 123, which also requires that the information be
determined as if the Company has accounted for its employee stock options
granted subsequent to December 31, 1994 under the fair value method of that
Statement. The fair value for these options was estimated at the date of the
grant using the minimum value method with the following assumptions for 1995,
1996 and 1997, respectively: risk-free interest rates of 6%; no dividend yield;
and a weighted-average expected life of the options ranging from 1 to 4 years.

Option valuation models require the input of highly subjective assumptions.
Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

F-25
<PAGE> 142
EYE CARE CENTERS OF AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(DOLLAR AMOUNTS IN THOUSANDS UNLESS INDICATED OTHERWISE)

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. In fiscal 1995
the effect to the Company's pro forma net income would not have been
significant. The Company's pro forma net income for fiscal year 1996 and 1997
are as follows:

<TABLE>
<CAPTION>
FISCAL FISCAL
1996 1997
------ ------
<S> <C> <C>
Pro forma Net Income.................................... $1,218 $4,802
</TABLE>

The pro forma calculations include only the effects of 1995 through 1997 grants.
As such, the impacts are not necessarily indicative of the effects on reported
net income of future years.

Deferred Stock Plan. Effective January 1, 1994, the Company adopted a
Deferred Stock Plan whereby certain directors, executives or employees of the
Company (as approved by the Board of Directors) may elect to defer part of their
compensation to be used to purchase common stock of the Company at fair market
value to be determined in advance by the Board of Directors.

The distributions of the stock pursuant to this plan will be deferred until
no earlier than January 1, 1998. Total authorized shares to be issued under this
plan are 38,500. For fiscal 1996 and 1997, the Company recorded $158 and $179
respectively, of additional paid-in capital resulting from the deferred
compensation under this plan. There are 16,849 shares of common stock that are
issuable under this plan at January 3, 1998.

11. INCOME TAXES

The provision for income taxes is comprised of the following:

<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------
DECEMBER 30, DECEMBER 28, JANUARY 3,
1995 1996 1998
------------ ------------ ----------
<S> <C> <C> <C>
Current............................. $ -- $188 $335
Deferred............................ -- -- --
---- ---- ----
$ -- $188 $335
==== ==== ====
</TABLE>

There was no net Federal or State income tax expense for the fiscal year
ended December 30, 1995. For the years ended December 28, 1996 and January 3,
1998 there was approximately $188 and $335 of federal income tax expense.

The reconciliation between the federal statutory tax rate at 34% and the
Company's effective tax rate is as follows:

<TABLE>
<CAPTION>
DECEMBER 28, JANUARY 3,
1996 1998
------------ ----------
<S> <C> <C>
Expected tax expense (benefit).................... $ 546 $ 1,887
Goodwill.......................................... 459 872
Deferred Rent..................................... 142 142
Investment in foreign subsidiary.................. 305 45
Nondeductible meals and donations................. 19 29
Change in valuation allowance..................... (1,350) (2,924)
Other............................................. 67 284
------- -------
$ 188 $ 335
======= =======
</TABLE>

F-26
<PAGE> 143
EYE CARE CENTERS OF AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(DOLLAR AMOUNTS IN THOUSANDS UNLESS INDICATED OTHERWISE)

The components of the net deferred tax asset (liability) are as follows:

<TABLE>
<CAPTION>
DECEMBER 28, JANUARY 3,
1996 1998
------------ ----------
<S> <C> <C>
Total deferred tax liabilities, current............. $ (35) $ (55)
Total deferred tax liabilities, long-term........... (788) (329)
Total deferred tax assets, current.................. 3,150 2,458
Total deferred tax assets, long-term................ 7,094 4,817
Valuation Allowance................................. (9,421) (6,889)
------- -------
Net deferred tax assets (liabilities).......... $ -- $ 2
======= =======
</TABLE>

The sources of the difference between the financial accounting and tax
basis of the Company's assets and liabilities which give rise to the deferred
tax assets and deferred tax liabilities are as follows:

<TABLE>
<CAPTION>
DECEMBER 28, JANUARY 3,
1996 1998
------------ ----------
<S> <C> <C>
Deferred tax assets:
Deferred rent.................................. $ 660 $ 743
Deferred compensation.......................... 62 9
Deferred revenue............................... 983 1,055
Net operating loss and credit carryforwards.... 5,783 2,057
Noncompete and SearsCard Agreements............ 185 31
Inventory basis differences.................... 564 453
Accrued salaries............................... 832 198
Property and equipment......................... 1,128 2,729
Other.......................................... 47 --
------- -------
Total deferred tax assets...................... 10,244 7,275
Valuation allowance............................ (9,421) (6,889)
------- -------
Net deferred tax assets........................ $ 823 $ 386
======= =======
Deferred tax liabilities:
Property and equipment......................... $ 566 $ --
Store preopening costs......................... 44 53
Deferred financing costs....................... 91 76
Accounts receivable............................ 86 37
Other.......................................... 36 218
------- -------
$ 823 $ 384
======= =======
</TABLE>

At January 3, 1998, the Company had, subject to the limitations discussed
below, $4,513 of net operating loss carryforwards for tax purposes. These loss
carryforwards will expire from 2000 through 2010 if not utilized.

During September 1996, the Company acquired 100% of the common stock of
Visionworks Holdings, Inc. As a result of the limitations imposed by Section
382, the use of net operating loss carryforwards of $6,288 acquired in the
acquisition are limited to approximately $3,567 per year.

In addition to the Section 382 limitations, uncertainties exist as to the
future realization of the deferred tax asset under the criteria set forth under
FASB Statement No. 109. Therefore, the Company has established a valuation
allowance for deferred tax assets of $6,889 at January 3, 1998 and $9,421 at
December 28, 1996.

F-27
<PAGE> 144
EYE CARE CENTERS OF AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(DOLLAR AMOUNTS IN THOUSANDS UNLESS INDICATED OTHERWISE)

Based upon the weight of available evidence allowed under the criteria set forth
under FAS Statement No. 109, uncertainties exist as to the future realization of
the deferred tax asset. These uncertainties include lack of carryback potential
as the Company has incurred taxable losses in each of the past four years.
Further, the Company does not anticipate that it will produce taxable income
during the carryforward period. Therefore, the Company has established a full
valuation allowance for its deferred tax assets.

12. EMPLOYEE BENEFITS

401 (K) Plan. The Company maintains a defined contribution plan whereby
substantially all employees who have been employed for at least six consecutive
months are eligible to participate. Contributions are made by the Company as a
percentage of employee contributions. In addition, discretionary contributions
may be made at the direction of the Company's Board of Directors. Total Company
contributions were approximately $69, $97 and $163 for fiscal 1995, 1996 and
1997 respectively.

13. LEASES

The Company is obligated as lessee under operating leases for substantially
all of the Company's retail facilities as well as certain warehouse space. In
addition to rental payments, the leases generally provide for payment by the
Company of property taxes, insurance, maintenance and its pro rata share of
common area maintenance. These leases range in terms of up to 16 years. Certain
leases also provide for additional rent in excess of the base rentals calculated
as a percentage of sales.

The Company subleases a portion of substantially all of the stores to an
independent optometrist or a corporation controlled by an independent
optometrist. The terms of these leases or subleases are principally one to
fifteen years with rentals consisting of a percentage of gross receipts, base
rentals, or a combination of both. Certain of these leases contain renewal
options.

Certain of the Company's lease agreements contain provisions for scheduled
rent increases or provide for occupancy periods during which no rent payment is
required. For financial statement purposes, rent expense is recorded based on
the total rentals due over the entire lease term and charged to rent expense on
a straight-line basis. The difference between the actual cash rentals paid and
rent expenses recorded for financial statement purposes is recorded as a
deferred rent obligation. At the end of fiscal years 1996 and 1997, deferred
rent obligations aggregated approximately $1.9 million and $3.0 million,
respectively.

In December 1993, the Company purchased its headquarters facilities
location, which was previously leased under an operating lease. During 1997, the
Company sold this location for net proceeds of $4.8 million. The Company entered
into a 15 year operating lease with the new owners and will maintain its
corporate headquarters at its current location. As a result of this transaction,
the Company recorded a deferred gain, which will be amortized over the life of
the lease. In addition, the Company continues to sublease office space on terms
that range from one to four years within the headquarters facility.

Rent expense for all locations, net of lease and sublease income, is as
follows. For the purposes of this table, base rent expense includes common area
maintenance costs. Common area maintenance costs were approximately 23, 25 and
22 percent of base rent expense for fiscal years 1995, 1996 and 1997.

<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------
DECEMBER 30, DECEMBER 28, JANUARY 3,
1995 1996 1998
------------ ------------ ----------
<S> <C> <C> <C>
Base rent expense.......................... $ 15,613 $ 17,547 $24,007
Rent as a percent of sales................. 97 80 186
Lease and sublease income.................. (1,792) (2,280) (4,338)
-------- -------- -------
Rent expense, net.......................... $ 13,918 $ 15,347 $19,855
======== ======== =======
</TABLE>

F-28
<PAGE> 145
EYE CARE CENTERS OF AMERICA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(DOLLAR AMOUNTS IN THOUSANDS UNLESS INDICATED OTHERWISE)

Future minimum lease payments, excluding common area maintenance costs, net
of future minimum lease and sublease income under noncancelable operating leases
for the next five years and beyond are as follows:

<TABLE>
<CAPTION>
LEASE AND
RENTAL SUBLEASE
PAYMENTS INCOME NET
-------- --------- --------
<S> <C> <C> <C>
1998........................................... $ 20,241 $ 1,897 $ 18,344
1999........................................... 18,702 1,771 16,931
2000........................................... 17,315 1,644 15,671
2001........................................... 15,015 1,437 13,578
2002........................................... 12,277 1,199 11,078
Beyond 2002.................................... 40,230 2,824 37,406
-------- ------- --------
Rent expense, net.............................. $123,780 $10,772 $113,008
======== ======= ========
</TABLE>

14. COMMITMENTS AND CONTINGENCIES

The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's consolidated financial position or consolidated results of operations.

15. SIGNIFICANT EVENT

On March 6, 1998, the Company signed a Recapitalization Agreement which may
result in the transfer of significant ownership interest in the Company to
Thomas H. Lee Company. The financial statements presented do not reflect any
effects of this transaction.

16. YEAR 2000 ISSUE-UNAUDITED

The Company has developed a plan to modify its information technology to be
ready for the year 2000 and has begun converting critical data processing
systems. The Company currently expects the project to be substantially complete
by mid 1999. The estimated internal costs are not expected to be material. The
Company does not expect this project, including costs to upgrade and replace
systems to have a significant effect on operations.

F-29
<PAGE> 146

DR. BIZER'S VISION WORLD, PLLC AND AFFILIATES

CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
------------ --------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents..................... $ 103 $ 209
Accounts and notes receivable, net............ 1,183 1,384
Inventory..................................... 988 1,144
Prepaid expenses and other.................... 242 193
------ ------
Total current assets..................... 2,516 2,930
Property and Equipment, Net........................ 2,825 2,647
Intangible Assets, Net............................. 94 122
Other Assets....................................... 33 --
------ ------
5,4$68 $5,699
====== ======

LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)
Current Liabilities:
Accounts payable.............................. $ 488 $ 328
Deferred revenue.............................. 753 420
Current portion of long-term debt............. 341 75
Other accrued expenses........................ 831 698
------ ------
Total current liabilities................ 2,413 1,521
Long-Term Debt, less current maturities............ 1,257 1,424
Deferred Rent...................................... 61 78
------ ------
Total liabilities........................ 3,731 3,023
------ ------
Shareholders' Equity/(Deficit):
Common stock.................................. 2 2
Additional paid-in capital.................... 1,586 2,204
Retained earnings............................. 149 470
------ ------
Total shareholders' equity/(deficit)..... 1,737 2,676
------ ------
$5,468 $5,699
====== ======
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

F-30
<PAGE> 147

DR. BIZER'S VISION WORLD, PLLC AND AFFILIATES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------------
1997 1998
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Net Revenues....................................... $18,572 $19,412
Operating Costs and Expenses:
Cost of goods sold............................ 3,491 4,132
Selling, general and administrative expenses.. 12,563 13,468
------- -------
Total operating costs and expenses....... 16,054 17,600
------- -------
Income/(Loss) From Operations...................... 2,518 1,812
Interest Expense, Net.............................. 48 48
------- -------
Net Income/(Loss).................................. $ 2,470 $ 1,764
======= =======
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

F-31
<PAGE> 148

DR. BIZER'S VISION WORLD, PLLC AND AFFILIATES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------------
1997 1998
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income/(loss).................................. $ 2,471 $1,764
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation.................................. 317 389
Amortization of intangibles................... -- 6
Deferred revenue.............................. (210) (333)
Deferred rent and other....................... 128 50
Changes in operating assets and liabilities:
Accounts and notes receivable................. (387) (201)
Inventory..................................... (251) (156)
Prepaid expenses and other.................... 2 49
Accounts payable and accrued liabilities...... 310 (293)
------- ------
Net cash provided by (used for) operating activities.... 2,380 1,275
------- ------
Cash flows from investing activities:
Acquisition of property and equipment.............. (537) (211)
Organization costs incurred........................ 11 (34)
------- ------
Net cash used for investing activities.................. (526) (245)
------- ------
Cash flows from financing activities:
New borrowings..................................... 200 --
Net change in debt................................. (266) (99)
Distributions to members........................... (1,390) (825)
Net cash provided by (used for) financing activities.... (1,456) (924)
------- ------
Net increase in cash.................................... 398 106
Cash and cash equivalents, beginning of period.......... 315 103
------- ------
Cash and cash equivalents, end of period................ $ 713 $ 209
======= ======
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

F-32
<PAGE> 149
DR. BIZER'S VISION WORLD, PLLC AND AFFILIATES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Dr. Bizer's
VisionWorld, PLLC and its affiliates (the "Company"). All significant
intercompany balances and transactions have been eliminated.

The accompanying unaudited Condensed Consolidated Financial Statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information. 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
considered necessary for a fair presentation have been included and are of a
normal, recurring nature. Operating results for the three month and six month
periods ended June 30, 1998 are not necessarily indicative of the results that
may be expected for the fiscal year ended December 31, 1998.

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------------
1997 1998
---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash paid for interest........................... $27 $27
</TABLE>

F-33
<PAGE> 150

INDEPENDENT AUDITORS' REPORT

Partners and Stockholders
Dr. Bizer's VisionWorld, PLLC and Affiliates
Clarksville, Indiana

We have audited the accompanying combined balance sheets of Dr. Bizer's
VisionWorld, PLLC and affiliates as of December 31, 1997 and 1996 and the
related combined statements of earnings, equity, and cash flows for the years
ended December 31, 1997, 1996 and 1995. These combined 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 audits to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined 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 combined financial statements referred to above present
fairly, in all material respects, the financial position of Dr. Bizer's
VisionWorld, PLLC and affiliates as of December 31, 1997 and 1996 and the
results of their operations and their cash flows for the years ended December
31, 1997, 1996 and 1995 in conformity with generally accepted accounting
principles.

/s/ WELENKEN HIMMELFARB & CO.

WELENKEN HIMMELFARB & CO.
Certified Public Accountants

Louisville, Kentucky
June 24, 1998

F-34
<PAGE> 151

DR. BIZER'S VISION WORLD, PLLC AND AFFILIATES

COMBINED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996

<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
ASSETS
Current Assets:
Cash.................................................... $ 102,939 $ 314,967
Trade accounts receivable, less allowance for doubtful
accounts of $200,000 in 1997 and $194,400 in 1996...... 1,182,732 976,117
Employee receivables.................................... 31,720 1,506
Miscellaneous receivables............................... 55,435 88,646
Inventory............................................... 987,858 595,574
Prepaid expenses........................................ 154,725 196,796
---------- ----------
Total Current Assets............................... 2,515,409 2,173,606
---------- ----------
Property and Equipment:
Machinery and equipment................................. 800,307 706,586
Leased equipment........................................ 1,319,760 1,098,424
Computer equipment and software......................... 561,648 518,051
Leasehold improvements.................................. 2,449,829 2,191,593
Furniture and fixtures.................................. 1,824,048 1,664,726
Autos................................................... 9,303 16,664
---------- ----------
6,964,895 6,196,044
Less: accumulated depreciation.......................... 4,139,770 3,586,515
---------- ----------
2,825,125 2,609,529
---------- ----------
Noncurrent Assets:
Investment in First Look, LLC........................... 3,459 3,451
Accounts receivable -- members and stockholders......... -- 60,801
Employee receivables.................................... 18,000 --
Organizational costs (net of accumulated amortization of
$30,489 in 1997 and $27,472 in 1996)................... 6,830 3,770
Start up costs (net of accumulated amortization of
$127,212 in 1997 and $94,749 in 1996).................. 87,626 102,552
Deposits................................................ 11,496 43,068
---------- ----------
127,411 213,642
---------- ----------
Total Assets....................................... $5,467,945 $4,996,777
========== ==========

LIABILITIES AND EQUITY
Current Liabilities:
Notes payable........................................... $ 157,600 $ --
Accounts payable........................................ 487,536 531,386
Accrued expenses........................................ 674,578 468,217
Deferred revenue........................................ 752,625 630,469
Current portion of long-term notes payable.............. 71,767 73,144
Current portion of capital leases....................... 269,177 206,741
---------- ----------
Total Current Liabilities.......................... 2,413,283 1,909,957
---------- ----------
Long-Term Liabilities:
Notes payable, net of current portions.................. 662,321 734,088
Capital leases, net of current portions................. 594,388 674,749
---------- ----------
1,256,709 1,408,837
---------- ----------
Deferred Rent............................................... 61,273 56,863
---------- ----------
Equity:
Members' capital........................................ 1,586,017 1,805,464
Stockholders' equity
Common stock....................................... 2,000 2,000
Retained earnings (deficit)........................ 148,663 (186,344)
---------- ----------
1,736,680 1,621,120
---------- ----------
Total Liabilities and Equity....................... $5,467,945 $4,996,777
========== ==========
</TABLE>

See accompanying Notes to Financial Statements

F-35
<PAGE> 152

DR. BIZER'S VISION WORLD, PLLC AND AFFILIATES

COMBINED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
AMOUNT
---------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Net Sales..................................... $34,573,344 $31,680,052 $25,412,739
Cost of Sales................................. 7,118,966 8,190,207 6,493,396
----------- ----------- -----------
Gross Profit.................................. 27,454,378 23,489,845 18,919,343
Selling, General and Administrative Expenses.. 24,640,166 21,307,475 17,116,114
----------- ----------- -----------
Earnings From Operations...................... 2,814,212 2,182,370 1,803,229
----------- ----------- -----------
Other Income (Expense)
Interest income.......................... 21,814 24,810 33,887
Rental income............................ 56,843 46,175 46,354
Vendor cooperative income................ 125,134 133,087 108,177
Other income............................. 62,625 49,272 9,766
Investment loss.......................... (2,182) (349) --
Gain (loss) on disposal of assets........ (13,784) 43,777 (22,090)
Interest expense......................... (150,162) (126,584) (57,408)
----------- ----------- -----------
100,288 170,188 118,686
----------- ----------- -----------
Net Earnings.................................. $ 2,914,500 $ 2,352,558 $ 1,921,915
=========== =========== ===========
</TABLE>

See accompanying Notes to Financial Statements

F-36
<PAGE> 153
DR. BIZER'S VISION WORLD, PLLC AND AFFILIATES

COMBINED STATEMENTS OF EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Members' Capital, beginning.............. $ 1,805,464 $ 2,012,412 $ 2,096,752
Net earnings, as restated for 1996.. 2,556,993 2,229,511 1,700,763
Capital contributions............... 2,000 2,000 --
Members' distributions.............. (2,778,440) (2,438,459) (1,785,103)
----------- ----------- -----------
Members' Capital, ending................. 1,586,017 1,805,464 2,012,412
----------- ----------- -----------
Stockholders' Equity
Common Stock, beginning.................. 2,000 1,000 1,000
Common stock, issued..................... -- 1,000 --
----------- ----------- -----------
Common Stock, ending..................... 2,000 2,000 1,000
----------- ----------- -----------
Additional Paid-in Capital, beginning.... -- 260,000 480,000
Stockholders' distributions......... -- (260,000) (220,000)
----------- ----------- -----------
Additional Paid-in Capital, ending....... -- -- 260,000
----------- ----------- -----------
Retained Earnings (Deficit), beginning... (186,344) (147,391) 102,457
Net earnings, as restated for 1996.. 357,507 123,047 221,152
Stockholders' distributions......... (22,500) (162,000) (471,000)
----------- ----------- -----------
Retained Earnings (Deficit), ending...... 148,663 (186,344) (147,391)
----------- ----------- -----------
Total Equity........................ $ 1,736,680 $ 1,621,120 $ 2,126,021
=========== =========== ===========
</TABLE>

See accompanying Notes to Financial Statements

F-37
<PAGE> 154
DR. BIZER'S VISION WORLD, PLLC AND AFFILIATES

COMBINED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net earnings...................................... $2,914,500 $2,352,558 $1,921,915
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Cumulative effect of accounting change....... -- -- (320,656)
Depreciation and amortization................ 806,189 663,467 556,022
Loss on investment in First Look, LLC........ 2,182 349 --
Provision for doubtful accounts.............. 5,600 28,100 --
Deferred revenue............................. 122,156 78,166 14,951
Deferred rent................................ 4,410 56,863 --
(Gain) loss on disposal of assets............ 13,784 (43,777) 22,090
Changes in operating assets and liabilities:
Receivables.................................. (166,417) (202,135) (260,490)
Inventory.................................... (392,284) 215,050 (205,527)
Prepaid expenses and deposits................ 73,643 (156,703) (20,882)
Accounts payable............................. (43,850) (134,025) 293,478
Accrued expenses............................. 206,361 (241,192) 352,238
---------- ---------- ----------
Net cash provided by operating
activities............................ 3,546,274 2,616,721 2,353,139
---------- ---------- ----------
Cash Flows from Investing Activities:
Purchases of property and equipment............... (778,754) (658,799) (686,144)
Investment in First Look, LLC..................... (2,190) (3,800) --
Organizational and start up costs incurred........ (23,614) (22,486) (111,073)
---------- ---------- ----------
Net cash used in investing activities... (804,558) (685,085) (797,217)
---------- ---------- ----------
Cash Flows from Financing Activities:
Repayment of principal on capital lease
obligations..................................... (239,260) (158,417) (58,516)
Repayment of principal on long-term notes
payable......................................... (73,144) (65,918) --
Borrowing under notes payable/line of credit...... 211,600 -- --
Repayments of notes payable/line of credit........ (54,000) -- --
Distributions paid to members and stockholders.... (2,800,940) (1,987,309) (2,476,103)
Issuance of common stock.......................... -- 1,000 --
Members contributions............................. 2,000 2,000 --
---------- ---------- ----------
Net cash used in financing activities... (2,953,744) (2,208,644) (2,534,619)
---------- ---------- ----------
Net Change in Cash..................................... (212,028) (277,008) (978,697)
Cash at Beginning of Year.............................. 314,967 591,975 1,570,672
---------- ---------- ----------
Cash at End of Year.................................... $ 102,939 $ 314,967 $ 591,975
========== ========== ==========
Supplemental cash flow disclosures: Cash paid during
the period for:
Interest..................................... $ 151,514 $ 126,016 $ 57,408
Noncash investing and financing activity:
Capital lease obligations incurred for
purchase of equipment...................... 221,335 243,380 85,044
Members' capital converted to notes
payable.................................... -- 873,150 --
</TABLE>

See accompanying Notes to Financial Statements

F-38
<PAGE> 155
DR. BIZER'S VISION WORLD, PLLC AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS AND ORGANIZATION

Dr. Bizer's VisionWorld, PLLC and Affiliates (the "Company") consist of the
following:

Dr. Bizer's VisionWorld, PLLC -- a Kentucky PLLC taxed as a partnership.
This company is a professional optometry practice which performs eye exams, fits
contact lens, performs some medical treatments, sells eyeglasses, contact lens,
and miscellaneous items, and purchases all eyeglasses from Bizer Enterprises.
Dr. Bizer's VisionWorld operates six stores in Louisville and Elizabethtown,
Kentucky and Southern Indiana.

Bizer Enterprises, LLC -- a Kentucky LLC taxed as a partnership. This
company is a manufacturer of eyeglasses who sells its products to Dr. Bizer's
VisionWorld. Bizer Enterprises also employs dispensers, frame stylists and some
managers and sells those services to Dr. Bizer's VisionWorld.

Vision For Less of Kentucky, Inc. -- a Kentucky Subchapter S corporation.
This company is a combination professional optometry practice and manufacturer
of eyeglasses. The company performs eye exams, fits and sells contact lens,
performs some medical treatments, sells eyeglasses and miscellaneous items.
Vision for Less of Kentucky, Inc. operates three stores in Nashville, Tennessee.

Dr.'s ValuVision, PLLC, f/k/a Dr. Bizer's ValuVision -- a Kentucky PLLC
taxed as a partnership. This company is a professional optometry practice which
performs eye exams, fits contact lens, performs some medical treatments, sells
eyeglasses, contact lens, and miscellaneous items, and purchases all eyeglasses
from Bizer Service Company, LLC. Dr.'s ValuVision operates nine stores in
Clarksville, Murfreesboro, Johnson City, Kingsport, and Bristol, Tennessee; Cape
Girardeau, Missouri; Bowling Green, Lexington, and Paducah, Kentucky.

Bizer Service Company, LLC -- a Kentucky LLC taxed as a partnership. This
company is a manufacturer of eyeglasses who sells its products to Dr.'s
ValuVision. Bizer Service Company also employs dispensers, frame stylists and
some managers and sells those services to Dr.'s ValuVision.

The Eye Surgery Center, PSC -- a Kentucky PSC. This company is an
ophthalmology practice serving Louisville, Lexington, Elizabethtown and Bowling
Green, Kentucky as well as southern Indiana. The Eye Surgery Center was
established in 1996. The Center scheduled its first patients in January, 1997.

Eye Care Associates, PLLC -- a Kentucky PLLC taxed as a partnership. This
company is a professional optometry practice which performs eye exams, fits
contact lens, performs some medical treatments, sells eyeglasses, contact lens,
and miscellaneous items, and purchases all eyeglasses from Optical Processors,
LLC. Eye Care Associates operates a store in Brentwood, Tennessee. Eye Care
Associates scheduled its first patients in January, 1998.

Optical Processors, LLC -- a Kentucky LLC taxed as a partnership. This
company is a manufacturer of eyeglasses who sells its products to Eye Care
Associates. Optical Processors also employs dispensers, frame stylists and some
managers and sells those services to Eye Care Associates. Eye Care Associates
scheduled its first patients in January, 1998.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation -- Combined financial statements are presented due to
the common ownership of Dr. Bizer's VisionWorld PLLC and affiliates. The
combined financial statements include the accounts of Dr. Bizer's VisionWorld,
PLLC and its affiliates, Bizer Enterprises, LLC, Vision for Less of Kentucky,
Inc., Dr.'s ValuVision, PLLC, Bizer Service Company, LLC, The Eye Surgery
Center, PSC, Eye Care Associates, PLLC, and Optical Processors, LLC. All
significant intercompany accounts and transactions have been eliminated in
combination.

Use of Estimates -- In preparing financial statements in conformity with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amount of

F-39
<PAGE> 156
DR. BIZER'S VISION WORLD, PLLC AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements and revenues and expenses during the
reporting period. Actual results could differ from these estimates.

Trade Accounts Receivable -- Trade accounts receivable include receivables
from patients and amounts receivable from the patient's insurance company and
Medicare.

Allowance for Doubtful Accounts -- The Company establishes an allowance for
uncollectible trade accounts receivable based on historical collection
experience and management's evaluation of collectibility.

Inventory -- Inventory consists principally of eyeglass frames, lenses, and
contact lenses and are stated at the lower of cost or market. Cost is determined
by using replacement cost which approximates the first-in, first-out (FIFO)
method.

Organizational and Start-up Costs -- These costs are being amortized into
expense using the straight-line method over five years.

Prepaid Expenses -- Prepaid expenses consist of prepaid rent for store
locations, deposits and prepaid insurance.

Property and Equipment -- Property and equipment is recorded at cost.
Maintenance and repair costs are charged to expense as incurred. For financial
statement purposes, depreciation of property and equipment is calculated using
the double declining balance method over the approximate estimated useful lives
of the assets. Leasehold improvements are amortized on a straight-line method
over the shorter of the life of the lease or the estimated useful lives of the
assets.

Estimated useful lives are as follows:

<TABLE>
<S> <C>
Furniture and equipment.................................... 3 to 7 Years
Leasehold improvements..................................... 2 to 10 Years
</TABLE>

Deferred Revenue -- At the time of a frame or contact lens sale, some
customers purchase a warranty contract covering frame or contact lens defects or
damage during the 12-month period subsequent to the date of the sale. Revenue
relating to these contracts is deferred and recognized on a straight-line basis
over the life of the warranty contract (one year). Costs incurred to fulfill the
warranty are expensed when incurred.

Income Taxes -- Dr. Bizer's VisionWorld, PLLC, Bizer Enterprises, LLC.,
Dr.'s ValuVision, PLLC, Bizer Service Company, LLC, Eye Care Associates, PLLC,
and Optical Processors, LLC have elected to be treated as partnerships for
federal and state income tax purposes. A partnership is not a taxpaying entity
for federal or state income tax purposes. Accordingly, no income tax expense has
been recorded in the financial statements. All income or losses will be reported
on the individual members' income tax returns.

Vision for Less of Kentucky, Inc. and The Eye Surgery Center, P.S.C. have
elected to be taxed as "S" corporations under the Internal Revenue Code. In lieu
of corporate income taxes, the stockholders of a Subchapter S corporation are
taxed on their proportionate share of the Company's taxable income. Accordingly,
no income tax expense has been recorded in the financial statements.

3. INVESTMENT IN FIRST LOOK, LLC

The Company has a 6.75 percentage ownership in First Look, LLC, a national
optometric provider association. The Company's investment in the LLC is recorded
at its capital balance of $3,459 and $3,451 at December 31, 1997 and 1996,
respectively.

F-40
<PAGE> 157
DR. BIZER'S VISION WORLD, PLLC AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

4. NOTES PAYABLE

Notes payable consists of the following:

<TABLE>
<CAPTION>
1997 1996
-------- -----
<S> <C> <C>
Loan payable to Lewis S. Bizer Irrevocable Trust in
the amount of $11,600. Non-interest bearing due and
payable on demand................................... $ 11,600 $ --
Discretionary line of credit demand note up to
$200,000, due and payable on demand with interest at
the bank's prime rate. The bank's prime rate was
8.5% at December 31, 1997. The line of credit is
guaranteed by a stockholder of the Company.......... 146,000 --
-------- -----
$157,600 $ --
======== =====
</TABLE>

5. ACCRUED EXPENSES

Accrued expenses consist of the following:

<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Payroll expense.................................... $369,627 290,064
Management fees.................................... 140,723 72,979
Sales and other taxes.............................. 122,354 73,650
Rent............................................... 41,874 29,249
Interest........................................... -- 1,352
Other.............................................. -- 923
-------- --------
$674,578 $468,217
======== ========
</TABLE>

6. LONG-TERM LIABILITIES

Long-term liabilities consists of the following:

<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Note payable to Lewis S. Bizer Irrevocable Trust
in the amount of $873,150 on March 13, 1996,
with interest at the rate of 5.91% per annum,
principal and interest paid in 519 equal weekly
installments of $2,174.86 and a final payment of
the balance due on
March 1, 2006................................... $ 734,088 $ 807,232
Capital leases.................................. 863,565 881,490
Less current portions........................... (340,944) (279,885)
---------- ----------
$1,256,709 $1,408,837
========== ==========
</TABLE>

Maturities of long-term liabilities are as follows:

<TABLE>
<S> <C>
1998........................................................ $340,944
1999........................................................ 367,255
2000........................................................ 286,792
2001........................................................ 174,444
2002........................................................ 99,370
Thereafter.................................................. 328,848
</TABLE>

F-41
<PAGE> 158
DR. BIZER'S VISION WORLD, PLLC AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

7. CAPITAL LEASES

The Company is obligated under various capital leases for optometry
equipment. Equipment under capital leases are amortized over a seven year life.
Amortization expense totaled $184,232 and $130,177 for years ended December 31,
1997 and 1996, respectively.

The future minimum lease payments under capital leases and the net present
value of the future minimum lease payments at December 31, 1997 and 1996 are as
follows:

<TABLE>
<CAPTION>
1997 1996
-------- ----------
<S> <C> <C>
Total minimum lease payments................................ $998,123 $1,052,140
Amount representing interest................................ (134,558) (170,650)
-------- ----------
Present value of net minimum lease payments............ 863,565 881,490
Current portion............................................. (269,177) (206,741)
-------- ----------
Long-Term Capital Lease Obligation.......................... $594,388 $ 674,749
======== ==========
</TABLE>

8. OPERATING LEASES

The Company subleases a portion of one store to a tanning salon. The term
of this sublease is principally five years with rental consisting of the base
rentals increased annually in conjunction with the increase in the Consumer
Price Index (CPI).

The Company subleases the parking lot of one store to a nightclub for its
use after the store closes each night. This agreement is for an indefinite
period and is cancelable by either party upon fourteen days notice. The rentals
under this agreement are a percentage of each nights parking receipts.

Certain of the Companies' lease agreements contain provisions for scheduled
rent increases or provide for occupancy periods during which no rent payment is
required.

Rent expense for all locations, net of lease and sublease income, is as
follows. For the purposes of this table, base rent expense includes common area
maintenance costs. Common area maintenance costs were approximately eleven
percent and nine percent of base rent expense for the years 1997 and 1996,
respectively.

<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Base rent expense.......................... $1,518,943 $1,237,210 $1,076,299
Lease and sublease income.................. (56,843) (38,507) (39,164)
---------- ---------- ----------
Rent expense, net.......................... $1,462,100 $1,198,703 $1,037,135
========== ========== ==========
</TABLE>

F-42
<PAGE> 159
DR. BIZER'S VISION WORLD, PLLC AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
LEASE AND
RENTAL SUBLEASE
PAYMENTS INCOME NET
---------- --------- ----------
<S> <C> <C> <C>
1998..................................... $1,385,546 $ 35,000 $1,350,546
1999..................................... 1,251,754 35,000 1,216,754
2000..................................... 1,063,778 37,214 1,026,564
2001..................................... 714,397 37,214 677,183
2002..................................... 562,630 37,214 525,416
Beyond 2002.............................. 1,439,339 -- 1,439,339
---------- -------- ----------
Rent expense, net........................ $6,417,444 $181,642 $6,235,802
========== ======== ==========
</TABLE>

The Company leases vehicles under operating leases with terms of 36 months.
Future minimum payments required under the leases are as follows:

9. COMMON STOCK

A summary of common stock at December 31, 1997 and 1996 follows:

<TABLE>
<CAPTION>
VISION FOR THE EYE
LESS OF SURGERY
KENTUCKY, INC. CENTER, PSC COMBINED
-------------- ----------- --------
<S> <C> <C> <C>
Total value........................... $1,000 $1,000 $2,000
====== ====== ======
Stated value per share................ No Par No Par
Authorized shares..................... 1,000 1,000
Shares issued and outstanding......... 1,000 1,000
</TABLE>

10. RETIREMENT PLAN

The Company maintains a 401-(K) profit-sharing plan covering all full-time
employees of the Company who have six months of service and are age twenty-one
or older. The Company's contributions to the plan are made at the discretion of
management. The Company's contributions for the years ended December 31, 1997,
1996 and 1995, were $9,641, $8,208 and $6,984, respectively.

F-43
<PAGE> 160
DR. BIZER'S VISION WORLD, PLLC AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

11. RELATED PARTY TRANSACTIONS

Dr. Bizer's VisionWorld, PLLC leases the following from related parties:

<TABLE>
<CAPTION>
LESSOR TERMS
LOCATION ------ -----
<S> <C> <C>
Clarksville, Indiana -- Bizer's Four $16,650 per month plus all real
Store Location estate taxes and utilities, 5 year
lease with renewal options through
July 2003
Clarksville, Indiana Wesleyan Group, LLC $2,979.16 per month, 5 year lease
Administrative Offices with renewal options through January
2017
Louisville, Kentucky -- L & E Realty, Inc. $15,650 per month plus all real
Market Street Store estate taxes and utilities, 5 year
Location lease with renewal options through
February 2003
</TABLE>

The above lessors are owned by certain members and stockholders of the
Company.

Accounts receivable -- members and stockholders include monies owed to the
Company from its members and stockholders and from various entities owned in
full or in part by the members and stockholders of the Company.

12. CONCENTRATIONS OF CREDIT RISK

The Company maintains its cash balances at several financial institutions.
Accounts at each institution are insured by the Federal Deposit Insurance
Corporation up to $100,000. At December 31, 1997 and 1996, the Company's
uninsured cash balances totaled $430,572 and $262,594, respectively.

13. COMMITMENTS AND CONTINGENCIES

The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's combined financial position or combined results of operations.

14. RESTATEMENT

The accompanying financial statements for 1996 have been restated to record
deferred rent and adjust accounts payable. The combined effect of the
restatement was to decrease net earnings by $16,929 for 1996.

15. RECLASSIFICATIONS

Certain reclassifications have been made in the 1996 financial statements
to conform to the classifications used in 1997.

F-44
<PAGE> 161

INDEPENDENT AUDITORS' REPORT

To the Stockholders of
The Samit Organization
Alexandria, Virginia

We have audited the accompanying consolidated and combined balance sheets
of The Samit Organization as of September 30, 1997 and December 31, 1996 and the
related consolidated and combined statements of income, changes in stockholders'
equity and cash flows for the period of January 1, 1997 through September 30,
1997, and the year ended December 31, 1996. These consolidated and combined
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.

As discussed in Note 10 to these financial statements, during the current
year the Company's management discovered certain errors resulting in the
overstatement of net income and the understatement of occupancy expense as of
and for fiscal periods ending on and prior to December 31, 1995. Accordingly,
the 1995 financial statements have been restated and an adjustment to correct
the error has been made to retained earnings as of January 1, 1996.

In our opinion, the consolidated and combined financial statements referred
to above present fairly, in all material respects, the financial position of The
Samit Organization as of September 30, 1997 and December 31, 1996, and the
results of its operations and its cash flows for the period January 1, 1997
through September 30, 1997, and the year ended December 31, 1996 in conformity
with generally accepted accounting principles.

/s/ BEERS & CUTLER PLLC
Washington, D.C.
November 20, 1997

F-45
<PAGE> 162
THE SAMIT ORGANIZATION

CONSOLIDATED AND COMBINED BALANCE SHEETS

AS OF SEPTEMBER 30, 1997 AND DECEMBER 31, 1996

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
ASSETS ------------- ------------
<S> <C> <C>
Current Assets
Cash and cash equivalents.............................. $ 117,518 $ 198,668
Accounts receivable, net of allowance for doubtful
accounts of $30,207 and $10,825....................... 754,389 656,310
Inventory.............................................. 1,687,657 1,628,872
Prepaid expenses....................................... 72,040 35,833
Notes receivable and advances -- stockholder, current
portion............................................... 561,527 25,227
Refundable income taxes................................ 37,378 --
----------- -----------
Total current assets................................... 3,230,509 2,544,910
----------- -----------
Property and Equipment
Furniture and equipment................................ 2,794,602 2,665,050
Leasehold improvements................................. 2,019,635 1,908,823
----------- -----------
4,814,237 4,573,873
Less accumulated depreciation.......................... (2,134,410) (1,793,309)
----------- -----------
Total property and equipment........................... 2,679,827 2,780,564
----------- -----------
Other Assets
Notes receivable and advances -- stockholder, net of
current portion....................................... 1,001,557 47,454
Deposits............................................... 114,566 104,566
Intangible assets, net of accumulated amortization..... 681,553 830,291
Deferred income tax benefit............................ 447,127 107,127
----------- -----------
Total other assets..................................... 2,244,803 1,089,438
----------- -----------
Total assets........................................... $ 8,155,139 $ 6,414,912
=========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated and combined
financial statements.

F-46
<PAGE> 163
THE SAMIT ORGANIZATION

CONSOLIDATED AND COMBINED BALANCE SHEETS

AS OF SEPTEMBER 30, 1997 AND DECEMBER 31, 1996

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
LIABILITIES AND STOCKHOLDERS' EQUITY ------------- -------------
<S> <C> <C>
Current Liabilities
Accounts payable....................................... $ 616,495 $1,286,899
Current portion of long-term debt...................... 541,071 684,159
Accrued expenses
Salaries and wages................................... 731,846 369,555
Special bonuses and doctor liabilities............... 2,625,546 --
Other................................................ 67,649 7,177
Income taxes payable................................... -- 139,130
Patient deposits....................................... 37,286 38,723
---------- ----------
Total current liabilities.............................. 4,619,893 2,525,643
---------- ----------
Noncurrent Liabilities
Long-term debt, net of current portion................. 1,636,038 1,838,618
Deferred rent.......................................... 327,520 331,400
Deferred compensation.................................. 97,396 --
---------- ----------
Total noncurrent liabilities........................... 2,060,954 2,170,018
---------- ----------
Total liabilities...................................... 6,680,847 4,695,661
---------- ----------
Stockholders' Equity
Common stock........................................... 210 200
Additional paid-in-capital............................. 681,983 281,993
Retained earnings...................................... 792,099 1,437,058
---------- ----------
Total stockholders' equity............................. 1,474,292 1,719,251
---------- ----------
Total liabilities and stockholders' equity............. $8,155,139 $6,414,912
========== ==========
</TABLE>

The accompanying notes are an integral part of these consolidated and combined
financial statements.

F-47
<PAGE> 164
THE SAMIT ORGANIZATION

CONSOLIDATED AND COMBINED STATEMENTS OF INCOME

FOR THE PERIOD JANUARY 1, 1997 THROUGH SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
JANUARY 1, 1997
THROUGH YEAR ENDED
SEPTEMBER 30, 1997 DECEMBER 31, 1996
------------------ -----------------
<S> <C> <C>
Gross Revenues.............................................. $19,558,881 $21,848,000
Cost of Goods Sold.......................................... 5,786,956 6,494,912
----------- -----------
Gross Profit................................................ 13,771,925 15,353,088
----------- -----------
Operating Expenses
Salaries and wages..................................... 7,214,792 8,500,846
Payroll benefits....................................... 774,131 806,691
Occupancy.............................................. 1,837,861 2,021,342
General and administrative............................. 1,582,902 2,354,991
Depreciation and amortization.......................... 482,722 554,910
----------- -----------
11,892,408 14,238,780
----------- -----------

Income from Operations...................................... 1,879,517 1,114,308
Other Income and Expense
Interest income........................................ 62,800 --
Interest expense....................................... (191,676) (144,867)
Settlement related to prior acquisitions............... (1,000,000) --
Special bonuses related to sale by stockholders........ (1,625,546) --
----------- -----------
(2,754,422) (144,867)
----------- -----------
(Loss) Income Before (Benefit) Provision for Income Taxes... (874,905) 969,441
(Benefit) Provision for Income Taxes........................ (229,946) 409,683
----------- -----------
Net (Loss) Income........................................... $ 644,959 $ 559,758
=========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated and combined
financial statements.

F-48
<PAGE> 165
THE SAMIT ORGANIZATION

CONSOLIDATED AND COMBINED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY

FOR THE PERIOD JANUARY 1, 1997 THROUGH SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
ADDITIONAL
COMMON COMMON PAID-IN RETAINED
SHARES STOCK CAPITAL EARNINGS
------ ------ ---------- --------
<S> <C> <C> <C> <C>
Balance, December 31, 1995............. 20,000 $200 $281,993 $1,096,300
Prior Period Adjustment................ -- -- -- (219,000)
------ ---- -------- ----------
Balance, January 1, 1996, as restated.. 20,000 200 281,993 877,300
Net Income............................. -- -- -- 559,758
------ ---- -------- ----------
Balance, December 31, 1996............. 20,000 $200 281,993 $1,437,058
Issuance of common stock............... 1,040 10 399,990 --
Net Loss............................... -- -- -- (644,959)
------ ---- -------- ----------
Balance, September 30, 1997............ 21,040 $210 $681,983 $ 792,099
====== ==== ======== ==========
</TABLE>

The accompanying notes are an integral part of these consolidated and combined
financial statements.

F-49

<PAGE> 166
THE SAMIT ORGANIZATION

CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

FOR THE PERIOD JANUARY 1, 1997 THROUGH SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
JANUARY 1, 1997
THROUGH YEAR ENDED
SEPTEMBER 30, 1997 DECEMBER 31, 1996
------------------ -----------------
<S> <C> <C>
Cash Flows from Operating Activities
Net (loss) income............................. $ (644,959) $ 559,758
Reconciliation adjustments
Depreciation and amortization............... 482,722 555,666
Loss on retirement and disposal............. 7,118 5,486
Changes in:
Accounts receivable...................... (98,079) (315,526)
Inventory................................ (58,785) (124,455)
Prepaid expenses......................... (36,207) (13,469)
Refundable income taxes.................. (176,508) --
Deferred tax benefit..................... (340,000) 7,490
Accounts payable......................... (670,404) 187,061
Accrued expenses......................... 3,048,309 6,307
Patient deposits......................... (1,437) (28,333)
Income taxes payable..................... -- 72,376
Deferred rent............................ (3,880) --
Deferred compensation.................... 97,396 --
---------- -----------
Net cash provided by operating activities..... 1,605,286 912,361
---------- -----------
Cash Flows from Investing Activities
Purchases of property and equipment........... (240,364) (1,103,330)
Payments for intangible assets................ -- (611,461)
Loans to stockholder.......................... (1,490,403) 33,553
Deposits...................................... (10,000) (15,968)
---------- -----------
Net cash used in investing activities......... (1,740,767) (1,697,206)
---------- -----------
Cash Flows from Financing Activities
Proceeds from long-term debt.................. 2,917,895 1,315,000
Repayment of long-term debt................... (2,863,564) (570,502)
---------- -----------
Net cash provided by financing activities..... 54,331 744,498
---------- -----------
Net Decrease in Cash and Cash Equivalents.......... (81,150) (40,347)
Cash and Cash Equivalents, beginning of period..... 198,668 239,015
---------- -----------
Cash and Cash Equivalents, end of period........... $ 117,518 $ 198,668
========== ===========
Supplementary Cash Flow Information:
Interest paid................................. $ 191,676 $ 144,867
========== ===========
Income taxes paid............................. $ 292,704 $ 329,816
========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated and combined
financial statements.

F-50
<PAGE> 167
THE SAMIT ORGANIZATION

NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

SEPTEMBER 30, 1997 AND DECEMBER 31, 1996

1. ORGANIZATION AND PRINCIPLES OF CONSOLIDATION AND COMBINATION

The consolidated and combined financial statements include the accounts of
the following corporations which are under the common control of Dr. Robert A.
Samit and are related in their operations, which are conducted primarily in the
Washington Metropolitan area:

<TABLE>
<CAPTION>
CORPORATION OPERATIONS
----------- ----------
<S> <C>
- - The Samit Group, Inc. (Parent) Management Holding Company
- - Hour Eyes, Inc. (Subsidiary) Retail Optometry Stores (Maryland and D.C.)
- - Metropolitan Vision Services, Inc. Insurance Marketing Service
(Subsidiary) Processing Lab
- - Skylab, Inc. (Subsidiary) Retail Optometry Stores (Virginia)
- - Dr. Samit's Hour Eyes Optometrist, P.C.
(Identical ownership as The Samit Group,
Inc.)
</TABLE>

Capital stock information is as follows:

<TABLE>
<CAPTION>
SHARES
SHARES ISSUED AND
SEPTEMBER 30, 1997 AUTHORIZED OUTSTANDING PAR VALUE
------------------ ---------- ----------- ---------
<S> <C> <C> <C>
The Samit Group, Inc. and Subsidiaries...... 20,000 10,520 $105
Dr. Samit's Hour Eyes Optometrist, P.C...... 11,000 10,520 105
----
$210
====
</TABLE>

<TABLE>
<CAPTION>
SHARES
SHARES ISSUED AND
DECEMBER 31, 1996 AUTHORIZED OUTSTANDING PAR VALUE
----------------- ---------- ----------- ---------
<S> <C> <C> <C>
The Samit Group, Inc. and Subsidiaries...... 20,000 10,000 $100
Dr. Samit's Hour Eyes Optometrist, P.C...... 11,000 10,000 100
----
$200
====
</TABLE>

Combined financial statements are presented due to the common ownership of
The Samit Group, Inc., Dr. Samit's Hour Eyes Optometrist, P.C. and interrelated
business activities. All material intercompany transactions have been
eliminated.

On September 30, 1997, the stockholders of the Companies sold their
ownership interests to an unrelated third party. These financial statements
present the financial condition of the Companies immediately prior to the sale
and include an accrual for bonuses to employees in connection with the sale. As
a result of the sale, an accrual of $1,000,000 was recorded as a settlement
associated with the acquisition of practices of two doctors prior to 1996.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition--Sales and related costs are recognized by the
Companies upon the sale of visionary care products.

Cash and Cash Equivalents--The term cash and cash equivalents, as used in
the accompanying financial statements, includes currency on hand, demand
deposits and certificates of deposit with financial institutions.

Inventory--Inventory consists of eyeglass lenses and frames, contact lenses
and accessories. Inventory is stated at the lower of cost or market value using
the first-in, first-out (FIFO) method.

F-51
<PAGE> 168
THE SAMIT ORGANIZATION

NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

SEPTEMBER 30, 1997 AND DECEMBER 31, 1996

Income Taxes--Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes currently due plus
deferred taxes related primarily to differences between the basis of fixed
assets for financial and income tax reporting. The deferred tax assets and
liabilities represent the future tax return consequences of those differences,
which will either be taxable or deductible when the assets and liabilities are
recovered or settled.

Property and Equipment--Assets are stated at cost. Depreciation and
amortization are computed using both accelerated and straight-line methods over
the following estimated useful lives:

<TABLE>
<S> <C>
Furniture and equipment.............................. 5 and 7 years
Leasehold improvements............................... 10 and 31 1/2 years
</TABLE>

Long-lived Assets--Periodically, the Companies evaluates the realizability
of long-lived assets based on expectations of nondiscounted cash flows and
operating income. Based on it most recent analysis, the Companies believe that
no impairment of long-lived assets exists at September 30, 1997.

Intangible Assets--Intangible assets represent covenants not-to-compete,
patient records acquired from others, lease acquisition costs, organization
costs and goodwill. Intangible assets are amortized on a straight-line basis
over the following estimated useful lives:

<TABLE>
<S> <C>
Covenants not-to-compete 2 years
Patient records 2 to 6 years
Lease acquisition costs 10 years
Organization costs 5 years
Goodwill 5 to 20 years
</TABLE>

Advertising--The Companies follow the policy of charging the costs of
advertising to expense as incurred. Advertising expense, net of cooperative
advertising reimbursements from vendors, was approximately $188,000 for the
period January 1, 1997 through September 30, 1997 and $300,000 for 1996.

Deferred Rent--Rent concessions under new leases are amortized on a
straight-line basis over the lease term.

Noncash Financing Transaction--During 1997, 1,040 shares of common stock
were transferred to a stockholder in satisfaction of a $400,000 convertible note
payable to such stockholder.

Use of Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues, expenses and the disclosure of contingent assets and
liabilities.

F-52
<PAGE> 169
THE SAMIT ORGANIZATION

NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

SEPTEMBER 30, 1997 AND DECEMBER 31, 1996

3. INTANGIBLE ASSETS

Intangible assets consist of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
Goodwill.................................... $ 351,613 $ 351,613
Patient records............................. 568,010 592,328
Covenants not-to-compete.................... 205,000 205,000
Lease acquisition costs..................... 125,000 125,000
Organization costs.......................... 17,031 17,031
Loan points paid............................ 15,317 --
Other....................................... 3,451 --
---------- ----------
$1,285,422 1,290,972
Accumulated amortization.................... (603,869) (460,681)
---------- ----------
$ 681,553 $ 830,291
========== ==========
</TABLE>

During 1996, the Companies purchased the assets of two optometry practices
for approximately $675,000. The allocation of the purchase price was as follows.

<TABLE>
<S> <C>
Inventory................................................... $ 40,000
Fixed Assets................................................ 110,000
Covenant Not-to-Compete..................................... 175,000
Patient Records............................................. 175,000
Goodwill.................................................... 175,000
--------
$675,000
========
</TABLE>

One of the practices was acquired through the payment of $200,000 plus a
$300,000 note payable (see Note 5). The other practice was acquired as a
repayment of advances made to the practice. A stockholder of the second practice
is a shareholder of the Companies (see Note 8). The amortization of the various
intangible assets is straight-line over two years for the covenant
not-to-compete, six years for patient records and 20 years for goodwill.

4. LINE OF CREDIT

The Companies have a $350,000 revolving line of credit with Central
Fidelity Bank. The line of credit carries a variable interest rate, and there
were no advances at September 30, 1997.

The Companies had a $250,000 revolving line of credit with Citizens Bank
which was replaced by the Central Fidelity Bank line on April 1, 1997. The line
of credit carried a variable interest rate, and there were no advances at
December 31, 1996.

5. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
Note payable to Central Fidelity Bank, requiring monthly
principal payments of $41,632 plus interest at 270 basis
points over the one month LIBOR rate and matures in March
2002. The note is secured by the assets of the Companies and
the stockholders provided additional guarantees............. $1,748,106 $ --
</TABLE>

F-53
<PAGE> 170
THE SAMIT ORGANIZATION

NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

SEPTEMBER 30, 1997 AND DECEMBER 31, 1996

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
Notes payable to Citizens Bank, requiring monthly principal
payments of $48,000 plus interest at Prime plus 1/4% with
maturities from April 1998 to December 2001. All the notes
were paid in full on April 1, 1997. The notes were secured
by the assets of the Companies and the stockholders provided
additional collateral and guarantees. These amounts were
borrowed under lines of credit discussed below.............. -- 1,629,553

Unsecured note payable, entered into in 1994 in connection
with the acquisition of a practice, maturing in July 2001,
requiring monthly payments of interest at Prime plus 1% with
principal due at maturity. The note was convertible to a 5%
equity interest in the Companies. A stockholder of the
holder of the note is a stockholder of the Companies. The
note was subordinated to all other bank financing........... -- 400,000

Note payable, in connection with the acquisition of a
practice, maturing in June 2000, monthly payments of $9,000
comprising principal and interest at 4%, commencing July
1997. The note is secured by the property acquired with the
loan proceeds............................................... 276,350 300,000

Guaranteed bonus payments to an employee in connection with
the purchase of a practice. Bonus payments of $4,000 per
month for 60 months with imputed interest at 9%............. 103,903 131,832
Unsecured note payable related to the buyout of an equity
participation interest maturing in October 1999 and bearing
interest at Prime plus 1%. Requires monthly principal and
interest payments of $2,000................................. 48,750 61,392
---------- ----------
2,177,109 2,522,777
Less current portion........................................ (541,071) (684,159)
---------- ----------
$1,636,038 $1,838,618
========== ==========
</TABLE>

The Companies had a line of credit for term loans with Citizens Bank for
future expansion. Amounts drawn on the line of credit were term loans with a
five-year maturity that bear interest at the Prime Rate plus 1/4% or the
five-year Treasury Rate plus 300 basis points. Amounts drawn on the line of
credit are included in long-term debt above. At December 31, 1996 there was no
unused line of credit.

Principal maturities of long-term debt for each year are as follows:

<TABLE>
<S> <C>
Year ending September 30, 1998.............................. $ 541,071
1999........................................................ 548,112
2000........................................................ 468,901
2001........................................................ 396,515
2002........................................................ 222,510
----------
$2,177,109
==========
</TABLE>

All outstanding debt as of September 30, 1997 was extinguished on October
1, 1997 in connection with the sale of The Samit Organization by the
stockholders. See Note 1.

F-54
<PAGE> 171
THE SAMIT ORGANIZATION

NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

SEPTEMBER 30, 1997 AND DECEMBER 31, 1996

6. COMMITMENTS

The Companies lease retail and office space under the terms of various
operating leases which expire during the years 1998 through 2006. Minimum lease
payments in the aggregate for each year are as follows:

<TABLE>
<S> <C>
Year ending September 30, 1998.............................. $1,564,048
1999........................................................ 1,353,768
2000........................................................ 1,179,029
2001........................................................ 1,001,277
2002........................................................ 601,960
Thereafter.................................................. 1,026,892
----------
$6,726,974
==========
</TABLE>

Rent expense totaled $1,607,810 and $2,021,342 (including percentage rent
of $55,872 and $36,253) for the period from January 1, 1997 through September
30, 1997 and for the year ended December 31, 1996, respectively.

7. INCOME TAXES

The Companies' deferred tax assets and liabilities at September 30, 1997
are summarized below. The deferred tax assets and liabilities reflect the tax
consequence of the differences in the financial reporting and tax basis of
accounts receivable, property and equipment, settlements related to acquisitions
and deferred rent.

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
Deferred Tax Assets........................... $ 452,400 $ 116,514
Deferred Tax Liabilities...................... (5,273) (9,387)
------------- ------------
Net Deferred Tax Asset........................ $ 447,127 $ 107,127
============= ============
</TABLE>

The income tax (benefit) expense consists of the following:

<TABLE>
<CAPTION>
JANUARY 1, 1997
THROUGH YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1997 1996
--------------- ------------
<S> <C> <C>
Federal......................................... $(248,248) $349,020
State........................................... 18,302 60,663
--------- --------
Income Tax (Benefit) Expense.................... $(229,946) $409,683
========= ========
</TABLE>

The reconciliation between the federal statutory tax rate at 34 percent and
the Companies' effective tax rate is as follows:

<TABLE>
<CAPTION>
JANUARY 1, 1997
THROUGH YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1997 1996
--------------- ------------
<S> <C> <C>
Expected tax (benefit) expense........................ $(297,468) $329,610
Non-deductible meals and entertainment................ 10,540 12,800
State income taxes, net of federal income tax effect.. 5,254 38,390
Change in estimated income tax expense................ 56,000 37,405
Other................................................. (4,272) (8,342)
--------- --------
$(229,946) $409,683
========= ========
</TABLE>

F-55
<PAGE> 172
THE SAMIT ORGANIZATION

NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996

8. RELATED PARTY TRANSACTIONS

During 1995, the Companies received a $106,234 note receivable from a
stockholder for amounts advanced by the Companies on his behalf. The note bears
interest at 6% per annum and matures on December 31, 1999. Annual principal
payments of $25,227 plus accrued interest are required.

During 1997, the Companies loaned $1,000,000 to a stockholder. The note
bears interest at 370 basis points over the one month LIBOR rate and matures in
March 2002. Accrued interest of $46,990 was outstanding as of September 30,
1997.

The Companies provided services to an affiliate whose stockholders include
a stockholder of the Companies. During 1996, the Companies acquired the assets
of the affiliate in exchange for advances totaling $175,000 made to the
affiliate (see Note 3).

During 1997, the Companies made advances of approximately $390,000 to a
stockholder. The advances accrue interest at 9.4% and approximately $14,000 of
interest was outstanding at September 30, 1997.

The notes receivable and advances described above were repaid by a
reduction of the sales proceeds received by the shareholders upon the sale of
the Companies subsequent to September 30, 1997.

The Companies purchase from and sell to an affiliate whose stockholders
include a stockholder of the Companies.

<TABLE>
<CAPTION>
JANUARY 1, 1997
THROUGH YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1997 1996
--------------- ------------
<S> <C> <C>
Sales to affiliate........................................ $23,000 $115,657
======= ========
Purchases from affiliate.................................. $ -- $ 41,282
======= ========
</TABLE>

9. 401 (K) RETIREMENT PLAN AND PROFIT-SHARING PLAN

During 1994, the Companies established a defined contribution 401(k)
retirement plan. The plan is eligible to all employees with over one year of
service, subject to certain vesting requirements. Employees may contribute up to
the IRS maximum, which during 1997 was $9,500. The Companies currently match up
to 2% of each participant's salary reduction. The Companies incurred
approximately $77,400 and $72,900, respectively, in contributions and expenses
of the plan in the period January 1, 1997 through September 30, 1997 and the
year ended December 31, 1996.

10. PRIOR PERIOD ADJUSTMENT

Certain errors resulting in the omission of deferred rent were discovered
during the current year. Accordingly, an adjustment of $331,400 was made during
1996 to record the deferred rent as of January 1, 1996. A corresponding entry
was made to reduce previously reported retained earnings by $219,000 (net of the
related deferred tax benefit of $112,400) as of the beginning of 1996.

F-56
<PAGE> 173
THE SAMIT ORGANIZATION

NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996

11. SUBSEQUENT EVENT

On September 30, 1997, The Samit Organization was restructured into two
entities, Hour Eyes Optometrist, P.C. and Hour Eyes, Inc. The Hour Eyes, Inc.
entity was sold to Eye Care Care Centers of America, Inc. and an independent
optometrist purchased the Hour Eyes Optometrist, P.C. entity. The following is
summarized financial data as of and for the nine-month period ended September
30, 1997 of the two entities which previously comprised The Samit Organization.

<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS)
HOUR EYES THE SAMIT
OPTOMETRIST, P.C. HOUR EYES, INC. ORGANIZATION
----------------- --------------- ------------
<S> <C> <C> <C>
Balance Sheet Data:
Current Assets.................................... $ 1,334 $1,897 $ 3,231
Noncurrent Assets................................. 1,879 3,045 4,924
Current Liabilities............................... 783 3,837 4,620
Noncurrent Liabilities............................ 669 1,392 2,061
Statement of Operations Data:
Gross Revenues.................................... $11,836 $7,723 $19,559
Cost of Goods Sold................................ 3,891 1,896 5,787
------- ------ -------
Gross Profit...................................... 7,945 5,827 13,772
Operating Expenses................................ 6,717 5,175 11,892
------- ------ -------
Income from Operations............................ 1,228 652 1,880
Other Expenses.................................... (1,619) (1,135) (2,754)
------- ------ -------
Income before Provision for Income Tax............ (391) (483) (874)
Benefit Provision for Income Taxes................ 137 93 230
------- ------ -------
Net Income........................................ $ (254) $ (390) $ (644)
======= ====== =======
</TABLE>

F-57
<PAGE> 174

VISIONWORKS HOLDINGS, INC.
INDEPENDENT AUDITORS' REPORT

The Board of Directors
Visionworks Holdings, Inc.:

We have audited the accompanying consolidated balance sheets of Visionworks
Holdings, Inc. (the Company) as of January 28, 1995, February 3, 1996 and August
31, 1996, and the related consolidated statements of earnings, stockholders'
equity, and cash flows for the periods then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Visionworks
Holdings, Inc. as of January 28, 1995, February 3, 1996 and August 31, 1996, and
the results of its operations and its cash flows for the periods then ended in
conformity with generally accepted accounting principles.

/s/ KPMG PEAT MARWICK LLP

Tampa, FL
October 15, 1996

F-58
<PAGE> 175

VISIONWORKS HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS
JANUARY 28, 1995, FEBRUARY 3, 1996 AND AUGUST 31, 1996

<TABLE>
<CAPTION>
JANUARY 28, FEBRUARY 3, AUGUST 31,
1995 1996 1996
----------- ----------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS (NOTE 3)
Cash........................................................ $ 1,570 $ 1,269 $ 940
Inventory................................................... 7,734 9,555 9,705
Receivables, less allowance for doubtful receivables of $360
at January 28, 1995, $182 at February 3, 1996 and $376 at
August 31, 1996........................................... 441 662 523
Current installments of equipment receivables............... 313 519 482
Current installments of note receivable - officer (note
7)........................................................ 100 -- --
Prepaid expenses and other current assets................... 83 645 246
Deferred tax asset (note 9)................................. 1,221 1,167 1,290
------- ------- -------
Total current assets............................ 11,462 13,817 13,186
Property, plant and equipment, at cost (note 4):
Land.................................................... 6,000 6,000 6,000
Buildings............................................... 3,000 3,129 3,134
Furniture and equipment................................. 11,508 12,056 12,397
Transportation equipment................................ 15 54 54
Leasehold improvements.................................. 4,585 5,294 5,551
------- ------- -------
25,108 26,533 27,136
Less accumulated depreciation....................... 2,332 4,618 5,961
------- ------- -------
Net property, plant and equipment............... 22,776 21,915 21,175
Long-term equipment receivables, excluding current
installments.............................................. 1,257 958 795
Note receivable - officer, excluding current installments
(note 7).................................................. 100 -- --
Goodwill, net of accumulated amortization of $234 at January
28, 1995, $478 at February 3, 1996 and $596 at August 31,
1996...................................................... 5,825 5,581 5,463
Unamortized debt expense, net of accumulated amortization of
$273 at January 28, 1995, $557 at February 3, 1996 and
$724 at August 31, 1996................................... 1,092 863 696
Deferred tax asset (note 9)................................. 953 -- --
Other assets................................................ 23 29 26
------- ------- -------
$43,488 $43,163 $41,341
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt (note 3)......... $ 1,200 2,000 1,825
Accounts payable........................................ 2,409 6,063 6,673
Customer deposits....................................... 314 403 307
Accrued expenses:
Payroll and payroll related......................... 2,147 2,332 1,872
Other............................................... 1,197 1,148 1,559
Protection plan reserve................................. 1,558 800 800
Store closing reserve................................... 700 456 330
------- ------- -------
Total current liabilities....................... 9,525 13,202 13,366
Long-term debt, excluding current installments (note 3)..... 16,280 9,500 5,675
Store purchase obligation (note 4).......................... 10,000 10,000 9,979
Deferred compensation payable (note 8)...................... 355 435 505
Deferred tax liability (note 9)............................. -- 16 801
------- ------- -------
Total liabilities............................... 36,160 33,153 30,326
------- ------- -------
Stockholders' equity (notes 1 and 6):
Common stock and paid-in capital........................ 6,500 7,750 7,750
Retained earnings....................................... 828 2,260 3,265
------- ------- -------
Total stockholders' equity...................... 7,328 10,010 11,015
------- ------- -------
$43,488 $43,163 $41,341
======= ======= =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-59
<PAGE> 176

VISIONWORKS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE YEARS ENDED JANUARY 28, 1995 AND FEBRUARY 3, 1996
AND FOR THE SEVEN MONTHS ENDED AUGUST 31, 1996

<TABLE>
<CAPTION>
YEARS ENDED SEVEN
------------------------- MONTHS ENDED
JANUARY 28, FEBRUARY 3, AUGUST 31,
1995 1996 1996
----------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Net revenues............................................ $60,466 $61,509 $37,759
Cost of goods sold...................................... 17,999 17,232 11,030
------- ------- -------
Gross profit....................................... 42,467 44,277 26,729
Selling, general and administrative expenses............ 35,286 36,212 22,175
Depreciation and amortization expense................... 2,640 2,588 1,505
------- ------- -------
Operating income................................... 4,541 5,477 3,049
Interest expense, including amortization of debt
expenses of $273, $284 and $167....................... 3,205 3,022 1,371
------- ------- -------
Earnings before income taxes....................... 1,336 2,455 1,678
Income taxes (note 9)................................... 508 1,023 673
------- ------- -------
Net earnings....................................... $ 828 $ 1,432 $ 1,005
======= ======= =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-60
<PAGE> 177

VISIONWORKS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JANUARY 28, 1995 AND FEBRUARY 3, 1996
AND FOR THE SEVEN MONTHS ENDED AUGUST 31, 1996

<TABLE>
<CAPTION>
COMMON
STOCK AND
PAID-IN RETAINED
CAPITAL EARNINGS TOTAL
--------- -------- -----
(IN THOUSANDS)
<S> <C> <C> <C>
Balances at January 29, 1994................................ $ -- $ -- $ --
Common stock issued.................................... 7,000 -- 7,000
Unearned compensation -- restricted stock (note
6(a))................................................ (500) -- (500)
Net earnings........................................... -- 828 828
------ ------ -------
Balances at January 28, 1995................................ 6,500 828 7,328
Earned compensation -- restricted stock (note 6(a)).... 500 -- 500
Conversion of convertible subordinated debenture into
common stock (note 6(a))............................. 750 -- 750
Net earnings........................................... -- 1,432 1,432
------ ------ -------
Balances at February 3, 1996................................ 7,750 2,260 10,010
Net earnings........................................... -- 1,005 1,005
------ ------ -------
Balances at August 31, 1996................................. $7,750 $3,265 $11,015
====== ====== =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-61
<PAGE> 178

VISIONWORKS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JANUARY 28, 1995 AND FEBRUARY 3, 1996
AND FOR THE SEVEN MONTHS ENDED AUGUST 31, 1996

<TABLE>
<CAPTION>
YEARS ENDED SEVEN MONTHS
------------------------- ENDED
JANUARY 28, FEBRUARY 3, AUGUST 31,
1995 1996 1996
----------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings......................................... $ 828 $ 1,432 $ 1,005
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization................... 2,640 2,588 1,505
Non-cash compensation........................... 250 500 --
Non-cash interest expense....................... 703 406 167
Deferred income taxes........................... 508 1,023 662
------- -------- -------
4,929 5,949 3,339
------- -------- -------
Changes in operating assets and liabilities:
Receivables..................................... 966 (221) 139
Inventory....................................... 1,805 (1,821) (150)
Equipment receivables........................... 297 93 200
Note receivable -- officer...................... (200) 200 --
Prepaid expense and other assets................ (291) (623) 402
Accounts payable and accruals................... 3,220 2,957 409
------- -------- -------
5,797 585 1,000
------- -------- -------
Net cash provided by operating
activities............................... 10,726 6,534 4,339
------- -------- -------
Cash flows from investing activity --
Capital expenditures, net of minor disposals......... (1,000) (1,483) (647)
------- -------- -------
Net cash used in investing activities...... (1,000) (1,483) (647)
------- -------- -------
Cash flows from financing activities:
Proceeds from long-term debt......................... -- 5,250 --
Principal payments on long-term debt................. (8,700) (10,602) (4,000)
Principal payments on store purchase obligation...... -- -- (21)
------- -------- -------
Net cash used in financing activities...... (8,700) (5,352) (4,021)
------- -------- -------
Net increase (decrease) in cash........................... 1,026 (301) (329)
Cash at beginning of year................................. 544 1,570 1,269
------- -------- -------
Cash at end of year....................................... $ 1,570 $ 1,269 $ 940
======= ======== =======
Supplemental cash flow information --
Cash paid during the year for:
Interest........................................ $ 2,164 $ 2,563 $ 1,244
======= ======== =======
Income taxes.................................... $ -- -- $ 11
======= ======== =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-62
<PAGE> 179

VISIONWORKS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 28, 1995, FEBRUARY 3, 1996 AND AUGUST 31, 1996
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

(1) ORGANIZATION OF THE BUSINESS
The consolidated financial statements include Visionworks Holdings, Inc. (a
holding company) and its wholly-owned subsidiaries Visionworks, Inc. and
Visionworks Properties, Inc. On March 29, 1994, Visionworks, Inc. closed on an
asset purchase agreement (the Asset Purchase Agreement) entered into with Eckerd
Corporation to purchase certain assets and assume certain liabilities of Eckerd
Corporation's Vision-Group operations.

The purchase, effective for financial statement purposes on January 30,
1994, was made through the payment of cash, issuance of notes payable, and
assumption of liabilities totaling approximately $48,000, and was accounted for
using the purchase method of accounting. The purchase price was allocated to
assets based on their estimated fair market values at January 30, 1994.

The Company operates a chain of stores, primarily in the Southeastern
United States, which sell vision wear and related accessories.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Use of Estimates

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

(b) Definition of Fiscal Year

The fiscal year ends on the Saturday nearest January 31. Fiscal year 1994
ended on January 28, 1995 and consisted of 52 weeks. Fiscal year 1995 ended on
February 3, 1996 and consisted of 53 weeks. The seven months ended August 31,
1996 consisted of 30 weeks.

Inventories consist principally of merchandise held for resale and are
stated at the lower of cost (first-in, first-out (FIFO)) or market.

(d) Depreciation Policy and Maintenance and Repairs

Plant and equipment is depreciated principally by the straight-line method
over the estimated useful lives of such assets. The principal lives used to
compute depreciation are:

<TABLE>
<S> <C>
Buildings................................................... 30
Furniture and equipment..................................... 1 - 10
Transportation equipment.................................... 1 - 8
Leasehold improvements...................................... 2 - 20
------
</TABLE>

Maintenance and repairs are charged to expense as incurred. The Company's
policy is to capitalize expenditures for renewals and betterments and to reduce
the asset accounts and the related allowance for depreciation for the cost and
accumulated depreciation of items replaced, retired or fully depreciated.

F-63
<PAGE> 180
VISIONWORKS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

(e) Goodwill

The Company amortizes the goodwill which arose from the January 30, 1994
Asset Purchase Agreement over 30 years on a straight-line basis for financial
statement purposes. Goodwill is reviewed for recoverability based on
undiscounted cash flows.

(f) Unamortized Debt Expenses

Unamortized debt expenses represent professional fees and other costs
related to the long-term debt financing (see note 3), which are amortized over
the life of the related debt instruments.

(g) Fair Value of Financial Instruments

The carrying value of financial instruments, including cash, receivables,
and accounts payable approximated fair value because of the relatively short
maturity of these instruments. The carrying value of the long-term debt
approximates fair value based on interest rates currently available to the
Company.

(h) Income Taxes

Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes. Under the asset and
liability method of Statement 109, deferred income taxes are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to be recovered or settled. Under Statement 109, the
effect on deferred taxes of a change in tax rate is recognized in income in the
period that includes the enactment date.

(i) Protection Plan Reserve

The Company offers a protection plan to customers, whereby customers who
select the plan are offered a replacement of their vision wear in the twelve
months following purchase of the item. The Company defers the related revenues
to the applicable period.

(j) Store Closing Reserve

The Company accrues the cost of lease payments expected to be incurred
after the date of a store closing and the remaining net book value of related
property and equipment at the date of the store closing.

(k) Advertising

The cost of advertising is expensed as the related advertising takes place.
Prepaid advertising costs related to direct response advertising amounted to $5
at January 28, 1995, $19 at February 3, 1996, and $143 at August 31, 1996.
Advertising expense was $3,295 in fiscal 1994, $3,289 in fiscal 1995, and $1,986
in fiscal 1996 to date.

(m) Reclassifications

Certain amounts from the prior period financial statements have been
reclassified to conform with the current period presentation.

(l) Revenue Recognition

Revenue Recognition. Sales and related costs are recognized by the Company
upon the sale of products at company-owned retail locations. Managed care
revenues are derived from monthly capitation payments

F-64
<PAGE> 181
VISIONWORKS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

from health benefit payors which contract with the Company. The Company records
this revenue at contractually agreed upon rates. Historically, the Company's
highest sales occur in the first and third quarters.

(3) LONG-TERM DEBT

Long-term debt at January 28, 1995, February 3, 1996 and August 31, 1996
was:

<TABLE>
<CAPTION>
JANUARY 28, FEBRUARY 3, AUGUST 31,
1995 1996 1996
----------- ----------- ----------
<S> <C> <C> <C>
Term loans, due January 28, 1999...................... $11,442 $11,500 $7,500
Revolving credit...................................... 58 -- --
Senior subordinated note, due March 29, 2001.......... 5,230 -- --
16% junior subordinated note -- due to officer, due
March 28, 1997 (note 6(a)).......................... 750 -- --
------- ------- ------
Total long-term debt............................. 17,480 11,500 7,500
Less current installments........................... 1,200 2,000 1,825
------- ------- ------
Long-term debt, excluding current installments... $16,280 $ 9,500 $5,675
======= ======= ======
</TABLE>

The aggregate minimum annual maturities of long-term debt are: $1,825;
1997, $1,995; 1998, and $3,680, 1999.

On March 29, 1994, the Company entered into a Credit Agreement, which
provided for (i) an $18,000 term loan facility (Term Loans); and (ii)a $5,250
revolving credit facility (Revolving Loans).

On April 5, 1995, the Company amended the Credit Agreement. The amendment
increased the outstanding Term Loans by $5,250, the proceeds of which were used
to pay the outstanding principal and interest on the senior subordinated note.
The fees associated with executing the amendment were capitalized as part of
unamortized debt expenses.

Under the terms of the amendment, the Term Loans have an interest rate
equal to, at the Company's option, the bank prime loan rate plus 1.25% per annum
or the LIBOR rate plus 2.75% per annum. The Revolving Loans have an interest
rate equal to, at the Company's option, the bank prime loan rate plus 1.00% per
annum or the LIBOR rate plus 2.50% per annum. The interest rate on the Term
Loans at January 28, 1995 was approximately 10.5%, at February 3, 1996 was
approximately 8.7%, and at August 31, 1996 was approximately 9.5%.

The Term Loans and Revolving Loans are collateralized by all inventory,
equipment, and both tangible, as well as intangible, property of the Company.

At August 31, 1996, there was a $93 letter of credit outstanding against
the Revolving Loan.

(4) CAPITAL LEASES

In connection with the purchase of certain assets of Vision-Group described
in note 1, the Company agreed to sublease land, buildings and equipment at eight
of the operating locations. Under the terms of the agreement, the Company
committed to purchase such properties on February 1, 1999 for $10,000 and to pay
Eckerd Corporation $1,260 per year annually until February 1, 1999 for the
subleases. The Company has accounted for this transaction in a manner similar to
a capital lease and has recorded the assets and the future obligation on the
balance sheet at $10,000. The annual sublease payments have been reflected as
interest expense in the statement of earnings.

F-65
<PAGE> 182
VISIONWORKS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

At January 28, 1995, February 3, 1996 and August 31, 1996, the gross amount
of the assets and related accumulated amortization recorded were as follows:

<TABLE>
<CAPTION>
JANUARY 28, FEBRUARY 3, AUGUST 31,
1995 1996 1996
----------- ----------- ----------
<S> <C> <C> <C>
Land.................................................. $ 6,000 $ 6,000 $ 6,000
Buildings and equipment............................... 4,000 4,000 4,000
------- ------- -------
10,000 10,000 10,000
Less accumulated amortization......................... (300) (600) (775)
------- ------- -------
$ 9,700 $ 9,400 $ 9,225
======= ======= =======
</TABLE>

(5) COMMITMENTS

The Company conducts the major portion of its retail operations from leased
store premises under leases that will expire over the next twenty years. Such
leases generally contain renewal options exercisable at the option of the
Company. In addition to minimum rental payments, certain leases provide for
payment of taxes, maintenance, and percentage rentals based upon sales in excess
of stipulated amounts. Rental expense was $6,144 in fiscal 1994, $6,324 in
fiscal 1995, and $3,917 in fiscal 1996 to date.

At February 3, 1996 and August 31, 1996, minimum rental commitments for the
next five fiscal years and thereafter under noncancelable leases were as
follows:

<TABLE>
<CAPTION>
FEBRUARY 3, AUGUST 31,
FISCAL YEAR 1996 1996
----------- ----------- ----------
<S> <C> <C>
1996............................................... $ 5,438 $ 5,599
1997............................................... 5,097 5,506
1998............................................... 5,136 5,525
1999............................................... 4,979 5,358
2000............................................... 4,840 5,139
Thereafter......................................... 29,718 27,806
------- -------
$55,208 $54,933
======= =======
</TABLE>

(6) STOCKHOLDERS' EQUITY

(a) Common Stock

The Company's authorized common stock consists of 2,000,000 shares of no
par value common stock. As of January 28, 1995 there were 903,226 shares of
common stock issued and outstanding and as of February 3, 1996 and August 31,
1996, there were 1,000,000 shares of common stock issued and outstanding. A
total of 96,774 of these shares, valued by the Company's Board of Directors,
were issued as part of a restricted stock award to a Company officer in fiscal
1994. At January 28, 1995, 24,186 of these restricted shares were vested. In
fiscal 1995, the remaining 72,588 shares became vested. In connection with this
restricted stock award, the Company recorded $250 of compensation during fiscal
1994 and $500 of compensation during fiscal 1995.

On March 28, 1994, the Company issued a $750 subordinated debenture to a
Company officer. The debenture stipulated that it could be converted into 96,774
shares of the Company's common stock for a period of three years from the date
of issuance. This conversion ratio was determined by the Board of Directors
based on their estimate of the fair value of the Company's common stock at March
28, 1994.

F-66
<PAGE> 183
VISIONWORKS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

(b) Stock Incentive Plan

The Company has a qualified stock incentive plan for the purpose of
granting stock options to officers and key employees of the Company. The number
of shares reserved for this purpose is discretionary and is determined by the
Stock Incentive Plan Committee of the Board of Directors. Options are granted at
prices which are not less than the fair market value at the date of grant.

Through August 31, 1996, 50,000 stock options were authorized and 49,500
were issued in fiscal 1995 and 500 in fiscal 1996 to date with an exercise price
of $7.75. These options vest 50% after three years and 25% in each of the two
years thereafter. At January 28, 1995, February 3, 1996 and August 31, 1996, no
options were exercisable.

The Company applies the provisions of APB Opinion No. 25 to all employee
stock-based compensation and, accordingly, no compensation expense is recorded
when the exercise price is greater than or equal to fair value at the
measurement date.

(7) NOTE RECEIVABLE -- OFFICER

On April 24, 1994, the Company received a $300 note due from a Company
officer. The note bore interest at 8% and required annual principal payments of
$100 plus interest. The note was repaid on January 20, 1996.

(8) DEFERRED COMPENSATION PLAN

The Company maintains an unfunded deferred compensation plan, initiated as
of December 20, 1994, whereby any eligible executive of the Company may defer a
certain portion of their compensation. The deferred amounts earn interest at a
rate equal to the interest paid by the Company in relation to its senior debt
outstanding. These amounts are payable (over a minimum of 5 years) only on
termination of employment or a change in control of the Company.

F-67
<PAGE> 184
VISIONWORKS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

(9) INCOME TAXES

The tax effects of temporary differences that account for significant
portions of the deferred tax assets and deferred tax liabilities at January 28,
1995, February 3, 1996 and August 31, 1996 are presented below:

<TABLE>
<CAPTION>
JANUARY 28, FEBRUARY 3, AUGUST 31,
1995 1996 1996
----------- ----------- ----------
<S> <C> <C> <C>
Deferred tax assets:
Accounts receivable, principally due to
allowance for uncollectible accounts.......... $ 102 35 108
Inventory, principally due to obsolete
inventory..................................... 731 -- --
Accrued expenses, principally due to deferral
for income tax reporting purposes............. 235 338 642
Unamortized debt expense, principally due to
differences in amortization................... 17 17 17
Alternative minimum tax credit carryforward..... -- -- 8
Charitable contribution carryforward............ -- -- 9
Net operating loss carryforwards................ 1,056 1,339 506
------ ------ ------
Total gross deferred tax assets............ 2,141 1,729 1,290
------ ------ ------
Deferred tax liabilities:
Property and equipment, principally due to
differences in depreciation................... 68 (498) (695)
Goodwill, principally due to differences in
amortizable amounts........................... (35) (80) (106)
------ ------ ------
Total gross deferred tax liabilities....... 33 (578) (801)
------ ------ ------
Net deferred tax asset..................... $2,174 1,151 489
====== ====== ======
</TABLE>

The Company considers estimated future taxable income and scheduled
reversals of taxable temporary differences in determining whether it is more
likely than not that deferred tax assets will be realized. Based on these
factors, there was no valuation allowance for deferred tax assets as of January
28, 1995, February 3, 1996 and August 31, 1996.

Income tax expense attributable to continuing operations consists of:

<TABLE>
<CAPTION>
YEARS ENDED SEVEN MONTHS
------------------------- ENDED
JANUARY 28, FEBRUARY 3, AUGUST 31,
1995 1996 1996
----------- ----------- ------------
<S> <C> <C> <C>
Current:
Federal........................................ $ -- -- 8
State.......................................... -- -- 3
---- ----- ---
-- -- 11
---- ----- ---
Deferred:
Federal........................................ 457 861 566
State.......................................... 51 162 96
---- ----- ---
508 1,023 662
---- ----- ---
$508 1,023 673
==== ===== ===
</TABLE>

F-68
<PAGE> 185
VISIONWORKS HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

Total income tax expense differs from the amounts computed by applying a
U.S. federal income tax rate of 34% to income before income taxes as set forth
below:

<TABLE>
<CAPTION>
JANUARY 28, FEBRUARY 3, AUGUST 31,
RATE RECONCILIATION 1995 1996 1996
------------------- ----------- ----------- ----------
<S> <C> <C> <C>
Expected tax rate.................................... 34.0% 34.0% 34.0%
State income tax rate, net of federal benefit........ 3.8% 4.4% 3.8%
Amortization of goodwill and other................... .2% 3.3% 2.3%
---- ---- ----
38.0% 41.7% 40.1%
==== ==== ====
</TABLE>

The Company has a net tax operating loss carryforward of approximately
$3,500 at February 3 1996 and $1,320 at August 31, 1996, which will expire
beginning in fiscal year 2010.

(10) CONTINGENCIES

The Company is engaged in certain claims and legal actions. In the opinion
of management, the ultimate outcome of these matters will not have a material
adverse effect on the Company's financial position, results of operation or
liquidity.

(11) SUBSEQUENT EVENT

On September 27, 1996, the Company closed on a stock purchase agreement
entered into with Eye Care Centers of America, Inc., a Texas corporation, to
sell 100% of the outstanding shares of common stock of the Company.

F-69
<PAGE> 186
- ------------------------------------------------------
- ------------------------------------------------------

NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE INITIAL PURCHASERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
REGISTERED SECURITIES TO WHICH IT RELATES, NOR DOES IT CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF NOR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary............................... 1
Recent Developments................... 14
Risk Factors.......................... 15
The Exchange Offer.................... 23
The Recapitalization.................. 30
Use of Proceeds....................... 31
Capitalization........................ 32
Unaudited Pro Forma Condensed
Consolidated Financial Statements... 33
Selected Historical Financial Data.... 42
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 44
Industry.............................. 51
Business.............................. 54
Management............................ 65
Principal Shareholders................ 70
Certain Transactions.................. 71
Description of the New Credit
Facility............................ 72
Description of Exchange Notes......... 73
Description of Initial Notes.......... 104
Description of New Preferred Stock.... 104
Exchange Offer; Registration Rights... 105
Income Tax Considerations............. 107
Plan of Distribution.................. 108
Legal Matters......................... 109
Experts............................... 109
Index to Defined Terms................ 110
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>

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

- ------------------------------------------------------
- ------------------------------------------------------
$150,000,000

[EYE CARE LOGO]

$100,000,000
9 1/8% SENIOR SUBORDINATED
NOTES DUE 2008

$50,000,000 FLOATING
INTEREST RATE SUBORDINATED
TERM SECURITIES DUE 2008
(FIRSTS(SM))

------------------------
PROSPECTUS
------------------------

, 1998

- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 187

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Article 2.02-1(B)-(U) of the Texas Business Corporation Act provides as
follows:

ART. 2.02-1(B)-(U) POWER TO INDEMNIFY AND TO PURCHASE INDEMNITY INSURANCE; DUTY
TO INDEMNIFY.

B. A corporation may indemnify a person who was, is, or is threatened to be
made a named defendant or respondent in a proceeding because the person is or
was a director only if it is determined in accordance with Section F of this
article that the person:

(1) conducted himself in good faith;

(2) reasonably believed:

(a) in the case of conduct in his official capacity as a director
of the corporation, that his conduct was in the corporation's best
interests; and

(b) in all other cases, that his conduct was at least not opposed
to the corporation's best interest; and

(3) in the case of any criminal proceeding, had no reasonable cause to
believe his conduct was unlawful.

C. Except to the extent permitted by Section E of this article, a director
may not be indemnified under Section B of this article in respect of a
proceeding:

(1) in which the person is found liable on the basis that personal
benefit was improperly received by him, whether or not the benefit resulted
from an action taken in the person's official capacity; or

(2) in which the person is found liable to the corporation.

D. The termination of a proceeding by judgment, order, settlement, or
conviction, or on a plea of nolo contendere or its equivalent is not of itself
determinative that the person did not meet the requirements set forth in Section
B of this article. A person shall be deemed to have been found liable in respect
of any claim, issue or matter only after the person shall have been so adjudged
by a court of competent jurisdiction after exhaustion of all appeals therefrom.

E. A person may be indemnified under Section B of this article against
judgments, penalties (including excise and similar taxes), fines, settlements,
and reasonable expenses actually incurred by the person in connection with the
proceeding; but if the person is found liable to the corporation or is found
liable on the basis that personal benefit was improperly received by the person,
the indemnification (1) is limited to reasonable expenses actually incurred by
the person in connection with the proceeding and (2) shall not be made in
respect of any proceeding in which the person shall have been found liable for
willful or intentional misconduct in the performance of his duty to the
corporation.

F. A determination of indemnification under Section B of this article must
be made:

(1) by a majority vote of a quorum consisting of directors who at the
time of the vote are not named defendants or respondents in the proceeding;

(2) if such a quorum cannot be obtained, by a majority vote of a
committee of the board of directors, designated to act in the matter by a
majority vote of all directors, consisting solely of two or more directors
who at the time of the vote are not named defendants or respondents in the
proceeding;

(3) by special legal counsel selected by the board of directors or a
committee of the board by vote as set forth in Subsection (1) or (2) of
this section, or, if such a quorum cannot be obtained and such a committee
cannot be established, by a majority vote of all directors; or

II-1
<PAGE> 188

(4) by the shareholders in a vote that excludes the shares held by
directors who are named defendants or respondents in the proceeding.

G. Authorization of indemnification and determination as to reasonableness
of expenses must be made in the same manner as the determination that
indemnification is permissible, except that if the determination that
indemnification is permissible is made by special legal counsel, authorization
of indemnification and determination as to reasonableness of expenses must be
made in the manner specified by Subsection (3) of Section F of this article for
the selection of special legal counsel. A provision contained in the articles of
incorporation, the bylaws, a resolution of shareholders or directors, or an
agreement that makes mandatory the indemnification permitted under Section B of
this article shall be deemed to constitute authorization of indemnification in
the manner required by this section even though such provision may not have been
adopted or authorized in the same manner as the determination that
indemnification is permissible.

H. A corporation shall indemnify a director against reasonable expenses
incurred by him in connection with a proceeding in which he is a named defendant
or respondent because he is or was a director if he has been wholly successful,
on the merits or otherwise, in the defense of the proceeding.

I. If, in a suit for the indemnification required by Section H of this
article, a court of competent jurisdiction determines that the director is
entitled to indemnification under that section, the court shall order
indemnification and shall award to the director the expenses incurred in
securing the indemnification.

J. If, upon application of a director, a court of competent jurisdiction
determines, after giving any notice the court considers necessary, that the
director is fairly and reasonably entitled to indemnification in view of all the
relevant circumstances, whether or not he has met the requirements set forth in
Section B of this article or has been found liable in the circumstances
described by Section C of this article, the court may order the indemnification
that the court determines is proper and equitable; but if the person is found
liable to the corporation or is found liable on the basis that personal benefit
was improperly received by the person, the indemnification shall be limited to
reasonable expenses actually incurred by the person in connection with the
proceeding.

K. Reasonable expenses incurred by a director who was, is, or is
threatened to be made a named defendant or respondent in a proceeding may be
paid or reimbursed by the corporation, in advance of the final disposition of
the proceeding and without the determination specified in Section F of this
article or the authorization or determination specified in Section Go of this
article, after the corporation receives a written affirmation by the director of
his good faith belief that he has met the standard of conduct necessary for
indemnification under this article and a written undertaking by or on behalf of
the director to repay the amount paid or reimbursed if it is ultimately
determined that he has not met that standard or if it is ultimately determined
that indemnification of the director against expenses incurred by him in
connection with that proceeding is prohibited by Section E of this article. A
provision contained in the articles of incorporation, the bylaws, a resolution
of shareholders or directors, or an agreement that makes mandatory the payment
or reimbursement permitted under this section shall be deemed to constitute
authorization of that payment or reimbursement.

L. The written undertaking required by Section K of this article must be
an unlimited general obligation of the director but need not be secured. It may
be accepted without reference to financial ability to make repayment.

M. A provision for a corporation to indemnify or to advance expenses to a
director who was, is, or is threatened to be made a named defendant or
respondent in a proceeding, whether contained in the articles of incorporation,
the bylaws, a resolution of shareholders or directors, an agreement, or
otherwise, except in accordance with Section R of this article, is valid only to
the extent it is consistent with this article as limited by the articles of
incorporation, if such a limitation exists.

N. Notwithstanding any other provision of this article, a corporation may
pay or reimburse expenses incurred by a director in connection with his
appearance as a witness or other participation in a proceeding at a time when he
is not a named defendant or respondent in the proceeding.

II-2
<PAGE> 189

O. An officer of the corporation shall be indemnified as, and to the same
extent, provided by Sections H, I, and J of this article for a director and is
entitled to seek indemnification under those sections to the same extent as a
director. A corporation may indemnify and advance expenses to an officer,
employee, or agent of the corporation to the same extent that it may indemnify
and advance expenses to directors under this article.

P. A corporation may indemnify and advance expenses to persons who are not
or were not officers, employees, or agents of the corporation but who are or
were serving at the request of the corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, employee benefit plan, other
enterprise, or other entity to the same extent that it may indemnify and advance
expenses to directors under this article.

Q. A corporation may indemnify and advance expenses to an officer,
employee, agent, or person identified in Section P of this article and who is
not a director to such further extent, consistent with law, as may be provided
by its articles of incorporation, bylaws, general or specific action of its
board of directors, or contract or as permitted or required by common law.

R. A corporation may purchase and maintain insurance or another
arrangement on behalf of any person who is or was a director, officer, employee,
or agent of the corporation or who is or was serving at the request of the
corporation as a director, officer, partner, venturer, proprietor, trustee,
employee, agent, or similar functionary of another foreign or domestic
corporation, employee benefit plan, other enterprise, or other entity, against
any liability asserted against him and incurred by him in such a capacity or
arising out of his status as such a person, whether or not the corporation would
have the power to indemnify him against that liability under this article. If
the insurance or other arrangement is with a person or entity that is not
regularly engaged in the business of providing insurance coverage, the insurance
or arrangement may provide for payment of a liability with respect to which the
corporation would not have the power to indemnify the person only if including
coverage for the additional liability has been approved by the shareholders of
the corporation. Without limiting the power of the corporation to procure or
maintain any kind of insurance or other arrangement, a corporation may, for the
benefit of persons indemnified by the corporation, (1) create a trust fund; (2)
establish any form of self-insurance; (3) secure its indemnity obligation by
grant of a security interest or other lien on the assets of the corporation; or
(4) establish a letter of credit, guaranty, or surety arrangement. The insurance
or other arrangement may be procured, maintained, or established within the
corporation or with any insurer or other person deemed appropriate by the board
of directors regardless of whether all or part of the stock or other securities
of the insurer or other person are owned in whole or in part by the corporation.
In the absence of fraud, the judgment of the board of directors as to the terms
and conditions of the insurance or other arrangement and the identity of the
insurer or other person participating in an arrangement shall be conclusive and
the insurance or arrangement shall not be voidable and shall not subject the
directors approving the insurance or arrangement to liability, on any ground,
regardless of whether directors participating in the approval are beneficiaries
of the insurance or arrangement.

S. Any indemnification of or advance of expenses to a director in
accordance with this article shall be reported in writing to the shareholders
with or before the notice or waiver of notice of the next shareholders' meeting
or with or before the next submission to shareholders of a consent to action
without a meeting pursuant to Section A, Article 9.10, of this Act and, in any
case, within the 12-month period immediately following the date of the
indemnification or advance.

T. For purposes of this article, the corporation is deemed to have
requested a director to serve as a trustee, employee, agent, or similar
functionary of an employee benefit plan whenever the performance by him of his
duties to the corporation also imposes duties on or otherwise involves services
by him to the plan or participants or beneficiaries of the plan. Excise taxes
assessed on a director with respect to an employee benefit plan pursuant to
applicable law are deemed fines. Action taken or omitted by a director with
respect to an employee benefit plan in the performance of his duties for a
purpose reasonably believed by him to be in the interest of the participants and
beneficiaries of the plan is deemed to be for a purpose which is not opposed to
the best interests of the corporation.

II-3
<PAGE> 190

U. The articles of incorporation of a corporation may restrict the
circumstances under which the corporation is required or permitted to indemnify
a person under Sections H, I, J, O, P, or Q of this article.

Article VIII of the By-laws of the Issuer provides as follows:

ARTICLE VIII

INDEMNITY

Section 1. Indemnification. The Corporation shall indemnify its directors
and officers from and against any and all liabilities, costs and expenses
incurred by them in such capacities and shall advance expenses to its directors
and officers, all to the fullest extent permitted by the Act, as presently in
effect and as may able hereafter amended. The Corporation shall also have the
power to purchase and maintain liability insurance coverage for those persons or
make and maintain other arrangements on such persons' behalf as, and to the
fullest extent permitted by the Act, as presently in effect and as may be
hereafter amended. The Corporation shall pay or reimburse, in advance,
reasonable expenses incurred by a director who was, is or is threatened to be
made a named defendant or respondent in a proceeding, without the authorization
or determination specified in the Act, after the corporation receives a written
affirmation by the director or officer of his good faith belief that he has met
the standard of conduct necessary for indemnification under the Act and a
written undertaking by or on behalf of the director or officer to repay the
amount paid or reimbursed if it is ultimately determined that indemnification
that he has not met that standard or if it is ultimately determined that
indemnification that he has met that standard or if it is ultimately determined
that indemnification of a director against expenses incurred by him in
connection with that proceeding is prohibited by the Act.

Section 2. Indemnification Not Exclusive. The rights of indemnification
and reimbursement provided for in Section 1 of this Article shall not be deemed
exclusive of any other rights to which such director or officer may be entitled
under the Restated Articles of Incorporation, any by-laws, agreement, vote of
shareholders, or as a matter of law or otherwise.

Article Ten of the Restated Articles of Incorporation of the Issuer
provides in relevant part as follows:

ARTICLE TEN

The Corporation shall indemnify and advance expenses to its directors and
officers to the fullest extent permitted by the Texas Business Corporation Act,
as it now exists and as it may hereafter be amended, and shall have the power to
purchase and maintain liability insurance for those persons as and to the
fullest extent permitted by such Act.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits.

<TABLE>
<C> <S>
2.1 Stock Purchase Agreement dated August 15, 1996 by and
between Eye Care Centers of America, Inc., Visionworks
Holdings, Inc. and the sellers listed therein.*
2.2 Stock Purchase Agreement, dated September 30 1997, by and
among Eye Care Centers of America, Inc., a Texas
corporation, Robert A. Samit, O.D. and Michael Davidson, O.D.*
2.3 Recapitalization Agreement dated as of March 6, 1998 among
ECCA Merger Corp., Eye Care Centers of America, Inc. and the
sellers listed therein.*
2.4 Amendment No. 1 to the Recapitalization Agreement dated as
of April 23, 1998 among ECCA Merger Corp., Eye Care Centers
of America, Inc, and the sellers listed therein.*
2.5 Amendment No. 2 to the Recapitalization Agreement dated as
of April 24, 1998 among ECCA Merger Corp., Eye Care Centers
of America, Inc. and the sellers listed therein.*
2.6 Articles of Merger of ECCA Merger Corp. with and into Eye
Care Centers of America, Inc. dated April 24, 1998.*
2.7 Master Asset Purchase Agreement, dated as of August 22,
1998, by and among Eye Care Centers of America, Inc.; Mark
E. Lynn; Dr. Mark Lynn & Associates, PLLC; Dr. Bizer's
VisionWorld, PLLC and its affiliates.*
</TABLE>

II-4
<PAGE> 191

<TABLE>
<C> <S>
2.8 Letter Agreement, dated October 1, 1998, amending and modifying that certain Master Asset Purchase
Agreement, dated as of August 22, 1998, by and among Eye Care Centers of America, Inc.; Mark E.
Lynn; Dr. Mark Lynn & Associates, PLLC; Dr. Bizer's VisionWorld, PLLC and its affiliates.*
3.1 Restated Articles of Incorporation of Eye Care Centers of America Inc.*
3.2 Statement of Resolution of the Board of Directors of Eye Care Centers of America, Inc. designating
a series of Preferred Stock.*
3.3 Amended and Restated By-laws of Eye Care Centers of America, Inc.*
3.4 Articles of Incorporation of ECCA Managed Vision Care, Inc.*
3.5 By-Laws of ECCA Managed Vision Care, Inc.*
3.6 Articles of Incorporation of Enclave Advancement Group, Inc.*
3.7 By-Laws of Enclave Advancement Group, Inc.*
3.8 Articles of Incorporation of Visionworks, Inc.*
3.9 By-Laws of Visionworks, Inc.*
3.10 Articles of Incorporation of Visionworks Holdings, Inc.*
3.11 By-Laws of Visionworks Holdings, Inc.*
3.12 Certificate of Incorporation of Eye Care Holdings, Inc.*
3.13 By-Laws of Eye Care Holdings, Inc.*
3.14 Articles of Incorporation of Visionworks Properties, Inc.*
3.15 By-Laws of Visionworks Properties, Inc.*
3.16 Certificate of Incorporation of Visionary Retail Management, Inc.*
3.17 By-Laws of Visionary Retail Management, Inc.*
3.18 Certificate of Incorporation of Visionary Properties, Inc.*
3.19 By-Laws of Visionary Properties, Inc.*
3.20 Certificate of Incorporation of Visionary MSO, Inc.*
3.21 By-Laws of Visionary MSO, Inc.*
3.22 Certificate of Incorporation of The Samit Group, Inc.*
3.23 By-Laws of The Samit Group, Inc.*
3.24 Amended Articles of Incorporation of Skylab Optical, Inc.*
3.25 By-Laws of Skylab Optical, Inc.*
3.26 Articles of Incorporation of Metropolitan Vision Services, Inc.*
3.27 By-Laws of Metropolitan Vision Services, Inc.*
3.28 Amended Articles of Incorporation of Hour Eyes, Inc.*
3.29 By-Laws of Hour Eyes, Inc.*
4.1 Indenture dated as of April 24, 1998 among Eye Care Centers of America, Inc., the Guarantors named
therein and United States Trust Company of New York, as Trustee for the 9 1/8% Senior Subordinated
Notes Due 2008 and Floating Interest Rate Subordinated Term Securities.*
4.2 Form of Fixed Rate Exchange Note (included in Exhibit 4.1 hereto).*
4.3 Form of Floating Rate Exchange Note (included in Exhibit 4.1 hereto).*
4.4 Form of Guarantee (included in Exhibit 4.1 hereto).*
4.5 Registration Rights Agreement dated April 24, 1998 between Eye Care Centers of America, Inc., the
subsidiaries of the Company named as guarantors therein, BT Alex. Brown Incorporated and Merrill
Lynch, Pierce, Fenner & Smith Incorporated.*
5.1 Opinion of Hutchins, Wheeler & Dittmar, A Professional Corporation, regarding legality of
securities being registered.*
8.1 Opinion of Hutchins, Wheeler & Dittmar, A Professional Corporation, regarding tax matters.*
10.1 Form of Stockholders Agreement dated as of April 24, 1998 by and among Eye Care of America, Inc.
and the shareholders listed therein.*
10.2 1998 Stock Option Plan.*
10.3 Amended and Restated Deferred Stock Plan of Eye Care Centers of America, Inc.*
10.4 Employment Agreement dated April 24, 1998 by and between Eye Care Centers of America, Inc. and
Bernard W. Andrews.*
10.5 Stock Option Agreement dated April 24, 1998 by and between Bernard W. Andrews and Eye Care Centers
of America, Inc.*
10.6 Form of Employment Agreement dated January 1, 1998 between Eye Care Centers of America, Inc. and
Mark T. Pearson, William A. Shertzer, Jr., George Gebhardt and Kent M. Keish.*
10.7 Employment Agreement dated March 24, 1997 between Eye Care Centers of America, Inc. and Michele
Benoit.*
</TABLE>

II-5
<PAGE> 192

<TABLE>
<S> <C>
10.8 Management Agreement, dated as of April 24, 1998, by and between Thomas H. Lee
Company and Eye Care Centers of America, Inc.*
10.9 Retail Business Management Agreement, dated September 30, 1997, by and between
Dr. Samit's Hour Eyes Optometrist, P.C., a Virginia professional corporation,
and Visionary Retail Management, Inc., a Delaware corporation.+*
10.10 Professional Business Management Agreement dated September 30, 1997, by and
between Dr. Samit's Hour Eyes Optometrists, P.C., a Virginia professional
corporation, and Visionary MSO, Inc., a Delaware corporation.+*
10.11 Contract for Purchase and Sale dated May 29, 1997 by and between Eye Care
Centers of America, Inc. and JDB Real Properties, Inc.*
10.12 Amendment to Contract for Purchase and Sale dated July 3, 1997 by and between
Eye Care Centers of America, Inc. and JDB Real Properties, Inc.*
10.13 Second Amendment to Contract for Purchase and Sale dated July 10, 1997 by and
between Eye Care Centers of America, Inc. and JDB Real Properties, Inc.*
10.14 Third Amendment to Contract for Purchase and Sale by and between Eye Care
Centers of America, Inc., John D. Byram, Dallas Mini #262. Ltd. and Dallas
Mini #343, Ltd.*
10.15 Commercial Lease Agreement dated August 193 1997 by and between John D. Byram,
Dallas Mini #262, Ltd. and Dallas Mini #343, Ltd. and Eye Care Centers of
America, Inc.*
10.16 1997 Incentive Plan for Key Management.*
10.17 1998 Incentive Plan for Key Management.*
10.18 Employment Agreement and Noncompetition Agreement, dated December 31, 1996 by
and between Eye Care Centers of America, Inc. and Gary D. Hahs, together with
letter, dated November 21, 1997, regarding extension of term.*
10.19 Master Lease Agreement, dated August 12, 1997, by and between Pacific
Financial Company and Eye Care Centers of America, Inc., together with all
amendments, riders and schedules thereto.*
10.20 Credit Agreement, dated as of April 23, 1998, among Eye Care Centers of
America, Inc., Various Lenders, Bankers Trust Company, as Administrative
Agent, and Merrill Lynch Capital Corporation, as Syndication Agent.*
10.21 Purchase Agreement, dated as of April 24, 1998, by and among Eye Care Centers
of America, Inc., the subsidiaries of Eye Care Centers of America, Inc. named
therein, BT Alex. Brown Incorporated and Merrill Lynch, Pierce, Fenner & Smith
Incorporated.*
10.22 Secured Promissory Note, dated April 24, 1998, issued by Bernard W. Andrews in
favor of Eye Care Centers of America, Inc.*
10.23 Form of Eye Care Centers of America, Inc. Standard Managed Care Contract.*
10.24 Employment Agreement, dated July 8, 1998, by and between Eye Care Centers of
America, Inc. and David E. McComas.*
10.25 Employment Agreement, dated November 2, 1998, by and between Eye Care Centers
of America, Inc. and Alan E. Wiley.
12.1 Statement re Computation of Ratios.*
21.1 List of subsidiaries of Eye Care Centers of America, Inc.*
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Beers & Cutler PLLC.
23.3 Consent of KPMG Peat Marwick LLP.
23.4 Consent of Hutchins, Wheeler & Dittmar, A Professional Corporation (included
in Exhibit 5.1).*
23.5 Consent of Welenken Himmelfarb & Co.
24.1 Powers of Attorney (contained on the signature pages to this Registration
Statement).*
25.1 Statement on Form T-1 of the eligibility of the Trustee.*
27.1 Financial Data Schedule.*
99.1 Letter of Transmittal.*
99.2 Notice of Guaranteed Delivery.*
99.3 Form of Exchange Agent Agreement by and between Eye Care Centers of America,
Inc. and United States Trust Company of New York.*
99.4 Eye Care Centers of America, Inc. Representation Letter.*
</TABLE>

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

+ Portions of this Exhibit have been omitted pursuant to an application for an
order declaring confidential treatment filed with the Securities and Exchange
Commission.

* Previously filed.

II-6
<PAGE> 193

(b) Financial Statement Schedules.

Schedule II -- Consolidated Valuation and Qualifying Accounts (at page
S-1).

ITEM 22. UNDERTAKINGS

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

(b) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.

(c) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject and included
in the registration statement when it became effective.

(d) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.

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

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

II-7
<PAGE> 194

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 5 TO THE REGISTRATION STATEMENT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF SAN
ANTONIO, STATE OF TEXAS, ON THE 10TH DAY OF NOVEMBER, 1998.

EYE CARE CENTERS OF AMERICA, INC.

BY: /s/ BERNARD W. ANDREWS
------------------------------------
BERNARD W. ANDREWS
CHAIRMAN AND CHIEF EXECUTIVE OFFICER

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 5 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ Bernard W. Andrews Chairman of the Board and Chief November 10, 1998
- --------------------------------------------------- Executive Officer (Principal
BERNARD W. ANDREWS Executive Officer)

/s/ Alan E. Wiley Executive Vice President and Chief November 10, 1998
- --------------------------------------------------- Financial Officer (Principal
ALAN E. WILEY Financial and Accounting Officer)

* Director November 10, 1998
- ---------------------------------------------------
NORMAN S. MATTHEWS

* Director November 10, 1998
- ---------------------------------------------------
ANTOINE G. TREUILLE

* Director November 10, 1998
- ---------------------------------------------------
ANTHONY J. DINOVI

* Director November 10, 1998
- ---------------------------------------------------
WARREN C. SMITH, JR.

* Director November 10, 1998
- ---------------------------------------------------
CHARLES A. BRIZIUS
</TABLE>

*By: /s/ DOUGLAS C. SHEPARD
---------------------------------
DOUGLAS C. SHEPARD
ATTORNEY-IN-FACT

II-8
<PAGE> 195

SIGNATURES

ECCA MANAGED VISION CARE, INC.

By: /s/ BERNARD W. ANDREWS
------------------------------------
BERNARD W. ANDREWS,
PRESIDENT

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 5 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ Bernard W. Andrews President, Director (Principal November 10, 1998
- --------------------------------------------------- Executive Officer)
BERNARD W. ANDREWS

/s/ Douglas C. Shepard Treasurer, Secretary and November 10, 1998
- --------------------------------------------------- Director (Principal
DOUGLAS C. SHEPARD Financial and Accounting
Officer)

* Vice President and Director November 10, 1998
- ---------------------------------------------------
GEORGE E. GEBHARDT
</TABLE>

*By: /s/ DOUGLAS C. SHEPARD
---------------------------------
DOUGLAS C. SHEPARD
ATTORNEY-IN-FACT

II-9
<PAGE> 196

SIGNATURES

ENCLAVE ADVANCEMENT GROUP, INC.

By: /s/ BERNARD W. ANDREWS
------------------------------------
BERNARD W. ANDREWS,
PRESIDENT

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 5 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.

/s/ Douglas C. Shepard Treasurer, Secretary and November 10, 1998
- --------------------------------------------------- Director (Principal
DOUGLAS C. SHEPARD Financial and Accounting
Officer)

* Vice President and Director November 10, 1998
- ---------------------------------------------------
GEORGE E. GEBHARDT
</TABLE>

*By: /s/ DOUGLAS C. SHEPARD
---------------------------------
DOUGLAS C. SHEPARD
ATTORNEY-IN-FACT

II-10
<PAGE> 197

SIGNATURES

EYE CARE HOLDINGS, INC.

By: /s/ BERNARD W. ANDREWS
------------------------------------
BERNARD W. ANDREWS,
PRESIDENT

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 5 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.

/s/ Douglas C. Shepard Treasurer, Secretary and November 10, 1998
- --------------------------------------------------- Director (Principal
DOUGLAS C. SHEPARD Financial and Accounting
Officer)

* Vice President and Director November 10, 1998
- ---------------------------------------------------
GEORGE E. GEBHARDT
</TABLE>

*By: /s/ DOUGLAS C. SHEPARD
---------------------------------
DOUGLAS C. SHEPARD
ATTORNEY-IN-FACT

II-11
<PAGE> 198

SIGNATURES

HOUR EYES, INC.

By: /s/ BERNARD W. ANDREWS
------------------------------------
BERNARD W. ANDREWS,
PRESIDENT

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 5 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.

/s/ Douglas C. Shepard Treasurer, Secretary and November 10, 1998
- --------------------------------------------------- Director (Principal
DOUGLAS C. SHEPARD Financial and Accounting
Officer)

* Vice President and Director November 10, 1998
- ---------------------------------------------------
GEORGE E. GEBHARDT
</TABLE>

*By: /s/ DOUGLAS C. SHEPARD
---------------------------------
DOUGLAS C. SHEPARD
ATTORNEY-IN-FACT

II-12
<PAGE> 199

SIGNATURES

METROPOLITAN VISION SERVICES, INC.

By: /s/ BERNARD W. ANDREWS
------------------------------------
BERNARD W. ANDREWS,
PRESIDENT

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 5 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.

/s/ Douglas C. Shepard Treasurer, Secretary and November 10, 1998
- --------------------------------------------------- Director (Principal
DOUGLAS C. SHEPARD Financial and Accounting
Officer)

* Vice President and Director November 10, 1998
- ---------------------------------------------------
GEORGE E. GEBHARDT
</TABLE>

*By: /s/ DOUGLAS C. SHEPARD
---------------------------------
DOUGLAS C. SHEPARD
ATTORNEY-IN-FACT

II-13
<PAGE> 200

SIGNATURES

SKYLAB OPTICAL, INC.

By: /s/ BERNARD W. ANDREWS
------------------------------------
BERNARD W. ANDREWS,
PRESIDENT

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 5 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.

/s/ Douglas C. Shepard Treasurer, Secretary and November 10, 1998
- --------------------------------------------------- Director (Principal
DOUGLAS C. SHEPARD Financial and Accounting
Officer)

* Vice President and Director November 10, 1998
- ---------------------------------------------------
GEORGE E. GEBHARDT
</TABLE>

*By: /s/ DOUGLAS C. SHEPARD
---------------------------------
DOUGLAS C. SHEPARD
ATTORNEY-IN-FACT

II-14
<PAGE> 201

SIGNATURES

THE SAMIT GROUP, INC.

By: /s/ BERNARD W. ANDREWS
------------------------------------
BERNARD W. ANDREWS,
PRESIDENT

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 5 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.

/s/ Douglas C. Shepard Treasurer, Secretary and November 10, 1998
- --------------------------------------------------- Director (Principal
DOUGLAS C. SHEPARD Financial and Accounting
Officer)

* Vice President and Director November 10, 1998
- ---------------------------------------------------
GEORGE E. GEBHARDT
</TABLE>

*By: /s/ DOUGLAS C. SHEPARD
---------------------------------
DOUGLAS C. SHEPARD
ATTORNEY-IN-FACT

II-15
<PAGE> 202

SIGNATURES

VISIONARY MSO, INC.

By: /s/ BERNARD W. ANDREWS
------------------------------------
BERNARD W. ANDREWS,
PRESIDENT

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 5 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.

/s/ Douglas C. Shepard Treasurer, Secretary and November 10, 1998
- --------------------------------------------------- Director (Principal
DOUGLAS C. SHEPARD Financial and Accounting
Officer)

* Vice President and Director November 10, 1998
- ---------------------------------------------------
GEORGE E. GEBHARDT
</TABLE>

*By: /s/ DOUGLAS C. SHEPARD
---------------------------------
DOUGLAS C. SHEPARD
ATTORNEY-IN-FACT

II-16
<PAGE> 203

SIGNATURES

VISIONARY PROPERTIES, INC.

By: /s/ BERNARD W. ANDREWS
------------------------------------
BERNARD W. ANDREWS,
PRESIDENT

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 5 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.

/s/ Douglas C. Shepard Treasurer, Secretary and November 10, 1998
- --------------------------------------------------- Director (Principal
DOUGLAS C. SHEPARD Financial and Accounting
Officer)

* Vice President and Director November 10, 1998
- ---------------------------------------------------
GEORGE E. GEBHARDT
</TABLE>

*By: /s/ DOUGLAS C. SHEPARD
---------------------------------
DOUGLAS C. SHEPARD
ATTORNEY-IN-FACT

II-17
<PAGE> 204

SIGNATURES

VISIONARY RETAIL MANAGEMENT, INC.

By: /s/ BERNARD W. ANDREWS
------------------------------------
BERNARD W. ANDREWS,
PRESIDENT

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 5 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.

/s/ Douglas C. Shepard Treasurer, Secretary and November 10, 1998
- --------------------------------------------------- Director (Principal
DOUGLAS C. SHEPARD Financial and Accounting
Officer)

* Vice President and Director November 10, 1998
- ---------------------------------------------------
GEORGE E. GEBHARDT
</TABLE>

*By: /s/ DOUGLAS C. SHEPARD
---------------------------------
DOUGLAS C. SHEPARD
ATTORNEY-IN-FACT

II-18
<PAGE> 205

SIGNATURES

VISIONWORKS, INC.

By: /s/ BERNARD W. ANDREWS
------------------------------------
BERNARD W. ANDREWS,
PRESIDENT

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 5 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.

/s/ Douglas C. Shepard Treasurer, Secretary and November 10, 1998
- --------------------------------------------------- Director (Principal
DOUGLAS C. SHEPARD Financial and Accounting
Officer)

* Vice President and Director November 10, 1998
- ---------------------------------------------------
GEORGE E. GEBHARDT
</TABLE>

*By: /s/ DOUGLAS C. SHEPARD
---------------------------------
DOUGLAS C. SHEPARD
ATTORNEY-IN-FACT

II-19
<PAGE> 206

SIGNATURES

VISIONWORKS HOLDINGS, INC.

By: /s/ BERNARD W. ANDREWS
------------------------------------
BERNARD W. ANDREWS,
PRESIDENT

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 5 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.

/s/ Douglas C. Shepard Treasurer, Secretary and November 10, 1998
- --------------------------------------------------- Director (Principal
DOUGLAS C. SHEPARD Financial and Accounting
Officer)

* Vice President and Director November 10, 1998
- ---------------------------------------------------
GEORGE E. GEBHARDT
</TABLE>

*By: /s/ DOUGLAS C. SHEPARD
---------------------------------
DOUGLAS C. SHEPARD
ATTORNEY-IN-FACT

II-20
<PAGE> 207

SIGNATURES

VISIONWORKS PROPERTIES, INC.

By: /s/ BERNARD W. ANDREWS
------------------------------------
BERNARD W. ANDREWS,
PRESIDENT

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 5 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.

/s/ Douglas C. Shepard Treasurer, Secretary and November 10, 1998
- --------------------------------------------------- Director (Principal
DOUGLAS C. SHEPARD Financial and Accounting
Officer)

* Vice President and Director November 10, 1998
- ---------------------------------------------------
GEORGE E. GEBHARDT
</TABLE>

*By: /s/ DOUGLAS C. SHEPARD
---------------------------------
DOUGLAS C. SHEPARD
ATTORNEY-IN-FACT

II-21
<PAGE> 208

SCHEDULE II

EYE CARE CENTERS OF AMERICA, INC.

CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
CHARGED TO/ CHARGED TO/
BALANCE AT CREDITED FROM CREDITED FROM DEDUCTIONS BALANCE
BEGINNING COSTS AND OTHER FROM AT CLOSE
OF PERIOD EXPENSES ACCOUNTS RESERVE OF PERIOD
---------- ------------- ------------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts of
current receivables:
Year Ended December 30, 1995........ 130,000 -- -- -- 130,000
Year Ended December 28, 1996........ 130,000 -- 121,000 -- 251,000
Year Ended January 3, 1998.......... 251,000 -- 67,000 -- 318,000
Six Months Ended July 4, 1998....... 318,000 -- 3,000 -- 321,000

Inventory obsolescence reserves:
Year Ended December 30, 1995........ 361,000 -- -- -- 361,000
Year Ended December 28, 1996........ 361,000 -- 200,000 -- 561,000
Year Ended January 3, 1998.......... 561,000 -- -- -- 561,000
Six Months Ended July 4, 1998....... 561,000 -- -- -- 561,000
</TABLE>

S-1
<PAGE> 209

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ----------- ----------- ------------
<C> <S> <C>
2.1 Stock Purchase Agreement dated August 15, 1996 by and
between Eye Care Centers of America, Inc., Visionworks
Holdings, Inc. and the sellers listed therein.*.............
2.2 Stock Purchase Agreement, dated September 30 1997, by and
among Eye Care Centers of America, Inc., a Texas
corporation, Robert A. Samit, O.D. and Michael Davidson,
O.D.*.......................................................
2.3 Recapitalization Agreement dated as of March 6, 1998 among
ECCA Merger Corp., Eye Care Centers of America, Inc. and the
sellers listed therein.*....................................
2.4 Amendment No. 1 to the Recapitalization Agreement dated as
of April 23, 1998 among ECCA Merger Corp., Eye Care Centers
of America, Inc, and the sellers listed therein.*...........
2.5 Amendment No. 2 to the Recapitalization Agreement dated as
of April 24, 1998 among ECCA Merger Corp., Eye Care Centers
of America, Inc. and the sellers listed therein.*...........
2.6 Articles of Merger of ECCA Merger Corp. with and into Eye
Care Centers of America, Inc. dated April 24, 1998.*........
2.7 Master Asset Purchase Agreement, dated as of August 22,
1998, by and among Eye Care Centers of America, Inc., Mark
E. Lynn, Dr. Mark Lynn & Associates, PLLC; Dr. Bizer's
Vision World, PLLC and its affiliates.*.....................
2.8 Letter Agreement, dated October 1, 1998, amending and
modifying that certain Master Asset Purchase Agreement,
dated as of August 22, 1998, by and among Eye Care Centers
of America, Inc.; Mark E. Lynn; Dr. Mark Lynn & Associates,
PLLC; Dr. Bizer's VisionWorld, PLLC and its affiliates.*....
3.1 Restated Articles of Incorporation of Eye Care Centers of
America Inc.*...............................................
3.2 Statement of Resolution of the Board of Directors of Eye
Care Centers of America, Inc. designating a series of
Preferred Stock.*...........................................
3.3 Amended and Restated By-laws of Eye Care Centers of America,
Inc.*.......................................................
3.4 Articles of Incorporation of ECCA Managed Vision Care,
Inc.*.......................................................
3.5 By-Laws of ECCA Managed Vision Care, Inc.*..................
3.6 Articles of Incorporation of Enclave Advancement Group,
Inc.*.......................................................
3.7 By-Laws of Enclave Advancement Group, Inc.*.................
3.8 Articles of Incorporation of Visionworks, Inc.*.............
3.9 By-Laws of Visionworks, Inc.*...............................
3.10 Articles of Incorporation of Visionworks Holdings, Inc.*....
3.11 By-Laws of Visionworks Holdings, Inc.*......................
3.12 Certificate of Incorporation of Eye Care Holdings, Inc.*....
3.13 By-Laws of Eye Care Holdings, Inc.*.........................
3.14 Articles of Incorporation of Visionworks Properties,
Inc.*.......................................................
3.15 By-Laws of Visionworks Properties, Inc.*....................
3.16 Certificate of Incorporation of Visionary Retail Management,
Inc.*.......................................................
3.17 By-Laws of Visionary Retail Management, Inc.*...............
3.18 Certificate of Incorporation of Visionary Properties,
Inc.*.......................................................
3.19 By-Laws of Visionary Properties, Inc.*......................
3.20 Certificate of Incorporation of Visionary MSO, Inc.*........
3.21 By-Laws of Visionary MSO, Inc.*.............................
3.22 Certificate of Incorporation of The Samit Group, Inc.*......
3.23 By-Laws of The Samit Group, Inc.*...........................
3.24 Amended Articles of Incorporation of Skylab Optical,
Inc.*.......................................................
3.25 By-Laws of Skylab Optical, Inc.*............................
3.26 Articles of Incorporation of Metropolitan Vision Services,
Inc.*.......................................................
3.27 By-Laws of Metropolitan Vision Services, Inc.*..............
3.28 Amended Articles of Incorporation of Hour Eyes, Inc.*.......
</TABLE>
<PAGE> 210

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ----------- ----------- ------------
<C> <S> <C>
3.29 By-Laws of Hour Eyes, Inc.*.................................
4.1 Indenture dated as of April 24, 1998 among Eye Care Centers
of America, Inc., the Guarantors named therein and United
States Trust Company of New York, as Trustee for the 9 1/8%
Senior Subordinated Notes Due 2008 and Floating Interest
Rate Subordinated Term Securities.*.........................
4.2 Form of Fixed Rate Exchange Note (included in Exhibit 4.1
hereto).*...................................................
4.3 Form of Floating Rate Exchange Note (included in Exhibit 4.1
hereto).*...................................................
4.4 Form of Guarantee (included in Exhibit 4.1 hereto).*........
4.5 Registration Rights Agreement dated April 24, 1998 between
Eye Care Centers of America, Inc., the subsidiaries of the
Company named as guarantors therein, BT Alex. Brown
Incorporated and Merrill Lynch, Pierce, Fenner & Smith
Incorporated.*..............................................
5.1 Opinion of Hutchins, Wheeler & Dittmar, A Professional
Corporation, regarding legality of securities being
registered.*................................................
8.1 Opinion of Hutchins, Wheeler & Dittmar, A Professional
Corporation, regarding tax matters.*........................
10.1 Form of Stockholders Agreement dated as of April 24, 1998 by
and among Eye Care of America, Inc. and the shareholders
listed therein.*............................................
10.2 1998 Stock Option Plan.*....................................
10.3 Amended and Restated Deferred Stock Plan of Eye Care Centers
of America, Inc.*...........................................
10.4 Employment Agreement dated April 24, 1998 by and between Eye
Care Centers of America, Inc. and Bernard W. Andrews.*......
10.5 Stock Option Agreement dated April 24, 1998 by and between
Bernard W. Andrews and Eye Care Centers of America, Inc.*...
10.6 Form of Employment Agreement dated January 1, 1998 between
Eye Care Centers of America, Inc. and Mark T. Pearson,
William A. Shertzer, Jr., George Gebhardt and Kent M.
Keish.*.....................................................
10.7 Employment Agreement dated March 24, 1997 between Eye Care
Centers of America, Inc. and Michele Benoit.*...............
10.8 Management Agreement, dated as of April 24, 1998, by and
between Thomas H. Lee Company and Eye Care Centers of
America, Inc.*..............................................
10.9 Retail Business Management Agreement, dated September 30,
1997, by and between Dr. Samit's Hour Eyes Optometrist,
P.C., a Virginia professional corporation, and Visionary
Retail Management, Inc., a Delaware corporation.+*..........
10.10 Professional Business Management Agreement dated September
30, 1997, by and between Dr. Samit's Hour Eyes Optometrists,
P.C., a Virginia professional corporation, and Visionary
MSO, Inc., a Delaware corporation.+*........................
10.11 Contract for Purchase and Sale dated May 29, 1997 by and
between Eye Care Centers of America, Inc. and JDB Real
Properties, Inc.*...........................................
10.12 Amendment to Contract for Purchase and Sale dated July 3,
1997 by and between Eye Care Centers of America, Inc. and
JDB Real Properties, Inc.*..................................
10.13 Second Amendment to Contract for Purchase and Sale dated
July 10, 1997 by and between Eye Care Centers of America,
Inc. and JDB Real Properties, Inc.*.........................
10.14 Third Amendment to Contract for Purchase and Sale by and
between Eye Care Centers of America, Inc., John D. Byram,
Dallas Mini #262. Ltd. and Dallas Mini #343, Ltd.*..........
10.15 Commercial Lease Agreement dated August 193 1997 by and
between John D. Byram, Dallas Mini #262, Ltd. and Dallas
Mini #343, Ltd. and Eye Care Centers of America, Inc.*......
10.16 1997 Incentive Plan for Key Management.*....................
10.17 1998 Incentive Plan for Key Management.*....................
10.18 Employment Agreement and Noncompetition Agreement, dated
December 31, 1996 by and between Eye Care Centers of
America, Inc. and Gary D. Hahs, together with letter, dated
November 21, 1997, regarding extension of term.*............
</TABLE>

<PAGE> 211

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ----------- ----------- ------------
<C> <S> <C>
10.19 Master Lease Agreement, dated August 12, 1997, by and
between Pacific Financial Company and Eye Care Centers of
America, Inc., together with all amendments, riders and
schedules thereto.*.........................................
10.20 Credit Agreement, dated as of April 23, 1998, among Eye Care
Centers of America, Inc., Various Lenders, Bankers Trust
Company, as Administrative Agent, and Merrill Lynch Capital
Corporation, as Syndication Agent.*.........................
10.21 Purchase Agreement, dated as of April 24, 1998, by and among
Eye Care Centers of America, Inc., the subsidiaries of Eye
Care Centers of America, Inc. named therein, BT Alex. Brown
Incorporated and Merrill Lynch, Pierce, Fenner & Smith
Incorporated.*..............................................
10.22 Secured Promissory Note, dated April 24, 1998, issued by
Bernard W. Andrews in favor of Eye Care Centers of America,
Inc.*.......................................................
10.23 Form of Eye Care Centers of America, Inc. Standard Managed
Care Contract.*.............................................
10.24 Employment Agreement, dated July 8, 1998, by and between Eye
Care Centers of America, Inc. and David E. McComas.*........
10.25 Employment Agreement, dated November 2, 1998, by and between
Eye Care Centers of America, Inc. and Alan E. Wiley.........
12.1 Statement re Computation of Ratios.*........................
21.1 List of subsidiaries of Eye Care Centers of America,
Inc.*.......................................................
23.1 Consent of Ernst & Young LLP................................
23.2 Consent of Beers & Cutler PLLC..............................
23.3 Consent of KPMG Peat Marwick LLP............................
23.4 Consent of Hutchins, Wheeler & Dittmar, A Professional
Corporation (included in Exhibit 5.1).*.....................
23.5 Consent of Welenken Himmelfarb & Co.........................
24.1 Powers of Attorney (contained on the signature pages to this
Registration Statement).*...................................
25.1 Statement on Form T-1 of the eligibility of the Trustee.*...
27.1 Financial Data Schedule.*...................................
99.1 Letter of Transmittal.*.....................................
99.2 Notice of Guaranteed Delivery.*.............................
99.3 Form of Exchange Agent Agreement by and between Eye Care
Centers of America, Inc. and United States Trust Company of
New York.*..................................................
99.4 Eye Care Centers of America, Inc. Representation Letter.*...
</TABLE>

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

+ Portions of this Exhibit have been omitted pursuant to an application for an
order declaring confidential treatment filed with the Securities and Exchange
Commission.

* Previously filed.

<PAGE> 1
EXHIBIT 10.25

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the "Agreement") made and entered into effective
as of the second day of November 1998, by and between Eye Care Centers of
America, Inc., a Texas corporation (the "Company"), or its assigns, and Alan
Wiley ("Employee");

WITNESSETH:

WHEREAS, the Company desires to employ executive on the terms and
conditions set forth below; and

WHEREAS, Employee desires to serve in the employment of the Company on the
terms and conditions set forth below;

NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereto agree as follows:

1. EMPLOYMENT. The Company hereby employs Employee and Employee hereby
accepts such employment, upon the terms and conditions set forth herein.

2. TERM. The term of this Agreement shall commence on the date hereof (the
"Effective Date") and shall terminate on December 31, 1999, subject to earlier
termination and extension as hereinafter provided (the "Term"). Thereafter, and
subject to Section 8(d), this Agreement shall automatically renew for successive
one-year terms unless either party gives written notice of its election not to
renew at least thirty (30) days prior to the end of the then current period. In
the event of such extension, all of the terms and conditions of this Agreement
shall remain in full force and effect.

3. DUTIES. During the Term, employee agrees that he will devote his full
business time, attention and energies to the business of the Company and its
subsidiaries and affiliates, if applicable, and to the performance of his duties
hereunder, and shall not engage in any other business, profession, or occupation
for compensation or otherwise.

4. COMPENSATION.

(a) BASE COMPENSATION. During the term of this Agreement, the Company shall
pay to Employee a salary at an annual rate of not less than $225,000 (the "Base
Salary"). The Base Salary shall be reviewed by the Board from time to time as
the Board deems appropriate. The Base Salary shall be payable during the Term in
substantially equal installments not less frequently than monthly in accordance
with the Company's standard payroll policy or in such other installments as the
parties may mutually agree.

(b) BONUS. Employee shall be eligible to earn a bonus based upon a bonus
plan to be determined from time to time by the Company for each fiscal year.

<PAGE> 2
(c) REIMBURSEMENT OF EXPENSES; AUTOMOBILE. The Company shall reimburse
Employee, in accordance with the Company's policy in effect from time to
time, for all reasonable travel, entertainment and other business expenses
incurred by Employee in the performance of his duties and responsibilities
hereunder. Employee will receive an automobile allowance of $600 per month
and will be reimbursed for his reasonable automobile insurance costs in
accordance with the Company's automobile allowance policy.

(d) STOCK OPTION PLAN. Employee shall be eligible to participate in the Eye
Care Centers of America, Inc.'s Executive Stock Option Plan, and his rights
with respect to options granted to him thereunder shall be governed solely
by the terms of such plan, as it may be in effect from time to time, and
the terms of the Stock Option Agreement evidencing the grant of such
options.

(e) NET PAYMENTS. The amount of any gross payments provided for in this
Agreement shall be paid net of any applicable withholding required under
federal, state or local law.

5. BENEFITS. Employee shall be entitled to receive the benefits made
available or applicable from time to time to the employees of the Company;
provided, however, that the receipt of such benefits by Employee shall be
subject to the Company's eligibility and enrollment requirements pertaining to
such benefit programs.

6. CONFIDENTIALITY AND COMPETITIVE ACTIVITIES.

(a) CONFIDENTIALITY. Employee acknowledges that during his employment with
the Company, the Company has and will continue to disclose to him the
confidential affairs and proprietary information of the Company and its
subsidiaries and affiliates which is developed by and belongs to the Company and
its subsidiaries and affiliates, including matters of a business nature such as
information about costs, profits, markets, sales, trade secrets, potential
patents and other business ideas, customer lists, supplier and vendor lists,
plans for future developments and/or acquisitions, and information of any other
kind not known within the optical retail industry generally (collectively,
"Confidential Matters"). Employee further acknowledges that the Company would
not hire Employee or disclose these Confidential Matters to Employee without the
promises made by Employee in this Section 6. In light of the foregoing, Employee
agrees:

(i) To keep secret all Confidential Matters of the Company and of any
subsidiaries and affiliates of the Company, and not to disclose them to anyone
outside of the Company or its subsidiaries or affiliates, or otherwise use them
or use his knowledge of them for his own benefit or for the benefit of any third
party, including, without limitation, use of the trade secrets, trade names or
trademarks of the Company, either during or after the Term, except with the
Company's prior written consent; and

(ii) To deliver promptly to the Company at the termination of the Term, or
at any time the Company may request, all memoranda, notices, records, reports
and other documents

<PAGE> 3
(and all copies thereof) relating to the business of the Company or any of its
subsidiaries or affiliates, including, but not limited to, Confidential Matters,
which he may then possess or have under his control. Notwithstanding any of the
foregoing, the term "Confidential Matters" does not include information which
(i) is or becomes generally available to the public other than as a result of
any disclosure by Employee or (ii) Employee is compelled to disclose by judicial
or administrative process; provided, that in the case of any such requirement or
purported requirement Employee shall provide written notice to the Company prior
to producing such information, which notice shall be given at least ten (10)
days prior to the producing such information, if practicable, so that the
Company may seek a protective order or other appropriate remedy.

(b) COMPETITIVE ACTIVITIES. Employee expressly recognizes and acknowledges
that the terms and condition of this Section 6(b) are reasonable as to time,
area and scope of restricted activity, necessary to protect the legitimate
interests of the Company, and are not unduly burdensome to Employee. For a
period commencing on the Effective Date and ending twelve (12) months following
the effective date of a termination of Employee's employment (for any reason
whatsoever other than termination by the Company without Cause or if the Company
elects not to renew the Term as provided in Section 2 hereof), Employee shall
not, without the written consent of the Company, directly or indirectly (whether
for compensation or otherwise), alone or as officer, director, stockholder
(excepting not more than 1% stockholdings for investment purposes in securities
of publicly held and traded companies), partner, associate, employee, agent,
principal, trustee, salesman, consultant, capacity, take any action in or
participate with or become interested in or associated with the companies
commonly referred to as Cole/Pearl, Lenscrafter or Walmart (or any successor
thereto). (Such activities are hereinafter referred to as the "Competitive
Activities").

(c) ANTISOLICITATION. Employee agrees that during the Term of this
Agreement, and for a period of two (2) years thereafter, he will not influence
or attempt to influence customers (including customers with respect to managed
care plans), vendors or suppliers of the Company or any of its present or future
direct or indirect subsidiaries or affiliates, either directly or indirectly, to
divert their business from the Company or any of its direct or indirect
subsidiaries or affiliates to any individual, partnership, firm, corporation or
other entity then in competition with the business of the Company or any
subsidiary or affiliate of the Company; provided this prohibition shall not
apply to general advertisements in newspaper or other widely distributed
publications, media, or mail, whether electronic or otherwise.

d. SOLICITING EMPLOYEES.

v. Employee agrees that during the Term of this Agreement, and for a period of
two (2) years thereafter, he will not, without the prior written consent of the
Company, directly or indirectly engage in efforts to induce any employees of the
Company to terminate their employment for the purpose of being employed by
another business entity and shall not directly or indirectly employ, or offer
employment to any such person in any activity unless such person shall have
ceased to be employed by the Company and such cessation of employment shall have
occurred at least twelve (12) months prior thereto.

vi. Employee agrees that during the Term of this Agreement, and for a period of
two years thereafter, he will not disclose the names or positions of any of the
Employer's employees to any

<PAGE> 4

business, including but not limited to employment agencies, executive search
firms or similar personnel placement businesses.

(e) COMMENTS REGARDING EMPLOYER. Employer and Employee agree that during
Employee's employment and following Employee's separation from employment with
Employer, Employee will not defame, disparage or in any way malign Employer, its
officers, directors or past and present employees to anyone, including but not
limited to prospective employers, competitors, vendors or suppliers to the
Employer, and current or former employees of the Employer. Employer agrees that
it will not defame, disparage or malign Employee in any way to any third party.

7. REMEDIES FOR BREACH. In addition to the rights and remedies provided in
Section 14, and without waiving the same if Employee breaches, or threatens to
breach, any of the provisions of Section 6, the Company shall have the following
rights and remedies, in addition to any others, each of which shall be
independent of the other and severally enforceable:

(i) The right and remedy to have such provisions specifically enforced
by any court having equity jurisdiction together with an accounting for any
benefit or gain by Employee in connection with any such breach. Employee
specifically acknowledges and agrees that any breach or threatened breach
of the provisions of Section 6 will cause irreparable injury to the Company
and that money damages will not provide an adequate remedy to the Company.
Such injunction shall be available without the posting of any bond or other
security.

(ii) The right and remedy to require Employee to account for and pay
over to the Company all compensation, profits, monies, accruals, increments
or other benefits (hereinafter collectively the "Benefits") derived or
received, directly or indirectly, by Employee as a result of any
transactions constituting a breach of any of the provisions of Section 6,
Employee hereby agreeing to account for and pay over the Benefits to the
Company.

(iii) The right to terminate Employee's employment pursuant to Section
8(c).

(iv) Upon discovery by the Company of a breach or immediate and
material threatened breach of Section 6, the right to immediately suspend
payments to Employee under Section 8, pending a resolution of the dispute.

If any covenant contained in Section 6 or any portion thereof is hereafter
construed to be invalid or unenforceable, the same shall not affect the
remainder of the covenant or covenants contained therein, which shall be given
full effect, without regard to the invalid portions, and any court having
jurisdiction shall reform the covenant to the extent necessary to cause the
limitations contained therein as to time, geographical area and scope of
activity to be restrained to be reasonable and to impose a restraint that is not
greater than necessary to protect the goodwill and other business

<PAGE> 5

interest of the Company and to enforce the covenant as reformed. The parties
hereto intend to and hereby confer jurisdiction to enforce the covenants
contained in Section 6 upon the courts of any state or other jurisdiction in
which any alleged breach of any such covenant occurs. If the courts of any of
one or more of such states or other jurisdictions shall hold such covenants not
wholly enforceable by reason of the scope thereof or otherwise, it is the
intention of the parties hereto that such determination not bar or in any way
affect the Company's right to the relief provided above in the courts of any
other states or jurisdictions as to breaches of such covenants in such other
respective states or jurisdictions, and the above covenants as they relate to
each state or jurisdiction being, for this purpose, severable into diverse and
independent covenants.

8. TERMINATION OF AGREEMENT.

(a) DEATH. This Agreement shall automatically terminate upon the death of
Employee. During the Term, if Employee's employment is terminated due to his
death, Employee's estate shall be entitled to receive the Base Salary set forth
in Section 4 accrued through the date of death; provided, however, Employee's
estate shall not be entitled to any bonus payments (except as otherwise provided
in the applicable bonus plan) or any other benefits (except as provided by law).

(b) DISABILITY. If Employee is unable to perform his services by reason of
mental or physical Disability (as herein defined), the Company may terminate
this Agreement at any time. Upon termination of Employee's employment due to
Disability, Employee shall be entitled to receive the Base Salary set forth in
Section 4 accrued through the date on which Employee is first eligible to
receive payment of disability benefits under the employee benefit plans as then
in effect, and if no such plan is in effect, through the month ending one
hundred eighty (180) days after onset of Disability and Employee shall not be
entitled to any bonus payments (except as otherwise provided in the applicable
bonus plan) or any other benefits (except as provided by law). The term
"Disability" shall mean an infirmity preventing Employee from performing his
duties for a period of more than three (3) consecutive months where no
reasonable accommodation is available or where a reasonable accommodation would
create an undue burden on the Company. Any question as to the existence of the
Disability of Employee as to which Employee and the Company cannot agree shall
be determined in writing by a qualified independent physician mutually
acceptable to Employee and the Company. If the Employee and the Company cannot
agree as to a qualified independent physician, each shall appoint such a
physician and those two physicians shall select a third who shall make such
determination in writing. The determination of Disability made in writing to the
Company and Employee shall be final and conclusive for all purposes of the
Agreement.

(c) TERMINATION FOR CAUSE. The Company may terminate this Agreement at any
time for "Cause" in accordance with the procedures provided below. Termination
of this Agreement for "Cause" shall mean termination upon (i) the breach of any
material provision of this Agreement by Employee which has not been rectified or
cured within 30 days after notice by the Company to the Employee containing in
reasonably specific detail the violation or breach and the necessary corrective
action to rectify or cure such violation or breach, (ii) commission of an act
punishable by imprisonment, (iii) willful failure to substantially perform his
duties hereunder (other than as a result of total or partial incapacity due to
physical or mental illness) which has not been rectified or cured within 30 days
after notice by the Company to the Employee containing in reasonably specific
detail the acts or omissions complained of and the necessary corrective action
to rectify or cure the matters set forth in such notice; provided, however, if
the actions or omissions that are the subject of such notice are substantially
similar to acts or omissions with respect to which the Employee has received

<PAGE> 6

notice hereunder within the prior 12 months and had an opportunity to cure or
rectify, the Employee shall not be entitled to such notice and opportunity to
cure, (iv) the engaging by Employee in conduct that is materially injurious to
the Company, monetarily or otherwise, including, without limitation,
embezzlement, fraud, theft, dishonesty, misfeasance, insubordination,
malfeasance, and neglect of duties, (v) violation of the Company's code of
conduct or any material violation or repeated violations by Employee of the
other policies and procedures promulgated from time to time by the Company, or
(vi) current alcohol or drug abuse by Employee. In the event of termination of
Employee's employment for Cause, Employee shall be entitled to receive only the
Base Salary set forth in Section 4 accrued through the date of termination and
he shall not be entitled to any bonus payments or other benefits (except as
provided by law).

(d) OTHER TERMINATION BY THE COMPANY. The Company may terminate this
Agreement at any time without "Cause" by providing written notice to Employee.
If the Company terminates this Agreement at any time without Cause (i.e., other
than pursuant to Section 8(b) or 8(c) above), or the Company elects not to renew
the Term as provided in Section 2 hereof, the Company shall continue to pay
Employee his Base Salary for a period of nine-months following the date of
termination of employment, the timing and manner of such payments to be in
accordance with the salary payment arrangements in effect at the time of such
termination. Employee shall be required to comply with Section 6. It shall be a
condition precedent of payment to Employee of such continued payments pursuant
to this subsection (d) that the Employee execute a full and complete release of
the Company, each of its subsidiaries, affiliates and their respective past,
present and future officers, directors, employees, consultants, attorneys,
agents and shareholders, in form and substance reasonably acceptable to the
Company, of any claims Employee may have against any of them, to the extent such
claims arise from Employee's employment hereunder. Notwithstanding any provision
in this Agreement to the contrary, the Company's obligations to make payments
pursuant to this Section 8(d) shall immediately terminate in the event that the
Employee engages in any of the Competitive Activities (even if Section 6(b) is
not applicable due to termination of employment without Cause).

(e) TERMINATION BY EMPLOYEE. Employee may terminate this Agreement upon
thirty (30) days prior written notice to the Company. Termination shall be
effective at the expiration of the notice period. All obligations of the Company
under this Agreement shall end on the effective date of termination and the
Company shall have no further obligations under this Agreement, including, but
not limited to payment of salary, bonuses or any similar compensation or
benefits. Notwithstanding the notice provided by Employee, the Company, in its
sole discretion, may choose to accept Employee's resignation immediately. In
that event, the Company's only obligation to Employee will be to pay the Base
Salary Employee would have received during the notice period.

(f) MITIGATION. Employee shall not be required to mitigate the amount of
any payment or benefit to be provided pursuant to Section 8(d) ("Severance") by
seeking other employment. However, anything in this Agreement notwithstanding,
if Employee provides services for other than de minimus pay to anyone other than
the Company or any of its subsidiaries or affiliates ("Third Party Services")
during a period in which he is receiving such Severance (the "Severance
Period"), the amount of Severance to be paid to Employee with respect to such
Severance Period shall,

<PAGE> 7

beginning on the date such payment for Third Party Services is received by
employee, be reduced by the lesser of (i) fifty percent (50%) of such Severance
payment, or (ii) fifty percent (50%) of such payment for Third Party Services
rendered.

9. EFFECT OF TERMINATION. Upon the termination of this Agreement, whether
by the expiration of the Term specified in Section 2 or pursuant to Section 8,
the rights of Employee which shall have accrued prior to the date of such
termination shall not be affected in any way. Except as provided in Section
8(d), Employee shall not have any rights which have not previously accrued upon
termination of this Agreement.

16. COMMUNICATIONS. All notices and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the respective addresses set forth below,
or to such other addresses as either party may have furnished to the other in
writing in accordance herewith, except that notice of a change of address shall
be effective only upon actual receipt; to the Company: the Company, at c/o Eye
Care Centers of America, Inc., 11103 West Avenue, San Antonio, Texas
78213-1392,for the attention of Bernard Andrews, President; and to Employee:
Alan Wiley, 7005 Erin Court, Charlotte, North Carolina 28210.

11. AMENDMENTS OR ADDITIONS. No amendments or additions to this Agreement
shall be binding unless in writing and signed by all parties hereto.

12. BINDING EFFECT; ASSIGNABILITY. This Agreement shall be binding upon,
and shall inure to the benefit of, Employee; the obligations of Employee
hereunder are personal and this Agreement may not be assigned by Employee. This
Agreement is completely assignable by the Company without notice to or consent
of Employee. This Agreement shall be binding upon, and shall inure to the
benefit of, the Company and shall also bind and inure to the benefit of any
successor of the Company by merger or consolidation or any assignee of all or
substantially all of its properties.

13. HEADINGS; REFERENCES. The headings used in this Agreement are included
solely for convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement. References to a "Section" when used without
further attribution shall refer to the particular sections of this Agreement.

14. BINDING ARBITRATION. Subject to the rights of any party to seek
injunctive relief pursuant to Section 7 above and without waiving the same, the
parties agree that all disputes, controversies or claims that may arise among
them (including their agents and employees), arising out of or relating to this
Agreement, or the breach, termination or invalidity thereof, shall be submitted
to, and determined by, binding arbitration. Such arbitration shall be conducted
before a single arbitrator pursuant to the Commercial Arbitration Rules then in
effect of the American Arbitration Association, except to the extent such rules
are inconsistent with this Section 14. The arbitrator shall apply the laws of
the State of Texas (without regard to conflict of law rules) in determining the
substance of the dispute, controversy or claim and shall decide the same in
accordance with applicable usages and terms of trade. The fees of the
arbitration initially shall be paid one-half by the Company and one-half by
Employee; provided, however, that the prevailing party in any such arbitration
shall be entitled to recover its reasonable attorneys' fees, costs and

<PAGE> 8

expenses incurred in connection with the arbitration. Any award pursuant to such
arbitration shall be final and binding upon the parties, and judgment on the
award may be entered in any federal or state court sitting in any court having
jurisdiction. The obligations set forth in this Section 14 shall survive the
termination of this Agreement. THE COMPANY AND EMPLOYEE EACH KNOWINGLY AND
VOLUNTARILY GIVE UP ANY RIGHT TO A TRIAL BY JURY IN CONNECTION WITH ANY DISPUTE,
CLAIM OR CONTROVERSY WHICH MAY ARISE BETWEEN THEM.

15. MISCELLANEOUS. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by Employee and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Texas without regard to its conflicts of law
principles.

16. SURVIVING PROVISIONS. The obligations of the Company under Section 8,
of Employee under Section 6, and of both the Company and Employee under Section
14 shall survive the expiration of the Term of this Agreement.

17. ENTIRE AGREEMENT. This Agreement shall constitute the entire agreement
between the parties superseding all prior agreements and all other negotiations,
letter of intent, memoranda of understandings, and representations (if any) made
by and among such parties, and may not be modified or amended, and no waiver
shall be effective, unless by written document signed by both parties hereto.
Notwithstanding its foregoing, the parties agree that the provisions of Section
6 shall be in addition to, and shall not supersede, similar provisions contained
in the Stock Purchase Agreement. The Company and Employee have each had an
opportunity to consult with counsel of their choice regarding the terms and
conditions of this Agreement, and each understands the consequences of entering
into and complying with the terms and conditions of the Agreement.

18. PRONOUNS. In this Agreement, the use of any gender shall be deemed to
include all genders, and the use of the singular shall include the plural,
wherever it appears appropriate from the context.

19. ENFORCEMENT COSTS. If any legal action or other proceeding, including
arbitration, is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with any
provisions of this Agreement, the prevailing party or parties shall be entitled
to recover reasonable attorneys' fees, court costs and all expenses even if not
taxable as court costs, incurred in that action or proceeding, in addition to
any other relief to which such party or parties may be entitled.

<PAGE> 9

20. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. Except
that to the extent any court determines that Section 6 is invalid or
unenforceable, in this event the Company shall be relieved of its payment
obligations to Employee under Section 8.

21. INDEMNIFICATION. Employee shall be entitled to indemnification, in has
capacity as an officer of the Company in accordance with the provisions of the
Company's certificate of incorporation, bylaws or actions of the Board, as the
same shall be in effect from time to time, and Employee shall be entitled to the
protection of any insurance policies the Company may elect to maintain generally
for the benefit of its officers or directors.

22. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
day and year first above written.

Eye Care Centers of America, Inc.

By: /s/ Bernard W. Andrews
------------------------------
Bernard W. Andrews
Chairman & Chief Executive Officer

EMPLOYEE:

/s/ Alan Wiley
--------------------------------
Alan Wiley
Executive Vice President and
Chief Financial Officer

<PAGE> 1

EXHIBIT 23.1

Consent of Independent Auditors

We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated March 2, 1998, except for Note 15 as to which the date
is March 6, 1998, in Amendment No. 5 to the Registration Statement (Form S-4)
and related Prospectus of Eye Care Centers of America, Inc. for the
Registration of $100,000,000 of Senior Subordinated Notes due 2008 and
$50,000,000 of Floating Interest Rate Subordinated Term Securities due 2008.

/s/ Ernst & Young LLP

San Antonio, Texas
November 10, 1998

<PAGE> 1
EXHIBIT 23.2

Consent of Independent Auditors

As indepemndent auditors, we hereby consent to the use of our report dated
November 20, 1997 on our audits of the consolidated and combined financial
statements of The Samit Organization as of September 30, 1997, and for the
period January 1, 1997 through September 30, 1997, and the year ended December
31, 1996 (and to all references to our Firm) included in or made a part of this
registration statement.

/s/ Beers & Cutler PLLC

Beers & Cutler PLLC
Washington, D.C.
November 10, 1998

<PAGE> 1
EXHIBIT 23.3

The Board of Directors
Eye Care Centers of America, Inc.

We consent to the use of our report dated October 15, 1996 on Visionworks
Holdings, Inc. included herein and to the reference to our firm under the
heading "Experts" in the prospectus.

/s/ KPMG PEAT MARWICK LLP

Tampa, Florida
November 10, 1998

<PAGE> 1
EXHIBIT 23.5

Consent of Independent Auditors

As independent auditors, we hereby consent to the use of our report dated June
24, 1998, on our audits of the combined financial statements of Dr. Bizer's
VisionWorld, PLLC and affiliates as of December 31, 1997 and 1996, and for the
years ended December 31, 1997, 1996 and 1995 (and to all references to our
Firm) included in or made a part of this registration statement.

/s/ WELENKEN HIMMELFARB & CO.

Louisville, Kentucky
November 10, 1998