SIGHT RESOURCE CORP, DEF 14A, 1999-04-15

SIGHT RESOURCE CORP
DEF 14A, 1999-04-15
HEALTH SERVICES

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<PAGE>

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

SIGHT RESOURCE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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Notes:

<PAGE>

[LOGO APPEARS HERE]

Sight Resource Corporation
100 Jeffrey Avenue
Holliston, MA 01746

April 15, 1999

Dear Stockholder,

You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of Sight Resource Corporation (the "Company") to be held at 9:00 a.m. on
Thursday, May 20, 1999 at the offices of Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C., 38th floor, One Financial Center, Boston, Massachusetts
02111.

At the Annual Meeting, the Company will ask the Stockholders to elect three
members to the Board of Directors. The Company will also seek Stockholder
approval of an amendment to the Company's 1992 Employee, Director and
Consultant Stock Option Plan to increase the aggregate number of shares for
which stock options may be granted. In addition, the Company will ask the
Stockholders to ratify the selection of KPMG, LLP as the Company's independent
public accountants. The Board of Directors recommends the approval of each of
these proposals. Such other business will be transacted as may properly come
before the Annual Meeting.

We hope you will be able to attend the Annual Meeting. Whether you plan to
attend the Annual Meeting or not, it is important that your shares are
represented. Therefore, you are urged promptly to complete, sign, date and
return the enclosed proxy card in accordance with the instructions set forth
on the card. This will ensure your proper representation at the Annual
Meeting.

Sincerely,

/s/ William T. Sullivan

WILLIAM T. SULLIVAN
President and Chief Executive
Officer

YOUR VOTE IS IMPORTANT.

PLEASE RETURN YOUR PROXY PROMPTLY.
<PAGE>

[LOGO APPEARS HERE]

Sight Resource Corporation
100 Jeffrey Avenue
Holliston, MA 01746

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

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To be Held May 20, 1999

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

To the Stockholders of Sight Resource Corporation:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Sight
Resource Corporation, a Delaware corporation (the "Company"), will be held at
9:00 a.m. on Thursday, May 20, 1999 at the offices of Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., One Financial Center, 38th floor, Boston,
Massachusetts 02111 for the following purposes:

1. To elect three members to the Board of Directors to serve until the
Annual Meeting of Stockholders in the year 2002 and until their successors
are duly elected and qualified.

2. To consider and act upon a proposal to amend the Company's 1992
Employee, Director and Consultant Stock Option Plan to increase the
aggregate number of shares for which stock options may be granted.

3. To consider and act upon a proposal to ratify the appointment of KPMG,
LLP as the Company's independent public accountants for the fiscal year
ending December 25, 1999.

4. To transact such other business as may be properly brought before the
Annual Meeting and any adjournments thereof.

The Board of Directors has fixed the close of business on March 24, 1999, as
the record date for the determination of Stockholders entitled to notice of
and to vote at the Annual Meeting and at any adjournments thereof.

All Stockholders are cordially invited to attend the Annual Meeting. Whether
you plan to attend the Annual Meeting or not, you are requested to complete,
sign, date and return the enclosed proxy card as soon as possible in
accordance with the instructions on the proxy card. A pre-addressed, postage
prepaid return envelope is enclosed for your convenience.

By Order of the Board of Directors,

/s/ William T. Sullivan
WILLIAM T. SULLIVAN
President and Chief Executive
Officer

April 15, 1999
<PAGE>

[LOGO APPEARS HERE]

Sight Resource Corporation
100 Jeffrey Avenue
Holliston, MA 01746

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

PROXY STATEMENT

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

GENERAL INFORMATION

This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Sight Resource Corporation (the "Company"), a Delaware
corporation, of proxies, in the accompanying form, to be used at the Annual
Meeting of Stockholders to be held at 9:00 a.m. on Thursday, May 20, 1999, at
the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., 38th
floor, One Financial Center, Boston, Massachusetts 02111 and any adjournments
thereof (the "Meeting").

Where the Stockholder specifies a choice on the proxy as to how his or her
shares are to be voted on a particular matter, the shares will be voted
accordingly. If no choice is specified, the shares will be voted FOR the
election of the three nominees for director named herein, FOR the proposal to
amend the Company's 1992 Employee, Director and Consultant Stock Option Plan
and FOR the ratification of the appointment of KPMG, LLP as the Company's
independent public accountants for the fiscal year ending December 25, 1999.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company a written
notice of revocation or a duly executed proxy bearing a later date. Any
Stockholder who has executed a proxy but is present at the Meeting and who
wishes to vote in person, may do so by revoking his or her proxy as described
in the preceding sentence. Shares represented by valid proxies in the form
enclosed, received in time for use at the Meeting and not revoked at or prior
to the Meeting, will be voted at the Meeting. The presence, in person or by
proxy, of the holders of a majority of the outstanding shares of the Company's
common stock, par value $.01 per share ("Common Stock"), is necessary to
constitute a quorum at the Meeting.

The affirmative vote of a majority of the shares present or represented and
entitled to vote at the Meeting is required to approve each proposal, other
than the election of directors which requires a plurality of the shares voted
affirmatively or negatively at the Meeting. With respect to the tabulation of
votes on any matter, abstentions are treated as present or represented and
entitled to vote at the Meeting, while broker non-votes are treated as not
being present or represented and entitled to vote at the Meeting.

The close of business on March 24, 1999 has been fixed as the record date
for determining the Stockholders entitled to notice of and to vote at the
Meeting. As of the close of business on March 24, 1999, the Company had
9,060,952 shares of Common Stock and 1,452,119 shares of Series B Convertible
Preferred Stock ("Preferred Stock") outstanding and entitled to vote. Holders
of Common Stock and Preferred Stock are entitled to one vote per share on all
matters to be voted on by Stockholders.

The cost of soliciting proxies, including expenses in connection with
preparing and mailing this Proxy Statement, will be borne by the Company. In
addition, the Company will reimburse brokerage firms and other persons
representing beneficial owners of Common Stock of the Company for their
expenses in forwarding proxy
<PAGE>

materials to such beneficial owners. Solicitation of proxies by mail may be
supplemented by telephone, telegram, telex and personal solicitation by the
directors, officers or employees of the Company. No additional compensation
will be paid for such solicitation.

This Proxy Statement and the accompanying proxy are being mailed on or about
April 15, 1999 to all Stockholders entitled to notice of and to vote at the
Meeting.

The Annual Report to Stockholders for the fiscal year ended December 31,
1998 is being mailed to the Stockholders with this Proxy Statement, but does
not constitute a part hereof.

SHARE OWNERSHIP

The following table sets forth certain information regarding the beneficial
ownership of (i) shares of the Company's Common Stock and (ii) shares of the
Company's Preferred Stock and Common Stock, in each case as of March 24, 1999
by each Stockholder known by the Company to own beneficially 5% or more of its
outstanding shares of Common Stock, each current director of the Company, each
nominee for the Board of Directors who is not currently serving on the Board,
each named executive officer (as defined below) of the Company, and all
directors and executive officers of the Company as a group:

<TABLE>
<CAPTION>
Common Stock Preferred Stock
Shares Shares
Beneficially Beneficially
Owned(1) Owned (1)
----------------- -----------------
Name and Address** of Beneficial Owner Number Percent Number Percent
- -------------------------------------- --------- ------- --------- -------
<S> <C> <C> <C> <C>
Carlyle Venture Partners, L.P.(2).......... 1,742,543 16.1% 1,452,119 100%
1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, D.C. 20004
William G. McLendon(3)..................... 385,895 4.2% -0- --
Stephen M. Blinn(4)........................ 364,500 4.0% -0- --
William T. Sullivan(5)..................... 291,290 3.1% -0- --
Elliot S. Weinstock, O.D.(6)............... 243,000 2.7% -0- --
Craig H. Risk(7)........................... 40,000 * -0- --
Russell E. Taskey(8)....................... 39,734 * -0- --
Gary Jacobson, M.D.(8)..................... 27,834 * -0- --
Allen R. Kirkpatrick(8).................... 27,834 * -0- --
Richard G. Darman(2)....................... -0- -- -0- --
J. Mitchell Reese(2)....................... -0- -- -0- --
James W. Norton............................ 500 * -0- --
Christian E. Callsen(9).................... -0- -- -0- --
George B. Clairmont(10).................... 161,500 1.8% -0- --
All Directors and executive officers as a
group (11 persons)(11).................... 1,420,587 14.9% -0- --
</TABLE>
- --------
* Represents beneficial ownership of less than 1% of the Company's Common
Stock.
**Addresses are given for beneficial owners of more than 5% of the outstanding
Common Stock only.

2
<PAGE>

(1) The number of shares of Common Stock issued and outstanding on March 24,
1999 was 9,060,952 and the number of shares of Preferred Stock issued and
outstanding on March 24, 1999 was 1,452,119. The calculation of percentage
ownership for each listed beneficial owner is based upon the number of
shares of Common Stock and Preferred Stock issued and outstanding at March
24, 1999 plus shares of Common Stock subject to options held by such person
at March 24, 1999 and exercisable within 60 days thereafter and shares
underlying redeemable common stock purchase warrants (the "Warrants"),
warrants issued to investors (the "Investor Warrants") and shares of
Preferred Stock held by such person. The persons and entities named in the
table have sole voting and investment power with respect to all shares
shown as beneficially owned by them, except as noted below.
(2) Includes 1,229,472 shares of Common Stock issuable upon conversion of
1,024,560 shares of Preferred Stock and upon exercise of 204,912 Investor
Warrants issued to Carlyle Venture Partners, L.P. ("CVP"), whose general
partner is TCG Ventures, Ltd. ("Ventures Ltd."). The sole shareholder of
Ventures Ltd. is TCG Ventures, L.L.C. ("Ventures LLC"). Mr. Richard G.
Darman and Mr. J. Mitchell Reese are Managing Directors of Ventures LLC.
Mr. Darman and Mr. Reese may be deemed to share beneficial ownership of
shares owned by CVP, but each of them disclaims any such beneficial
ownership. Also includes an aggregate of 513,071 shares of Common Stock
issuable upon conversion of 427,559 shares of Preferred Stock and upon
exercise of 85,512 Investor Warrants held by affiliates of CVP: C/S
Venture Investors, L.P. ("C/S"), whose general partner is Ventures Ltd.;
Carlyle U.S. Venture Partners, L.P. ("CUS") and Carlyle Venture
Coinvestment, L.L.C. ("CVC"), whose general partner and managing member,
respectively, is Ventures LLC. Mr. Darman and Mr. Reese may be deemed to
share beneficial ownership of shares owned by C/S, CUS and CVC, but each
of them disclaims any such beneficial ownership.
(3) Includes 60,000 shares issuable upon exercise of stock options within 60
days after March 24, 1999. Also includes, 23,000 shares of common stock
held by a member of Mr. McLendon's immediate family of which Mr. McLendon
disclaims beneficial ownership.
(4) Includes 71,668 shares issuable upon exercise of stock options within 60
days after March 24, 1999, and 52,192 shares gifted to Mr. Blinn's
immediate family, of which Mr. Blinn disclaims beneficial ownership.
(5) Includes 200,000 shares issuable upon exercise of stock options within 60
days after March 24, 1999.
(6) Includes 18,000 shares issuable upon exercise of stock options within 60
days after March 24, 1999.
(7) Includes 40,000 shares issuable upon exercise of stock options within 60
days after March 24, 1999.
(8) Includes 25,834 shares issuable upon exercise of stock options within 60
days after March 24, 1999.
(9) Mr. Callsen has been nominated to fill the position on the Board of
Directors made available by the expiration, on May 20, 1999, of the term
of Dr. Weinstock.
(10) Mr. Clairmont has been appointed to fill a vacancy created by the
resignation of Mr. Kirkpatrick as a Class A director, effective May 20,
1999. Includes 70,500 shares held for the account of Clairvest
Corporation of which Mr. Clairmont is a principal. As a result of Mr.
Clairmont's relationship with Clairvest Corporation he may be deemed to
be a beneficial owner of such shares; however, Mr. Clairmont disclaims
beneficial ownership of such shares.
(11) Includes 467,170 shares issuable upon exercise of stock options within 60
days after March 24, 1999.

3
<PAGE>

MANAGEMENT

Directors

The Company's Certificate of Incorporation provides for a classified Board
of Directors consisting of three classes of directors, with each class to be
as nearly equal in number as is reasonably possible. The Company has
designated three Class A directors (Mr. Blinn, Mr. Darman and Mr.
Kirkpatrick,), three Class B directors (Dr. Jacobson, Mr. Sullivan and Mr.
Taskey) and three Class C directors (Mr. McLendon, Mr. Reese and
Dr. Weinstock). The Class C directors constitute a class with a term which
expires at the upcoming meeting. Class A and Class B directors will serve
until the annual meetings of stockholders to be held in 2000 and 2001,
respectively, and until their respective successors are duly elected and
qualified. At each annual meeting of stockholders, directors are elected for a
full term of three years to succeed those directors whose terms are expiring.

The names of the Company's current directors and certain information about
them are set forth below:

<TABLE>
<CAPTION>
Name Age Position with the Company
---- --- -------------------------
<S> <C> <C>
William G. McLendon..... 47 Chairman of the Board of Directors
William T. Sullivan..... 55 President, Chief Executive Officer and Director
Stephen M. Blinn........ 51 Director
Richard G. Darman....... 55 Director
Gary Jacobson, M.D...... 61 Director
Allen R. Kirkpatrick*... 57 Director
J. Mitchell Reese....... 39 Director
Russell E. Taskey....... 65 Director
Elliot S. Weinstock,
O.D.**................. 51 Director
</TABLE>
- --------
* Mr. Kirkpatrick has resigned his position as a Class A director, effective
May 20, 1999. Mr. George B. Clairmont, 50, has been appointed to fill the
vacancy created by the resignation of Mr. Kirkpatrick. Information on Mr.
Clairmont is provided below.
** Dr. Weinstock, whose term as a Class C director expires on May 20, 1999,
will not be standing for re-election to the Board of Directors. Mr.
Christian E. Callsen, 61, has been nominated for election to fill the
position of Class C director made available by the pending expiration of
Dr. Weinstock's term. Information on Mr. Callsen is provided below.

William G. McLendon has been a Director of the Company since its inception
in 1992 and served as President from 1992 to January 1998 and Chief Executive
Officer from April 1994 to January 1998. Mr. McLendon served as Vice President
and Chief Financial Officer of IBIS Technology Corporation, a manufacturer of
silicon-based materials for semiconductors, from 1990 to 1993. Prior thereto,
Mr. McLendon was the Vice President, Chief Financial Officer and Treasurer of
Summit Technology, Inc. from 1986 to 1990, and was Vice President and Chief
Financial Officer of Zymet, Inc. from 1983 to 1985. Mr. McLendon is a Director
of Epion Corporation, a company which develops advanced materials and new
technology for semiconductors and other applications.

William T. Sullivan has been President, Chief Executive Officer and a
Director of the Company since January of 1998. Mr. Sullivan served as
President and Chief Operating Officer of BEC Group, a company whose business
includes marketing and distributing premium sunglasses, from 1994 to 1997. Mr.
Sullivan served as President of the Consumer Optical Group at Optical
Radiation Corporation from 1987 to the time it was acquired

4
<PAGE>

by BEC Group in 1994. Prior thereto, Mr. Sullivan served for eleven years in
senior management positions for Pearle Vision Center, including four years as
President. Mr. Sullivan is a past Director of Lumen Technologies.

Stephen M. Blinn has been a Director of the Company since May of 1993. Mr.
Blinn has served as President and Chief Executive Officer of Silver Platter
Education, Inc., a company providing continuing education programs for medical
providers, since January 1999. Mr. Blinn served as an Executive Vice President
and Chief Operating Officer from May 1993 to January 1998, and as President of
the Company's SightCare operations from January 1998 to August 1998. Mr. Blinn
served as Executive Vice President, Strategic Marketing Development of Summit
Technology, Inc. from 1991 to May 1993. Mr. Blinn first joined Summit in 1987
and served as Vice President, Sales and Marketing. Prior thereto he was the
co-founder and President of Source Research, Inc., a distribution company for
medical lasers and cardiac pacemakers from 1985 to 1987.

Christian E. Callsen has been nominated to fill the position on the Board of
Directors made available by the expiration, on May 20, 1999, of the term of
Dr. Weinstock. Mr. Callsen has served as Chairman of Polymer Concepts,
Incorporated, formerly known as Allen Medical Systems, a private Cleveland-
based medical devices manufacturer, since 1995 and as President and Chief
Executive Officer from 1996 to 1998. Prior thereto he served in the following
positions at various times throughout his professional career: President and
Chief Operating Officer of Applied Medical Technology, Inc.; President, Chief
Operating Officer and Director of Professional Veterinary Hospitals of
America, Inc.; President and Chief Operating Officer of HLS Management
Company; and Chairman and Chief Executive Officer of the Optical Group of Cole
National Corporation.

George B. Clairmont has been appointed to fill the vacancy created by the
resignation, effective May 21, 1999, of Mr. Kirkpatrick. Mr. Clairmont is the
President of Clairvest Corporation, a New York City based investment group
which he founded in 1983. From 1987 to 1990 Mr. Clairmont also served as
Chairman of Signal Apparel Company, a publicly owned apparel manufacturer. Mr.
Clairmont is currently a director of Frisco Energy, a privately owned natural
resource corporation based in Tulsa, Oklahoma, and Thompson-Leeds Corporation,
a New York designer and manufacturer of point of sales displays. Mr. Clairmont
is a past Director of Lumen Technologies.

Richard G. Darman has been a Director of the Company since December 1997.
Mr. Darman has been a Partner of The Carlyle Group, a Washington D.C. based
investment group, since 1993. Since January 1998 he has also been a Public
Service Professor at Harvard University. Mr. Darman served as Director of the
U.S. Office of Management and Budget and as a member of President Bush's
Cabinet from 1989 to 1993. Prior thereto he was a Managing Director of
Shearson Lehman Brothers, Inc. from 1987 to 1989. Mr. Darman is a trustee of
The New England Funds.

Gary Jacobson, M.D. has been a Director of the Company since November 1992.
Dr. Jacobson is a founder of two Massachusetts hospitals, Westwood Lodge and
Pembroke Hospital, has served as President of each from 1990 to 1995 and now
serves as the Clinical Director of Westwood Pembroke Health System. He is a
physician board-certified in psychiatry and is a past President of the
Massachusetts Psychiatric Society. He has held an appointment at Massachusetts
General Hospital since 1969 and has served as Assistant Clinical Professor at
Harvard Medical School since 1977.

J.Mitchell Reese has been a Director of the Company since January 1998. Mr.
Reese has been Managing Director-Venture of The Carlyle Group, a Washington
D.C. based investment group, since 1997. Mr. Reese served as President of the
Venture Capital Division, and co-head of the Investment Banking Group, at
Morgan Keegan, Inc. from 1990 to 1997. Prior thereto he was with Alex Brown
and Sons.

5
<PAGE>

Russell E. Taskey has been a Director of the Company since November, 1992.
Mr. Taskey is currently President of R. E. Taskey, Associates a human resource
consulting firm. Mr. Taskey served as Vice President of Human Resources at The
Analytic Sciences Corporation ("TASC") from 1973 to 1994. Mr. Taskey was the
founding President and is presently a Director of the North East Human
Resource Association, a 2,000 person human resource professional association.
He also serves on the advisory board of Active Control Experts and the
advisory board of Epion Corporation.

Committees of the Board of Directors and Meetings

Meeting Attendance. During the fiscal year ended December 31, 1998 there
were eight meetings of the Board of Directors, and the various committees of
the Board of Directors met a total of seven times. With the exception of Dr.
Jacobson, who attended 38% of the meetings, no director attended fewer than
75% of the total number of meetings of the Board and of committees of the
Board on which he served during fiscal 1998. In addition, from time to time,
the members of the Board of Directors and its committees acted by unanimous
written consent pursuant to Delaware law.

Audit Committee. The Audit Committee has three members, Messrs. Kirkpatrick,
McLendon, and Taskey. The Audit Committee reviews the engagement of the
Company's independent accountants, reviews annual financial statements,
considers matters relating to accounting policy and internal controls and
reviews the scope of annual audits. The Audit Committee met once during the
year ended December 31, 1998.

Compensation Committee. The Compensation Committee, which met six times
during fiscal 1998, has three members, Messrs. Darman, Kirkpatrick and Taskey.
The Compensation Committee reviews, approves and makes recommendations on the
Company's compensation policies, practices and procedures to ensure that legal
and fiduciary responsibilities of the Board of Directors are carried out and
that such policies, practices and procedures contribute to the success of the
Company. The Compensation Committee also administers the Company's 1992
Employee, Director and Consultant Stock Option Plan (the "Stock Option Plan").

The Audit Committee and Compensation Committee are the only standing
Committees of the Board of Directors. The Company does not have a standing
Nominating Committee.

Compensation of Directors

The Company has implemented a stock option program under its Stock Option
Plan for non-employee directors. The Stock Option Plan provides for a grant to
each non-employee director immediately following each annual meeting of
shareholders of a non-qualified option to purchase 5,000 shares of Common
Stock, provided that on such date such director has been in the continued and
uninterrupted services of the Company as a director for a period of at least
one year. Each such option has an exercise price equal to the fair market
value of the Common Stock on the date of grant and vests in equal annual
installments over two years. The Company currently has no other compensation
arrangements for members of the Board of Directors but may elect in the future
to compensate Board members for attendance at regular meetings of the Board of
Directors and for meetings of the committees of the Board.

6
<PAGE>

Executive Officers

The names of, and certain information regarding, executive officers of the
Company as of April 15, 1999 who are not also directors, are set forth below.

<TABLE>
<CAPTION>
Name Age Position with the Company
---- --- -------------------------
<S> <C> <C>
James W. Norton......... 48 Vice President of Finance, Chief Financial Officer and Treasurer
Craig H. Risk........... 44 Vice President of Operations
</TABLE>

James W. Norton, has been Vice President of Finance, Chief Financial Officer
and Treasurer of the Company since August 1998. Mr. Norton served as Vice
President of Finance for the International Division of Dunkin Donuts/Baskin
Robbins, a Massachusetts-based subsidiary of Allied Domecq, a British food and
service company, from 1982 to 1998. Prior thereto, Mr. Norton served as
Marketing Controller of Unitrode Corporation, a Massachusetts based
manufacturer of electrical components.

Craig H. Risk, has been Vice President of Operations and Secretary of the
Company since December 1997. Mr. Risk served as President and Chief Executive
Officer of Visual Options, Inc., an optical retailer, from 1993 to 1997. Mr.
Risk served as President and Chief Operating Officer of Lens Lab--Paris Miki,
Inc., a chain operating "superoptical" stores in ten states. Prior thereto,
Mr. Risk served as Managing Director and Chief Executive Officer of Vision
Express of Australia, a chain of optical stores which he helped to develop as
part of a joint venture which included Paris Miki.

7
<PAGE>

REPORT OF COMPENSATION COMMITTEE

The Compensation Committee (the "Committee") consists of the following non-
employee members of the Board of Directors: Richard Darman, Allen Kirkpatrick
and Russell Taskey. The Committee determines and maintains the Company's
executive compensation policies and objectives and administers the Company's
Stock Option Plan.

The objectives of the Committee are to attract and retain highly talented
and productive executives, to provide incentives for superior performance and
to align the interests of executive officers, officers and certain senior
management (all three groups collectively, the "Senior Managers") with the
interests of the Company's stockholders.

The Company's executive compensation program combines cash compensation with
long-term incentive compensation, consisting principally of stock option
grants, to attract, motivate and maintain its Senior Managers. In addition,
Senior Managers are included in the Company's benefit plan which includes
health, dental, life and disability insurance and which is offered to all
employees of the Company.

Cash compensation consists of base salary and annual bonus programs. When
setting base salary levels, including the base salary level for the Chief
Executive Officer, the Committee considers the individual's salary history,
experience, performance and contribution to the management team. The Committee
also considers salaries of executives in other companies of similar size and
industry, as well as the competitive market conditions, for the purpose of
determining base salary necessary to recruit and retain highly talented and
productive executives. The Committee generally intends to target base salary
levels of the Company's executive officers, including the Company's Chief
Executive Officer, to the mid-range of such comparable companies. Also
considered are the performance of the Company, the performance of the specific
area of the Company's business for which the Senior Manager has direct
responsibility and progress towards implementing the Company's business plan.

Cash bonuses are awarded to Senior Managers principally as a mechanism to
recognize and reward individual and/or Company achievements. Cash bonuses are
awarded based upon the Senior Manager's progress towards meeting specific
goals established in writing at the time that final budgets for the fiscal
year are approved, including the performance of the specific area of the
Company's business for which the Senior Manager has direct responsibility and
progress towards implementing and achieving the Company's business plan and
profit goals. The amount of such bonuses will vary depending upon the above
mentioned factors and in determining such amounts the Committee will consider
a bonus range based on minimum and maximum percentages of the Senior Manager's
base salary.

The Committee believes that stock option grants: (1) align Senior Managers'
interest with stockholder interest by creating a direct link between
compensation and stockholder return; (2) assure that Senior Managers maintain
a significant long-term interest in the Company's success; and (3) help retain
Senior Managers in a competitive market. Option grants are made from time to
time to Senior Managers whose contributions have or will have a significant
impact on the Company's long-term performance. The Company's determination of
whether option grants are appropriate each year is based upon individual
and/or Company performance measures established for each individual, including
the Company's Chief Executive Officer. Generally, options vest in equal annual
installments over a period of three years and expire ten years from the date
of grant.

Richard Darman
Allen Kirkpatrick
Russell Taskey

8
<PAGE>

EXECUTIVE COMPENSATION

Summary of Executive Compensation

The following Summary Compensation Table sets forth summary information as
to compensation received by the Company's Chief Executive Officer, each of the
three other most highly compensated executive officers of the Company who were
serving as such at the end of fiscal 1998 and one additional individual for
whom such information would have been provided but for the fact that such
individual was not serving as an executive officer at the end of fiscal 1998
(the "named executive officers") for services rendered to the Company in all
capacities during the three fiscal years ended December 31, 1998. No other
executive officer of the Company received compensation exceeding $100,000 for
the fiscal year ended December 31, 1998.

Summary Compensation Table

<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
--------------------------- ------------
Securities
Name and Principal Fiscal Underlying All Other
Position Year Salary($) Bonus($) Other($) Options(#) Compensation($)(1)
- ------------------ ------ --------- -------- -------- ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
William T. Sullivan (2). 1998 216,731 -0- -0- 325,000 9,221
President and Chief
Executive Officer

William G. McLendon (3). 1998 178,223 -0- -0- -0- 14,858
Chairman 1997 176,745 20,000 -0- -0- 6,765
1996 171,596 -0- -0- 30,000 3,169

Stephen M. Blinn (4).... 1998 176,702 -0- -0- -0- 16,337
Former Chief Operating
Officer 1997 175,683 20,000 -0- -0- 8,313
1996 169,683 -0- -0- 30,000 4,644

Craig H. Risk (5)....... 1998 136,634 4,000 -0- 15,000 8,069
Vice President,
Operations 1997 4,462 -0 -0- 100,000 -0-

James W. Norton (6)..... 1998 52,308 7,500 -0- 114,999 12,698
Vice President, Finance
and Chief Financial
Officer
</TABLE>
- --------
(1) Represents the cost to the Company of matching contributions under the
Company's 401(k) Plan, the dollar value of premiums paid by the Company
with respect to term life insurance for all named executive officers, car
allowances and relocation expenses.
(2) Mr. Sullivan became an executive officer of the Company and was named
President and Chief Executive Officer effective January 26, 1998. Mr.
Sullivan receives an annual salary of $245,000.
(3) Mr. McLendon became an executive officer of the Company effective November
1992. Mr. McLendon resigned his positions as President and Chief Executive
Officer effective January 26, 1998 and continues to serve as Chairman of
the Board of Directors. Under the terms of an amendment to his contract,
which expires in February 2000, effective August 1998 Mr. McLendon
receives an annual salary of $91,000.
(4) Mr. Blinn became an executive officer and Chief Operating Officer of the
Company effective May 1993 and resigned both positions effective January
1998. Mr. Blinn also served as President of the Company's SightCare
operations from January 1998 to August 1998. Under the terms of an
amendment to his contract which expires in April 2000, effective August
1998 Mr. Blinn receives an annual salary of $97,500.
(5) Mr. Risk became an executive officer and Vice President of Operations of
the Company effective December 1997. Effective January 1, 1999, Mr. Risk
receives an annual salary of $150,000.
(6) Mr. Norton became an executive officer and Vice President, Finance and
Chief Financial Officer, of the Company effective August 17, 1998.
Effective January 1, 1999, Mr. Norton receives an annual salary of
$165,000.

9
<PAGE>

Option Grants in Last Fiscal Year

The following table sets forth information regarding each stock option
granted during fiscal year 1998 to each of the named executive officers. The
potential realizable values that would exist for the respective options are
based on assumed rates of annual compound stock price appreciation of 5% and
10% from the date of grant over the full term of the option. Actual gains, if
any, on stock options, exercises and Common Stock holdings are dependent on
the future performance of the Common Stock.

Option/SAR Grants in Last Fiscal Year

<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation
Individual Grants for Option Term
--------------------------------------------------- ---------------------
Number of
Securities
Underlying % of Total
Options Options Granted Exercise
Granted To Employees Price Expiration
Name (#)(1) In Fiscal Year(2) ($/Share) Date 5% 10%
- ---- ---------- ----------------- --------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
William T. Sullivan..... 300,000(3) 48.9% $3.93 1/22/08 $ 741,467 $ 1,879,022
William T. Sullivan..... 25,000(4) 4.1% $2.00 12/4/08 $ 31,445 $ 79,687
James W. Norton......... 99,999(4) 16.3% $3.00 8/17/08 $ 188,667 $ 478,118
James W. Norton......... 15,000(4) 2.4% $2.00 12/4/08 $ 18,867 $ 47,812
Craig H. Risk........... 15,000(4) 2.4% $2.00 12/4/08 $ 18,867 $ 47,812
</TABLE>
- --------
(1) The options were granted pursuant to the Company's Stock Option Plan at an
exercise price equal to or greater than the fair market value on the date
of grant.
(2) The Company granted options representing 613,749 shares of Common Stock in
fiscal year 1998.
(3) 100,000 of these options vested immediately with the remaining options
vesting annually in two equal installments commencing one year from the
date of grant.
(4) These options vest annually in three equal installments commencing one
year from the date of grant.

Option Exercises in Last Fiscal Year and Fiscal Year-End Values

None of the named executive officers exercised stock options during fiscal
year 1998. The following table includes the number of shares covered by both
exercisable and unexercisable stock options as of December 31, 1998 and the
values of "in-the-money" options, which values represent the positive spread
between the exercise price of any such option and the fiscal year-end value of
the Company's Common Stock.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values

<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options
Shares Fiscal Year-End (#) at Fiscal Year-End ($)
Acquired Value ------------------------- -----------------------------
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable (1)
- ---- --------------- ------------ ----------- ------------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
William T. Sullivan..... -- -- 100,000 225,000 -0- -0-
Craig H. Risk........... -- -- 40,000 75,000 -0- -0-
James W. Norton......... -- -- -0- 114,999 -0- -0-
Stephen M. Blinn........ -- -- 61,668 10,000 -0- -0-
William G. McLendon..... -- -- 50,000 10,000 -0- -0-
</TABLE>
- --------
(1) The value of unexercised in-the-money options at fiscal year end assumes a
fair market value for the Company's Common Stock of $2.00, the closing
sale price per share of the Company's Common Stock as reported on NASDAQ
on December 31, 1998.

10
<PAGE>

PERFORMANCE GRAPH

The graph below compares the performance of Sight Resource Corporation with
that of the NASDAQ Stock Market Total Return Index, the NASDAQ Health Service
Stock Return Index and the NASDAQ Retail Trade Stock Return Index. The
comparison of total return on investment (change in period end stock price
plus reinvested dividends) for each of the periods assumes that $100 was
invested on December 31, 1993 in each of Sight Resource Corporation, the
NASDAQ Stock Market, the NASDAQ Health Service Group and the NASDAQ Retail
Trade Group with investment weighted on the basis of market capitalization.
The graph lines merely connect quarter-end dates and do not reflect
fluctuations between those dates.

[GRAPH APPEARS HERE]

12/93 6/94 12/94 6/95 12/95 6/96
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sight Resource Corporation 100.00 93.15 69.86 53.42 54.79 72.60 80.82 95.89 117.81 90.41 72.60
NASDAQ Stock Market 100.00 95.80 91.32 98.88 97.75 106.58 121.91 136.60 138.26 144.70 156.51
NASDAQ Health Service Stock 100.00 101.92 92.82 110.94 107.29 117.56 101.11 117.40 136.11 141.92 154.29
NASDAQ Retail Trade Stocks 100.00 91.98 88.23 96.45 91.18 90.19 99.34 106.34 100.43 112.94 120.71

<CAPTION>
12/96 6/97 12/97 6/98 12/98
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sight Resource Corporation 69.86 50.01 42.47 48.64 59.59 41.09589 45.20548 39.73 24.66 21.92
NASDAQ Stock Market 162.05 170.01 160.79 190.27 222.40 208.30 243.77 250.54 226.85 293.53
NASDAQ Health Service Stock 153.39 135.89 126.88 141.62 154.09 138.49 151.93 138.05 104.56 118.77
NASDAQ Retail Trade Stocks 127.44 119.73 113.90 128.67 145.87 140.67 168.82 172.39 125.38 170.96
</TABLE>

Employment Agreements, Termination of Employment and Change of Control
Arrangements

The Company has entered into employment agreements with Messrs. Sullivan,
McLendon, Blinn, Norton and Risk. The terms of the agreement with Mr. Sullivan
provide that he will serve as President and Chief Executive Officer until
January 26, 2001 and receive an annual salary of $245,000, subject to increase
from time to time by the Board of Directors. The terms of the agreement with
Mr. McLendon provide that he will receive biweekly payments of $3,500 through
February 25, 2000. The terms of the agreement with Mr. Blinn provide that he
will receive biweekly payments of $3,750 through April 28, 2000. The terms of
the agreement with Mr. Norton provide that he will serve as Vice President of
Finance and Chief Financial Officer of the Company at an annual salary of
$165,000. The terms of the agreement with Mr. Risk provide that he will serve
as Vice President of Operations at an annual salary of $150,000. Mr. Sullivan
is also eligible to receive a discretionary annual bonus not to exceed 50% of
his yearly base salary payable annually based upon profitability of the
Company. Mr. Norton is also eligible to receive a discretionary annual bonus
not to exceed 35% of his yearly base salary payable annually based upon
profitability of the Company. Mr. Risk is also eligible to receive a
discretionary annual bonus not to exceed 30% of his yearly base salary payable
annually based upon profitability of the Company. Mr. Sullivan's agreement was
amended on December 4, 1998. The amendment provides for payment of base salary
and health insurance for a period of two years in the event that Mr.
Sullivan's employment is (i) terminated without cause, (ii) not renewed by the
Company, or (iii) terminated by a breach of contract by the Company. The
amendment also provides for payment of two years salary upon certain changes
of control of the Company. Changes of control which may trigger payment are
(i) a person's becoming the

11
<PAGE>

beneficial owner of 25% or more of the outstanding Common Stock of the
Company, (ii) if, ten days following a tender offer or exchange offer, the
consummation of which would result in the beneficial ownership by a person of
25% or more of the outstanding Common Stock of the Company, such person has
not discontinued or rescinded the tender offer or exchange offer, (iii) if,
during any consecutive twelve month period beginning on or after the date on
which the amendment was executed individuals who at the beginning of such
period were directors of the Company cease to constitute at least a majority
of the Board of Directors of the Company, or (iv) a merger, consolidation,
liquidation or sale of substantially all of the Company's assets. The
agreement for Mr. Norton provides for a payment of one year's salary in the
event employment is terminated upon certain changes of control of the Company.
Changes of control which may trigger a payment of one year's salary are (i) a
person's becoming the beneficial owner of 25% or more of the outstanding
Common Stock of the Company, (ii) if, ten days following a tender offer or
exchange offer, the consummation of which would result in the beneficial
ownership by a person of 25% or more of the outstanding Common Stock of the
Company, such person has not discontinued or rescinded the tender offer or
exchange offer, or (iii) a merger, consolidation, liquidation or sale of
substantially all of the Company's assets. In the event that Mr. Norton's
employment is terminated without cause or in certain other circumstances, he
is entitled to one year's base salary and the cost of one year's health
benefits as severance. The agreement for Mr. Risk provides for a payment for
six month's salary and certain benefits in the event that employment is
terminated.

COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934

Under the securities laws of the United States, the Company's directors, its
executive officers, and any persons holding more than 10% of the Company's
Common Stock are required to report their initial ownership of the Company's
Common Stock and any subsequent changes in that ownership to the Securities
and Exchange Commission (the "SEC"). Specific due dates for these reports have
been established, and the Company is required to disclose in this Proxy
Statement any failure to file by these dates during fiscal 1998. To the
knowledge of the Company, all of these filing requirements were satisfied
during fiscal 1998, except that: (i) Dr. Weinstock, a director of the Company,
failed to file two timely Form 4's to report sales of an aggregate of 35,200
shares of the Company's Common Stock; however, Dr. Weinstock subsequently
reported such transactions on a Form 5 filed in February of 1999, (ii) Mr.
Norton submitted a late Form 3, and (iii) Mr. Risk submitted a late Form 3. In
making these disclosures, the Company has relied solely on written
representations of its directors and executive officers and its 10% holders
and copies of the reports that they have filed with the SEC.

CERTAIN TRANSACTIONS

On November 25, 1997, the Company closed upon the sale of an aggregate of
1,452,119 shares of Series B Convertible Preferred Stock (the "Preferred
Stock"), and Class I and Class II Warrants to Carlyle Venture Partners, L.P.,
C/S Venture Investors, L.P., Carlyle U.S. Venture Partners, L.P. and Carlyle
Venture Coinvestment, L.L.C. (collectively, the "Purchasers") for a net
purchase price of $4,582,000. The Preferred Stock was purchased at a price
lower than market value, and as a result, the difference of $1,953,000 was
accounted for by the Company as a dividend to the holders of the Preferred
Stock. Each share of Preferred Stock is convertible into one share of Common
Stock, subject to adjustment, at the Purchasers' option at any time and at the
Company's option if the price per share of Common Stock during any period of
thirty consecutive trading days equals or exceeds $7.00 at any time during the
first three years or $9.00 at any time thereafter. The holders of the
Preferred Stock have the right to appoint two directors to the Company's Board
of Directors. The

12
<PAGE>

Purchasers have appointed Richard G. Darman, a Partner of The Carlyle Group,
and J. Mitchell Reese, the Managing Director-Venture of The Carlyle Group, as
their initial appointees to the Company's Board of Directors. The Class I
(Mirror) Warrants entitle the Purchasers to purchase an amount of shares of
the Company's Common Stock equal to an aggregate of up to 19.9% of the shares
of Common Stock purchasable under the Company's outstanding warrants and
options on the same terms and conditions of existing warrant and option
holders. The Purchasers are obligated to exercise the Class I Warrants at the
same time the options and warrants of existing holders are exercised, subject
to certain limitations. The Class II Warrants entitle the Purchasers to
purchase an aggregate of 290,424 shares of the Company's Common Stock at an
exercise price of $7.00 per share for a term of five years. The Purchasers are
entitled to "shelf" registration rights and "piggyback" registration rights
with respect to the shares of Common Stock underlying the Preferred Stock, the
Class I Warrants and the Class II Warrants. Upon a change of control of the
Company, defined as (i) a change in any person or group obtaining a majority
of the securities ordinarily having the right to vote in an election of
Directors; (ii) during any two year period, the individuals who at the
beginning of the period constituted the Company's Board of Directors no longer
constitute a majority of the Board of Directors; (iii) any merger,
consolidation, recapitalization, reorganization, dissolution or liquidation of
the Company which results in the current stockholders no longer owning more
than 50% of the voting securities of the Company; (iv) any sale, lease
exchange or other transfer of all, or substantially all, of the assets of the
Company; or (v) the adoption of a plan leading to the liquidation or
dissolution of the Company, at the option of the Purchasers, the Company would
be required to redeem the Preferred Stock at a price equal to 105% of the
offering price, subject to certain adjustments, plus accrued and unpaid
dividends.

In connection with the exercise of stock options during fiscal 1997, Stephen
M. Blinn, the Company's Executive Vice President and a Director, issued a
promissory note (the "Promissory Note") to the Company for $594,111. The
Promissory Note is due on the earlier of September 2, 2007 or the date upon
which Mr. Blinn receives the proceeds of the sale of not less than 20,000 of
the shares acquired in connection with the exercise of the stock options.
Interest accrues at the rate of 6.55%, compounding annually, and is payable on
the earlier of the maturity date of the Promissory Note or upon certain
defined Events of Default. Mr. Blinn may prepay all or any part of the
Promissory Note without penalty or premium.

PROPOSAL 1
ELECTION OF DIRECTORS

The Company's Certificate of Incorporation provides for a classified Board
of Directors. The Board of Directors currently consists of nine members,
classified into three classes as follows: first, Mr. McLendon, Mr. Reese and
Dr. Weinstock, constitute a class with a term which expires at the Annual
Meeting (the "Class C directors"); second, Mr. Blinn, Mr. Darman and Mr.
Kirkpatrick constitute a class with a term ending in 2000 (the "Class A
directors"); and third, Dr. Jacobson, Mr. Sullivan and Mr. Taskey constitute a
class with a term ending in 2001 (the "Class B directors"). At each annual
meeting of Stockholders, directors are elected for a full term of three years
to succeed those directors whose terms are expiring.

Pursuant to the Company's by-laws, the Board of Directors on February 16,
1999 voted (i) to fix the Board of Directors at nine members and (ii) to
nominate Mr. Callsen, Mr. McLendon, and Mr. Reese for election at the Meeting
for a term of three years to serve until the Annual Meeting of Stockholders in
the year 2002, and until their respective successors are elected and
qualified. The Class A directors (Mr. Blinn, Mr. Darman and Mr. Kirkpatrick)
and the Class B directors (Dr. Jacobson, Mr. Sullivan and Mr. Taskey) will
serve until the Annual Meetings of Stockholders to be held in 2000 and 2001,
respectively, and until their respective successors

13
<PAGE>

have been elected and qualified, except that Mr. Kirkpatrick will resign
effective May 20, 1999 and Mr. Clairmont has been appointed to fill the
vacancy created by such resignation.

Unless authority to vote for any of the nominees named above is withheld,
the shares represented by the enclosed proxy will be voted FOR the election as
directors of such nominees. In the event that any nominee shall become unable
or unwilling to serve, the shares represented by the enclosed proxy will be
voted for the election of such other person as the Board of Directors may
recommend in his place. The Board has no reason to believe that any nominee
will be unable or unwilling to serve.

A plurality of the shares voted affirmatively or negatively at the Meeting
is required to elect each nominee as a director.

THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF MR. CALLSEN, MR. MCLENDON,
AND MR. REESE AS DIRECTORS, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED
IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.

PROPOSAL 2
AMENDMENT OF THE COMPANY'S 1992 EMPLOYEE, DIRECTOR
AND CONSULTANT STOCK OPTION PLAN

General

The Company's 1992 Employee, Director and Consultant Stock Option Plan (the
"Stock Option Plan") was approved by the Company's Board of Directors on
November 30, 1992 and by the Company's Stockholders on February 4, 1993. A
total of 170,000 shares of Common Stock were initially reserved for issuance
under the Stock Option Plan. By the terms of the Stock Option Plan, the Stock
Option Plan may be amended by the Board of Directors or the Compensation
Committee of the Board of Directors (the "Compensation Committee"), provided
that any amendment approved by the Board of Directors or the Compensation
Committee which is of a scope that requires Stockholder approval in order to
ensure favorable federal income tax treatment for any incentive stock options
under Code Section 422 or requires Stockholder approval in order to ensure the
qualification of the Stock Option Plan under Rule 16b-3 under the Securities
Exchange Act of 1934, is subject to obtaining such Stockholder approval.

On May 18, 1993, October 1, 1993, March 4, 1994, and March 5, 1996 the
Compensation Committee voted to approve amendments to the Stock Option Plan to
increase by 155,000, 175,000, 500,000 and 500,000 shares, respectively, the
aggregate number of shares of Common Stock for which stock options may be
granted under the Stock Option Plan. On February 16, 1999, the Board of
Directors voted to approve a further amendment to the Stock Option Plan to
increase by an additional 350,000 shares to 1,850,000 the aggregate number of
shares of Common Stock for which options may be granted under the Stock Option
Plan.

This amendment is being submitted for Stockholder approval at the Meeting to
ensure continued qualification of the Stock Option Plan under Rule 16b-3 under
the Securities Exchange Act of 1934. The Board believes that the increase in
the number of shares reserved for issuance under the Stock Option Plan is
advisable to give the Company the flexibility needed to attract, retain and
motivate employees, directors and consultants. All employees and consultants
of the Company and the members of the Board of Directors are eligible to
participate in the Stock Option Plan.

14
<PAGE>

Material Features of the Stock Option Plan

Options granted under the Stock Option Plan may be either (i) options
intended to qualify as "incentive stock options" under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or (ii) options that
are not incentive stock options ("non-qualified stock options"). Incentive
stock options may be granted under the Stock Option Plan to officers and other
employees of the Company and its affiliates (approximately 675 persons). Non-
qualified stock options may be granted to directors, employees, officers or
consultants of the Company and its affiliates (approximately 750 persons). The
Stock Option Plan currently provides for a grant to each non-employee director
immediately following each Annual Meeting of shareholders of a non-qualified
stock option to purchase 5,000 shares of Common Stock provided that on such
date such director has been in the continued and uninterrupted services of the
Company as a director for a period of at least one year. Each such grant shall
have an exercise price equal to the fair market value of the Common Stock on
the date of grant and shall vest in equal annual installments over two years.
See "Compensation of Directors."

The Stock Option Plan is administered by the Compensation Committee of the
Board of Directors. Subject to the provisions of the Stock Option Plan, the
Compensation Committee has the authority to administer the provisions of the
Stock Option Plan, to determine the persons to whom options will be granted,
the number of shares to be covered by each option and the terms and conditions
upon which an option may be granted.

The aggregate fair market value (determined at the time of grant) of shares
issuable pursuant to incentive stock options which become exercisable in any
calendar year under any incentive stock option plan of the Company by an
employee or officer may not exceed $100,000. Incentive stock options granted
under the Stock Option Plan may not be granted at a price less than 100% of
the fair market value of the Common Stock on the date of grant (or 110% of
fair market value in the case of employees or officers holding 10% or more of
the voting stock of the Company). Non-qualified stock options granted under
the Stock Option Plan may not be granted at an exercise price less than 50% of
the fair market value of a share of Common Stock on the date of grant.
Incentive stock options granted under the Stock Option Plan expire not more
than ten years from the date of grant, or not more than five years from the
date of grant in the case of incentive stock options granted to an employee or
officer holding 10% or more of the voting stock of the Company.

An option granted under the Stock Option Plan is exercisable, during the
optionholders lifetime, only by the optionholder and is not transferable by
him except by will or by the laws of descent and distribution. An option
granted to an individual who is subject to Section 16 of the Securities
Exchange Act of 1934 is not exercisable within six months after the date of
grant. An incentive stock option granted under the Stock Option Plan may, at
the Board of Director's discretion, be exercisable after the termination of
the optionholder's employment with the Company (other than by reason of death,
disability or termination for cause as defined in the Stock Option Plan) to
the extent exercisable on the date of such termination, for up to 90 days
following such termination, provided that such incentive stock option has not
expired on the date of such exercise. In granting any non-qualified stock
option, the Board of Directors may specify that such non-qualified stock
option shall be subject to such termination or cancellation provisions as the
Board of Directors may specify. In the event of the optionholder's death, both
incentive stock options and non-qualified stock options may be exercised, to
the extent exercisable on the date of death, by the optionholder's survivors
at any time prior to the earlier of the option's specified expiration date or
one year from the date of the optionholder's death.

As of March 24, 1999, options to purchase an aggregate of 1,219,779 shares
had been granted under the Stock Option Plan, of which options to purchase
700,201 shares were exercisable. As of March 24, 1999,

15
<PAGE>

158,332 options had been exercised by Directors or executive officers of the
Company. On March 24, 1999, the closing sale price per share of the Company's
Common Stock was $2.50, as reported on NASDAQ.

Certain options granted pursuant to the Stock Option Plan to Mr. Norton, Mr.
Sullivan and Mr. Blinn, a former officer, may be subject to immediate vesting
upon the event of a change in control of the Company, as defined in their
option agreements with the Company. Changes in control triggering immediate
vesting of options may include (i) a person's becoming the beneficial owner of
25% or more of the outstanding Common Stock of the Company, or (ii) the
merger, consolidation, liquidation or sale of substantially all of the
Company's assets. Currently, 460,000 options granted under the Stock Option
Plan are subject to a change of control provision.

Federal Income Tax Considerations

The following is a description of certain U.S. federal income tax
consequences of the issuance and exercise of options under the Stock Option
Plan:

Incentive Stock Options. An incentive stock option does not result in
taxable income to the option holder or deduction to the Company at the time it
is granted or exercised, provided that no disposition is made by the optionee
of the shares acquired pursuant to the option within two years after the date
of granting of the option nor within one year after the date of issuance of
shares to the individual (the "ISO holding period"). However, the difference
between the fair market value of the stock on the date of exercise and the
option price therefor will be an item of tax preference included in
"alternative minimum taxable income." Upon disposition of the stock after the
ISO holding period, the optionee will generally recognize long-term capital
gain or loss based on the difference between the disposition proceeds and the
option price paid for the stock. If the stock is disposed of prior to the
expiration of the ISO holding period, the optionee generally will recognize
taxable compensation, and the Company will have a corresponding deduction, in
the year of disposition, equal to the excess of the fair market value of the
stock on the date of exercise of the option over the option price. Any
additional gains realized on the disposition will normally constitute capital
gain. If the amount realized upon such a disqualifying disposition is less
than fair market value of the stock on the date of exercise, the amount of
compensation income will be limited in the excess of the amount realized over
the optionee's adjusted basis in the stock.

Non-Qualified Stock Options. The grant of a non-qualified option will not
result in taxable income to the optionee, or deduction to the Company at the
time of grant. The optionee will recognize taxable compensation, and the
Company will have a corresponding deduction, at the time of exercise in the
amount of the excess of the then fair market value of the shares acquired over
the option price. Upon disposition of the shares, the optionee will generally
realize capital gain or loss, and the individual's basis for determining gain
or loss will be the sum of the option price paid for the stock plus the amount
of compensation income recognized on exercise of the option.

The affirmative vote of a majority of the votes present or represented and
entitled to vote at the Meeting is required to approve the amendment to the
Stock Option Plan which increase the aggregate number of shares of Common
Stock available under the Stock Option Plan.

THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE ADOPTION OF AN AMENDMENT
TO THE STOCK OPTION PLAN TO INCREASE BY 350,000 SHARES, THE AGGREGATE NUMBER
OF SHARES FOR WHICH STOCK OPTIONS MAY BE GRANTED UNDER THE STOCK OPTION PLAN,
AND PROXIES SOLICITIED BY THE BOARD WILL BE VOTED IN FAVOR OF SUCH AMENDMENT
UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.

16
<PAGE>

PROPOSAL 3
INDEPENDENT PUBLIC ACCOUNTANTS

The Audit Committee has recommended and the Board of Directors has approved
the appointment of KPMG, LLP, independent certified public accountants, to
audit the financial statements of the Company for the fiscal year ending
December 25, 1999. The Company expects that representatives of KPMG, LLP will
be present at the Annual Meeting, with the opportunity to make a statement if
they so desire, and will be available to respond to appropriate questions.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS RATIFY THE
APPOINTMENT OF KPMG, LLP AS INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS TO AUDIT
THE FINANCIAL STATEMENTS OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER
25, 1999 AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF
UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.

OTHER MATTERS

The Board of Directors knows of no other business which will be presented to
the Meeting. If any other business is properly brought before the Meeting, it
is intended that proxies in the enclosed form will be voted in respect thereof
in accordance with the judgment of the persons voting the proxies.

STOCKHOLDER PROPOSALS

In order to be included in Proxy material for the 2000 Annual Meeting,
stockholder proposal's must be received by the Company on or before December
16, 2000. For stockholder proposals which are not to be included in proxy
materials for the 2000 Annual Meeting, in order for a stockholder to nominate
a person or persons for election to the Board of Director or to properly bring
other business before an annual meeting of stockholders, notice of such
business proposal or of such nomination must be delivered to the Secretary of
the Company not earlier than January 31, 2000 and not later than February 29,
2000. Stockholder proposals must be received, marked for the attention of:
Secretary, Sight Resource Corporation, 100 Jeffrey Avenue, Holliston,
Massachusetts 01746.

WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, YOU ARE URGED TO
FILL OUT, SIGN, DATE AND RETURN THE ENCLOSED PROXY AT YOUR EARLIEST
CONVENIENCE.

By order of the Board of Directors:

/s/ William T. Sullivan

WILLIAM T. SULLIVAN
President and Chief Executive
Officer

April 15, 1999

17
<PAGE>

APPENDIX TO PROXY

AS AMENDED FEBRUARY 1999

SIGHT RESOURCE CORPORATION

1992 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK OPTION PLAN

1. DEFINITIONS AND PURPOSES.
------------------------

A. Definitions

Unless otherwise specified or unless the context otherwise requires,
the following terms, as used in this Sight Resource Corporation 1992
Employee, Director and Consultant Stock Option Plan, have the following
meanings:

1. Administrator means the Board of Directors, unless it has delegated
-------------
power to act on its behalf to a committee. (See Article 3)

2. Affiliate means a corporation which, for purposes of Section 424 of
---------
the Code, is a parent or subsidiary of the Company, direct or
indirect.

3. Board of Directors means the Board of Directors of the Company.
------------------

4. Code means the United States Internal Revenue Code of 1986, as
----
amended.

5. Committee means the Committee to which the Board of Directors has
---------
delegated power to act under or pursuant to the provisions of the
Plan.

6. Company means Sight Resource Corporation, a Delaware corporation.
-------

7. Disability or Disabled means permanent and total disability as defined
---------- --------
in Section 22(e)(3) of the Code.

8. Fair Market Value of a Share of Common Stock means:
-----------------

(a) If such Shares are then listed on any national securities exchange,
the fair market value shall be the last sale price, if any, on the largest
such exchange on the date of the grant of the Option, or, if none, on the
most recent trade date thirty (30) days or less prior to the date of the
grant of the Option;

(b) If the Shares are not then listed on any such exchange, the fair
market value of such Shares shall be the last sale price, if any, as
reported in the National Association of Securities Dealers Automated
<PAGE>

Quotation System (NASDAQ) for the date of the grant of the Options, or
if none, for the most recent trade date thirty (30) days or less prior
to the date of the grant of the Option;

(c) If the Shares are not then either listed on any such exchange or
quoted in NASDAQ, the fair market value shall be the mean between the
average of the "Bid" and the average of the "Ask" prices, if any, as
reported in the National Daily Quotation Service for the date of the
grant of the option, or, if none, for the most recent trade date
thirty (30) days or less prior to the date of the grant of the Option
for which such quotations are reported; and

(d) If the market value cannot be determined under the preceding three
paragraphs, it shall be determined in good faith by the Board of
Directors.

9. ISO means an option meant to qualify as an incentive stock option
---
under Code Section 422.

10. Key Employee means an employee of the Company or of an Affiliate
------------
(including, without limitation, an employee who is also serving as an
officer or director of the Company or of an Affiliate), designated by
the Administrator to be eligible to be granted one or more Options
under the Plan.

11. Non-Qualified Option means an option which is not intended to qualify
--------------------
as an ISO.

12. Option means an ISO or Non-Qualified Option granted under the Plan.
------

13. Option Agreement means an agreement between the Company and a
----------------
Participant executed and delivered pursuant to the Plan, in such form
as the Administrator shall approve.

14. Participant means a Key Employee, director or consultant to whom one
-----------
or more Options are granted under the Plan.

15. Participant's Survivors means a deceased Participant's legal
-----------------------
representatives and/or any person or persons who acquired the
Participant's rights to an Option by will or by the laws of descent
and distribution.

16. Plan means this Restated Stock Option Plan.
----

-2-
<PAGE>

17. Shares means shares of the common stock, $.01 par value, of the
------
Company ("Common Stock") as to which Options have been or may be
granted under the Plan or any shares of capital stock into which the
Shares are changed or for which they are exchanged within the
provisions of Article 2 of the Plan. The shares issued upon exercise
of Options granted under the Plan may be authorized and unissued
shares or shares held by the Company in its treasury, or both.

B. Purposes of the Plan

The Plan is intended to encourage ownership of Shares by Key Employees,
non-employee directors and certain consultants of the Company in order to
attract such people, to induce them to work for the benefit of the Company or of
an Affiliate and to provide additional incentive for them to promote the success
of the Company or of an Affiliate. The Plan provides for the issuance of ISOs
and Non-Qualified Options.

2. SHARES SUBJECT TO THE PLAN.
--------------------------

The number of Shares subject to this Plan as to which Options may be
granted from time to time shall be 1,850,000, or the equivalent of such number
of Shares after the Administrator, in its sole discretion, has interpreted the
effect of any stock split, stock dividend, combination, recapitalization or
similar transaction effected after such date in accordance with Paragraph 16 of
the Plan.

If an Option ceases to be "outstanding", in whole or in part, the Shares
which were subject to such Option shall be available for the granting of other
Options under the Plan. Any Option shall be treated as "outstanding" until such
Option is exercised in full, or terminates or expires under the provisions of
the Plan, or by agreement of the parties to the pertinent Option Agreement.

-3-
<PAGE>

3. ADMINISTRATION OF THE PLAN.
--------------------------

The Administrator of the Plan will be the Board of Directors, except to the
extent the Board of Directors delegates its authority to a Committee of the
Board of Directors. The Plan is intended to comply with Rule 16b-3 or its
successors, promulgated pursuant to Section 16 of the Securities Exchange Act of
1934, as amended (the "1934 Act") with respect to Participants who are subject
to Section 16 of the 1934 Act, and any provision in this Plan with respect to
such persons contrary to Rule 16b-3 shall be deemed null and void to the extent
permissible by law and deemed appropriate by the Administrator. Subject to the
provisions of the Plan, the Administrator is authorized to:

a. Interpret the provisions of the Plan or of any Option or Option
Agreement and to make all rules and determinations which it deems
necessary or advisable for the administration of the Plan;

b. Determine which employees of the Company or of an Affiliate shall be
designated as Key Employees and which of the Key Employees, directors
and consultants shall be granted Options;

c. Determine the number of Shares for which an Option or Options shall be
granted; and

d. Specify the terms and conditions upon which an Option or Options may
be granted;

provided, however, that all such interpretations, rules, determinations,
terms and conditions shall be made and prescribed in the context of
preserving the tax status under Code Section 422 of those Options which are
designated as ISOs. Subject to the foregoing, the interpretation and
construction by the Administrator of any provisions of the Plan or of any
Option granted under it shall be final, unless otherwise determined by the
Board of Directors, if the Administrator is other than the Board of
Directors.

4. ELIGIBILITY FOR PARTICIPATION.
-----------------------------

The Administrator will, in its sole discretion, name the Participants in
the Plan, provided, however, that each Participant must be a Key Employee,
director or consultant of the Company or of an Affiliate at the time an Option
is granted. Notwithstanding any of the foregoing provisions, the Administrator
may authorize the grant of an Option to a person not then an employee, director
or consultant of the Company or of

-4-
<PAGE>

an Affiliate. The actual grant of such Option, however, shall be conditioned
upon such person becoming eligible to become a Participant at or prior to the
time of the execution of the Option Agreement evidencing such Option. ISOs may
be granted only to Key Employees. Non-Qualified Options may be granted to any
Key Employee, director or consultant of the Company or an Affiliate. Granting of
any Option to any individual shall neither entitle that individual to, nor
disqualify him or her from, participation in any other grant of Options. In no
event shall any Participant be granted, in any consecutive three year period,
options to purchase more than 350,000 shares pursuant to the Plan.

5. TERMS AND CONDITIONS OF OPTIONS.
-------------------------------

Each Option shall be set forth in an Option Agreement, duly executed by the
Company and by the Participant. The Option Agreements, which may be changed in
the Administrator's discretion for any particular Participant (provided that any
change in the Incentive Stock Option Agreement is not inconsistent with Code
Section 422), shall be subject to the following terms and conditions:

Non-Qualified Options: Each Option intended to be a Non- Qualified Option
---------------------
shall be subject to the terms and conditions which the Administrator
determines to be appropriate and in the best interest of the Company,
subject to the following minimum standards for any such Non-Qualified
Option:

a. The Option Agreement shall be in writing in the form approved by the
Administrator, with such modifications to such form as the
Administrator shall approve;

b. Option Price: The option price (per share) of the Shares covered by
each Option shall be determined by the Administrator but shall not be
less than the par value per share of the Shares on the date of the
grant of the Option.

c. Each Option Agreement shall state the number of Shares to which it
pertains; and

d. Each Option Agreement shall state the date on which it first is
exercisable and the date after which it may no longer be exercised.
Except as otherwise determined by the Administrator, each Option
granted hereunder shall become cumulatively exercisable in four (4)
equal annual installments of twenty-five percent (25%) each,
commencing on the first anniversary date of the Option

-5-
<PAGE>

Agreement executed by the Company and the Participant with respect to
such Option, and continuing on each of the next three (3) anniversary
dates.

e. Each Option shall terminate not more than 10 (ten) years from the date
of grant thereof or at such earlier time as the Option Agreement may
provide.

f. Directors' Options: Each director of the Company who is not an
------------------
employee of the Company or any Affiliate, immediately after each
Annual Meeting of Stockholders of the Company, provided that on such
dates such director has been in the continued and uninterrupted
service of the Company as a director for a period of at least one year
prior to the date of such annual meeting and is and was a director and
was and is not an employee of the Company at such times, shall be
granted a Non-Qualified Option to purchase 5,000 Shares. Each such
Option shall (i) have an exercise price equal to the Fair Market Value
(per share) of the Shares on the date of grant of the Option, (ii)
have a term of ten (10) years, and (iii) shall become cumulatively
exercisable in two (2) equal annual installments of fifty percent
(50%) each, upon the first and second anniversary of the date of
grant, provided that on such dates such director has been in the
continued and uninterrupted service of the Company as a director and
not an employee since the date of grant. Any director entitled to
receive an Option grant under this subparagraph (f) may elect to
decline the Option. Notwithstanding the provisions of Paragraph 23
concerning amendment of the Plan, the provisions of this subparagraph
(f) shall not be amended more than once every six months, other than
to comport with changes in the Code, the Employee Retirement Income
Security Act, or the rules thereunder. The provisions of Articles 9,
10, 11 and 12 below shall not apply to Options granted pursuant to
this subparagraph (f).

ISOs: Each Option intended to be an ISO shall be issued only to a Key
----
Employee and be subject to at least the following terms and conditions,
with such additional restrictions or changes as the Administrator
determines are appropriate but not in conflict with Code Section 422 and
relevant regulations and rulings of the Internal Revenue Service:

a. Minimum standards: The ISO shall meet the minimum standards for Non-
Qualified Options, as described above, except clauses (a), (b) and (e)
thereunder.

-6-
<PAGE>

b. Option Agreement: The Option Agreement for an ISO shall be in writing
in substantially the form as approved by the Administrator, with such
changes to such form as the Administrator shall approve, provided any
changes are not inconsistent with Code Section 422.

c. Option Price: Immediately before the Option is granted, if the
Participant owns, directly or by reason of the applicable attribution
rules in Code Section 424(d):

i. Ten percent (10%) or less of the total combined voting power of
-------
all classes of share capital of the Company or an Affiliate, the
Option price per share of the Shares covered by each Option shall
not be less than one hundred percent (100%) of the Fair Market
Value per share of the Shares on the date of the grant of the
Option.

ii. More than ten percent (10%) of the total combined voting power of
all classes of share capital of the Company or an Affiliate, the
Option price per share of the Shares covered by each Option shall
be not less than one hundred ten percent (110%) of the said Fair
Market Value on the date of grant.

d. Term of Option: For Participants who own

i. Ten percent (10%) or less of the total combined voting power of
-------
all classes of share capital of the Company or an Affiliate, each
Option shall terminate not more than ten (10) years from the date
of the grant or at such earlier time as the Option Agreement may
provide;

ii. More than ten percent (10%) of the total combined voting power of
all classes of share capital of the Company or an Affiliate, each
Option shall terminate not more than five (5) years from the date
of the grant or at such earlier time as the Option Agreement may
provide.

e. Limitation on Yearly Exercise: The Option Agreements shall restrict
the amount of Options which may be exercisable in any calendar year
(under this or any other ISO plan of the Company or an Affiliate) so
that the aggregate Fair Market Value (determined at the time each ISO
is granted) of the stock with respect to which ISOs are exercisable
for the first time by the Participant in any calendar year does not
exceed one hundred thousand dollars ($100,000), provided that this

-7-
<PAGE>

subparagraph (e) shall have no force or effect if its inclusion in the
Plan is not necessary for Options issued as ISOs to qualify as ISOs
pursuant to Section 422(d) of the Code.

f. Limitation on Grant of ISOs: No ISOs shall be granted after the
expiration of the earlier of ten (10) years from the date of the
-------
adoption of the Plan by the Company or the approval of the Plan by the
shareholders of the Company.

6. EXERCISE OF OPTION AND ISSUE OF SHARES.
--------------------------------------

An Option (or any part or installment thereof) shall be exercised by giving
written notice to the Company at its principal office address, together with
provision for payment of the full purchase price in accordance with this
paragraph for the shares as to which such Option is being exercised, and upon
compliance with any other condition(s) set forth in the Option Agreement. Such
written notice shall be signed by the person exercising the Option, shall state
the number of Shares with respect to which the Option is being exercised and
shall contain any representation required by the Plan or the Option Agreement.
Payment of the purchase price for the shares as to which such Option is being
exercised shall be made (a) in United States dollars in cash or by check, or (b)
at the discretion of the Administrator, through delivery of shares of Common
Stock having a Fair Market Value equal as of the date of the exercise to the
cash exercise price of the Option, (c) at the discretion of the Administrator,
by delivery of the grantee's personal recourse note bearing interest payable not
less than annually at no less than 100% of the applicable Federal rate, as
defined in Section 1274(d) of the Code, (d) at the discretion of the
Administrator, in accordance with a cashless exercise program established with a
securities brokerage firm, and approved by the Administrator, or (e) at the
discretion of the Administrator, by any combination of (a), (b), (c) and (d)
above. Notwithstanding the foregoing, the Administrator shall accept only such
payment on exercise of an ISO as is permitted by Section 422 of the Code.

The Company shall then reasonably promptly deliver the Shares as to which
such Option was exercised to the Participant (or to the Participant's Survivors,
as the case may be). In determining what constitutes "reasonably promptly," it
is expressly understood that the delivery of the Shares may be delayed by the
Company in order to comply with any law or regulation which requires the Company
to take any action with respect to the Shares prior to their issuance. The
Shares shall, upon delivery, be evidenced by an appropriate certificate or
certificates for paid-up non-assessable Shares.

-8-
<PAGE>

The Administrator shall have the right to accelerate the date of exercise
of any installment of any Option; provided that the Administrator shall not
accelerate the exercise date of any installment of any Option granted to any Key
Employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to Article 18) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in paragraph
5(e).

7. RIGHTS AS A SHAREHOLDER.
-----------------------

No Participant to whom an Option has been granted shall have rights as a
shareholder with respect to any Shares covered by such Option, except after due
exercise of the Option and provision for payment of the full purchase price for
the Shares being purchased pursuant to such exercise.

8. ASSIGNABILITY AND TRANSFERABILITY OF OPTIONS.
--------------------------------------------

By its terms, an Option granted to a Participant shall not be transferable
by the Participant other than by will or by the laws of descent and distribution
or pursuant to a qualified domestic relations order as defined by the Code or
Title I of the Employee Retirement Income Security Act or the rules thereunder,
and shall be exercisable, during the Participant's lifetime, only by such
Participant (or by his or her legal representative). Such Option shall not be
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar process.
Any attempted transfer, assignment, pledge, hypothecation or other disposition
of any Option or of any rights granted thereunder contrary to the provisions of
this Plan, or the levy of any attachment or similar process upon an Option,
shall be null and void.

9. EFFECT OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE".
-------------------------------------------------------

Except as otherwise provided in the pertinent Option Agreement, in the
event of a termination of service (whether as an employee or consultant) before
the Participant has exercised all Options, the following rules apply:

a. A Participant who ceases to be an employee or consultant of the
Company or of an Affiliate (for any reason other than termination "for
cause", Disability, or death for which events there are special rules
in Articles 10, 11, and 12, respectively), may exercise

-9-
<PAGE>

any Option granted to him or her to the extent that the right to
purchase Shares has accrued on the date of such termination of
service, but only within such term as the Administrator has designated
in the pertinent Option Agreement.

b. In no event may an Option Agreement provide, if the Option is intended
to be an ISO, that the time for exercise be later than three (3)
months after the Participant's termination of employment.

c. The provisions of this paragraph, and not the provisions of Article 11
or 12, shall apply to a Participant who subsequently becomes disabled
or dies after the termination of employment, or consultancy, provided,
however, in the case of a Participant's death, the Participant's
survivors may exercise the Option within six (6) months after the date
of the Participant's death, but in no event after the date of
expiration of the term of the Option.

d. Notwithstanding anything herein to the contrary, if subsequent to a
Participant's termination of employment or consultancy, but prior to
the exercise of an Option, the Board of Directors determines that,
either prior or subsequent to the Participant's termination, the
Participant engaged in conduct which would constitute "cause", then
such Participant shall forthwith cease to have any right to exercise
any Option.

e. A Participant to whom an Option has been granted under the Plan who is
absent from work with the Company or with an Affiliate because of
temporary disability (any disability other than a permanent and total
Disability as defined in Article 1 hereof), or who is on leave of
absence for any purpose, shall not, during the period of any such
absence, be deemed, by virtue of such absence alone, to have
terminated such Participant's employment or consultancy with the
Company or with an Affiliate, except as the Administrator may
otherwise expressly provide.

f. Options granted under the Plan shall not be affected by any change of
employment or other service within or among the Company and any
Affiliates, so long as the Participant continues to be an employee or
consultant of the Company or any Affiliate, provided, however, if a
Participant's employment by either the Company or an Affiliate should
cease (other than to become an employee of an Affiliate or the
Company), such termination shall affect the Participant's rights under

-10-
<PAGE>

any Option granted to such Participant in accordance with the terms of
the Plan and the pertinent Option Agreement.

10. EFFECT OF TERMINATION OF SERVICE "FOR CAUSE".
--------------------------------------------

Except as otherwise provided in the pertinent Option Agreement, the
following rules apply if the Participant's service (whether as an employee or
consultant) is terminated "for cause" prior to the time that all of his or her
outstanding Options have been exercised:

a. All outstanding and unexercised Options as of the date the Participant
is notified his or her service is terminated "for cause" will
immediately be forfeited, unless the Option Agreement provides
otherwise.

b. For purposes of this Article, "cause" shall include (and is not
limited to) dishonesty with respect to the employer, insubordination,
substantial malfeasance or non-feasance of duty, unauthorized
disclosure of confidential information, and conduct substantially
prejudicial to the business of the Company or any Affiliate. The
determination of the Administrator as to the existence of cause will
be conclusive on the Participant and the Company.

c. "Cause" is not limited to events which have occurred prior to a
Participant's termination of service, nor is it necessary that the
Administrator's finding of "cause" occur prior to termination. If the
Administrator determines, subsequent to a Participant's termination of
service but prior to the exercise of an Option, that either prior or
subsequent to the Participant's termination the Participant engaged in
conduct which would constitute "cause", then the right to exercise any
Option is forfeited.

d. Any definition in an agreement between the Participant and the Company
or an Affiliate, which contains a conflicting definition of "cause"
for termination and which is in effect at the time of such
termination, shall supersede the definition in this Plan with respect
to such Participant.

11. EFFECT OF TERMINATION OF SERVICE FOR DISABILITY.
-----------------------------------------------

Except as otherwise provided in the pertinent Option Agreement, a
Participant who ceases to be an employee of or

-11-
<PAGE>

consultant to the Company or of an Affiliate by reason of Disability may
exercise any Option granted to such Participant:

a. To the extent that the right to purchase Shares has accrued on the
date of his Disability; and

b. In the event rights to exercise the Option accrue periodically, to the
extent of a pro rata portion of such rights based upon the number of
days prior to such Participant's Disability and during the accrual
period which next ends following the date of Disability.

A Disabled Participant may exercise such rights only within a period of not
more than one (1) year after the date that the Participant became Disabled or,
if earlier, within the originally prescribed term of the Option.

The Administrator shall make the determination both of whether Disability
has occurred and the date of its occurrence (unless a procedure for such
determination is set forth in another agreement between the Company and such
Participant, in which case such procedure shall be used for such determination).
If requested, the Participant shall be examined by a physician selected or
approved by the Administrator, the cost of which examination shall be paid for
by the Company.

12. EFFECT OF DEATH WHILE AN EMPLOYEE OR CONSULTANT.
-----------------------------------------------

Except as otherwise provided in the pertinent Option Agreement, in the
event of the death of a Participant to whom an Option has been granted while the
Participant is an employee or consultant of the Company or of an Affiliate, such
Option may be exercised by the Participant's Survivors:

a. To the extent exercisable but not exercised on the date of death; and

b. In the event rights to exercise the Option accrue periodically, to the
extent of a pro rata portion of such rights based upon the number of
days prior to the Participant's death and during the accrual period
which next ends following the date of death;

If the Participant's Survivors wish to exercise the Option, they must take
all necessary steps to exercise the Option within one (1) year after the date of
death of such Participant, notwithstanding that the decedent might have been
able to exercise the Option as to some or all of the Shares on a later date if
he or she had not died and had continued to be an employee or consultant or, if
earlier, within the originally

-12-
<PAGE>

prescribed term of the Option.

13. TERMINATION OF DIRECTORS' OPTION RIGHTS.
---------------------------------------

Except as otherwise provided in the pertinent Non-Qualified Option
Agreement, if a director who receives Options pursuant to Article 5,
subparagraph (f):

a. ceases to be a member of the Board of Directors of the Company for any
reason other than death or disability, any then unexercised Options
granted to such Director may be exercised by the director within a
period of ninety (90) days after the date the director ceases to be a
member of the Board of Directors, but only to the extent of the number
of shares with respect to which the Options are exercisable on the
date the director ceases to be a member of the Board of Directors, and
in no event later than the expiration date of the Option; or,

b. ceases to be a member of the Board of Directors of the Company by
reason of his or her death or Disability, any then unexercised Options
granted to such Director may be exercised by the director (or by the
director's personal representative, heir or legatee, in the event of
death) within a period of one hundred eighty (180) days after the date
the director ceases to be a member of the Board of Directors, but only
to the extent of the number of Shares with respect to which the
Options are exercisable on the date the director ceases to be a member
of the Board of Directors, and in no event later than the expiration
date of the Option.

14. PURCHASE FOR INVESTMENT.
-----------------------

Unless the offering and sale of the Shares to be issued upon the particular
exercise of an Option shall have been effectively registered under the
Securities Act of 1933, as now in force or hereafter amended (the "Act"), the
Company shall be under no obligation to issue the Shares covered by such
exercise unless and until the following conditions have been fulfilled:

a. The person(s) who exercise such Option shall warrant to the Company,
prior to receipt of the Shares, that such person(s) are acquiring such
Shares for their own respective accounts, for investment, and not with
a view to, or for sale in connection with, the distribution of any
such Shares, in which event the person(s) acquiring such Shares shall
be bound by the

-13-
<PAGE>

provisions of the following legend which shall be endorsed upon the
certificate(s) evidencing their Shares issued pursuant to such
exercise or such grant:

"The shares represented by this certificate have been taken for
investment and they may not be sold or otherwise transferred by
any person, including a pledgee, in the absence of an effective
registration statement of the shares under the Securities Act of
1933 or an opinion of counsel satisfactory to the Company that an
exemption from registration is then available."

b. The Company shall have received an opinion of its counsel that the
Shares may be issued upon such particular exercise in compliance with
the Act without registration thereunder.

The Company may delay issuance of the Shares until completion of any action
or obtaining of any consent which the Company deems necessary under any
applicable law (including, without limitation, state securities or "blue sky"
laws).

15. DISSOLUTION OR LIQUIDATION OF THE COMPANY.
-----------------------------------------

Upon the dissolution or liquidation of the Company, all Options granted
under this Plan which as of such date shall not have been exercised will
terminate and become null and void; provided, however, that if the rights of a
Participant or a Participant's Survivors have not otherwise terminated and
expired, the Participant or the Participant's Survivors will have the right
immediately prior to such dissolution or liquidation to exercise any Option to
the extent that the right to purchase Shares has accrued under the Plan as of
the date immediately prior to such dissolution or liquidation.

16. ADJUSTMENTS.
-----------

Upon the occurrence of any of the following events, a Participant's rights
with respect to any Option granted to him or her hereunder which have not
previously been exercised in full shall be adjusted as hereinafter provided,
unless otherwise specifically provided in the written agreement between the
optionee and the Company relating to such Option:

A. Stock Dividends and Stock Splits. If the shares of Common Stock shall
--------------------------------
be subdivided or combined into a greater or smaller number of shares or if the
Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock deliverable upon
the

-14-
<PAGE>

exercise of such Option shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend.

B. Consolidations or Mergers. If the Company is to be consolidated with or
-------------------------
acquired by another entity in a merger, sale of all or substantially all of the
Company's assets or otherwise (an "Acquisition"), the Administrator or the board
of directors of any entity assuming the obligations of the Company hereunder
(the "Successor Board"), shall, as to outstanding Options, either (i) make
appropriate provision for the continuation of such Options by substituting on an
equitable basis for the shares then subject to such Options the consideration
payable with respect to the outstanding shares of Common Stock in connection
with the Acquisition or securities of any successor or acquiring entity; or (ii)
upon written notice to the optionees, provide that all Options must be
exercised, to the extent then exercisable, within a specified number of days of
the date of such notice, at the end of which period the Options shall terminate;
or (iii) terminate all Options in exchange for a cash payment equal to the
excess of the fair market value of the shares subject to such Options (to the
extent then exercisable) over the exercise price thereof.

C. Recapitalization or Reorganization. In the event of a recapitalization
----------------------------------
or reorganization of the Company (other than a transaction described in
subparagraph B above) pursuant to which securities of the Company or of another
corporation are issued with respect to the outstanding shares of Common Stock,
an optionee upon exercising an Option shall be entitled to receive for the
purchase price paid upon such exercise the securities he or she would have
received if he or she had exercised such Option prior to such recapitalization
or reorganization.

D. Modification of ISOs. Notwithstanding the foregoing, any adjustments
--------------------
made pursuant to subparagraphs A, B or C with respect to ISOs shall be made only
after the Administrator, after consulting with counsel for the Company,
determines whether such adjustments would constitute a "modification" of such
ISOs (as that term is defined in Section 424(h) of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Administrator
determines that such adjustments made with respect to ISOs would constitute a
modification of such ISOs, it may refrain from making such adjustments, unless
the holder of an ISO specifically requests in writing that such adjustment be
made and such writing indicates that the holder has full knowledge of the
consequences of such "modification" on his or her income tax treatment with
respect to the ISO.

17. ISSUANCES OF SECURITIES.
-----------------------

-15-
<PAGE>

Except as expressly provided herein, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options. Except as
expressly provided herein, no adjustments shall be made for dividends paid in
cash or in property (including without limitation, securities) of the Company.

18. FRACTIONAL SHARES.
-----------------

No fractional share shall be issued under the Plan and the person
exercising such right shall receive from the Company cash in lieu of such
fractional share equal to the Fair Market Value thereof.

19. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS: TERMINATION OF ISOs.
------------------------------------------------------------------

The Administrator, at the written request of any optionee, may in its
discretion take such actions as may be necessary to convert such optionee's ISOs
(or any installments or portions of installments thereof) that have not been
exercised on the date of conversion into Non-Qualified Options at any time prior
to the expiration of such ISOs, regardless of whether the optionee is an
employee of the Company or an Affiliate at the time of such conversion. Such
actions may include, but not be limited to, extending the exercise period or
reducing the exercise price of the appropriate installments of such Options. At
the time of such conversion, the Administrator (with the consent of the
optionee) may impose such conditions on the exercise of the resulting Non-
Qualified Options as the Administrator in its discretion may determine, provided
that such conditions shall not be inconsistent with this Plan. Nothing in the
Plan shall be deemed to give any optionee the right to have such optionee's
ISO's converted into Non-Qualified Options, and no such conversion shall occur
until and unless the Administrator takes appropriate action. The Administrator,
with the consent of the optionee, may also terminate any portion of any ISO that
has not been exercised at the time of such termination.

20. WITHHOLDING.
-----------

Upon the exercise of a Non-Qualified Option for less than its fair market
value, the making of a Disqualifying Disposition (as defined in paragraph 21) or
the vesting of restricted Common Stock acquired on the exercise of an Option
hereunder, the

-16-
<PAGE>

Company may withhold from the optionee's wages, if any, or other remuneration,
or may require the optionee to pay additional federal, state, and local income
tax withholding and employee contributions to employment taxes in respect of the
amount that is considered compensation includible in such person's gross income.
Such amounts may be payable in Common Stock at the discretion of the Committee
(if permitted by law), provided that with respect to persons subject to Section
16 of the 1934 Act, any such withholding arrangement shall be in compliance with
any applicable provisions of Rule 16b-3 promulgated under Section 16 of the 1934
Act. The Administrator in its discretion may condition the exercise of an Option
for less than its fair market value or the vesting of restricted Common Stock
acquired by exercising an Option on the grantee's payment of such additional
income tax withholding and employee contributions to employment taxes.

21. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.
----------------------------------------------

Each Key Employee who receives an ISO must agree to notify the Company in
writing immediately after the Key Employee makes a Disqualifying Disposition of
any shares acquired pursuant to the exercise of an ISO. A Disqualifying
Disposition is any disposition (including any sale) of such shares before the
later of (a) two years after the date the Key Employee was granted the ISO, or
(b) one year after the date the Key Employee acquired shares by exercising the
ISO. If the Key Employee has died before such stock is sold, these holding
period requirements do not apply and no Disqualifying Disposition can occur
thereafter.

22. TERMINATION OF THE PLAN.
-----------------------

Except as provided in the following sentence, the Plan will terminate on
November 30, 2002. The Plan may be terminated at an earlier date by vote of the
stockholders of the Company; provided, however, that any such earlier
termination will not affect any Options granted or Option Agreements executed
prior to the effective date of such termination.

23. AMENDMENT OF THE PLAN.
---------------------

The Plan may be amended by the stockholders of the Company. The Plan may
also be amended by the Administrator, including, without limitation, to the
extent necessary to qualify any or all outstanding ISOs granted under the Plan
or ISOs to be granted under the Plan for favorable federal income tax treatment
(including deferral of taxation upon exercise) as may be afforded incentive
stock options under Section 422 of the Code, to the

-17-
<PAGE>

SIGHT RESOURCE CORPORATION

THIS PROXY IS BEING SOLICITED BY SIGHT RESOURCE CORPORATION BOARD OF DIRECTORS

The undersigned, revoking any previous proxies relating to these shares,
hereby acknowledges receipt of the Notice and Proxy Statement dated April 15,
1999 in connection with the Annual Meeting to be held at 9:00 a.m. on Thursday,
May 20, 1999 at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,
P.C., at One Financial Center, 38th Floor, Boston, MA 02111, and hereby appoints
William T. Sullivan and James W. Norton, and each of them (with full power to
act alone), the attorneys and proxies of the undersigned, with power of
substitution to each, to vote all shares of the Common Stock of Sight Resource
Corporation registered in the name provided herein which the undersigned is
entitled to vote at the 1999 Annual Meeting of Stockholders, and at any
adjournments thereof, with all the powers the undersigned would have if
personally present. Without limiting the general authorization hereby given,
said proxies are, and each of them is, instructed to vote or act as follows on
the proposals set forth in said Proxy.

This Proxy when executed will be voted in the manner directed herein. If no
direction is made this Proxy will be voted FOR the election of Directors, FOR
Proposal 2 and FOR Proposal 3.

In their discretion the proxies are authorized to vote upon such other matters
as may properly come before the meeting or any adjournments thereof.

Election of Directors (or if any nominee is not available for election, such
substitute as the Board of Directors may designate)

Nominees: Christian E. Callsen, William G. McLendon and J. Mitchell Reese

SEE REVERSE SIDE FOR THE PROPOSALS. If you wish to vote in accordance with the
Board of Directors' recommendations, just sign on the reverse side. You need not
mark any boxes.

(SEE REVERSE SIDE)
<PAGE>

Please date, sign and mail your
proxy card back as soon as possible!

Annual Meeting of Stockholders
SIGHT RESOURCE CORPORATION

May 20, 1999

Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
A [X] Please mark your votes as in this example using dark ink only.

The Board of Directors recommends a vote FOR Proposals 1, 2 and 3.

1. Election of Directors (or if any nominee is not available for election, such
substitute as the Board of Directors may designate)

FOR WITHHELD

[_] [_]

For all nominees, except as noted below

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

Nominees: Christian E. Callsen
William G. McLendon
J. Mitchell Reese

2. Proposal to amend the Stock Option Plan to increase by 350,000 shares the
aggregate number of shares for which stock options may be granted.

FOR AGAINST ABSTAIN
[_] [_] [_]

3. Proposal to ratify the appointment of KPMG, LLP as the Company's independent
public accountants for the fiscal year ending 1999.

FOR AGAINST ABSTAIN
[_] [_] [_]

Signature:_________________________________________ Date:______________________

Note: Please sign exactly as name(s) appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.

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