SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.

                              FORM 10-K

                              (Mark One)

   [X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                    For the fiscal year ended January 1, 2000

                                       OR

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

                         Commission File Number 0-20001

                               VISTA EYECARE, INC.
             (Exact name of Registrant as specified in its charter)

                                     Georgia
                         (State or other jurisdiction of
                         incorporation or organization)

                                   58-1910859
                      (I.R.S. Employer Identification No.)

                               296 Grayson Highway
                             Lawrenceville, Georgia
                    (Address of principal executive offices)

                                      30045
                                   (Zip Code)

       Registrant's telephone number, including area code: (770) 822-3600

           Securities registered pursuant to Section 12(b) of the Act:

                                      None

      Securities registered pursuant to Section 12(g) of the Act:

                Common Stock, par value $.01 per share

                           (Title of Class)

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

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

     The number of shares of Common Stock of the  registrant  outstanding  as of
February 1, 2000, was 21,179,103. The aggregate market value of shares of Common
Stock held by  non-affiliates  of the  registrant  as of February  1, 2000,  was
approximately  $21.2  million  based on a closing  price of $1.313 on the NASDAQ
Stock  Market on such date.  For  purposes of this  computation,  all  executive
officers  and  directors of the  registrant  are deemed to be  affiliates.  Such
determination  should not be deemed to be an admission  that such  directors and
officers are, in fact, affiliates of the registrant.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the following  documents  have been  incorporated  by reference
into the parts indicated:  the Company's definitive Proxy Statement for the 2000
Annual  Meeting of  Shareholders  to be filed with the  Securities  and Exchange
Commission  not later than 120 days after the end of the fiscal year  covered by
this report--Part III.

                                     Page 2

                                     PART I

ITEM 1. BUSINESS

OVERVIEW

     Vista Eyecare, Inc. (the Company,  which may be referred to as we, us, our,
or Vista) is a retail optical  company,  with 926 vision centers  throughout the
United  States  and  Mexico.  We  operate  604 of our  vision  centers  in  host
departments,  such as Wal-Mart and Sam's Club,  and 322 of our vision centers in
malls and strip centers.  Our locations  sell a wide range of optical  products,
including  eyeglasses,  contact lenses, and sunglasses.  At approximately 650 of
our locations,  we offer the services of  optometrists.  These  optometrists are
typically  independent  of us and operate their own practices  within our retail
locations. To support our retail operations, we also operate three manufacturing
and distribution centers.

CHAPTER 11 CASES

     On April 5, 2000,  the Company and ten of its  subsidiaries  (collectively,
the "Debtors") filed voluntary  petitions with the United State Bankruptcy Court
for the Northern  District of Georgia for  reorganization  under Chapter 11 (the
"Chapter 11 Cases"). The Chapter 11 Cases have been consolidated for the purpose
of joint  administration  under Case No.  00-65214.  The Debtors  are  currently
operating their businesses as  debtors-in-possession  pursuant to the Bankruptcy
Code.  All  affiliated  entities of the  Company are  included in the Chapter 11
Cases,  except  only (a) three  subsidiaries  which are  licensed  managed  care
organizations and (b) foreign subsidiaries of the Company.

     We cannot  predict the  outcome of the Chapter 11 Cases or their  effect on
the Company's  business.  See Item 7 - "Management's  Discussion and Analysis of
Financial  Condition and Results of Operations," Note 3 of Notes to Consolidated
Financial Statements,  and the Report of Independent Public Accountants included
herein. If the liabilities  subject to compromise in the Chapter 11 Cases exceed
the fair value of our  assets,  unsecured  claims in the Chapter 11 cases may be
satisfied  at less than 100% of their  face  value and the  common  stock of the
Company  may have no value.  The NASDAQ  Stock  Market has  notified us that our
common  stock may no longer be  eligible  for  trading  on the  NASDAQ  SmallCap
Market.  See  Item  5 -  "Market  for  Registrant's  Common  Stock  and  Related
Stockholder Matters."

DEPENDENCE ON WAL-MART

     We operate  385 units in  domestic  Wal-Mart  stores,  of which 379 operate
pursuant  to a  master  license  agreement  (see  Item  1 -  "Leased  Department
Agreements").  These units generated approximately 61.2% of our revenue in 1999.
We therefore  depend on Wal-Mart and on our agreement  with them for much of our
operations.

ACQUISITIONS

     To reduce our dependence on Wal-Mart,  we acquired Midwest Vision,  Inc. in
1997 and  Frame-n-Lens  Optical,  Inc. and New West Eyeworks,  Inc. in 1998 (See
Note 6 to  consolidated  financial  statements).  At the time of the  respective
acquisitions,  these three companies  collectively operated more than 500 vision
centers and generated approximately $140 million in annualized revenues.

                                     Page 3

BRANDED FREE-STANDING STORE STRATEGY

     Part of our business strategy is to build a national branded value oriented
retail  optical  chain  using our  free-standing  vision  centers as a platform.
During the first half of 1999,  all of the  free-standing  vision  centers  were
renamed "Vista Optical".

DATE OF INFORMATION

     Unless  otherwise  expressly  stated,  all  information in this  "Business"
section of this Form 10-K is as of January 1, 2000.

VISION CENTER OPERATIONS

     Our vision  centers  typically  occupy between 1,000 and 1,500 square feet,
including  areas for merchandise  display,  customer  service,  and contact lens
fitting.  Each vision center maintains inventory of approximately 1,000 eyeglass
frames and 550 pairs of contact lenses,  along with sunglasses and other optical
accessories.  Our three optical laboratories deliver prescription eyewear to all
our vision  centers.  The vision  centers  located in Wal-Mart  typically have a
finishing  laboratory,  which  allows for the vision  center to provide one hour
service for most single vision prescription  lenses.  These vision centers carry
inventory of approximately 725 pairs of spectacle lenses.

MARKETING

     We are a value  provider  of  optical  goods and  stress  that theme in our
marketing.  We offer everyday low prices at our vision centers. Vista also has a
"satisfaction guaranteed" customer policy. We are constantly vigilant about ways
to lower our own costs so we may pass savings on to our customers.

MANAGED VISION CARE

     We expect that retail  optical sales through  managed  vision care programs
will  increase  over the next several  years as a percentage  of overall  retail
optical sales.  Under managed vision care programs,  participants  fulfill their
eyecare  and  eyewear  needs at  specific  locations  designated  by the program
sponsor.  We  believe  our  network  of 926  vision  centers  combined  with the
convenience of their locations and our ability to offer low prices should enable
us to make competitive bids for managed care contracts.

TRADEMARKS

     We use the  "Vista  Optical"  name to  identify  our  free-standing  vision
centers,  as well as those  vision  centers  operating  in Fred Meyer and Meijer
Thrifty Acres  locations.  Our vision  centers in Wal-Mart are identified as the
"Vision  Center  Located  in  Wal-Mart."  Our  vision  centers in Sam's Club are
identified as "Optical  Center  Inside Sam's Club".  Vista has also licensed the
right  to use the  "Guy  Laroche"  trademark  for  certain  optical  goods.  Our
agreement  with Guy Laroche  expires on December 31, 2001, but can be renewed at
our option.

                                     Page 4

EMPLOYEES

     We employ 3,431  associates on a full-time basis and 1,269  associates on a
part-time  basis.  We have  4,079  associates  engaged in retail  sales,  430 in
laboratory   and   distribution   operations,   and   191  in   management   and
administration. Apart from our retail employees in Mexico, none of our employees
are  governed  by any  collective  bargaining  agreements.  We believe  that our
employment relations are generally good.

OPTOMETRISTS

     Optometrists are important to the success of our vision centers.  We strive
to have an  optometrist  on at least a part time basis at many of our locations.
These  optometrists are typically  independent from Vista and lease a portion of
our locations for an eye examination facility. We typically charge rent to these
optometrists,  in exchange for the premises and the equipment  which we provide.
Our agreement with Wal-Mart  requires us to have an optometrist on duty at least
48 hours each week. Our relationships with optometrists are subject to extensive
regulation. (See Item 1 - "Business - Government Regulation".)

MANUFACTURING AND DISTRIBUTION

     Vista operates three manufacturing and distribution facilities which supply
substantially all requirements of our vision centers. The facilities are located
in   Lawrenceville,   Georgia   (this   facility   also   includes  the  central
administrative  offices of Vista);  Fullerton,  California  (this  facility also
includes administrative  offices); and St. Cloud, Minnesota.  Each vision center
located in Wal-Mart stores (with the exception of seven vision centers  acquired
in  1998)  has its own  finishing  laboratory,  which  manufactures  lenses  for
approximately half of all customers purchasing spectacle lenses.

     Our distribution centers provide lens blanks,  frames,  contact lenses, and
sunglasses to our vision centers.  We use an overnight  delivery service to ship
completed orders and replenishment items to the vision centers. The distribution
centers and the manufacturing  facilities are interfaced with Vista's management
information system.

MANAGEMENT INFORMATION SYSTEM

     In 1999, Vista completed the development of a new point of sale system.  We
began installing the system in our vision centers in the fall of 1999 and expect
to complete the installation in all of our units by the second half of 2000. The
system is working  substantially as planned.  The system was designed to upgrade
data  processing,  broaden  capabilities  at the retail  level,  and improve the
processing of managed care transactions. The system was also designed to be Year
2000 compliant.  See Item 7 - "Management's Discussion and Analysis of Financial
Condition and Results of Operations- Impact of the Year 2000 Issue."

LEASED DEPARTMENT AGREEMENTS

     We  have   agreements  in  place  which  govern  our   operations  in  host
environments,  such as Wal-Mart.  Typically,  each agreement is for a base term,
followed by an option to renew.  The agreements  provide for payments of minimum
and percentage rent, and also contain customary provisions for leased department
operations. The table below sets forth key data about each of these agreements:

                                     Page 5

                          No. of Units as                                No. of Options
     Vision Centers        of January 1,      Length of    Length of     Exercisable in
       Located In             2000            Base Term   Option Term      Fiscal 2000
                                              (in years)   (in years)
- ----------------------------------------------------------------------------------------
                                                                  
Wal-Mart                  379                 9           3               51

- ----------------------------------------------------------------------------------------
Sam's Club                    111                 5           5                0

- ----------------------------------------------------------------------------------------
Fred Meyer                     54                 5           5                1

- ----------------------------------------------------------------------------------------
Wal-Mart Mexico                27                 5           2                4

- ----------------------------------------------------------------------------------------
Meijers Thrifty Acres           9                 5           0                0

- ----------------------------------------------------------------------------------------
Military Bases                 18               2 or 5        0                0

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

 The Company also  operates six  additional  Wal-Mart  stores which  operate
     under individual leases.

Other Terms
- -----------

     Our agreement  with Wal-Mart gives us the right to open at least 400 vision
centers, including those already open. Our agreement with Wal-Mart also provides
that,  if  Wal-Mart  converts  its own store to a  "supercenter"  (a store which
contains a grocery  department  in addition to the  traditional  Wal-Mart  store
offering) and relocates our vision center as part of the conversion, the term of
our lease begins again.  We believe that Wal-Mart may in the future convert many
of its stores and  thereby  cause  many of our  leases to start  again.  We have
received no  assurances  from  Wal-Mart as to how many of their  locations  will
ultimately be converted.

     Our agreement with Wal-Mart  Mexico  provides that each party will not deal
with other parties to operate leased department  vision centers in Mexico.  This
agreement  also permits each party to terminate the lease for each vision center
which fails to meet minimum sales requirements specified in the agreement.

                                     Page 6

Options to Renew
- ----------------

     Wal-Mart  Vision  Centers

     We exercised our option to renew 21 the leases for Wal-Mart  vision centers
in 1999. The base term for 51 vision  centers  expires in 2000, and we will need
to determine which leases to extend.  We expect to renew the leases for the vast
majority  of these  vision  centers.  These  decisions  will be based on various
factors,  including sales levels,  anticipated future  profitability,  increased
rental fees in the option period, and market share.

     Other Vision Centers

     We have exercised all options to renew locations in Sam's Clubs. By the end
of 2003, the term for all Sam's Club units will have expired. Our agreement with
Fred Meyer  obligates  us to exercise  our  renewal  option as to all or none of
these  locations  with the  exception  of five  stores,  which are  covered by a
separate  agreement.  This option must be exercised in 2003. Under our agreement
with Wal-Mart Mexico, we have two options for two year renewals,  and one option
for an additional one year renewal, for each vision center.

No  Assurances of  Expansion
- ----------------------------

     We have no  assurances  or  guarantees  that we will be able to expand  our
operations in any of our host  environments.  However,  we periodically  discuss
such  opportunities  with existing and new potential host companies.  We believe
that our most likely avenue of additional  expansion will be the addition of new
free standing locations.

GOVERNMENT REGULATION

     Our business is heavily regulated by federal, state, and local law. We must
comply with federal laws such as the Social  Security Act (which  applies to our
participation in Medicare  programs),  the Health  Insurance  Portability Act of
1996 (which governs our  participation  in managed care programs),  and the Food
and Drug  Administration  Act (which  regulates  medical devices such as contact
lenses).  In  addition,  all states have passed laws which  govern or affect our
arrangements  with the  optometrists  who practice in our vision  centers.  Some
states, such as California, Texas, North Carolina, and Kansas, have particularly
extensive and burdensome  requirements which affect the way we do business. Many
of these states also have  adopted laws which mirror the federal laws  described
above.   Local  ordinances  (such  as  zoning   requirements)  can  also  impose
significant burdens and costs of compliance.  Frequently, our competitors sit on
state and local boards. Our risks and costs of compliance are often increased as
a result.

                                     Page 7

     We believe that we  substantially  comply with material  regulations  which
apply to our business.

COMPETITION

     The retail  eyecare  industry is  extremely  competitive.  We compete  with
national  companies such as Lenscrafters and Cole; we also compete with numerous
regional  and local  firms.  In addition,  optometrists,  ophthalmologists,  and
opticians provide many of the same goods and services we provide.  The level and
intensity of  competition  can vary  dramatically  depending  on the  particular
market.  We believe that we have numerous  competitive  advantages,  such as our
everyday low pricing, product selection, and quality and consistency of service.

     We also  compete  for  managed  care  business.  Our  competition  for this
business  is  principally  the  larger  national  and  regional  optical  firms.
Competition for this business is driven by size of provider network, quality and
consistency of service,  and by pricing of vision care services.  We have one of
the largest  networks  in the  country and believe  that the size of the network
gives us a competitive advantage.

     Several of our competitors have significantly  greater financial  resources
than we do. As a result,  they may be able to engage in extensive  and prolonged
price promotions which may adversely affect our business.  They may also be able
spend more than we do for advertising.

MEXICO OPERATIONS

     We operate 27 vision  centers in Mexico  under a master  license  agreement
with  Wal-Mart.  Our  operations in Mexico face unique  risks,  such as currency
devaluations,  inflation,  difficulties in cross-cultural marketing, and similar
factors.

ITEM  2.   PROPERTIES

     Our 926 vision  centers in  operation  as of January 1, 2000 are located as
follows:

                                     Page 8

    Location                  Total         Location                  Total
    --------                  -----         --------                  -----
                                                               
 Alabama                        12       Nevada                         11
 Alaska                         18       New Hampshire                   4
 Arkansas                        4       New Jersey                     13
 Arizona                        40       New Mexico                     12
 California                    242       New York                       29
 Colorado                       27       North Carolina                 47
 Connecticut                    10       North Dakota                   10
 Florida                        39       Ohio                            4
 Georgia                        40       Oregon                         40
 Hawaii                          4       Pennsylvania                   22
 Idaho                          11       Puerto Rico                     1
 Illinois                        9       South Carolina                 14
 Indiana                         4       South Dakota                    1
 Iowa                           14       Tennessee                       8
 Kansas                         13       Texas                          37
 Kentucky                        3       Utah                            1
 Louisiana                       3       Virginia                       26
 Maine                           1       Washington                     47
 Maryland                        4       West Virginia                   7
 Massachusetts                   5       Wisconsin                       3
 Michigan                       11       Wyoming                         3
 Minnesota                      34
 Missouri                        6
 Montana                         5       Mexico                         27

     Our  headquarters in  Lawrenceville,  Georgia is located in a 66,000 square
foot building  which  includes a distribution  center and lens  laboratory.  The
building is subleased  from  Wal-Mart  through  2001. We have an option to renew
this lease for approximately seven years.

     The Company has regional  facilities  located in St.  Cloud,  Minnesota and
Fullerton, California. The 20,000 square foot St. Cloud facility is subject to a
lease that expires in October 2007. The 45,000 square foot Fullerton facility is
subject to a lease that expires in August  2006.  The Company also has an option
to extend the Fullerton lease for five years.  Both  facilities  contain optical
laboratories.

ITEM 3.   LEGAL PROCEEDINGS

     On April 5, 2000, the Company and ten of its  subsidiaries  filed voluntary
petitions with the United States  Bankruptcy Court for the Northern  District of
Georgia for reorganization  under Chapter 11 of the Bankruptcy Code. The Debtors
are currently operating their businesses as  debtors-in-possession.  The Chapter
11 Cases have been  consolidated for the purpose of joint  administration  under
case number 00-65214. All affiliated entities of the Company are included in the
Chapter 11 cases,  except only (a) three subsidiaries which are licensed managed
care organizations and (b) foreign subsidiaries of the Company.

                                     Page 9

     We cannot  predict the  outcome of the Chapter 11 Cases or their  effect on
the  Company's  business.  See Item 1 - "Business  - Chapter 11 Cases,"  Item 7-
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations,"  Note 3 of  Notes to  Consolidated  Financial  Statements,  and the
Report of Independent  Public  Accountants  included herein.  If the liabilities
subject  to  compromise  in the  Chapter  11 Cases  exceed the fair value of the
assets,  unsecured claims may be satisfied at less than 100% of their face value
and the common stock of the Company may have no value.

     On October 6, 1999,  former store  managers of  Frame-n-Lens  filed a class
action in the Orange County  Superior Court in California  (Kremer and Riddle v.
Vista Eyecare,  Inc.), alleging that the Company failed to pay overtime wages to
present and former  store  managers.  The Company is  vigorously  defending  the
lawsuit.  The Company has also asserted a right of  indemnification  pursuant to
the share purchase  agreement for the acquisition of Frame-n-Lens (See Note 6 to
consolidated financial statements).

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

     No matters  were  submitted to a vote of security  holders  during the last
quarter of fiscal 1999.

                                     Page 10

                                     PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
          MATTERS

     The Company's  common stock was traded on the NASDAQ National Market System
under the symbol "NVAL" from May 1992 until January 4, 1999, when the symbol was
changed to "VSTA". As of October 12, 1999, our common stock began trading on the
NASDAQ SmallCap Market.

     The following  table sets forth for the periods  indicated the high and low
prices  of the  Company's  Common  Stock in the  over-the-counter  market on the
NASDAQ Stock Market.

                  Quarter Ended              High                Low
                  ------------------         ------              ------

Fiscal 1998       April 4, 1998              $7.375              $4.875
                  July 4, 1998               $8.750              $5.000
                  October 3, 1998            $6.750              $4.125
                  January 2, 1999            $6.250              $2.188

Fiscal 1999       April 3, 1999              $6.250              $4.500
                  July 3, 1999               $6.250              $3.625
                  October 2, 1999            $3.938              $2.250
                  January 1, 2000            $2.750              $0.625

     On April 5, 2000,  trading of our common stock was halted after we issued a
press  release  announcing  the  filing  of the  Chapter  11 Cases.  NASDAQ  has
requested that we provide them with certain  information before they will permit
our  common  stock  to  trade.  We  are  considering  whether  to  provide  this
information. If we do not provide the information, it is likely that NASDAQ will
delist our common stock. We anticipate that our common stock would then trade on
the OTC Bulletin Board.

     As of January 1, 2000,  there were  approximately  500 holders of record of
the Company's Common Stock.

     The  Company's  board of directors  presently  intends to use the Company's
cash resources  only for its  operations and expenses  related to its Chapter 11
proceedings.  Future dividend policy will depend upon the earnings and financial
condition of the Company, the Company's need for funds and other factors.

ITEM 6.   SELECTED FINANCIAL DATA

     The following  selected  financial  data of the Company with respect to the
consolidated  financial  statements for the years ended January 1, 2000, January
2, 1999,  January 3, 1998,  December 28, 1996, and December 30, 1995, is derived
from the Company's  consolidated  financial  statements.  The selected financial
data set  forth  below  should  be read in  conjunction  with  the  consolidated
financial statements and notes thereto included elsewhere in this Report.

                                     Page 11

                                                           1999          1998        1997        1996        1995
                                                          --------   ------------  --------    --------    --------

                                                                                           
 STATEMENTS OF OPERATIONS DATA:
 (In thousands except per share information)
 Net sales                                              $ 329,055   $  245,331  $  186,354   $ 160,376    $ 145,573
 Cost of goods sold                                       147,768      112,929      86,363      76,692       67,966
                                                          --------    --------    --------      -------     -------
 Gross profit                                             181,287      132,402      99,991      83,684       77,607
 Gross profit percentage                                       55%          54%         54%         52%          53%

 Selling, general, and administrative expense             174,462      121,413      89,156      76,920       74,390
 Impairment loss on long lived assets                   1,952           --          --          --           --
 Provision for doubtful accounts                        2,700           --          --          --           --
 Provision for dispositions                                --           --          --          --          958
 Other nonrecurring charges                                --           --          --          --        1,053
                                                          --------    --------    --------      -------     -------
 Operating income                                           2,173       10,989      10,835       6,764        1,206
 Interest expense, net                                     19,329        5,538       1,554       2,084        2,626
                                                          --------    --------    --------      -------     -------
 Income/(loss) before income taxes and extraordinary item (17,156)       5,451       9,281       4,680       (1,420)
 Income tax expense                                            --        2,037       3,708       1,200          100
                                                          --------    --------    --------      -------     -------
 Income (loss) before extraordinary item                  (17,156)       3,414       5,573       3,480       (1,520)
 Extraordinary item, net of tax                              (406)          --          --          --           --
                                                          --------    --------    --------     -------      -------
 Net income/(loss)                                      $ (17,562)   $   3,414   $   5,573   $   3,480    $  (1,520)
                                                          ========    ========    ========      =======     =======
 Basic earnings/(loss) per common share:
    Earnings/(loss) before extraordinary item           $   (0.81)   $    0.16   $    0.27   $    0.17    $   (0.07)
    Extraordinary loss                                      (0.02)          --          --          --           --
                                                          --------    --------    --------     -------      -------
 Basic earnings/(loss) per common share                 $   (0.83)   $    0.16   $    0.27   $    0.17    $   (0.07)
                                                          ========    ========    ========      =======     =======
 Diluted earnings/(loss) per common share:
    Earnings/(loss) before extraordinary item           $   (0.81)   $    0.16   $    0.27   $    0.17    $   (0.07)
    Extraordinary loss                                      (0.02)          --          --          --           --
                                                          --------    --------    --------      ------      -------
Diluted earnings/(loss) per common share                $   (0.83)   $    0.16   $    0.27   $    0.17    $   (0.07)
                                                          ========    ========    ========      =======     =======
                                     Page 12

                                                             1999          1998        1997        1996        1995
                                                          --------   ------------  --------    --------    --------
                                                                                        
STATISTICAL DATA (UNAUDITED):
 (In thousands except vision center data) Domestic vision centers open at end of
 period:
    Leased department vision centers                           577         562         364         320          319
    Free-standing vision centers                               322         331          50          --           --
 Average weekly consolidated sales
    per leased department vision center             $    8,200    $  9,000  $    9,400   $   9,300    $   8,700
Average weekly consolidated sales
    per free-standing vision center                 $    4,700    $  4,900  $       --   $      --    $      --

 Capital expenditures                                   $   12,704    $  9,183  $    8,049   $   2,713    $  13,175
 Depreciation and amortization                              18,602      14,177      11,035      10,058       10,378
 EBITDA                                                 20,775      25,166      21,870      16,822       11,584
    EBITDA margin percentage                                   6.3%       10.3%       11.7%       10.5%         8.0%
 EBITDA prior to significant provisions                 25,427      25,166      21,870      16,822       13,595
    EBITDA margin percentage
     prior to significant provisions                       7.7%       10.3%       11.7%       10.5%         9.3%
 Total annual sales growth                                    34.1%       31.6%       16.2%       10.2%        21.9%

 BALANCE SHEET DATA:
 (In thousands except vision center data)
 Working capital                                        $  (11,714)   $  4,208  $   12,171    $ 13,502    $  14,556
 Total assets                                              220,219     229,097      83,250      74,564       81,237
 Current and long-term debt
    obligations                                        151,902     139,608      24,973      26,500       38,480
 Shareholders' equity                                       26,557      43,927      35,598      29,906       26,326
 Total debt and lease obligations as a
    percentage of total capital                             85%         76%         41%         47%          59%

 Financial  information  for 1995 and  subsequent  years include  results of
     international  operations  for the 12 months ended November 30. (see Note 2
     to consolidated financial statements.)

 Effective January 1, 1995, the Company changed its year end to a 52/53 week
     retail calendar (see Note 2 to consolidated financial  statements).  Fiscal
     1997  consisted of 53 weeks ended January 3, 1998.  Sales for the 53rd week
     approximated $3.0 million in fiscal 1997.

 In 1999, the Company recorded a $2.7 million provision for the write-off of
     certain  receivables  and an impairment  loss of $1.9 million in connection
     with 36  under-performing  vision centers.  In 1995, the Company decided to
     dispose of its  non-core  business  operations,  resulting  in a $2 million
     provision.

 Calculated  from  sales from each  month  during the period  divided by the
     number of store weeks of sales during the period, excluding stores not open
     a full month.

 EBITDA is calculated as earnings before interest,  taxes,  depreciation and
     amortization.  EBITDA prior to  significant  provisions  is  calculated  as
     EBITDA prior to provisions described per Note 3 above.

 Current  and  long-term  debt  obligations  include  the  Revolving  Credit
     Facility and term loan,  Senior Notes,  Redeemable  Common Stock, and other
     long-term debt and capital lease obligations.

 Total Capital is calculated as total current and long-term debt and capital
     lease obligations combined with total shareholders' equity.

                               Page 13

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS

Proceedings Under Chapter 11 of the Bankruptcy Code

     On April 5, 2000, the Company and ten of its  subsidiaries  filed voluntary
petitions with the  Bankruptcy  Court for  reorganization  under Chapter 11. The
Chapter 11 Cases have been consolidated for the purpose of joint  administration
under Case No. 00-65214. The Debtors are currently operating their businesses as
debtors-in-possession  pursuant to the Bankruptcy Code. All affiliated  entities
of the  Company  are  included  in the  Chapter 11 Cases,  except only (a) three
subsidiaries  which are  licensed  managed  care  organizations  and (b) foreign
subsidiaries of the Company.

     The Debtors expect to file a reorganization  plan or plans that provide for
emergence from bankruptcy in 2000 or 2001. There can,  however,  be no assurance
that a reorganization plan or plans will be proposed by the Debtors or confirmed
by the Bankruptcy Court, or that any such plan(s) will be consummated. A plan of
reorganization  could result in holders of the common  stock  receiving no value
for their  interests.  Because  of such  possibilities,  the value of the common
stock is highly speculative.

     At a hearing held on April 5, 2000,  the  Bankruptcy  Court entered  orders
granting  authority to the  Debtors,  among other  things,  to maintain our cash
management  system,  to  pay  pre-petition  and  post-petition  employee  wages,
salaries, benefits and other employee obligations, and to honor customer service
programs, including warranties,  returns, and gift certificates.  The Bankruptcy
Court also  ordered  that the Company  could  enter into a  debtor-in-possession
credit facility in substantially  the form as presented to the Court. See Note 3
of Notes to  Consolidated  Financial  Statements  and the Report of  Independent
Public Accountants included herein.

     We cannot  predict the  outcome of the Chapter 11 Cases or their  effect on
the  Company's  business.  See Item 1 - "Business - Chapter 11 Cases," Note 3 of
Notes to Consolidated  Financial Statements and the Report of Independent Public
Accountants  included  herein.  If the liabilities  subject to compromise in the
Chapter 11 Cases  exceed the fair value of the assets,  unsecured  claims may be
satisfied  at less than 100% of their  face  value and the  common  stock of the
Company may have no value.

Consolidated Financial Statements

     The Company's  Consolidated  Financial  Statements  have been prepared on a
going concern basis, which contemplates continuity of operations, realization of
assets and  liquidation of liabilities  and  commitments in the normal course of
business.  The filing of the bankruptcy petition,  the related circumstances and
the losses from operations raise substantial doubt with respect to the Company's
ability to continue as a going concern.  The  appropriateness of using the going
concern basis is dependent upon,  among other things,  confirmation of a plan or
plans  of  reorganization,  future  profitable  operations  and the  ability  to
generate  cash  from  operations  and  financing  sources   sufficient  to  meet
obligations. As a result of the filing of the Chapter 11 Cases and related

                                     Page 14

circumstances,  realization of assets and  liquidation of liabilities is subject
to  significant  uncertainty.  While  under the  protection  of Chapter  11, the
Debtors  may sell or  otherwise  dispose  of  assets,  and  liquidate  or settle
liabilities,  for  amounts  other  than  those  reflected  in  the  Consolidated
Financial  Statements.   Further,  a  plan  or  plans  of  reorganization  could
materially  change  the  amounts  reported  in  the  accompanying   Consolidated
Financial Statements.  The Consolidated  Financial Statements do not include any
adjustments relating to recoverability of the value of recorded asset amounts or
the amounts and  classification  of  liabilities  that might be  necessary  as a
consequence of a plan of reorganization.

Results of Operations

     As of January 1, 2000,  we operated 926 vision  centers,  versus 919 vision
centers at January 2, 1999.  Our results  for the  three-year  period  discussed
below were significantly  affected by our acquisitions of Frame-n-Lens  Optical,
Inc. and New West Eyeworks,  Inc. (the  "Acquired  Businesses")  in 1998.  These
entities  had  combined  revenues of $125  million for all of 1998 and  operated
approximately 455 vision centers at the time of the acquisitions. (See Note 6 to
consolidated financial statements.) These acquisitions, and the substantial debt
incurred by the Company to fund them, have had a substantial  negative impact on
our operating results and cash flow.

YEAR ENDED JANUARY 1, 2000 COMPARED TO YEAR ENDED JANUARY 2, 1999

     NET SALES. The Company recorded net sales of $329.1 million in fiscal 1999,
an  improvement of 34% over sales of $245.3 million in fiscal 1998. We increased
sales for two reasons.  First,  in 1999 our net sales  included the net sales of
our Acquired  Busineses  for the entire  fiscal year,  whereas our net sales for
1998  included  the sales of the acquired  businesses  for only a portion of the
year. Second,  our sales in our core leased  departments  increased by 4.1% over
1998 results.

     NET SALES IN ACQUIRED  BUSINESSES.  We believe that the  performance of the
Acquired Businesses  represents the most important  operational challenge facing
the  Company.   In  1999,  the  integration  of  these   businesses  fell  below
expectations  which negatively  affected our results.  The most important reason
for the disappointing performance was the significant shortfall in sales.

     The following factors contributed to our poor operating results.

   - The  consolidation  of three  different  retail  concepts into one existing
     concept proved more difficult than we anticipated.

   - We  underestimated  the power of the  existing  trade names of the acquired
     businesses  and lost market share when we changed the store names to "Vista
     Optical".

   - We incurred  significant  service  disruptions  when we closed three of our
     manufacturing locations and consolidated their operations into our existing
     facilities.

                                     Page 15

   - We had  substantial  turnover  at the field and  management  levels,  which
     further disrupted our operations.

     In 1999,  we made a number of  changes  to  improve  these  businesses.  In
particular, we:

   - improved the inventory carried by these vision centers.

   - recruited optometrists to many locations.

   - instituted intensive training programs for retail personnel.

   - created a new advertising campaign, which began running in early 2000.

     We  believe  that the  acquired  businesses  will need  additional  time to
benefit from these changes.  If sales at the acquired businesses do not improve,
the  Company's  liquidity  and  profitability  will  continue  to  be  adversely
affected. (See - "Liquidity and Capital Resources".)

     GROSS PROFIT.  In 1999, we increased gross profit to $181.3 million,  a 37%
increase over $132.4  million in 1998.  The increase in net sales resulted in an
increase in gross profit dollars. Our gross profit percentage increased from 54%
in 1998 to 55.1% in 1999. Several factors contributed to this increase:

   - We have increased our purchasing power since completing the acquisitions.

   - The  consolidation of our  manufacturing  operations from six facilities to
     three facilities has reduced our average lens cost.

   - We received significant promotional payments from key vendors.

     Other factors had a negative impact on gross profit percentage:

   - Retail prices for contact  lenses  continued to decline  because of intense
     price competition.

   - During the  consolidation  of our  manufacturing  operations,  our  service
     declined,  causing an  increase  in remake and  warranty  work on  customer
     orders.

   - Shortfalls in sales at the acquired vision centers caused rent as a percent
     of sales to increase.

     SELLING,  GENERAL,  AND  ADMINISTRATIVE  EXPENSE.  This category of expense
includes  both retail  operating  expense and  corporate  office  administrative
costs.  SG&A expense  increased from $121.4 million in 1998 to $177.2 million in
1999.  The  increase was  primarily  due to the increase in the number of vision
centers. As a percent of net sales, SG&A expense increased from 49.5% in 1998 to
53.8% in 1999. This increase was due to:

                                     Page 16

   - A decline in sales at the acquired  businesses,  which thereby caused store
     payroll to increase as a percent of sales.

   - An increase in goodwill  amortization from $800,000 in 1998 to $3.5 million
     in 1999 (this increase reflects the goodwill associated with the businesses
     acquired by the Company in 1998 and  therefore  amortized  over all of 1999
     versus a portion of 1998).

   - SG&A  includes  a  non-cash  expense  provision  of  $2.7  million  for the
     write-off of managed care  receivables.  During 1999, the Company continued
     its efforts with its third party  processor to timely collect  managed care
     receivable  accounts.  In the fourth  quarter,  management  concluded these
     efforts  were  not  achieving   anticipated   results  and,   consequently,
     determined an additional provision for doubtful accounts was warranted.  We
     do not  expect  to incur  any  additional  charges  of this  magnitude  for
     write-offs of managed care receivables,  although additional write-offs are
     possible.

     We believe that all our vision centers are adequately  staffed and that, if
sales  increase,  payroll  should  decline as a percent of sales.  In  addition,
before giving effect to goodwill amortization,  home office expense as a percent
of sales decreased by 0.5% over levels recorded in 1998.

     Results  for  1999  include  a  non-cash  charge  of  $1.9  million,  which
represents an impairment loss on fixed assets associated with 36 underperforming
vision  centers  acquired by the Company.  We expect to be closing a significant
number of these vision centers shortly.

     We  do  expect  additional  charges  associated  with  the  closure  of  36
underperforming  vision  centers.  Such  charges  would  primarily  be  for  the
settlement of lease obligations.

     We are currently evaluating additional  underperforming stores for possible
closure in 2000 and have  identified  at least an  additional 50 stores which we
expect to close during the second quarter.  The final plan to close these vision
centers will include additional charges for the impairment of assets, consisting
primarily of leasehold  improvements  and furniture  and  fixtures,  and for the
settlement of the related lease  obligations.  The number of vision  centers and
the aggregate costs to close are currently undetermined.

     OPERATING  INCOME.  Operating  income  decreased  to $2.2  million from $11
million in 1998.  Operating  margin  decreased from 4.5% to 0.7% of net sales in
1999.  The  decrease  was  attributable  to:

   - The  shortfall  in  operating  results of the  acquired  businesses.  - The
   increase in SG&A expense  discussed above. - The non-cash  charges  discussed
   above.

     Despite  poor results in the acquired  businesses,  we increased  operating
income in our core leased business more than 10% over levels recorded in 1998.

                                     Page 17

     INTEREST  EXPENSE.  Interest  expense  increased to $19.3 million from $5.5
million in 1998.  The Company  issued its $125 million senior notes in 1998 (See
Note 6 to consolidated financial statements) and incurred the associated expense
over the  entirety  of 1999  versus a portion of 1998.  In  November  1999,  the
Company  refinanced its secured credit  facility at a higher  interest rate than
that provided for in its previous credit  facility.  (See "Item  7-Liquidity and
Cash Resources".)

     PROVISION FOR INCOME TAXES.  Vista recorded a pre-tax operating loss before
extraordinary  item of $17.2 million in 1999.  The resulting  income tax benefit
was approximately $5.2 million.  We have established a valuation allowance equal
to the amount of the tax benefit.

     EXTRAORDINARY  LOSS. Results also include an extraordinary loss of $406,000
associated  with the write-off of the  capitalized  costs of the Company's  1998
secured credit facility.

     NET INCOME.  The Company  recorded a net loss of $17.6  million,  or a loss
of $(0.83) per basic and diluted share.

YEAR ENDED JANUARY 2, 1999 COMPARED TO YEAR ENDED JANUARY 3, 1998

Consolidated Results

     NET SALES.  Net sales during fiscal 1998  increased to $245.3  million from
$186.4   million  in  fiscal  1997.  The  increase  was  primarily  due  to  the
acquisitions of Frame-n-Lens  and New West in 1998 and a full year of operations
from Midwest Vision which was acquired in October 1997.  Comparable  store sales
in leased  departments  increased  by 3% over levels  recorded  in fiscal  1997.
Consolidated  average  weekly net sales per leased vision center  decreased from
$9,400 during  fiscal 1997 to $9,000 in fiscal 1998,  primarily as the result of
acquired vision centers with lower net sales levels.  Vision centers acquired in
the Frame-n-Lens  acquisition  recorded  significant  negative  comparable store
sales  and  had  a  negative  impact  on  results  following  the  date  of  the
acquisition. This trend had a negative impact on earnings and liquidity in 1998.

     For the core  leased  departments,  average  spectacle  unit sales per week
increased  and the  average  spectacle  transaction  value  decreased  over that
recorded in fiscal 1997,  resulting  in a net  increase in  spectacle  sales for
stores open for more than one year.  Contact lens unit sales  increased over the
prior year,  but such  increase was more than offset by a decline in the average
transaction value on disposable contacts resulting from competitive  pressure on
pricing. Sales under managed care plans increased over levels recorded in 1997.

                                     Page 18

     GROSS PROFIT.  Gross profit increased to $132.4 million in fiscal 1998 from
$100 million in fiscal  1997.  The increase was due to the increase in net sales
described  above.  Gross profit  percentage  essentially  remained  even against
levels  recorded in fiscal 1997.  Promotional  monies from vendors and increased
manufacturing  efficiencies had a positive impact on gross profit. However, this
was partially  offset by the lower gross profit  recorded at the vision  centers
acquired by the Company in 1998.

     SELLING,  GENERAL, AND ADMINISTRATIVE EXPENSE. SG&A expense (which includes
both operating expenses and home office overhead) increased to $121.4 million in
1998  from  $89.2  million  in 1997.  As a  percentage  of sales,  SG&A  expense
increased from 47.8% in 1997 to 49.5% in 1998.  Administrative  costs  increased
because of the  acquisitions of Frame-n-Lens  and New West. SG&A expense in 1998
included $800,000 of goodwill  amortization relating to the recent acquisitions.
Store  expense as a percentage  of sales was  negatively  affected by the vision
centers  recently  acquired,  which had higher store expenses as a percentage of
sales than did the Company's other vision centers.  SG&A expense as a percentage
of net sales was positively  affected by reduced  incentive  payment levels as a
result of the  Company's  lower  earnings  in 1998  versus  1997.  Additionally,
reserves associated with managed care receivables were increased.

     OPERATING  INCOME.  Operating  income for fiscal  1998  increased  to $11.0
million  from  $10.8  million  in fiscal  1997.  As a  percentage  of net sales,
operating  income  declined  to 4.5% from 5.8% in fiscal  1997.  The decline was
primarily  due to the  increase in SG&A expense  discussed  above and lower than
expected  operating  margins  from  Frame-n-Lens.  Before  giving  effect to the
businesses  acquired in 1998,  operating  income in 1998  improved 21 percent to
$13.1  million  from $10.8  million  recorded  in 1997.  The  Company's  Mexican
business  operated at a break-even level in 1998,  essentially flat against 1997
results.  Mexican operating results do not include allocated corporate overhead,
interest, and taxes.

     OTHER  EXPENSE.  Other expense  increased from $1.6 million in 1997 to $5.5
million in 1998,  primarily as a result of the interest  expense  arising out of
the  issuance  of the  Company's  senior  notes in  October  1998 (see Note 6 to
consolidated financial statements).

     PROVISION FOR INCOME TAXES.  The effective  income tax rate on consolidated
pretax income was 37% in 1998 versus 40% in 1997, primarily as the result of the
1998 operating losses from  Frame-n-Lens and New West. In 1998, the Company made
cash  payments  for  federal  and  state  income  taxes   approximating  30%  of
consolidated  pretax  earnings  primarily due to the  utilization of alternative
minimum tax credits.

     NET INCOME. Net income was $3.4 million, or $0.16 per share, as compared to
net income of $5.6 million, or $0.27 per share, in 1997.

                                     Page 19

Inflation

     Although the Company cannot determine the precise effects of inflation,  it
does not believe  inflation has had a material  effect on its domestic  sales or
results of operations.  The Company cannot determine whether inflation will have
a material  long-term  effect on its sales or results of  operations.  Continued
inflation in Mexico may cause consumers to reduce  discretionary  purchases such
as eyeglasses.

     As a result  of  inflation  in prior  years,  the  Company  has in the past
adjusted its retail  pricing.  Further  pricing  adjustments are contingent upon
competitive  pricing  levels in the  marketplace.  Management is monitoring  the
continuing impact of these inflationary trends.

LIQUIDITY AND CAPITAL RESOURCES

     Our capital needs have been for operating expenses,  capital  expenditures,
and  acquisitions  and interest  expense.  Our sources of capital have been cash
flow from operations and borrowings under our credit facilities.

     In October 1998, we issued our $125 million notes due 2005 to help fund our
acquisitions of  Frame-n-Lens  Optical,  Inc. and New West Eyeworks,  Inc. These
notes bear  interest of 12.75% and were issued  pursuant to an  indenture  which
contains a variety  of  customary  provisions  and  restrictions  (See note 6 to
consolidated  financial  statements).  Interest payments are due on April 15 and
October 15 of each year.  The  indenture  also gives us a 30 day grace period in
which to make interest payments.  We must pay penalty interest if we go into the
grace period.

     At the time we issued our notes, we also entered into a $25 million secured
credit facility.  The agreement contained customary  provisions and restrictions
(See Note 6 to consolidated financial statements).

     In October 1999, we announced  that,  because of slow sales in the acquired
businesses,  we would use the 30 day grace period contained in the indenture. We
also announced that we had breached various provisions of our credit facility.

     We then entered into a replacement  credit  facility with Foothill  Capital
Corporation (the "Foothill Credit Facility"),  and we used proceeds from the new
facility to make the October 15 interest  payment under the notes and to pay off
the  balance  under the prior  credit  facility.  As of January 1, 2000,  we had
borrowed $19.3 million under this credit facility.

     The Foothill  Credit Facility was in the amount of $25 million and included
a $12.5 million revolver and $12.5 million term loan. Our obligations  under the
Foothill  Credit  Facility  were  secured  by  substantially  all  assets of the
Company. The facility contained customary provisions and restrictions, including
restrictions on the amount we can borrow under the revolver  portion (See Note 6
to consolidated financial statements).

                                     Page 20

     As of January 1, 2000, we had breached a cash flow and a net worth covenant
in the Foothill Credit Facility. On April 5, 2000, the Debtors filed the Chapter
11 Cases.  We expect that the filing of these  cases will  affect the  Company's
liquidity and capital resources in fiscal 2000.

     On April 5, 2000, the Bankruptcy  Court entered an interim order permitting
the Company to enter into debtor-in  possession  financing with Foothill Capital
Corporation  (the "DIP  Facility").  The DIP Facility  remains  subject to final
Bankruptcy  Court  approval.  A hearing for this purpose has been set for May 3,
2000.  See Item 1 - "Business  - Chapter 11 Cases." If and when  approved by the
Bankruptcy  Court in a final order,  the DIP Facility will refinance all amounts
previously outstanding under the Foothill Credit Facility and provide additional
working  capital.  As of April 5, 2000, we had borrowed a total of $15.4 million
(inclusive  of the $12.5 million term loan  portion)  under the Foothill  Credit
Facility.

     Under the DIP Facility, the Company may borrow up to $25 million (inclusive
of amounts  outstanding under the Foothill Credit Facility),  subject to certain
limitations,  to  fund  ongoing  working  capital  needs  while  it  prepares  a
reorganization  plan.  The DIP Facility  includes a maximum of $12.5  million in
revolving  loans.  The DIP  Facility  also  contains a $12.5  million  term loan
bearing  interest at 15% per annum.  The DIP Facility  requires that the Company
have a rolling  twelve month EBITDA of no less than $15 million during its term,
which  expires on May 31,  2001.  Events  occuring in the Chapter 11 Cases could
result  in  earlier  termination.   The  DIP  Facility  includes  a  $4  million
sub-facility  for letters of credit.  Interest rates on the revolver  portion of
the DIP Facility are based on either the Wells Fargo Bank,  N.A.  Base Rate plus
2% or the Adjusted  Eurodollar  Rate plus 3.25%.  The DIP Facility is secured by
substantially  all of the assets of the  Company and its  subsidiaries,  subject
only to valid,  enforceable,  subsisting and non-voidable  liens of record as of
the date of commencement of the Chapter 11 Cases and other liens permitted under
the DIP Facility.

     The DIP Facility  contains  customary  covenants  including,  among others,
covenants restricting the incurrence of indebtedness,  the creation or existence
of liens,  the guarantee of other  indebtedness,  the  declaration or payment of
dividends,  the  repurchase or  redemption of debt and equity  securities of the
Company, change in business activities,  affiliate  transactions,  change in key
management and certain  corporate  transactions,  such as sales and purchases of
assets,  mergers,  or  consolidations.  The DIP  Facility  also  limits  capital
expenditures,  investments,  prepayments of other indebtedness, and requires the
delivery of financial and other  information to Foothill.  The DIP Facility also
contains  certain  customary  default  provisions  and  also  specifies  certain
possible  occurrences  in the Chapter 11 Cases  which could  result in events of
default.

     Availability  under the DIP Facility is limited to certain  percentages  of
accounts receivable and inventory, subject to other limitations based on rolling
twelve-month historical EBIDTA and rolling 60-day cash collections.

     The Company  believes the DIP Facility (if approved by the Bankruptcy Court
in a final  order)  should  provide it with  adequate  liquidity  to conduct its
operations  while it prepares a  reorganization  plan.  However,  the  Company's
liquidity, capital resources, results of operations and ability to continue as a
going concern are subject to known and unknown risks and uncertainties. See Item
7 -  "Management's  Discussion  and  Analysis  and Results of  Operations - Risk
Factors."

                                     Page 21

     Accordingly,  we are working to improve the Company's current and long-term
liquidity. We are preparing a plan of reorganization,  which will likely include
the conversion of debt into equity.  We do not know if the  reorganization  plan
will be approved, and if approved, we do not know if it will succeed.

     Even if the  reorganization  plan is successful in improving our liquidity,
we will have to take steps to improve  the  Company's  operating  results in the
Acquired Businesses. Our initial plans include improving sales and profitability
in  the   Acquired   Businesses   in   conjunction   with   closing   additional
underperforming stores with sizeable losses.

     Although  management  believes that its actions will have a positive impact
on the Company's operations,  there can be no assurance that the Company will be
able to operate profitably.

     If the Company is successful in restructuring  its debt obligations and its
equity,  the Company may trigger  limitations  on certain tax net operating loss
carryforwards. (See Note 11 to consolidated financial statements).

     We plan, as of January 1, 2000, to open  approximately  18 Wal-Mart  vision
centers  during  fiscal 2000.  We may open up to 12  additional  vision  centers
dependent upon liquidity, construction schedules and other constraints. For each
of our new vision centers,  we typically spend between $100,000 and $160,000 for
fixed assets and approximately $25,000 for inventory. In general,  free-standing
locations  are more costly than leased  locations.  We also spend  approximately
$20,000 for pre-opening  costs.  Before 1998, we capitalized  these  pre-opening
costs.  Beginning in 1998, we expensed them as required by new accounting  rules
(See Note 2 to consolidated financial statements).

IMPACT OF THE YEAR 2000 ISSUE

     The  transition  to the  year  2000  has  had no  impact  on the  Company's
operations.  All of the  Company's  hardware  and  software  functioned  without
incident during and after the transition.  The Company's point of sale system is
year 2000 compliant.

     Similarly,   none  of  the  Company's  business   relationships  have  been
materially  affected by transition to the year 2000.  Inventory  continues to be
shipped and billed  properly.  We have no basis to believe that our business has
been or will be adversely affected by year 2000 issues.

  Costs to Address Year 2000 Issues

     To prepare the Company for year 2000, we spent  approximately  $1.1 million
for changes to software and hardware and for various services.

                                     Page 22

  Risks of Third-Party Year 2000 Issues

     We  believe  that  our  business  partners  have  made  their  systems  Y2K
compliant. We obviously cannot predict whether they will incur any Y2K problems.
Our business could be adversely affected if such problems occur.

DERIVATIVE FINANCIAL INSTRUMENTS

Market Risk

     Market risk is the potential change in an instrument's value caused by, for
example,  fluctuations in interest and currency  exchange  rates.  The Company's
primary market risk exposures are interest rate risk and the risk of unfavorable
movements  in  exchange  rates  between the U.S.  dollar and the  Mexican  peso.
Monitoring and managing these risks is a continual process carried out by senior
management,  which reviews and approves the Company's risk management  policies.
We  manage  market  risk on the  basis of an  ongoing  assessment  of  trends in
interest  rates,  foreign  exchange  rates,  and economic  developments,  giving
consideration  to possible  effects on both total return and reported  earnings.
The Company's  financial advisors,  both internal and external,  provide ongoing
advice regarding trends that affect management's assessment.

Interest Rate Risk

     The Company  borrows  long-term debt under our credit  facility at variable
interest rates. (See Note 8 to consolidated  financial statements.) We therefore
incur the risk of increased interest costs if interest rates rise.

     In  anticipation  of the issuance of our senior  notes,  in 1998 we entered
into three  anticipatory  hedging  transactions  with a notional  amount of $100
million.  The interest  rates on these  instruments  were tied to U.S.  Treasury
securities  and ranged from 5.43% to 5.62%.  We settled these  transactions  for
approximately  $4.6  million  in  September  1998  with  $0.6  million  cash and
additional  borrowings  of $4.0  million.  The  settlement  costs are treated as
deferred financing costs amortized over the life of the notes.

Foreign Exchange Rate Risk

     Historically,  Mexico qualified as a highly inflationary  economy under the
provisions  of SFAS No. 52 -- Foreign  Currency  Translation.  Consequently,  in
1997, the financial  statements of the Mexico operation were remeasured with the
U.S. dollar as the functional currency.  Since 1997, we have recorded immaterial
losses  because of changes in foreign  currency  rates  between the peso and the
U.S. dollar.

                                     Page 23

RISK FACTORS

     This Form 10-K  contains a number of statements  about the future.  It also
contains  statements  which  involve  assumptions  about the  future.  All these
statements  are  forward  looking  statements  within the meaning of the Private
Securities Litigation Reform Act of 1995.  Forward-looking  statements represent
our expectations or belief  concerning  future events,  including the following:
any  statements  regarding  future sales levels,  any  statements  regarding the
continuation of historical  trends,  and any statements  regarding the Company's
liquidity.  Without limiting the foregoing, the words "believes," "anticipates,"
"plans,"   "expects,"   and  similar   expressions   are  intended  to  identify
forward-looking statements.

     We do not know  whether the  forward-looking  statements  made in this Form
10-K will prove to be correct. We have tried to identify factors which may cause
these  statements  to be  incorrect.  These  factors  could also have a negative
impact on our results. The following is our list of these factors:

   - We have filed for protection  under Chapter 11 of the Bankruptcy  Code. The
     fact of this filing,  along with the process through the Bankruptcy  Court,
     could affect our business in a variety of unforeseen  ways.  There could be
     impairment of our ability to:  operate our business  during the pendency of
     the  proceedings;  continue normal  operating  relationships  with our host
     licensors,  such as Wal-Mart;  obtain  shipments and  negotiate  terms with
     vendors;  fund, develop,  and execute an operating plan; attract and retain
     key executives and  associates;  maintain our gross margins  through vendor
     participation  programs  and  otherwise  to maintain  favorable  courses of
     dealing with vendors.

   - We expect  that,  under the plan of  reorganization  we will propose to the
     Bankruptcy  Court,  the equity of the current  shareholders  in the Company
     will be significantly diluted.

   - It is  unlikely  the our  common  stock will  continue  to be listed on the
     NASDAQ SmallCap Market. We anticipate that our shares will trade on the OTC
     Bulletin  Board.  The  liquidity  of our common  stock  could be  adversely
     affected as a result.

   - There are various risks  associated with the Chapter 11 Cases.  Our plan of
     reorganization  may not be  approved  or, even if it is  approved,  may not
     succeed.  In  addition,  the  Bankruptcy  Court  must  enter a final  order
     approving our DIP Facility.

                                     Page 24

   - We  depend  heavily  on our host  store  relationships,  particularly  with
     Wal-Mart.  Any  change  in these  relationships  could  have a  significant
     negative  impact on our business.  The filing of the Chapter 11 Cases could
     affect those relationships.

   - The  businesses we acquired in 1998  continue to generate low sales.  If we
     cannot improve these sales, we may not generate sufficient cash to continue
     in  business.  We might then be forced to convert the Chapter 11 Cases into
     proceedings under Chapter 7 of the Bankruptcy Code. In addition, even if we
     are able to pay our  bills,  we may not be able to expand our  business  if
     these low sales levels persist.

   - Our new debtor-in-possession  credit facility includes a revolver loan. Our
     ability  to  borrow  under the  revolver  portion  is  limited  to  certain
     percentages  of our inventory and accounts  receivable.  These  limitations
     could restrict our ability to borrow under this revolver portion.

   - Managed care plans are increasingly  important in the optical industry.  We
     will need to  attract  new  managed  care  business  if we intend to remain
     competitive.  We will  also  need  to  retain  our  existing  managed  care
     arrangements.  Loss of these  arrangements,  or our  failure to attract new
     managed care business, would impair our competitive position. The filing of
     the Chapter 11 Cases could impair our ability to retain existing  contracts
     and to enter into new ones.

   - We depend on reliable and timely reimbursement of claims we submit to third
     party payors. There are risks we may not be paid on a timely basis, or that
     we will be  paid  at all.  Some  plans  have  complex  forms  to  complete.
     Sometimes  our  staff  may  incorrectly   complete   forms,   delaying  our
     reimbursement.  These  delays  can hurt our cash flow and also  force us to
     write-off more of these accounts receivable.

   - Each year, we expect to have increasing numbers of vision centers under our
     Wal-Mart agreement come up for renewal.  Our rental obligations to Wal-Mart
     will  increase  in the option  period.  We will need to continue to improve
     sales at these vision centers. If we do not, our rent as a percent of sales
     will increase significantly during the option period. Alternatively, we may
     choose not to exercise the options.

   - A number of our leases for our  free-standing  vision  centers  have annual
     rent increases or provide for increased rent in option periods. We may need
     to consider closing locations or not renewing others unless we can increase
     their sales levels.

   - Operating factors affecting  customer  satisfaction and quality controls of
     the Company in optical manufacturing.

   - Risks   associated  with  the  Company's  Year  2000  compliance   program,
     including,  without limitation,  the risks that third parties with whom the
     Company deals will not have systems which are Year 2000 compliant.

                                     Page 25

   - Risks that the  Company's  new point of sale  system  will not  function as
     planned. In addition,  we could lose sales because employees are unfamiliar
     with the new system or because they have difficulty using it.

   - Pricing  and other  competitive  factors,  including,  without  limitation,
     increased price competition with respect to contact lenses.

   - Technological  advances  in the  eyecare  industry,  such  as new  surgical
     procedures  or  medical  devices,  which  could  reduce  the demand for the
     Company's  products.  The number of individuals  electing Lasik and similar
     surgical  procedures has dramatically  increased each year. If these trends
     continue, demand for our goods and services could decrease significantly.

   - The mix of goods sold.

   - Availability  of optical and  optometric  professionals.  An element of the
     Company's business strategy and a requirement of the Wal- Mart Agreement is
     the  availability of vision care  professionals at clinics in or nearby the
     Company's vision centers.

   - State  and  federal  regulation  of  managed  care and of the  practice  of
     optometry and opticianry.

   - General risks arising from  investing and operating in Mexico,  including a
     different regulatory,  political,  and governmental  environment,  currency
     fluctuations,  high  inflation,  price  controls,  restrictions  on  profit
     repatriation,  lower per capita income and spending levels,  import duties,
     value added taxes, and difficulties in cross-cultural marketing.

   - The  Company's  ability  to  select  in-stock  merchandise   attractive  to
     customers.

   - Weather affecting retail operations.

   - Variations  in the level of  economic  activity  affecting  employment  and
     income levels of consumers.

   - Seasonality of the Company's business.

Recent Accounting Pronouncements

     In  December  1999,  the SEC issued  Staff  Accounting  Bulletin  No.  101,
"Revenue Recognition in Financial Statements." SAB 101 summarizes the SEC's view
in  applying  generally  accepted  accounting  principles  to  selected  revenue
recognition  issues.  We are  required  to apply the  guidance in SAB 101 to our
financial  statements no later than the second quarter of 2000. We currently are
reviewing  the  requirements  of  SAB  101  and  assessing  its  impact  on  our
consolidated  financial  statements.  We anticipate  reporting the impact in the
second  quarter of 2000 as a cumulative  effect  adjustment to our  consolidated
financial statements resulting from a change in accounting principles.

                                     Page 26

     Effective in 1997, the Company  adopted  Statement of Financial  Accounting
Standards  No. 128 ("SFAS  128")  "Earnings  per Share" and No. 129 ("SFAS 129")
"Disclosure  of  Information  and Capital  Structure."  SFAS 128  simplifies the
calculation of basic  earnings per common share and diluted  earnings per common
share.  Additionally,  disclosure is required presenting a reconciliation of the
computations  for basic and diluted  earnings  per common  share.  The change in
calculations  did not change the  Company's  reported  earnings per common share
amounts  presented  in previous  filings.  SFAS 129 requires  disclosure  of the
pertinent  rights and  privileges of all securities  other than ordinary  common
stock.  The Company has disclosed  such  information  in previous  years' annual
reports filed on Form 10-K.

     In July 1997, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting Standards No. 130 ("SFAS 130"),  "Reporting  Comprehensive
Income." The statement  addresses the reporting and display of changes in equity
that result from transactions and other economic events,  excluding transactions
with owners.  The adoption of SFAS No. 130 did not have a material impact on the
Company's financial statements,  as comprehensive income was equal to net income
in 1999, 1998 and 1997.

     Effective in 1997, the Company  adopted  Statement of Financial  Accounting
Standards No. 131 ("SFAS 131"), "Disclosures about Segments of an Enterprise and
Related  Information." The statement  addresses reporting of segment information
(See Note 16 to consolidated financial statements).

     In 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  No.  133  ("SFAS No.  133"),  "Accounting  for
Derivative  Instruments and Hedging  Activities." SFAS No. 133 will be effective
in fiscal 2000.  The Company is  evaluating  the effects of the adoption of this
recent pronouncement.

ITEM  8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The  Consolidated  Financial  Statements  of the Company are  included as a
separate section of this Report commencing on page F-1.

ITEM  9.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

   None.

                                     Page 27

                               PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information Concerning Directors
                                      
     Name and Age as of March 1, 2000     Position, Business Experience and Directorships

     James W. Krause............55        Joined  the  Company in April  1994 as  President  and Chief  Executive  Officer  and a
                                          director.  He was named Chairman of the Company in June 1995.

     David I. Fuente............54        A director  since  April  1992,  Mr.  Fuente has been  Chairman  of the Board and Chief
                                          Executive  Officer of Office  Depot,  Inc.  since 1987.  He also serves on the Board of
                                          Directors for Ryder Systems,  Inc. Mr. Fuente has decided to leave the Board  effective
                                          the date of the meeting.

     Ronald J. Green............52        A director since December 1990, Mr. Green has been a partner in the accounting  firm of
                                          Stephen M. Berman & Associates, Atlanta, Georgia, since 1980.

     James E. Kanaley...........58        A director  since  October  1998,  Mr.  Kanaley was employed at Bausch & Lomb Inc. from
                                          1978 until his  retirement  in 1997.  From 1990 until  1993,  he served as Senior  Vice
                                          President and Group President  Contact Lens Care, and from 1993 until his retirement he
                                          served as Senior Vice President and President, North American Healthcare.

     Campbell B. Lanier, III....49        A director  since October 1990,  Mr.  Campbell B. Lanier,  III is Chairman of the Board
                                          and Chief  Executive  Officer of ITC Holding  Company,  a  telecommunications  services
                                          company located in West Point,  Georgia.  He is also Chairman,  Chief Executive Officer
                                          and director of Powertel, Inc. He also serves as a director of EarthLink, Inc.

     J. Smith Lanier, II........72        A director since October 1990,  Mr. J. Smith Lanier,  II is Chairman of J. Smith Lanier
                                          & Co., an insurance sales company. He is also a director of Interface,  Inc. Mr. Lanier
                                          is the uncle of Campbell B. Lanier, III.

     Peter T. Socha.............40        Mr.  Socha  joined the Company in October,  1999 as Senior  Vice  President,  Strategic
                                          Planning.  Prior to  joining  the  Company  he worked as a  consultant,  and  served as
                                          Executive  Vice  President of COHR,  Inc.,  from May 1998 to October 1998; and as Chief
                                          Credit Officer with Sirrom Capital  Corporation,  from 1994 to 1997. Mr. Socha became a
                                          director and was appointed Senior Vice President,  Strategic  Planning and Managed Care
                                          in February 2000.

                                     Page 28

Information Concerning Executive Officers

  Name, Age and Position
  as of March 1, 2000                   Business Experience
  -------------------                   -------------------

  James W. Krause            55         See "Information Concerning Directors"
    Chairman
    and Chief Executive Officer

  Michael J. Boden           52         Mr. Boden joined the Company in June 1995 as Vice President,  Sales and Marketing and was
    Executive Vice President,           named a Senior Vice  President  in February  1998.  He was named  Senior Vice  President,
    Retail Operations                   Leased Retail  Operations  in February,  1999.  From 1992 until  joining the Company,  he
                                        served as Vice  President-- Store  Operations  of This End Up Furniture  Company.  He was
                                        appointed to his current position in February 2000.

  Richard D. Anderson        41         Mr.  Anderson  joined the Company in January  1999 and was named  Senior Vice  President,
    Senior Vice President,              Real Estate in February  1999.  From 1987 until  joining the Company,  he was employed by
    Real Estate                         W.H.  Smith,  PLC where he served as Vice  President,  Real  Estate  and Vice  President,
                                        Development and Construction.

  Eduardo A. Egusquiza       47         Mr.  Egusquiza  joined the  Company in March 1998 as Senior Vice  President,  Information
    Senior Vice President,              Technology.  From 1982 until  joining the Company,  he was  employed by Musicland  Stores
    Information Technology              Corporation, Inc. where he served as Vice President of Information Systems and Services.

  Mitchell Goodman           46         Mr.  Goodman  joined the Company as General  Counsel and Secretary in September  1992 and
    Senior Vice President,              was named a Vice President in November 1993 and Senior Vice President in May 1998.
    General Counsel and Secretary

  Charles M. Johnson         50         Mr.  Johnson joined the Company in October 1997 as Senior Vice  President,  Manufacturing
    Senior Vice President,              and  Distribution.  From  1988  until  joining  the  Company,  he  was  employed  by  the
    Manufacturing and Distribution      Sherwin-Williams  Company, where he served as Vice President and Director of Research and
                                        Development.

  Angus C. Morrison          43         Mr.  Morrison  joined  the  Company  in  February  of 1995 as Vice  President,  Corporate
    Senior Vice President,              Controller.  He  was  appointed  Senior  Vice  President,  Chief  Financial  Officer  and
    Chief Financial Officer             Treasurer in March 1998.  From 1993 until  joining the  Company,  he was  Controller  and
                                        Senior  Financial  Officer  of the  Soap Division  of  The  Dial Corp. He  was Controller
                                        and Senior Financial  Officer  of  the  Food  Division  of  the  same  company  from 1989
                                        through 1992.

  Timothy W. Ranney          47         Mr. Ranney joined the Company in September 1998 and was named Vice  President,  Corporate
    Vice President,                     Controller in October 1998.  From 1991 until joining the Company,  he was employed by CVS
    Corporate Controller                Corporation  where he  served  as Store  Controller  and then as  Director  of  Financial
                                        Systems.

  Peter T. Socha             40         See "Information Concerning Directors"
    Senior Vice President,
    Strategic Planning and
    Managed Care

  Robert W. Stein            44         Mr.  Stein  joined the  Company as Director of Human  Resources  in May 1992.  In January
    Senior Vice President,              1993, he was appointed Vice President,  Human  Resources,  and was appointed  Senior Vice
    Human Resources and                 President in February 1999.  He was appointed to his current position in February 2000.
    Professional Services

  Michael C. Thomas          34         Mr. Thomas joined the Company as Assistant  Vice  President,  Western  Region in October,
    Senior Vice President,              1993.  He was promoted to Senior Vice President, Vista Retail Operations in July of 1999.
    Vista Retail Operations

                                     Page 29

            SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section  16(a)  of the  Exchange  Act  requires  our  directors,  executive
officers and holders of more than ten percent (10%) of Common Stock to file with
the Securities and Exchange  Commission initial reports of ownership and reports
of changes in  ownership  of Common  Stock and other  equity  securities  of the
Company.  We believe that,  during 1999, our officers,  directors and holders of
more than ten percent  (10%) of Common  Stock  complied  with all Section  16(a)
filing requirements, except for ITC Service Company, which filed one late report
arising  out of one  purchase  of  shares  of  Common  Stock.  In  making  these
statements, we have relied upon the written representations of our directors and
officers and upon copies of reports furnished to the Company.

ITEM 11.  EXECUTIVE COMPENSATION

     The following table discloses compensation received from the Company by the
Company's  Chief  Executive   Officer,   and  the  Company's  four  most  highly
compensated   officers  other  than  the  Chief  Executive   Officer  (all  such
individuals, collectively, the "named executive officers").

                                            Summary Compensation Table

                                                                                              Long Term Compensation
                                       Annual Compensation                      ------------------------------------------------
   Name and                         -----------------------------------------    Restricted      Securities
   Principal                Fiscal                              Other Annual       Stock         Underlying        All Other
   Position                  Year   Salary($)     Bonus($)    Compensation($)   Awards($)(1)    Options/SARs(#)  Compensation($)
   --------                -------  ---------     --------    ---------------   ------------    ---------------  ---------------
                                                                                            
   James W. Krause          1999     375,000           --              --            --(2)          340,000           20,000
     Chairman of            1998     368,000       101,500             --          79,688           250,000           20,000(3)
     the Board              1997     338,000       247,000             --          72,000            50,000           20,000(3)
     and Chief
     Executive Officer

   Michael J. Boden         1999     200,000            --             --            --(4)           12,000               --
     Executive Vice         1998     193,000        38,000             --          26,563            15,000               --
     President,             1997     185,000       135,000             --          24,000            15,000               --
     Retail Operations

   Eduardo A. Egusquiza    1999      170,000            --        153,000(5)         --(6)           12,000               --
     Senior Vice           1998(7)   139,000        36,000                         26,563            50,000               --
     President,
     Information
     Technology

   Charles M. Johnson      1999      204,000            --             --            --(6)           12,000               --
     Senior Vice           1998      197,000        39,000         37,000(8)       26,563            15,000               --
     President,            1997(9)    41,000        70,000             --              --            75,000               --
     Manufacturing and
     Distribution

   Angus C. Morrison       1999      170,000            --             --           --(10)           12,000               --
     Senior Vice           1998      160,000        31,000             --          28,155            25,000               --
     President, Chief      1997      107,000        49,000             --          14,438            10,000               --
     Financial Officer
     and Treasurer
                                     Page 30

(1)  Restricted  Stock  Awards  vest  and  restrictions  lapse  after  five-year
     performance  period to the extent and  depending  upon  achievement  by the
     Company  of  return  on  asset  goals  relative  to a  comparison  group of
     companies.  For awards made in 1998,  restricted  shares, to the extent not
     vested  after five years,  vest after ten years of  employment.  Vesting is
     accelerated automatically upon a change of control (as defined).  Dividends
     (if any are declared) will be paid on restricted stock.
(2)  As  of  January  1,  2000,  Mr.  Krause  had   restricted   stock  holdings
     representing 30,000 shares of Common Stock with a value of $30,930.
(3)  The Company has  executed a "split  dollar"  insurance  agreement  with Mr.
     Krause.  The annual premium  (payable by the Company) is $20,000.  The term
     life  portion of this  premium  is $2,500;  the  non-term  life  portion is
     $17,500.
(4)  As of January 1, 2000, Mr. Boden had restricted stock holdings representing
     10,000 shares of Common Stock with a value of $10,310.
(5)  $82,000 represents reimbursement of relocation expenses; $71,000 represents
     tax reimbursement payments on the foregoing.
(6)  As of  January  1, 2000,  this  executive  had  restricted  stock  holdings
     representing 5,000 shares of Common Stock with a value of $5,155.
(7)  Mr. Egusquiza joined the Company in March 1998.
(8)  $34,000 represents reimbursement of relocation expenses;  $3,000 represents
     tax reimbursement payments.
(9)  Mr. Johnson joined the Company in October 1997.
(10) As  of  January  1,  2000,  Mr.  Morrison  had  restricted  stock  holdings
     representing 8,000 shares of Common Stock with a value of $8,248.

                        OPTION GRANTS IN LAST FISCAL YEAR

     The  following  table  provides  information  on option grants to the named
executive officers by the Company in 1999. The table also shows the hypothetical
gains or "option  spreads" that would exist for the  respective  options.  These
gains are based on assumed rates of annual compound stock price  appreciation of
5% and 10% from the date the options were granted over the full option term.

                                                                                Potential Realizable
                                                                                  Value at Assumed
                            No. of      % of Total                              Annual Rates of Stock
                          Securities   Options/SARs                              Price Appreciation
                          Underlying    Granted to                             for Option Terms($)(2)
                         Option/SARs   Employees in   Exercise or   Expiration -----------------------
                           Granted    Fiscal Year(1) Base Price($)     Date         5%          10%
                        ------------  -------------- ------------------------- ----------- -----------

  James W. Krause          300,000(3)      34.0          5.50         4/03/04    456,000    1,008,000
                            40,000(4)       4.5          5.281        4/22/09    132,760      336,680
  Michael J. Boden          12,000(4)       1.4          5.281        4/22/09     39,828      101,004
  Eduardo A. Egusquiza      12,000(4)       1.4          5.281        4/22/09     39,828      101,004
  Charles M. Johnson        12,000(4)       1.4          5.281        4/22/09     39,828      101,004
  Angus C. Morrison         12,000(4)       1.4          5.281        4/22/09     39,828      101,004

                                     Page 31

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

(1)  The Company granted options covering 883,060 shares to employees in 1999.
(2)  These amounts represent  assumed rates of appreciation  only. Actual gains,
     if any,  on stock  option  exercises  and  holdings  of  Common  Stock  are
     dependent  on the future  performance  of Common  Stock and  overall  stock
     market conditions.  There can be no assurance that the amounts reflected in
     this table will be achieved.
(3)  Grant under the Company's  Restated Stock Option and Incentive  Award Plan.
     Option vests 50% first  anniversary of grant date and 25% on each of second
     and third anniversaries of grant date, subject to continued employment.
(4)  Grants under the Company's  Restated Stock Option and Incentive Award Plan.
     Options vest 50% on second anniversary of grant date and 25% on each of the
     third  and  fourth   anniversary  of  grant  date,   subject  to  continued
     employment. Expiration date is 10th anniversary of grant date.

                          FISCAL YEAR END OPTION VALUES

     The following table provides information,  as of January 1, 2000, regarding
the number and value of options held by the named executive officers.

                           No. of Securities Underlying        Value of Unexercised
                              Unexercised Options at           In-the-Money Options
                                 Fiscal Year End              At Fiscal Year End($)
                          ------------------------------- -------------------------------
                            Exercisable   Unexercisable(1)  Exercisable    Unexercisable

  James W. Krause            112,500          627,500              0               0
  Michael J. Boden            68,750           38,250              0               0
  Eduardo A. Egusquiza             0           62,000              0               0
  Charles M. Johnson          37,500           64,500              0               0
  Angus C. Morrison           47,500           44,500              0               0

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

(1)  Shares  represented  were not exercisable as of January 1, 2000, and future
     exercisability  is subject to the  executive's  remaining  employed  by the
     Company for up to four years from grant date of options.

Change in Control Arrangements

     The Company has agreements with the named executive  officers which provide
severance  benefits in the event of  termination  of  employment  under  certain
circumstances  following a change in control of the Company  (as  defined).  The
circumstances are:

   - termination  by the  Company,  other than  because  of death or  disability
     commencing prior to a threatened change in control (as defined);

   - for cause (as defined); or

   - by an officer as the result of a voluntary termination (as defined).

                                     Page 32

     Following any such  termination,  in addition to compensation  and benefits
already  earned,  the officer  will be entitled to receive a lump sum  severance
payment equal to up to three times the officer's annual rate of base salary.

     Cause for termination by the Company is the:

   - commission of any act that constitutes, on the part of the officer,

    (a)  fraud, dishonesty, gross negligence, or willful misconduct and
    (b)  that directly results in material injury to the Company, or

   - officer's material breach of the agreement, or

   - officer's conviction of a felony or crime involving moral turpitude.

     Circumstances  which would  entitle the officer to terminate as a result of
voluntary termination following a change in control include, among other things:

   - the assignment to the officer of any duties inconsistent with the officer's
     title and status in effect  prior to the  change in  control or  threatened
     change in control;

   - a reduction by the Company of the officer's base salary;

   - the  Company's  requiring the officer to be based  anywhere  other than the
     Company's principal executive offices;

   - the failure by the Company,  without the officer's  consent,  to pay to the
     officer any portion of the officer's then current compensation;

   - the failure by the Company to continue in effect any material  compensation
     plan in which the officer  participates  immediately prior to the change in
     control or threatened change in control; or

   - the failure by the Company to continue to provide the officer with benefits
     substantially  similar  to those  enjoyed by the  officer  under any of the
     Company's life insurance, medical, or other plans.

     The term of each  agreement is for a rolling three years unless the Company
gives  notice that it does not wish to extend such term,  in which case the term
of the agreement would expire three years from the date of the notice.

                                     Page 33

                      REPORT OF THE COMPENSATION COMMITTEE

                                   A. General

     The Compensation  Committee (the Committee)  determines the compensation of
the executive  officers of the Company and also  administers and makes awards of
equity  compensation  under Vista's equity programs.  None of the members of the
Committee is an officer or employee of the Company.

Compensation Philosophy

     The compensation philosophy of the Company is based on the premise that the
Company's achievements result from the coordinated efforts of its employees. The
Company strives to achieve those objectives  through teamwork that is focused on
meeting the expectations of customers and shareholders.

Goals of the Compensation Program

     The goals of the compensation program are to:

   - Link compensation with business objectives and performance

   - Enable the Company to attract,  retain,  and reward executive  officers who
     contribute to the long-term success of the Company.

Components

     The program consists of three components:

   - Salaries.   Salaries  are  based  on  compensation  studies  of  comparable
     positions in the Company's market area and on the Committee's assessment of
     the individual's performance.  Generally, the Company's objective is to set
     executive  salaries at or near the midpoint of the survey range of salaries
     for similar  positions  at other  companies.  Salaries  are  reviewed on an
     annual basis.

   - Annual Incentive  Compensation.  The Company has adopted a plan under which
     the Committee will award annual incentive  compensation only if the Company
     has met certain  financial goals (based on defined  improvement in earnings
     per share) and if the executive meets defined individual performance goals.
     Both conditions must be met; as a result,  if the Company does not meet its
     financial  goals, the Committee will not approve awards of annual incentive
     compensation, even if the executive has met the individual goals.

   - Equity  Compensation.  Each year,  the  Committee  grants stock  options to
     administrative  and field level employees.  In 1999, the Committee approved
     guidelines for annual grants of stock options to the executive  officers of
     the Company. These guidelines contemplate annual grants of 40,000 shares to
     the chief  executive  officer and 12,000 to the  executive  officers of the
     Company.  The Committee  approved these guidelines on the basis of a report
     submitted by independent compensation consultants.

                                     Page 34

                         B. 1999 Compensation Decisions

     The Company's financial performance in 1999 had a significant impact on the
Committee's actions this year.

   - Salaries.  Because of the  significant  operational  and  financial  issues
     facing the Company in 1999,  the  Committee  did not implement any proposed
     salary  increases.  [Because of raises  awarded  during 1998 (and therefore
     applicable to only a portion of 1998),  the summary  compensation  table on
     page 30 sets forth different salaries for 1998 and 1999.]

   - Annual Incentive Compensation. The Company did not meet its financial goals
     for  1999.  As a  result,  the  Committee  did not  approve  any  awards of
     incentive compensation.

   - Equity  Compensation.  In May 1999, the Committee approved annual grants of
     stock  options to  executive  officers in the amounts  contemplated  by the
     guidelines  described above. In October,  the Committee approved a grant of
     an option  covering  100,000  shares to Mr. Socha in  consideration  of Mr.
     Socha's  prior  experience  as well as the  position  and  duties  he would
     assume.  In addition,  in 1999 the Committee  approved grants of options to
     three  executive  officers  (including Mr. Krause) to replace stock options
     which had expired. The earlier grants had been for five-year terms. Because
     the Company has changed its policies to provide for options  with  ten-year
     terms, the Committee  awarded the replacement  options with five-year terms
     (at the same exercise price as in the original stock options).

                            C. Internal Revenue Code

     Section  162(m) of the  Internal  Revenue  Code  limits to $1  million  the
deductibility of compensation paid to the Company's five most highly compensated
officers, unless the Company meets certain requirements. One requirement is that
the Committee  consist entirely of outside  directors.  The Committee meets this
requirement.  Because the stock  option plan of the Company was  approved by our
shareholders, grants of stock options under the Company's stock option plan meet
the requirement that such awards be approved by the  shareholders.  With respect
to salary  compensation  under Section 162(m), the Committee has not adopted any
policies  because total salary  compensation  of each executive  officer is well
below $1 million.

                                                COMPENSATION COMMITTEE

                                                David I. Fuente (Chairman)
                                                Ronald J. Green
                                                James E. Kanaley

                                     Page 35

                                PERFORMANCE GRAPH

     NOTE:  The  stock  price  performance  shown  on  the  graph  below  is not
necessarily indicative of future price performance.

    [PERFORMANCE GRAPH WHICH APPEARS HERE IS REPRESENTED BY THE TABLE BELOW.]

                             CUMULATIVE TOTAL RETURN
          Based upon an initial investment of $100 on December 31, 1994
                            with dividends reinvested

                       31-Dec-94   30-Dec-95    28-Dec-96    3-Jan-98    2-Jan-99   1-Jan-00
                       ---------   ---------    ---------    --------    --------   --------
                                                                     
Vista Eyecare, Inc.       $100         $80          $110        $160        $143       $28
Nasdaq Composite Index    $100         $141         $174        $213        $300       $542
Nasdaq Retail Group       $100         $110         $131        $154        $188       $182

SOURCE:  GEORGESON SHAREHOLDER COMMUNICATIONS INC.

                                     Page 36

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

                        COMMON STOCK OWNERSHIP OF CERTAIN
                        BENEFICIAL OWNERS AND MANAGEMENT

     The  Company is not aware of any  person  who,  on March 1,  2000,  was the
beneficial  owner of five percent (5%) or more of  outstanding  shares of Common
Stock, except as set forth below.

                                            Amount and Nature of     Percent
                                            Beneficial Ownership    of Class
                                            --------------------    --------

               Campbell B. Lanier, III           4,361,187(a)(b)      20.6
               Rayna Casey                       1,808,152(c)          8.5
- ----------

(a)  Includes shares owned by the following individuals and entities, who may be
     deemed a "group" within the meaning of the beneficial  ownership provisions
     of the federal  securities laws: Mr. Lanier (836,957 shares);  Mr. Lanier's
     wife (750  shares);  Campbell B. Lanier,  IV (25,550  shares);  ITC Service
     Company (3,356,648 shares);  William H. Scott, III (82,782 shares);  Martha
     J. Scott  (28,000  shares,  inclusive  of 10,000  shares owned by the Scott
     Trust,  of which Ms.  Scott is the sole  trustee);  William H.  Scott,  III
     Irrevocable  Trust F/B/O Martha Scott (the "Scott Trust") (10,000  shares);
     Bryan W. Adams (8,000 shares).
(b)  Includes  22,500 shares which Mr. Lanier has the right to acquire under the
     Company's Non-Employee Director Stock Option Plan.
(c)  Includes  159,948 shares owned by a trust of which Ms. Casey is the trustee
     and her daughter the  beneficiary.  Ms.  Casey's  address is 712 West Paces
     Ferry Road, Atlanta,  Georgia.

     The following table sets forth information, as of March 1, 2000, concerning
beneficial  ownership by all directors  and  nominees,  by each of the executive
officers named in the Summary Compensation Table below, and by all directors and
executive officers as a group.  Percent of Number of Shares Outstanding Name and
Address of Beneficial Owner(1) Beneficially Owned Common Stock

    Campbell B. Lanier, III.................        4,361,187(2)(3)      20.6
    James W. Krause.........................          494,444(4)          2.3
    J. Smith Lanier, II.....................          302,235(3)(5)       1.4
    Ronald J. Green.........................          111,500(3)(6)        *
    Peter T. Socha..........................          100,000(7)           *
    David I. Fuente.........................           50,500(3)           *
    James E. Kanaley........................                0              *
    Michael J. Boden........................           96,827(8)           *
    Angus C. Morrison.......................           59,500(9)           *
    Charles M. Johnson......................           58,350(10)          *
    Eduardo A. Egusquiza....................           30,000(11)          *
    All directors and executive officers as a
    group (sixteen persons).................        5,832,753            26.6

                                     Page 37

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

*    Represents less than one percent of the outstanding Common Stock.
(1)  Unless  otherwise  indicated below, the address of the persons named is 296
     Grayson Highway, Lawrenceville, GA 30045.
(2)  See footnote (a) in table above.
(3)  Includes 22,500 shares which this individual has the right to acquire under
     the Company's Non-Employee Director Stock Option Plan.
(4)  Includes 262,500 shares which Mr. Krause has the right to acquire under the
     Company's Restated Stock Option and Incentive Award Plan (the "Plan"). Also
     includes 30,000 shares of restricted stock awarded under the Plan.
(5)  Includes 1,800 shares owned by Mr.  Lanier's wife, as to which he disclaims
     beneficial ownership.
(6)  Includes  9,000  shares  owned  by Mr.  Green's  children,  as to  which he
     disclaims beneficial ownership.
(7)  Represents  100,000  shares which Mr. Socha has the right to acquire  under
     the Plan.
(8)  Includes  83,750  shares which Mr. Boden has the right to acquire under the
     Plan.  Also includes  10,000  shares of restricted  stock awarded under the
     Plan.
(9)  Includes  11,200  shares held as  custodian  for Mr.  Morrison's  children,
     22,500  shares which Mr.  Morrison has the right to acquire under the Plan,
     and 8,000 shares of restricted stock awarded under the Plan.
(10) Includes 45,000 shares which Mr. Johnson has the right to acquire under the
     Plan and 5,000 shares of restricted stock awarded under the Plan.
(11) Includes  25,000 shares which Mr.  Egusquiza has the right to acquire under
     the Plan and 5,000 shares of restricted stock awarded under the Plan.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The Company paid insurance  premiums of approximately  $1.5 million in 1999
for insurance policies purchased through an agency in which J. Smith Lanier, II,
a director of the  Company,  has a  substantial  ownership  interest.  The Audit
Committee (which has ratified the purchase of insurance by the Company from this
insurance  agency) and management of the Company believe that these premiums are
comparable to those which could have been obtained from unaffiliated companies.

                                     Page 38

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

     (a) (1) and (2) The Consolidated  Financial  Statements and Schedule of the
Company  and its  subsidiaries  are filed as a separate  section of this  Report
commencing on page F-1.

     (3) We have filed or incorporated by reference the following exhibits:

Exhibit
Number     Description
- -------    -----------

3.1    -- Amended and Restated  Articles of  Incorporation of the Company, dated
          April 8, 1992,  along with  Articles of  Amendment  to the Amended and
          Restated  Articles of  Incorporation  of the Company dated January 17,
          1997,  and Articles of Amendment to the Amended and Restated  Articles
          of Incorporation of the Company dated December 31, 1998,  incorporated
          by reference to the  Company's  Form 8-K filed with the  Commission on
          January 6, 1999.

3.2    -- Amended and Restated By-Laws of the Company, incorporated by reference
          to the  Company's  Registration  Statement  on Form S-1,  registration
          number  33-46645,  filed with the  Commission  on March 25, 1992,  and
          amendments thereto.

4.1    -- Form of Common  Stock  Certificate, incorporated  by  reference to the
          Company's Registration Statement on Form 8-A filed with the Commission
          on January 17, 1997.

4.2    -- Rights  Agreement  dated  as  of  January 17, 1997 between the Company
          and Wachovia Bank of North Carolina,  N.A.,  incorporated by reference
          to the  Company's  Registration  Statement  on Form 8-A filed with the
          Commission on January 17, 1997.

4.3    -- Indenture  dated as of October 8, 1998, among the Company, the Guaran-
          tors and State Street Bank & Company,  as Trustee  (including  form of
          Exchange   Note),   incorporated   by  reference   to  the   Company's
          Registration  Statement on Form S-4,  registration  number  333-71825,
          filed with the Commission on February 5, 1998, and amendments thereto.

4.4    -- Purchase Agreement dated as of October 8, 1998, among the Company, the
          Guarantors and the Initial  Purchasers,  incorporated  by reference to
          the Company's  Registration Statement on Form S-4, registration number
          333-71825,  filed  with  the  Commission  on  February  5,  1998,  and
          amendments thereto.

4.5    -- Registration Rights Agreement  dated as of October 8, 1998,  among the
          Company,  the Guarantors and the Initial  Purchasers,  incorporated by
          reference  to  the  Company's  Registration  Statement  on  Form  S-4,
          registration  number 333- 71825, filed with the Commission on February
          5, 1998, and amendments thereto.

                                     Page 39

10.1   -- Sublease  Agreement, dated  December 16, 1991, by and between Wal-Mart
          Stores,  Inc.  and  the  Company,  incorporated  by  reference  to the
          Company's  Registration  Statement  on Form S-1,  registration  number
          33-46645,  filed with the Commission on March 25, 1992, and amendments
          thereto.

10.2   -- Form  indemnification  agreement  for directors and executive officers
          of the Company,  incorporated  by reference to the Company's Form 10-K
          for the fiscal year ended December 31, 1992.

10.3   -- Vision Center Master License Agreement,  dated as of June 16, 1994, by
          and between  Wal-Mart  Stores,  Inc. and the Company,  incorporated by
          reference to the Company's  Form 10-Q for the  quarterly  period ended
          September  30,  1994.  [Portions  of  Exhibit  10.3 have been  omitted
          pursuant  to an  order  for  confidential  treatment  granted  by  the
          Commission.  The omitted  portions have been filed separately with the
          Commission.]

10.4++ -- Split  Dollar  Life  Insurance  Agreement,  dated  as  of  November 3,
          1994, among the Company, A. Kimbrough Davis, as Trustee,  and James W.
          Krause,  incorporated  by reference to the Company's Form 10-K for the
          fiscal year ended December 31, 1994.

10.5++ -- Level  IV  Management  Incentive  Plan,  incorporated  by reference to
          the Company's Form 10-K for the fiscal year ended December 31, 1994.

10.6   -- Agreement dated as of November 23, 1995 by and between Mexican  Vision
          Associates Operadora,  S. de R.L. de C.V. and Wal-Mart de Mexico, S.A.
          de C.V. in original  Spanish and an uncertified  English  translation,
          incorporated  by reference to the  Company's  Form 10-K for the fiscal
          year ended  December  30,  1995.  [Portions  of Exhibit 10.6 have been
          omitted  pursuant to a request for  confidential  treatment filed with
          the Commission.  The omitted  portions have been filed separately with
          the Commission.]

10.7++ -- Executive   Relocation  Policy,   incorporated   by   reference to the
          Company's Form 10-Q for the quarterly period ended March 30, 1996.

10.8++ -- Restated  Stock  Option  and  Incentive  Award Plan,  incorporated  by
          reference to the Company's  Form 10-Q for the  quarterly  period ended
          June 29, 1996.

10.9++ -- First  Amendment  to  Restated  Stock Option and Incentive Award Plan,
          incorporated by reference to the Company's Form 10-Q for the quarterly
          period ended March 29, 1997.

10.10++-- Form  Change  in  Control  Agreement  for  executive  officers  of the
          Company,  incorporated by reference to the Company's Form 10-K for the
          fiscal year ended December 28, 1996.

                                     Page 40

10.11++-- Form  Restricted  Stock  Award,   incorporated  by  reference  to  the
          Company's Form 10-Q for the quarterly period ended March 29, 1997.

10.12++-- Restated  Non-Employee  Director  Stock Option Plan,  incorporated  by
          reference to the Company's Form 10-Q filed on June 28, 1997.

10.13++-- Executive Deferred Compensation Plan, incorporated by reference to the
          Company's Form 10-K for the fiscal year ended January 3, 1998.

10.14  -- Credit  Agreement  dated  October  8, 1998  by  and among the Company,
          Bank of America,  FSB,  First Union  National  Bank and the  financial
          institutions listed hereto, incorporated by reference to the Company's
          Registration  Statement on Form S-4,  registration  number  333-71825,
          filed with the Commission on February 5, 1999, and amendments thereto.

10.15**-- Amended and Restated Credit Agreement dated as of November 12, 1999 by
          and between the Company and Foothill Capital Corporation.

10.16**-- Agreement dated as of September 9, 1999, by and among the Company, ITC
          Service Company, and Campbell B. Lanier, III.

21**   -- Subsidiaries of the Registrant.

23**   -- Consent by Arthur Andersen LLP.

27**   -- Financial Data Schedule.

** Filed with this Form 10-K.

++   Management contract or compensatory plan or arrangement in which a director
     or named executive officer participates.

   (b)  The  following  reports  on Form 8-K have  been  filed  during  the last
        quarter of the period covered by this report:.

         Date of Report     Item Reported      Financial Statements Filed
         --------------     -------------      --------------------------
         October 19, 1999   Item 5             None

                                     Page 41

                    VISTA EYECARE, INC. AND SUBSIDIARIES

            CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
     AS OF JANUARY 1, 2000, JANUARY 2, 1999 AND JANUARY 3, 1998
                             TOGETHER WITH
                           AUDITORS' REPORT

         INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

   The  following   consolidated   financial  statements  and  schedule  of  the
registrant and its subsidiaries are submitted herewith in response to Item 8 and
Item 14(a)1 and to Item 14(a)2, respectively.

                                                                  Page
                                                                  ----

Report of Independent Public Accountants                           F-2

Consolidated Balance Sheets as of January 1, 2000 and
  January 2, 1999                                                  F-3

Consolidated Statements of Operations for the
  Years Ended  January 1, 2000, January 2, 1999 and
  January 3, 1998                                                  F-5

Consolidated  Statements of Shareholders'  Equity for the
  Years Ended January 1, 2000, January 2, 1999 and
  January 3, 1998                                                  F-6

Consolidated  Statements  of Cash  Flows for the
  Years  Ended  January  1, 2000, January 2, 1999 and
  January 3, 1998                                                  F-7

Notes to Consolidated Financial Statements and Schedule            F-8

Schedule II, Valuation and Qualifying Accounts                     F-36

   All other schedules for which provision is made in the applicable  accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions,  are inapplicable,  or have been disclosed in the notes to
consolidated financial statements and, therefore, have been omitted.

                                  F-1

               REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of Vista Eyecare, Inc.
and Subsidiaries:

     We have  audited  the  accompanying  consolidated  balance  sheets of VISTA
EYECARE, INC. (a Georgia corporation) AND SUBSIDIARIES as of January 1, 2000 and
January  2,  1999  and  the  related  consolidated   statements  of  operations,
shareholders'  equity,  and cash flows for each of the three years in the period
ended January 1, 2000. These financial  statements and the schedule  referred to
below are the responsibility of the Company's management.  Our responsibility is
to express an opinion on these  financial  statements  and schedule based on our
audits.

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

     In our opinion,  the financial statements referred to above present fairly,
in all material  respects,  the financial  position of Vista  Eyecare,  Inc. and
subsidiaries  as of January 1, 2000 and January 2, 1999 and the results of their
operations  and their cash flows for each of the three years in the period ended
January 1, 2000 in conformity with accounting  principles  generally accepted in
the United States.

     The accompanying  financial statements have been prepared assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 3 to the
financial  statements,  the  Company  incurred  a net loss in 1999 and has a net
working capital deficiency of approximately $11.7 million at January 1, 2000. In
addition,   the  Company  filed  voluntary  petitions  with  the  United  States
Bankruptcy  Court for  reorganization  under  Chapter 11.  These  matters  raise
substantial  doubt about the Company's  ability to continue as a going  concern.
Management's  plans in  regard to these  matters  are  described  in Note 3. The
financial   statements   do  not  include  any   adjustments   relating  to  the
recoverability  and  classification  of asset carrying amounts or the amount and
classification  of liabilities that might result should the Company be unable to
continue as a going concern.

     Our  audits  were made for the  purpose  of forming an opinion on the basic
financial  statements  taken as a whole.  The  schedule  listed  in the index to
consolidated  financial  statements is presented for purposes of complying  with
the  Securities  and  Exchange  Commission's  rules and is not part of the basic
financial  statements.   This  schedule  has  been  subjected  to  the  auditing
procedures  applied in the audit of the basic  financial  statements and, in our
opinion,  fairly states in all material  respects the financial data required to
be set forth therein in relation to the basic  financial  statements  taken as a
whole.

ARTHUR ANDERSEN LLP

Atlanta, Georgia
March 17, 2000
(except for the matter
discussed in Note 3,
as to which the date
is April 5, 2000)
                                       F-2

                                     VISTA EYECARE, INC. AND SUBSIDIARIES

                                          CONSOLIDATED BALANCE SHEETS
                                      January 1, 2000 and January 2, 1999
                                    (In thousands except share information)

                                                                                        1999           1998
                                                                                    -----------    -----------
                                                                                            
                                                    ASSETS
 CURRENT ASSETS:
   Cash and cash equivalents                                                           $   2,886    $   7,072
   Accounts receivable (net of allowance: 1999 - $4,403; 1998 - $1,516)                   10,416       10,135
   Inventories                                                                            34,373       31,670
   Other current assets                                                                    2,761        2,899
                                                                                       ----------   ----------
      Total current assets                                                                50,436       51,776
                                                                                       ----------   ----------
 PROPERTY AND EQUIPMENT:
   Equipment                                                                              57,750       54,396
   Furniture and fixtures                                                                 26,600       23,124
   Leasehold improvements                                                                 28,458       26,806
   Construction in progress                                                                3,427        2,022
                                                                                       ----------   ----------
                                                                                         116,235      106,348
   Less accumulated depreciation                                                         (62,329)     (48,305)
                                                                                       ----------   ----------
   Net property and equipment                                                             53,906       58,043

 OTHER ASSETS AND DEFERRED COSTS
   (net of accumulated amortization:  1999 - $1,500; 1998 - $1,292)                        9,315        9,953
 DEFERRED INCOME TAX ASSET                                                                   385          385
 GOODWILL AND OTHER INTANGIBLE ASSETS
   (net of accumulated amortization: 1999 - $6,994; 1998 - $2,544)                       106,177      108,940
                                                                                       ----------   ----------
                                                                                       $ 220,219    $ 229,097
                                                                                       ==========   ==========

                                                     F-3

                                                                                          1999        1998
                                                                                      ----------   ----------
                                                                                               
                                     LIABILITIES AND SHAREHOLDERS' EQUITY
 CURRENT LIABILITIES:
   Accounts payable                                                                    $  17,192   $  18,925
   Accrued expenses and other current liabilities                                         24,568      26,637
   Current portion other long-term debt and capital lease obligations                      1,098       2,006
   Revolving credit facility and term loan                                                19,292          --
                                                                                       ---------   ---------
      Total current liabilities                                                           62,150      47,568
                                                                                       ---------   ---------
 SENIOR NOTES (net of discount:  1999 - $1,253; 1998 - $1,391)                           123,747     123,609

 REVOLVING CREDIT FACILITY                                                                    --       6,000
 OTHER LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS                                        6,865       7,223

 COMMITMENTS AND CONTINGENCIES (Note 11)
 REDEEMABLE COMMON STOCK                                                                      900        770

 SHAREHOLDERS' EQUITY:
    Preferred stock, $1 par value; 5,000,000 shares authorized, none issued                   --          --
    Common stock, $0.01 par value, 100,000,000 shares authorized, 21,179,103
    and 21,166,612 shares issued and outstanding as of January 1, 2000 and
    January 2, 1999, respectively                                                            211         211
    Additional paid-in capital                                                            47,387      47,195
    Retained (deficit)earnings                                                           (16,968)        594
    Accumulated other comprehensive income                                                (4,073)     (4,073)
                                                                                       ---------   ---------
         Total shareholders' equity                                                       26,557      43,927
                                                                                       ---------   ---------
                                                                                       $ 220,219   $ 229,097
                                                                                       =========   =========

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

                                                     F-4

                                                    VISTA EYECARE, INC. AND SUBSIDIARIES

                                                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                 For the years ended January 1, 2000, January 2, 1999, and January 3, 1998
                                                 (In thousands except per share information)

                                                                                   For the years ended
                                                                        ---------------------------------------
                                                                        January 1,     January 2,    January 3,
                                                                          2000           1999          1998
                                                                        ----------    ----------     ----------
                                                                                             
 NET SALES                                                               $  329,055    $  245,331     $  186,354
 COST OF GOODS SOLD                                                         147,768       112,929         86,363
                                                                         ----------    ----------     ----------
 GROSS PROFIT                                                               181,287       132,402         99,991

 SELLING, GENERAL, AND ADMINISTRATIVE EXPENSE                               177,162       121,413         89,156
 IMPAIRMENT LOSS ON LONG-LIVED ASSETS                                         1,952            --             --
                                                                         ----------    -----------    ----------
 OPERATING INCOME                                                             2,173        10,989         10,835
 INTEREST EXPENSE, NET                                                       19,329         5,538          1,554
                                                                         ----------    ----------     ----------
 INCOME/(LOSS) BEFORE INCOME TAXES                                          (17,156)        5,451          9,281
 INCOME TAX EXPENSE                                                              --         2,037          3,708
                                                                         ----------    ----------     ----------
 NET INCOME/(LOSS) BEFORE EXTRAORDINARY ITEM                             $  (17,156)   $    3,414     $    5,573
 EXTRAORDINARY LOSS, NET OF TAXES                                              (406)           --             --
                                                                         ----------    ----------     ----------
 NET INCOME/(LOSS)                                                       $  (17,562)   $    3,414     $    5,573
                                                                         ==========    ==========     ==========

 BASIC EARNINGS/(LOSS) PER SHARE:
  EARNINGS/(LOSS) BEFORE EXTRAORDINARY ITEM                              $   (0.81)    $     0.16     $    0.27
  EXTRAORDINARY LOSS                                                         (0.02)            --            --
                                                                         ----------    ----------     ----------
  NET EARNINGS/(LOSS)PER BASIC SHARE                                     $   (0.83)    $     0.16     $    0.27
                                                                         ==========    ==========     ==========

 DILUTED EARNINGS/(LOSS) PER SHARE:
  EARNINGS/(LOSS) BEFORE EXTRAORDINARY ITEM                              $   (0.81)    $     0.16     $    0.27
  EXTRAORDINARY LOSS                                                         (0.02)            --            --
                                                                         ----------    ----------     ----------
  NET EARNINGS/(LOSS)PER DILUTED SHARE                                   $   (0.83)    $     0.16     $    0.27
                                                                         ==========    ==========     ==========

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

                                                      F-5

                                     VISTA EYECARE, INC. AND SUBSIDIARIES

                                CONSOLIDATED  STATEMENTS OF SHAREHOLDERS' EQUITY
                      For the years ended January 1, 2000, January 2, 1999, and January 3, 1998
                                    (In thousands except share information)

                                                                                       Accumulated
                                         Common Stock       Additional   Retained         Other
                                     ----------------------   Paid-In    Earnings     Comprehensive
                                     Shares          Amount   Capital    (Deficit)        Income       Total
                                     ------          ------ ----------   ---------     -----------   --------
                                                                                   
 BALANCE, December 28, 1996         20,644,752       $  206 $ 42,166     $  (8,393)    $  (4,073)   $  29,906
 Issuance of common stock              110,795                    66                                       66
 Awards of restricted stock             54,000            1       35                                       36
 Exercise of stock options              10,408                    17                                       17
 Net income                                                                  5,573                      5,573
                                    ----------       ------ --------     ---------     ---------     --------
 BALANCE, January 3, 1998           20,819,955          207   42,284        (2,820)       (4,073)      35,598
 Awards of restricted stock             52,000            1      121                                      122
 Exercise of stock options             294,657            3    1,482                                    1,485
 Tax settlement (see Note 11)                                  3,308                                    3,308
 Net income                                                                  3,414                      3,414
                                    ----------       ------ --------     ---------     ---------     --------
 BALANCE, January 2, 1999           21,166,612          211   47,195           594        (4,073)      43,927
 Restricted stock                                                136                                      136
 Exercise of stock options              12,491                    56                                       56
 Net loss                                                                  (17,562)                   (17,562)
                                    ----------       ------ --------     ---------     ---------     --------
 BALANCE, January 1, 2000           21,179,103       $  211 $ 47,387     $ (16,968)    $  (4,073)    $ 26,557
                                    ==========       ====== ========     =========     =========     ========

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

                                                     F-6

                                     VISTA EYECARE, INC. AND SUBSIDIARIES
                                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                     For the Years Ended January 1, 2000, January 2, 1999,  and January 3, 1998
                                                 (In thousands)

                                                                    1999            1998            1997
                                                                    ----            ----            ----
                                                                                        
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)                                                $(17,562)       $  3,414        $  5,573
Adjustments to reconcile net income to
   net cash provided by (used in) operating activities:
     Depreciation and amortization                                 18,602          14,177          11,035
     Provision for deferred income tax expense                         --           1,173           1,441
     Impairment of long-lived assets                                1,952              --              --
     Extraordinary loss                                               406              --              --
     Other                                                           (459)            936             319
     Changes in operating assets and liabilities, net of
       effects of acquisitions:
        Receivables                                                  (281)         (1,504)           (875)
        Inventories                                                (2,703)          1,304           2,031
        Store preopening costs                                         --              --            (643)
        Other current assets                                          138          (1,630)            612
        Accounts payable                                           (1,733)           (410)         (1,872)
        Accrued expenses                                           (2,069)         (7,691)          3,117
                                                                 --------        --------        --------
            Total adjustments                                      13,853           6,355          15,165
                                                                 --------        --------        --------
            Net cash (used in) provided by operating activities    (3,709)          9,769          20,738
                                                                 --------        --------        --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment                                (12,704)         (9,183)         (8,049)
Acquisitions, net of cash acquired                                     --         (97,357)         (1,772)
Proceeds from sale of property and equipment                          955              --              --
Payment for non-competition agreement                                  --              --            (484)
Purchase of assignment agreement                                       --              --            (500)
                                                                 --------        --------        --------
            Net cash used in investing activities                 (11,749)       (106,540)        (10,805)
                                                                 --------        --------        --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of senior notes, net of discount                    --         123,580              --
Advances on revolving credit facility                              79,238          52,500           5,500
Repayments on revolving credit facility                           (65,946)        (66,000)        (12,500)
Principal payment on notes payable and capital leases              (1,265)           (436)         (1,450)
Proceeds from exercise of stock options                                56           1,485              17
Deferred financing costs                                             (811)         (9,845)            (51)
                                                                 --------        --------        --------
            Net cash provided by (used in) financing activities    11,272         101,284          (8,484)
                                                                 --------        --------        --------
NET INCREASE (DECREASE) IN CASH                                    (4,186)          4,513           1,449
CASH, beginning of year                                             7,072           2,559           1,110
                                                                 --------        --------        --------
CASH, end of year                                                $  2,886        $  7,072        $  2,559
                                                                 ========        ========        ========

            The  accompanying  notes are an integral part of these  consolidated
financial statements.
                             F-7

                   VISTA EYECARE, INC. AND SUBSIDIARIES

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

1.  ORGANIZATION AND OPERATIONS

     Vista Eyecare,  Inc.,  formerly  National  Vision  Associates,  Ltd.,  (the
"Company")  is engaged in the retail  sale of optical  goods and  services.  The
Company is largely dependent on Wal-Mart Stores, Inc. ("Wal-Mart") for continued
operation  of  vision  centers  which  generate  a  significant  portion  of the
Company's  revenues  (See Note 5). In October  1997,  the Company  acquired  the
capital  stock of  Midwest  Vision,  Inc.,  a  retail  optical  company  with 51
locations in Minnesota and three  adjoining  states.  In July 1998,  the Company
acquired  the  capital  stock of  Frame-n-Lens  Optical,  Inc.,  which  operated
approximately  280 vision  centers,  mainly in the  western  United  States.  In
October 1998, the Company acquired the capital stock of New West Eyeworks,  Inc.
which operated approximately 175 vision centers in 13 states (See Note 6).

2.  SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

     The consolidated  financial  statements include the accounts of the Company
and its  subsidiaries.  All significant  intercompany  balances and transactions
have been  eliminated  in  consolidation.  The Company  operates on a 52/53 week
retail calendar with the fiscal year ending on the Saturday  closest to December
31. Pursuant to such calendar,  financial  information for each of 1998 and 1996
is  presented  for  the  52-week   period  ended  January  2  and  December  28,
respectively.  Fiscal 1997  consisted of 53 weeks ended January 3, 1998.  Due to
various statutory and other  considerations,  international  operations were not
changed to this 52/53 week calendar.  To allow for more timely consolidation and
reporting,  international  operations  are  reported  using a fiscal year ending
November 30.

     Certain  amounts in the  January 2, 1999 and  January 3, 1998  consolidated
financial  statements  have been  reclassified to conform to the January 1, 2000
presentation.

Revenue Recognition

     The Company  recognizes  revenues  and the related  costs from retail sales
when at least 50% of the payment has been received.

     In  December  1999,  the SEC issued  Staff  Accounting  Bulletin  No.  101,
"Revenue Recognition in Financial Statements." SAB 101 summarizes the SEC's view
in  applying  generally  accepted  accounting  principles  to  selected  revenue
recognition  issues. The Company is required to apply the guidance in SAB 101 to
the financial  statements no later than the second  quarter of 2000. The Company
is currently  reviewing the  requirements of SAB 101 and assessing its impact on
the consolidated  financial  statements.  The Company anticipates  reporting the
impact in the second  quarter of 2000 as a cumulative  effect  adjustment to the
consolidated   financial  statements  resulting  from  a  change  in  accounting
principles.

                                       F-8

Cash and Cash Equivalents

     The Company considers cash on hand, short-term cash investments, and checks
that  have not been  processed  by  financial  institutions  to be cash and cash
equivalents. The aggregate amount of outstanding checks not processed at January
1, 2000 was $556,000 (at January 2, 1999 - $816,000). The Company's policy is to
maintain uninvested cash at minimal levels. Cash includes cash equivalents which
represent  highly liquid  investments  with a maturity of one month or less. The
carrying amount  approximates  fair value. The Company  restricts  investment of
temporary cash investments to financial institutions with high credit standings.

Inventories

     Inventories  are valued at the lower of  weighted  average  cost or market.
Market represents the net realizable value.

Store Preopening Costs

     Prior to 1998,  preopening  costs which were directly  associated  with the
opening of new vision  centers have been  capitalized  and  amortized  using the
straight-line  method over 12 months  beginning  with the  commencement  of each
vision  center's  operations.  The average cost  capitalized  per vision  center
approximated  $20,000.  Effective  in 1998,  preopening  costs are  expensed  as
incurred in accordance with AICPA Statement of Position 98-5,  "Reporting on the
Costs of Start-Up Activities."

Property and Equipment

     Property  and  equipment  are  stated  at  cost.  For  financial  reporting
purposes,  depreciation  is  computed  using the  straight-line  method over the
assets'  estimated  useful  lives or terms of the related  leases,  whichever is
shorter.  Accelerated  depreciation  methods  are used for income tax  reporting
purposes.   For  financial  reporting  purposes,   the  useful  lives  used  for
computation of  depreciation  range from five to ten years for  equipment,  from
three to nine  years for  furniture  and  fixtures,  from three to six years for
hardware and software related to information systems  processing,  and from five
to  nine  years  which  approximate  the  remaining  lease  term  for  leasehold
improvements.  At the time  property and  equipment  are  retired,  the cost and
related  accumulated  depreciation are removed from the accounts and any gain or
loss is credited or charged to income.  Periodically,  the Company evaluates the
net book value of property and  equipment  for  impairment.  This  evaluation is
performed for retail locations and compares management's best estimate of future
cash flows with the net book value of the property and equipment. See Note 4 for
a discussion of impaired property and equipment in 1999. Maintenance and repairs
are  charged  to  expense  as  incurred.   Replacements   and  improvements  are
capitalized.

                                       F-9

Balance Sheet Financial Instruments:  Fair Values

     The carrying amount reported in the  consolidated  balance sheets for cash,
accounts  receivable,  accounts  payable and short-term debt  approximates  fair
value  because  of the  immediate  or  short-term  maturity  of these  financial
instruments.  The carrying  amount  reported  for  "Revolving  Credit  Facility-
Long-Term"  approximates  fair value  because  the  underlying  instrument  is a
variable  rate note that  reprices  frequently.  The fair value of the Company's
previous  fixed  interest rate swap  agreements and fixed rate debt was based on
estimates  using standard  pricing models that take into  consideration  current
interest rate market conditions supplied by independent financial institutions.

     Financial   instruments   which   potentially   subject   the   Company  to
concentrations of credit risk consist principally of trade accounts  receivable.
The  risk is  limited  due to the  large  number  of  individuals  and  entities
comprising the Company's customer base.

Goodwill and other Intangible Assets

     Goodwill and other  intangible  assets  represent the excess of the cost of
net assets acquired in certain contract  transactions and business  acquisitions
over their fair value.  Such amounts are amortized over periods  ranging from 11
years to 30 years.  The Company  periodically  evaluates  the carrying  value of
goodwill and other intangible  assets based on the expected future  undiscounted
operating cash flows of the related business unit.

Income Taxes

     Deferred  income  taxes are  recorded  using  current  enacted tax laws and
rates.  Deferred  income taxes are provided for  depreciation,  inventory  basis
differences,  and accrued  expenses  where there is a  temporary  difference  in
recording such items for financial reporting and income tax reporting purposes.

Other Deferred Costs

     Other deferred costs include  capitalized  financing  costs which are being
amortized  on a straight  line basis over  periods  from three to seven years to
correspond  with  the  terms  of  the  underlying  debt.  In  addition,  certain
capitalized  assets resulting from contractual  obligations are included and are
being amortized on a straight line basis over periods of up to five years.

Advertising and Promotion Expense

     Production  costs  of  future  media   advertising  and  related  promotion
campaigns are deferred until the advertising events occur. All other advertising
and  promotion  costs are expensed over the course of the year in which they are
incurred.

Interest Expense, Net

     Interest expense includes  interest on debt and capital lease  obligations,
purchase  discounts on invoice  payments,  the  amortization of finance fees, as
well as hedge and swap  agreements,  and the amortization of the discount on the
senior notes.

                                      F-10

Foreign Currency Translation

     The financial  statements of foreign  subsidiaries are translated into U.S.
dollars in accordance  with Statement of Financial  Accounting  Standards No. 52
("SFAS No.  52").  Translation  adjustments,  which  result  from the process of
translating foreign financial statements into U.S. dollars, are accumulated as a
separate component of other comprehensive income.

Other Comprehensive Income

     In July 1997, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting Standards No. 130 ("SFAS 130"),  "Reporting  Comprehensive
Income." The statement  addresses the reporting and display of changes in equity
that result from transactions and other economic events,  excluding transactions
with owners.  The adoption of SFAS No. 130 did not have a material impact on the
Company's financial statements,  as comprehensive income was equal to net income
in 1999, 1998 and 1997.

Use of Estimates

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

3.   SUBSEQUENT EVENTS AND GOING CONCERN MATTERS

Proceedings Under Chapter 11 of the Bankruptcy Code

     On April 5, 2000,  the Company and ten of its  subsidiaries  (collectively,
the "Debtors") filed voluntary petitions with the United States Bankruptcy Court
for the Northern  District of Georiga for  reorganization  under Chapter 11 (the
"Chapter 11 Cases"). The Chapter 11 Cases have been consolidated for the purpose
of joint  administration  under Case No.  00-65214.  The Debtors  are  currently
operating their businesses as  debtors-in-possession  pursuant to the Bankruptcy
Code.  All  affiliated  entities of the  Company are  included in the Chapter 11
Cases,  except  only (a) three  subsidiaries  which are  licensed  managed  care
organizations and (b) foreign subsidiaries of the Company.

     The Debtors expect to file a reorganization  plan or plans that provide for
emergence  from  bankruptcy  in 2000 or 2001.  Management  anticipates  that its
reorganization plan will include closing additional  under-performing stores and
restructuring  the Company's  debt and equity.  There can be no assurance that a
reorganization plan or plans will be proposed by the Debtors or confirmed by the
Bankruptcy  Court,  or that  any such  plan(s)  will be  consummated.  A plan of
reorganization  could result in holders of the Common  Stock  receiving no value
for their  interests.  Because  of such  possibilities,  the value of the Common
Stock is highly speculative.
                                      F-11

Debtor-in Possession Financing

     On April 5, 2000, the Bankruptcy  Court entered an interim order permitting
the Company to enter into debtor-in  possession  financing with Foothill Capital
Corporation  (the "DIP  Facility").  The DIP Facility  remains  subject to final
Bankruptcy  Court  approval.  A hearing for this purpose has been set for May 3,
2000.  See Item 1 - "Business  - Chapter 11 Cases." If and when  approved by the
Bankruptcy  Court in a final order,  the DIP Facility will refinance all amounts
previously outstanding under the Foothill Credit Facility and provide additional
working capital.  As of April 5, 2000, the Company had borrowed a total of $15.4
million  (inclusive of the $12.5  million term loan portion)  under the Foothill
Credit Facility.

     Under the facility,  the Company may borrow up to $25 million (inclusive of
amounts  outstanding  under the Foothill  Credit  Facility),  subject to certain
limitations,  to  fund  ongoing  working  capital  needs  while  it  prepares  a
reorganization  plan.  The DIP Facility  includes a maximum of $12.5  million in
revolving  loans.  The DIP  Facility  also  contains a $12.5  million  term loan
bearing  interest at 15% per annum.  The DIP Facility  requires that the Company
have a rolling  twelve month EBITDA of no less than $15 million during its term,
which  expires on May 31,  2001.  Events  occuring in the Chapter 11 Cases could
result  in  earlier  termination.   The  DIP  Facility  includes  a  $4  million
sub-facility  for letters of credit.  Interest rates on the revolver  portion of
the DIP Facility are based on either the Wells Fargo Bank,  N.A.  Base Rate plus
2% or the Adjusted  Eurodollar  Rate plus 3.25%.  The DIP Facility is secured by
substantially  all of the assets of the  Company and its  subsidiaries,  subject
only to valid,  enforceable,  subsisting and non-voidable  liens of record as of
the date of commencement of the Chapter 11 Cases and other liens permitted under
the DIP Facility.

     The DIP Facility  contains  customary  covenants  including,  among others,
covenants restricting the incurrence of indebtedness,  the creation or existence
of liens,  the guarantee of other  indebtedness,  the  declaration or payment of
dividends,  the  repurchase or  redemption of debt and equity  securities of the
Company, change in business activities,  affiliate  transactions,  change in key
management and certain  corporate  transactions,  such as sales and purchases of
assets,  mergers,  or  consolidations.  The DIP  Facility  also  limits  capital
expenditures,  investments,  prepayments of other indebtedness, and requires the
delivery of financial and other  information to Foothill.  The DIP Facility also
contains  certain  customary  default  provisions  and  also  specifies  certain
possible  occurrences  in the Chapter 11 Cases  which could  result in events of
default.

     Availability  under the DIP Facility is limited to certain  percentages  of
accounts receivable and inventory, subject to other limitations based on rolling
twelve-month historical EBIDTA and rolling 60-day cash collections.

                                      F-12

     The Company  believes the DIP Facility (if approved by the Bankruptcy Court
in a final  order)  should  provide it with  adequate  liquidity  to conduct its
operations  while it prepares a  reorganization  plan.  However,  the  Company's
liquidity, capital resources, results of operations and ability to continue as a
going concern are subject to known and unknown risks and uncertainties. See Item
7 -  "Management's  Discussion  and  Analysis  and Results of  Operations - Risk
Factors."

Going Concern Matters

     The accompanying  consolidated financial statements have been prepared on a
going concern basis of accounting and do not reflect any adjustments  that might
result if the Company is unable to continue as a going  concern.  The  Company's
recent losses and negative cash flows from operations, and the Chapter 11 Cases,
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern.   As  discussed  above,   management  intends  to  submit  a  plan  for
reorganization  to the Bankruptcy  Court. The ability of the Company to continue
as a going  concern  and  appropriateness  of using the going  concern  basis is
dependent  upon,  among other things,  (i) the  Company's  ability to obtain and
comply with  debtor-in-possession  financing agreements,  (ii) confirmation of a
plan of reorganization under the Bankruptcy Code, (iii) the Company's ability to
achieve profitable  operations after such  confirmation,  and (iv) the Company's
ability to generate sufficient cash from operations to meet its obligations.

     Management  believes that, subject to the approval of the Bankruptcy Court,
the  DIP  Facility,  along  with  cash  provided  by  operations,  will  provide
sufficient  liquidity  to allow the  Company  to  continue  as a going  concern;
however,  there  can be no  assurance  that the  sources  of  liquidity  will be
available or sufficient to meet the Company's needs. The consolidated  financial
statements  do not  include  any  adjustments  relating  to  recoverability  and
classification  of recorded  asset amounts or the amount and  classification  of
liabilities  that might be necessary should the Company be unable to continue as
a going concern.

     A plan of  reorganization  could  materially  change the amounts  currently
recorded in the consolidated  financial statements.  The consolidated  financial
statements do not give effect to any  adjustment to the carrying value of assets
or amounts and  classifications  of  liabilities  that might be  necessary  as a
result of the Chapter 11 Cases.

4.   SIGNIFICANT PROVISIONS

     Provision for Managed Care Receivables
     --------------------------------------

     During  1999,  the  Company  continued  its  efforts  with its third  party
processor to timely  collect  managed care  receivable  accounts.  In the fourth
quarter,  management  concluded  these  efforts were not  achieving  anticipated
results and,  consequently,  determined  an  additional  provision  for doubtful
accounts was warranted.

                                     F-13

     Impairment loss of long-lived assets
     ------------------------------------

     In accordance  with  Statement of Financial  Accounting  Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed  Of" ("SFAS  121"),  the Company  periodically  reviews the recorded
value of its  long-lived  assets to determine  if the future cash flows  derived
from these properties will be sufficient to recover the remaining recorded asset
values.  As a result of this review in the fourth  quarter of 1999,  the Company
recorded a noncash  pre-tax  charge of $1.9 million.  The  write-down  primarily
represents   leasehold   improvements   and   furniture   and  fixtures  for  36
under-performing   stores.  The  36  stores  are  concentrated  in  Florida  and
California.  Factors  leading  to the  impairment  of these  assets  included  a
combination of historical losses,  anticipated future losses and inadequate cash
flows.

     Extraordinary Item
     ------------------

     The  Company  recorded  an  extraordinary  loss of  $406,000 as a result of
refinancing  the  Company's  revolving  credit  facility.  (See  Note  8).  This
necessitated  the write-off of capitalized  costs  associated  with the previous
credit facility. Due to the Company's decision to fully reserve for the 1999 tax
benefit, the net tax effect on the extraordinary item is zero.

5.   WAL-MART MASTER LICENSE AGREEMENT AND OTHER AGREEMENTS

     Wal-Mart Agreement
     ------------------

     In 1994, the Company and Wal-Mart replaced their original  agreement with a
new master license agreement (the "Wal-Mart Agreement"), which increased minimum
and percentage  license fees payable by the Company and also granted the Company
the  opportunity  to  operate up to 400 vision  centers in  existing  and future
Wal-Mart  stores  (379  vision  centers  were in  operation  under the  Wal-Mart
Agreement at fiscal year end 1999). In January 1995, the Company made a lump sum
payment in exchange for such  opportunity.  The payment is being  amortized over
the initial term of the vision centers opened  subsequent to January 1, 1995. In
1997, the Wal-Mart Agreement was amended to provide that Wal-Mart must, by April
1, 2000,  grant the Company the  opportunity to operate 400 vision centers under
the Wal-Mart  Agreement,  and that,  with one exception,  all new vision centers
opened after 1997 will be located in California and North Carolina.  Each vision
center covered by the Wal-Mart Agreement has a separate license. Pursuant to the
Wal-Mart Agreement, the term of each such license is nine years with a renewable
option for one additional  three-year term.  Percentage  license fees remain the
same over the nine-year base term and three- year option term,  whereas  minimum
license fees increase during the three-year option term.

                                     F-14

     Consulting and Management Agreement
     -----------------------------------

     Among  other  things,  the  Wal-Mart  Agreement  requires  an  independent,
licensed  optometrist  to  practice  adjacent  to or near each of the  Company's
vision centers for at least 48 hours per week. In 1990, the Company entered into
a long-term  consulting and management service agreement,  as amended,  with two
companies  (Eyecare Leasing,  Inc. ("ELI") and  Stewart-Phillips,  Inc. ("SPI"))
jointly owned by two  shareholders to recruit such  optometrists  for certain of
its vision centers.  Subject to applicable  state  regulations,  this agreement,
among other things,  required the Company to provide space and certain equipment
to the optometrists for which the optometrists pay the Company an occupancy fee.
In exchange  for their  services,  ELI and SPI  received  certain fees under the
agreement.  The net payments offset  occupancy  expense incurred by the Company.
Occupancy expense is a component of cost of goods sold.

     In January 1997, the Company completed various  transactions related to its
relationship with each of ELI and SPI. The transactions involved the termination
of such consulting agreement and transfer of the responsibilities of ELI and SPI
to a subsidiary of the Company. As a result of these  transactions,  the Company
acquired the right to the payments which  otherwise  would have been made to ELI
and SPI under the consulting  agreement.  The aggregate cost of the transactions
was $4.6 million,  which was  capitalized  as an  intangible  asset and is being
amortized  over the remaining life of the original term of vision center leases.
The Company  made a lump sum  payment of  $500,000  at closing and entered  into
promissory  obligations  for the balance,  payable over a 12-year period at 6.4%
interest.

     Mexico Agreement
     ----------------

     In 1994,  the Company  opened 8 vision centers in stores owned and operated
by Wal-Mart de Mexico, S.A. de C.V. ("Wal-Mart de Mexico"). In 1995, the Company
completed the negotiation of a master license  agreement  governing these vision
centers.  Pursuant to this agreement,  each vision center has an individual base
term of five years from the date of opening,  followed by two options  (each for
two years), and one option for one year. Each party has the right to terminate a
location which fails to meet specified sales levels.  The agreement provides for
annual fees based on a minimum and percentage of sales. The agreement also gives
the  Company a right of first  refusal to open  vision  centers in all stores in
Mexico owned by Wal-Mart de Mexico.  As of January 1, 2000, the Company operated
27 vision centers in Wal- Mart de Mexico stores.

     Sam's Club
     ----------

     The Company  also  operates  111 vision  centers in Sam's Club stores in 21
states.  Each such vision center is subject to a separate lease,  which provides
for  payment  of  percentage  and  minimum  rent and other  customary  terms and
conditions.  The leases for these vision  centers began expiring in 1998 and the
term for the remaining  leases will expire at various  times  through 2003.  The
Company has no option or right to extend the term of these leases.

                                      F-15

     Fred Meyer
     ----------

     The Company operates 54 leased vision centers in stores owned by Fred Meyer
pursuant to a master license  agreement.  The agreement provides for minimum and
percentage  rent and  other  customary  terms  and  conditions.  The term of the
agreement  is for five years  (expiring  December  31,  2003),  with a five-year
option.

6.   ACQUISITIONS

     On July 28, 1998, the Company acquired all the outstanding capital stock of
Frame-n-Lens Optical, Inc.  ("Frame-n-Lens") in a transaction accounted for as a
purchase business combination.  Prior to the acquisition,  Frame-n-Lens operated
approximately  280 retail optical centers in 23 states.  The aggregate  purchase
price was $50  million  of which  $23  million  was paid in cash and  additional
borrowings from the Company's credit facilities, $24 million was assumed in debt
and  liabilities,  and  $3  million  was  established  as  a  deferred  purchase
obligation to be paid in quarterly installments over six years.

     The Company has  deposited  installment  payments of the deferred  purchase
obligation  into a separate  Company bank  account.  As of January 1, 2000,  the
Company had  deposited a total of  $833,000  which is included in the  Company's
cash  balance.  The Company has the right to  withhold  payment of the  deferred
purchase   obligation   based  upon  the   identification   of  any  undisclosed
liabilities. The Company is currently defending a class-action lawsuit which was
filed  against  Frame-n-Lens  and which was not  disclosed to the Company at the
time of  acquisition.  Although  management  cannot  predict the outcome of this
litigation,  we  believe  that the  amount  accrued  for the  deferred  purchase
obligation  will be  sufficient  to cover any  costs  incurred  related  to this
lawsuit.

     The excess of cost over fair value of assets acquired was $41 million,  and
is being amortized over 30 years using the straight-line  method. At the date of
acquisition  the assets of  Frame-n-Lens  included  approximately  $9 million of
goodwill.  Frame-n-Lens'  financial  position  and  results  of  operations  are
included with those of the Company for the periods subsequent to the date of the
acquisition.

     On October 23, 1998, the Company acquired all the outstanding capital stock
of New West  Eyeworks,  Inc.  ("New West") in a  transaction  accounted for as a
purchase  business  combination.  Prior to the  acquisition,  New West  operated
approximately  175 retail optical centers in 13 states.  The aggregate  purchase
price was $79 million,  including  the  assumption of certain  indebtedness  and
acquisition-related  expenses  which were paid with a portion of the proceeds of
the  Company's  12 3/4%  Senior  Notes  due 2005  (the  "Notes")  (See Note 8 to
consolidated  financial  statements).  In September  1999,  the Company sold the
Tempe  manufacturing  facility acquired from New West Eyeworks for approximately
$1 million.

                                      F-16

     The excess of cost over fair value of the assets  acquired  was $64 million
and is being amortized over 30 years using the straight-line  method. New West's
financial  position and results of  operations  are  included  with those of the
Company in the period subsequent to the date of the acquisition.

     The following  summary  prepared on an unaudited basis presents the results
of operations of the Company  combined with  Frame-n-Lens and New West as if the
acquisitions had occurred at the beginning of the periods  presented,  after the
impact of certain  adjustments.  These  adjustments  include 1) the cost savings
related to the  consolidation of duplicative  manufacturing  and  administrative
support  facilities,  2) the  amortization  of goodwill,  3) increased  interest
expense on the acquisition  debt, 4) elimination of interest on debt repaid with
proceeds from the Notes and 5) the related  income tax effects for the following
year ended (amounts in thousands, except per share amounts):

                                       January 2,            January 3,
                                         1999                  1998
                                     (unaudited)            (unaudited)
                                    -------------          -----------
 Net sales                           $  325,670             $  313,937
 Operating income                    $   15,831             $   18,518
 Net (loss)                          $   (2,811)            $     (475)
 (Loss) per share                    $    (0.13)            $    (0.02)
- -----------------------------------------------------------------------

     The pro forma results are not necessarily indicative of what actually would
have  occurred  if the  acquisitions  had  occurred as of the  beginning  of the
periods presented.

     In October 1997, the Company  acquired all the outstanding  common stock of
Midwest Vision,  Inc.  ("Midwest") in a transaction  accounted for as a purchase
business  combination.  Prior to the  acquisition,  Midwest  operated  51 retail
optical centers in Minnesota,  Wisconsin,  Iowa and North Dakota.  The aggregate
purchase price was approximately $5 million, including assumed long-term debt of
approximately  $1  million.  The  excess of cost over fair  value of the  assets
acquired was $2 million and is being amortized on a straight-line  basis over 15
years. The purchase price was paid in cash of $2 million, a note payable of $0.6
million and 110,975  shares of the  Company's  common  stock.  In addition,  the
Company  issued a put option to the seller,  entitling the seller to put 100,000
of such shares to the Company at $9.00 per share in January 2000.  Subsequent to
January 1, 2000, the seller  exercised the put option.  The Company has not paid
this obligation.  Any claims asserted by the seller will be addressed during the
Company's  Chapter  11  proceedings.  (See  Note  3  to  Consolidated  Financial
Statements.) The additional  obligation has been reflected as redeemable  common
stock.

                                      F-17

7.   INVENTORY

     The Company  classifies  inventory as finished  goods if such  inventory is
readily  available  for  sale to  customers  without  assembly  or  value  added
processing.  Finished goods include contact lenses,  over the counter sunglasses
and  accessories.  The  Company  classifies  inventory  as raw  material if such
inventory  requires  assembly  or value  added  processing.  This would  include
grinding a lens blank, "cutting" the lens in accordance with a prescription from
an  optometrist,  and  fitting  the lens in a frame.  Frames  and uncut lens are
considered  raw material.  A majority of the Company's  sales  represent  custom
orders;  consequently,  the majority of the Company's inventory is classified as
raw material.

     Inventory  balances,  by  classification,  may  be  summarized  as  follows
(amounts in thousands):
                                               1999           1998
                                            ---------      ---------
 Raw material                               $  24,408      $  22,814
 Finished goods                                 8,804          7,634
 Supplies                                       1,161          1,222
                                            ---------      ---------
                                            $  34,373      $  31,670
                                            =========      =========
8.   LONG-TERM DEBT

     Senior Notes
     ------------

     On October 8, 1998,  the  Company  issued its $125  million 12 3/4%  Senior
Notes due 2005 (the "Notes")  pursuant to Rule 144A of the  Securities  Act. The
Notes,  which were sold at a discount for an aggregate  price of $123.6 million,
require  semiannual  interest  payments  commencing on April 15, 1999. The Notes
were issued pursuant to an indenture containing customary provisions  including:
limitations on incurrence of additional indebtedness;  limitations on restricted
payments;   limitations   on  asset  sales;   payment   restrictions   affecting
subsidiaries; limitations on liens; limitations on transactions with affiliates;
and other customary terms. In the event of a Change of Control (as defined), the
Company will be required to offer to  repurchase  the Notes at a purchase  price
equal to 101% of the principal amount thereof, plus accrued and unpaid interest.
The Notes are  guaranteed  by a majority of the Company's  subsidiaries  and are
redeemable  at the option of the Company,  in whole or in part, at 105% of their
principal amount beginning  October 15, 2003 and at 100% on or after October 15,
2004.  In  addition,  the Company  may,  at its option,  redeem up to 35% of the
Notes, plus accrued  interest,  with the net cash proceeds of one or more equity
offerings at a redemption  price equal to 112.75% of the  principal  amount (see
Note 9 for financial information of guarantors).

     A  portion  of the  proceeds  from the  Notes was  utilized  to  extinguish
outstanding  indebtedness on the Company's existing credit facility (such credit
facility was terminated  simultaneously with the repayment),  with the remainder
to be utilized to complete the acquisition of New West and pay for miscellaneous
expenses related to the acquisitions of Frame-n-Lens and New West.

                                      F-18

     In  anticipation  of the Notes  offering,  the Company  entered  into three
anticipatory  hedging  transactions with a notional amount of $100 million.  The
interest rates on these  instruments were tied to U.S.  Treasury  securities and
ranged  from  5.43%  to  5.62%.  The  Company  settled  these  transactions  for
approximately  $4.6 million.  The settlement costs are being treated as deferred
financing costs amortized over the life of the Notes.

     Foothill Credit Facility
     ------------------------

     On  November  12,  1999,  the Company  replaced  its prior  secured  credit
facility with a new $25.0 million secured credit facility with Foothill  Capital
Corporation  (the "Foothill  Credit  Facility").  The Foothill  Credit  Facility
consists of a $12.5 million term loan and a $12.5 million revolver. Availability
under the  revolver  portion  is  limited to  certain  percentages  of  accounts
receivable  and  inventory,  subject  to other  limitations  based on a  rolling
six-month  historical  EBITDA  covenant  and a rolling  60-day cash  collections
covenant. The Foothill Credit Facility expires on May 31, 2002.

     The proceeds of the Foothill  Credit Facility were available for making the
October 15, 1999 payment  under the Senior  Notes,  refinancing  existing  debt,
working capital, and general corporate purposes.  All obligations of the Company
under  the  Foothill  Credit  Facility  are   unconditionally   and  irrevocably
guaranteed jointly and severally by certain of the Company's subsidiaries.

     The revolver under the Foothill Credit Facility bears interest at rates per
annum equal to, at the option of the Company,  either (i)  Foothill's  Reference
Rate plus 2.00% or (ii) the LIBOR rate plus 3.25%.  The term loan portion  bears
interest  at the rate of 15% per annum and may be prepaid at any time,  but only
if at the time of the payment the Company  meets  certain  minimum  availability
requirements. Payment of the principal of the term loan is due on May 31, 2002.

     The Company  paid  origination  fees of 0.50% and 2.00% on the revolver and
the term loan  portions,  respectively.  The Company will pay a fee of 0.50% per
annum on the  unused  portion of the  revolver  and an annual fee of .25% on the
full amount of the revolver.  In December 2000,  the Company,  to the extent the
term loan has not been repaid,  must elect to pay a fee, or interest on the term
loan  increases  monthly.  (The  term loan is  divided  into Term Loan A (in the
amount of $2.5 million) and Term Loan B (in the amount of $10 million);  the fee
is 1% and 2%,  respectively  (payable on the outstanding  balance of Term Loan A
and Term  Loan B),  and the  monthly  interest  increase  is  .125%  and  .375%,
respectively.) In addition,  the Company will pay fees of 1.5% on any letters of
credit issued under the Foothill Credit Facility,  which are calculated based on
the amount of  outstanding  letters of credit.  There is a prepayment  fee of 1%
under the revolver portion of the Foothill Credit Facility.

     The Foothill Credit Facility contains customary covenants including,  among
others,  covenants  restricting the incurrence of indebtedness,  the creation or
existence of liens,  the guarantee of other  indebtedness,  the  declaration  or
payment of dividends, the repurchase or redemption of debt and equity securities
of the Company, change in business activities, affiliate transactions, change in

                                      F-19

key management and certain corporate  transactions,  such as sales and purchases
of assets,  mergers,  or  consolidations.  The  Foothill  Credit  Facility  also
contains  certain  financial  covenants  relating to minimum  rolling  six-month
EBITDA and  rolling  three-month  net worth  requirements,  and  limitations  on
capital  expenditures,  investments,  prepayments  of  other  indebtedness,  and
delivery of financial and other information to Foothill and other matters.

     The Foothill Credit Facility contains certain customary default provisions,
including, among others, payment events of default, breach of representations or
warranties,  covenant defaults, an event of default based on a change in control
of the  Company,  a material  adverse  change  clause,  cross-defaults  to other
indebtedness of, and bankruptcy and judgment defaults against,  the Company, and
uninsured losses.

     As of January 1, 2000,  the Company is in  violation  of certain  financial
covenants under its Foothill Credit  Facility.  The Company filed for protection
under  Chapter  11 of the  Bankruptcy  Code on April  5,  2000.  (See  Note 3 to
Consolidated Financial Statements).

     Prior Credit Facility
     ---------------------

     On October 8, 1998,  the Company  entered  into a $25.0  million  revolving
credit  facility.  The  availability  under the credit  facility  was limited to
certain percentages of accounts receivable,  inventory and twelve-month trailing
EBITDA. All obligations of the Company under the credit facility were guaranteed
by a  majority  of the  Company's  subsidiaries.  Borrowings  under  the  credit
facility  were  secured  by  substantially  all  assets of the  Company  and its
subsidiaries.

     The credit  facility  charged  interest at rates per annum equal to, at the
option  of the  Company,  either  (i) the  applicable  Reference  Rate  plus the
applicable  margin  or (ii) the  LIBOR  rate  plus the  applicable  margin.  The
applicable  margin was a maximum of 2.00% for the  Reference  Rate and 3.25% for
the LIBOR rate.  The Company paid a fee of 0.50% per annum on the unused portion
of the credit facility.

     1997 Facility
     -------------

     In July 1997, the Company  entered into a syndicated  $45 million  two-year
unsecured  revolving  credit  facility.  Commitment  fees payable on the average
daily balance of the unused portion of the credit  facility were 0.25% per annum
in 1998 and 1997.

     The Company  paid  approximately  $710,110  and  $811,288  in various  fees
related to its various credit facilities in 1998 and 1999, respectively.

                                      F-20

     Unsecured Notes
     ---------------

     The Company  entered into  unsecured  promissory  notes relative to various
transactions  completed with the Frame-n-Lens and New West  acquisitions in 1998
and the ELI and Midwest Vision  acquisitions in 1997 (See Note 6). The notes are
fixed rate  instruments,  with rates  ranging  from 6.4% to 8.5%.  At January 1,
2000, future minimum principal payments on total indebtedness, excluding capital
leases, were as follows (amounts in thousands):

 2000                                           $   20,154
 2001                                                  974
 2002                                                  545
 2003                                                  373
 2004                                                  373
 Thereafter                                        129,459
                                                -----------
                                                $  151,878
                                                ===========
Long-Term Debt Balances
- -----------------------

     Long-term debt obligations at January 1, 2000 and January 2, 1999 consisted
of the following (amounts in thousands):

                                                                1999               1998
                                                             ---------          ----------
                                                                          
        12 3/4% Senior Notes Due 2005                        $125,000           $ 125,000
        Discount on 12 3/4 % Senior Notes                      (1,253)             (1,391)
        Borrowings under New Credit Facility                   19,292                  --
        Borrowings under Prior Credit Facility                     --               6,000
        Other promissory notes                                  7,586               8,344
                                                             ---------          ---------
                                                             $150,625           $ 137,953
        Less current portion                                   20,154               1,518
                                                             ---------          ---------
                                                             $130,471           $ 136,435
                                                             =========          =========

     As of January 1, 2000, the Company had borrowed $19.3 million under the New
Facility at a weighted average interest rate of 13%. The aggregate fair value of
the Company's  long-term debt  obligation  under the Foothill Credit Facility is
estimated to approximate its carrying value.

     This  note  contains   information   regarding  the  Company's   short-term
borrowings  and  long-term  debt as of January 1,  2000.  On April 5, 2000,  the
Company  filed  the  Chapter  11  Cases.  See Note 3 to  Consolidated  Financial
Statements.  As a result of the filing of the Chapter 11 Cases,  no principal or
interest  payments  will  be  made  on any  pre-petition  debt  until  a plan of
reorganization  defining the repayment terms has been approved by the Bankruptcy
Court.

9.   FINANCIAL INFORMATION OF GUARANTORS

     The Company's  wholly owned domestic  subsidiaries,  Midwest Vision,  Inc.;
NVAL  Healthcare  Systems,   Inc.;   International   Vision  Associates,   Ltd.;
Frame-n-Lens Optical, Inc.; Vision Administrators,  Inc.; Family Vision Centers,
Inc.; New West Eyeworks,  Inc.; Alexis Holdings Company, Inc.; and Vista Eyecare
Network,  LLC  (collectively,  the  "Guarantors"),  have  guaranteed on a senior
unsecured  basis,  jointly  and  severally,  the  payment of the  principal  of,
premium,  if any,  and  interest  on the Notes.  Combined  summarized  financial
information of the Guarantors is presented below (amounts in thousands):

                                      F-21

 For the years ending:               January 1, 2000         January 2, 1999        January 3, 1998
                                     ---------------         ---------------        ---------------
                                                                              
 Net sales                           $    123,090              $   49,904              $    3,540
 Gross profit                        $     63,747              $   21,545              $    1,816
 Net  (loss)                         $    (10,151)             $   (2,861)             $      (39)

                                     January 1, 2000         January 2, 1999        January 3, 1998
                                     ----------------        ---------------        ---------------
 Current assets                      $     14,287              $   22,080              $   2,239
 Noncurrent assets                   $     16,574              $   15,832              $   3,970
 Current liabilities                 $     25,742              $   18,979              $     836
 Noncurrent liabilities              $      3,265              $    3,748              $    --

10.   COMMITMENTS AND CONTINGENCIES

     Noncancelable Operating Lease and License Agreements
     ----------------------------------------------------

     As of  January  1,  2000,  the  Company  is a  lessee  under  noncancelable
operating lease  agreements for certain  equipment which expire at various dates
through  2003.  Additionally,  the  Company  is  required  to  pay  minimum  and
percentage  license fees pursuant to certain  commercial  leases and pursuant to
its agreements with its host store companies.

     Effective  December 20, 1991,  the Company  entered into a lease  agreement
with Wal-Mart for  approximately  66,000 square feet of corporate  office space.
The term of the lease is ten years  with a renewal  option of seven  years.  The
Company paid Wal-Mart  approximately  $215,000  annually in rental fees in 1999,
1998, and 1997.

     In connection with its  acquisition of Midwest  Vision,  Inc. (See Note 6),
the Company entered into a ten-year lease for administrative headquarters and an
optical laboratory located in St. Cloud, Minnesota.  The facility is leased from
the former  owner of Midwest  Vision.  Lease  expense  on the  headquarters  and
laboratory is approximately  $6,667 monthly which, in the opinion of management,
represents a fair market lease rate. Additionally, the Company assumed operating
lease agreements in connection with 51 freestanding  locations obtained from the
acquisition. Lease expense on these leases is approximately $64,000 monthly.

                                       F-22

     In connection with its  acquisitions of Frame-n-Lens and New West (See Note
6),  the  Company  assumed   operating  lease   agreements  in  connection  with
approximately  280 and 175  vision  centers,  respectively,  obtained  from  the
acquisitions.  Through the Frame-n-Lens acquisition, the Company assumed a lease
for a manufacturing and distribution facility located in Fullerton,  California.
This  facility is subject to a lease with a term  expiring  on August 31,  2006.
Lease expense is $408,000 annually for this facility.

     Aggregate future minimum payments under the license and lease  arrangements
are as follows (amounts in thousands):

                                            Capital           Operating
                  Fiscal Year                Leases             Leases
                  -----------                ------             ------
                                                       
 2000                                       $   259          $  33,102
 2001                                           136             30,251
 2002                                            13             24,965
 2003                                           ---             18,102
 2004                                           ---             11,166
 Thereafter                                     ---             17,185
                                            -------          ---------
 Total minimum lease payments               $   408          $ 134,771
 Less amounts representing interest              31          =========
                                            -------
 Present value of minimum capital lease
    payments                                    377

 Less current installments of obligations       236
    under capital leases                    -------

 Obligations under capital leases
    excluding current installments          $   141
                                            =======

     Total rental expenses  related to cancelable and  non-cancelable  operating
leases were approximately,  $43.1 million, $30.1 million, and $22.8 million, for
the years  ended  January  1,  2000,  January  2,  1999,  and  January  3, 1998,
respectively.

     Guy Laroche and Gitano Trademark Licenses
     -----------------------------------------

     The Company  has a license  agreement  with Guy  Laroche of North  America,
Inc.,  giving the Company the right to use the  trademark  "Guy  Laroche" in its
vision  centers in North  America.  The  agreement  requires  the Company to pay
minimum and percentage  royalties on retail and wholesale sales. The Guy Laroche
agreement,  as amended,  expires on  December  31,  2001.  Under the Guy Laroche
agreement,  the Company paid $310,000,  $389,000,  and $397,000,  in fees during
1999, 1998, and 1997, respectively.

                                     F-23

     In 1999,  1998, and 1997, the Company paid $53,000,  $96,000,  and $121,000
respectively,  in fees to Gitano,  Inc. and its successors in connection  with a
license  agreement  (which  expired in 1998) which gave the Company the right to
use the "Gitano" trademark in its vision centers.

       Change in Control and Other Arrangements
       ----------------------------------------

     There are  agreements  between  the  Company  and  twelve of its  executive
officers  which  provide  severance  benefits  in the  event of  termination  of
employment  under  certain  circumstances  following  a change in control of the
Company (as defined).  The  circumstances  are  termination by the Company other
than because of death or disability  commencing prior to a threatened  change in
control (as defined), or for cause (as defined), or by the officer as the result
of a voluntary  termination  (as defined).  Following any such  termination,  in
addition to  compensation  and  benefits  already  earned,  the officer  will be
entitled to receive a lump sum severance  payment equal to up to three times the
officer's  annual  rate of base  salary.  The  term of each  agreement  is for a
rolling  three-years  unless the Company  gives  notice that it does not wish to
extend such term,  in which case the term of the  agreement  would  expire three
years from the date of the notice.

11.  INCOME TAXES

     The  Company  accounts  for  income  taxes  under  Statement  of  Financial
Accounting  Standards  (SFAS No.  109)  "Accounting  for  Income  Taxes,"  which
requires the use of the  liability  method of  accounting  for  deferred  income
taxes.  The  components  of the net  deferred  tax  assets/(liabilities)  are as
follows (amounts in thousands):

                                           As of January 1,   As of January 2,
                                                 2000               1999
                                           ----------------   ----------------

 Total deferred tax liabilities                $ (8,980)           $ (9,001)
 Total deferred tax assets                       17,918              12,757
 Valuation allowance                             (8,553)             (3,371)
                                               --------           ---------
 Net deferred tax asset                        $    385            $    385
                                               ========           =========

     The sources of the  difference  between the  financial  accounting  and tax
basis of the  Company's  liabilities  and assets which give rise to the deferred
tax  liabilities  and  deferred  tax assets  and the tax  effects of each are as
follows (amounts in thousands):

                                     F-24

                                           As of January 1,   As of January 2,
                                                 2000               1999
                                           ----------------   ----------------
                                                            
 Deferred tax liabilities:
   Depreciation                                $  4,935            $  4,691
   Reserve for foreign losses                     2.218               2,218
   Other                                          1,827               2,092
                                               --------           ---------
                                               $  8,980            $  9,001
                                               ========           =========
 Deferred tax assets:
   Accrued expenses and reserves               $  3,206            $  3,292
   Inventory basis differences                      171                 456
   Net operating loss carryforwards              10,698               5,507
   Alternative minimum tax                        2,062               2,483
   Other                                          1,781               1,019
                                               --------           ---------

                                               $ 17,918           $  12,757
                                               ========           =========

     The  consolidated  provision  for income  taxes  consists of the  following
(amounts in thousands):

                                                 Year Ended
                                    ------------------------------------
                                     January 1,  January 2,  January 3,
                                        2000        1999        1998
                                        ----        ----        ----
 Current:
    Federal                         $     0      $  1,426    $  1,937
    State                                 0           191         330
                                    --------    ---------    --------
                                          0         1,617       2,267
                                    --------    ---------    --------
 Deferred:
    Federal                               0           338       1,296
    State                                 0            82         145
                                    --------    ---------    --------
                                          0           420       1,441
                                    --------    ---------    --------
 Total Provision for Income         $     0      $  2,037    $  3,708
   Taxes                            ========    =========    ========

                                      F-25

     The tax expense differs from the amounts resulting from multiplying  income
before income taxes by the statutory  federal  income tax rate for the following
reasons (amounts in thousands):

                                                                                  Year Ended
                                                               -------------------------------------------------
                                                               January 1,         January 2,         January 3,
                                                                  2000               1999               1998
                                                               ----------         ----------         ----------
                                                                                                
 Federal income tax(benefit) provision at statutory rate        $(5,971)           $1,853             $3,156
 State income taxes, net of federal income tax benefit             (439)              180                314
 Foreign losses not deductible for U.S. federal tax purposes          3                37                 65
 Change in valuation allowance for U.S. federal and state taxes   5,182              (548)
 Nondeductible goodwill                                           1,425               292
 Other, net                                                        (200)              223                173
                                                                --------           -------            -------
                                                                $    0             $2,037             $3,708
                                                                ========           =======            =======

     At January 1, 2000,  the Company had U.S.  regular tax net  operating  loss
carryforwards  of $28.5 million that can reduce future federal income taxes.  If
not utilized,  these  carryforwards  will expire  beginning in 2007. The Company
also has  non-expiring  alternative  minimum  tax credit  carryforwards  of $2.1
million available to offset future regular taxes.

     On July 28, 1998, the Company acquired all of the outstanding capital stock
of Frame-n-Lens.  The Company accounted for the acquisition as a purchase,  with
the excess of the purchase price over the fair value of the net assets  acquired
to be allocated to goodwill.  Frame-n-Lens had net operating loss  carryforwards
of $1.4 million.

     On October 25, 1998,  the Company  acquired all of the  outstanding  common
stock and common stock  equivalents of New West.  The Company  accounted for the
acquisition  as a purchase,  with the excess of the purchase price over the fair
value of the net assets  acquired to be allocated to goodwill.  New West had net
operating  loss  carryforwards  of $5.5 million and $4.9 million for regular tax
and  alternative  minimum tax purposes,  respectively,  which begin to expire in
2006.  These net  operating  losses  are  subject  to  limitations  from a prior
ownership change.

     At January 3, 1998,  the  Company  recorded a valuation  allowance  of $2.4
million due to the uncertainty  regarding the realizability of its net operating
loss   carryforwards.   A  portion  of  the  net  operating  loss   carryforward
(approximately  $3.3 million) related to tax benefits (subject to the outcome of
the audit  discussed  below) from the exercise of stock  options  granted by the
former  Chairman  of the Company to two  shareholders  who own  companies  which
recruited optometrists for the Company.

     As a result of an examination by the Internal  Revenue  Service  ("IRS") of
the  Company's  1992  tax  return,   the  Company  adjusted  its  net  operating
carryforward loss by $314,000. the agreement between the Company and the IRS was
reached  in  February  1998 for which no income tax was due or  receivable.  The
Company  reduced its  valuation  allowance  by  approximately  $3.3  million and
increased additional paid-in-capital for this benefit.

                                      F-26

     At January 1, 2000, the Company recorded an additional  valuation allowance
of $5.2 due to the  uncertainty  of the  realizability  of the current  year net
operating losses.

     The Company's net operating loss  carryforward  of $28.5 million at January
1, 2000  could be  limited  in the event of a greater  than 50%  change in stock
ownership of the Company.  The limitation  would be based on the stock value and
the Federal Exempt Tax Rate on the date of ownership  change.  These limitations
could create a cap on the amount of the NOLs that would be deductible  each year
going  forward  until the amount is depleted or the time  limitation on the NOLs
expires.

     In Mexico,  the location of the Company's foreign  operations,  the Company
pays the  greater of its income tax or an asset tax.  Because  the  Company  has
operating losses in Mexico, the Company pays no income tax, but it is subject to
the asset tax.  Therefore,  no  provision  for income taxes has been made on the
Company's books for its operations in Mexico.

12.  EARNINGS PER COMMON SHARE

     In 1997,  the Company  adopted SFAS No. 128,  "Earnings  per Share".  Basic
earnings  per common  share are  computed by dividing net income by the weighted
average number of common shares  outstanding  during the year.  Diluted earnings
per common share are computed as basic  earnings per common share,  adjusted for
outstanding  stock  options that are  dilutive.  The  computation  for basic and
diluted  earnings per share may be summarized  as follows  (amounts in thousands
except per share information):

                                                         1999              1998              1997
                                                                  ----              ----              ----
                                                                                          
 Income/(loss) before extraordinary item                       $(17,156)         $  3,414          $  5,573
 Extraordinary loss, net of tax                                    (406)               --                --
                                                               --------          --------          --------
 Net Income/(loss)                                             $(17,562)         $  3,414          $  5,573
                                                               ========          ========          ========

 Weighted shares outstanding                                     21,068            20,949            20,676

 Basic earnings/(loss) per share:
  Earnings before Extraordinary item                           $  (0.81)         $   0.16          $   0.27
  Extraordinary loss, net of tax                                  (0.02)               --                --
                                                               --------          --------          --------
 Net Income/(loss)                                             $  (0.83)         $   0.16          $   0.27
                                                               ========          ========          ========

 Weighted shares outstanding                                     21,068            20,949            20,676
 Net options issued to employees                                    110               285               163
                                                               --------          --------          --------
 Aggregate shares outstanding                                    21,178            21,234            20,839

 Diluted earnings/(loss) per share:
  Earnings before Extraordinary item                           $  (0.81)         $   0.16          $   0.27
  Extraordinary loss, net of tax                                  (0.02)               --                --
                                                               --------          --------          --------
  Net Income/(loss)                                            $  (0.83)         $   0.16          $   0.27
                                                               =========          ========         ========

                                      F-27

     Outstanding  options with an exercise  price below the average price of the
Company's common stock have been included in the computation of diluted earnings
per common share,  using the treasury stock method, as of the date of the grant.
In 1999,  these  options have been excluded  from the  calculation  due to their
anti-dilutive effect.

13.  SUPPLEMENTAL DISCLOSURE INFORMATION

     Supplemental disclosure information is as follows (amounts in thousands):

     (i) Supplemental Cash Flow Information

                                                                 1999              1998              1997
                                                                 ----              ----              ----
                                                                                          
            Cash paid for
              Interest                                        $17,826             $2,257            $1,582
              Income taxes                                        495              1,918             2,383

     (ii) Supplemental Noncash Investing and Financial Activities

     The  acquisition  information  relates  to the  Frame-n-Lens  and New  West
     acquisitions in 1998 (See Note 6 to Consolidated Financial Statements).

                                                                       1998                 1997
                                                                             --------             --------
                                                                                                 
           Business acquisitions, net of cash acquired
              Fair value of assets acquired                                $   30,240             $  4,459
              Purchase price in excess of net assets acquired                 104,813                6,671
              Liabilities assumed                                             (37,696)              (8,022)
              Stock issued                                                         --                 (836)
                                                                           -----------            --------
           Net cash paid for acquisitions                                  $   97,357             $  2,272
                                                                           ==========             ========

    (iii) Supplemental Balance Sheet Information

     Significant  components of accrued  expenses and other current  liabilities
     may be summarized as follows:

                                                                  1999              1998
                                                               ---------          --------
                                                                             
           Accrued employee compensation and benefits         $  6,343          $   6,966
           Accrued rent expense                                  4,047              3,677
           Accrued license fees                                  1,996              2,184
           Accrued acquisition expenses                          1,678              5,215
           Accrued capital expenditures                          1,345                498

                                      F-28

     (iv) Supplemental Income Statement Information

     The components of interest expense, net, may be summarized as follows:

                                                                  1999           1998              1997
                                                              ---------        --------          --------

           Interest expense on debt and capital leases        $  18,306       $   5,721          $  1,853
           Purchase discounts on invoice payments                   (37)           (509)             (483)
           Finance fees and amortization of hedge and swap
              agreements                                          1,158             407               236
           Interest income                                          (73)            (86)              (38)
           Other                                                    (25)              5               (14)
                                                              ---------        --------          --------
                                                              $  19,329       $   5,538          $  1,554
                                                              =========       =========          ========

14.  EQUITY TRANSACTIONS

     Employee Stock Option and Incentive Award Plan
     ----------------------------------------------

     In 1996, the Company  adopted the Restated Stock Option and Incentive Award
Plan (the "Plan")  pursuant to which  incentive stock options  qualifying  under
Section 422A of the Internal Revenue Code and nonqualified  stock options may be
granted to key  employees.  The Plan also  provides  for the  issuance  of other
equity  awards,  such as awards  of  restricted  stock.  The Plan  replaced  and
restated all the  Company's  prior  employee  stock option  plans.  The Plan was
amended in 1999 to increase the number of shares  under the Plan from  3,350,000
to 4,350,000.  The Plan is  administered  by the  Compensation  Committee of the
Company's Board of Directors.  The  Compensation  Committee has the authority to
determine the persons receiving  options,  option prices,  dates of grants,  and
vesting periods, although no option may have a term exceeding ten years. Options
granted prior to 1996 have a term of five years.

     Directors' Stock Option Plan
     ----------------------------

     In April 1997, the Company adopted the Restated Non-Employee Director Stock
Option Plan (the "Directors'  Plan"),  pursuant to which stock options for up to
500,000  shares of Common Stock may be granted to  non-employee  directors.  The
Directors' Plan replaced and restated the Company's prior non-employee  director
stock option plan. The Directors' Plan provides for automatic  grants of options
to purchase  7,500 shares of the  Company's  common  stock to each  non-employee
director serving on the date of each annual meeting of  shareholders,  beginning
with the 1997 annual meeting.  Of the options  granted,  50% of the shares under
each option are exercisable on the second  anniversary of the grant date, 75% in
three years, and 100% in four years. All option grants are at exercise prices no
less than the market  value of a share of Common  Stock on the date of grant and
are  exercisable  for a ten-year  period.  Options granted under the predecessor
stock  option plan are  exercisable  for a five-year  period.  Options  covering
90,000 shares under the Directors' Plan were exercisable at January 1, 2000.

                                      F-29

     All Stock Option Plans
     ----------------------

     All exercise prices  represent the estimated fair value of the Common Stock
on the date of grant as  determined  by the Board of  Directors.  Of the options
granted,  50% of the shares  under each option are  exercisable  after two years
from the grant date, 75% in three years, and 100% in four years.

     The  Committee  granted a stock option for 100,000  shares of the Company's
common stock to one  executive  officer  which vests at the rate of one-sixth of
the  number of shares  covered  by the  option  for each  month of  service  the
executive renders to the Company.

     Stock option transactions during the three years ended January 1, 2000 were
as follows:

                                                             1999               1998                1997
                                                          ---------           ---------           ---------
                                                                                         
 Options outstanding beginning of year                    2,582,380           2,294,203           1,950,166
 Options granted                                            928,060           1,171,750             631,864
 Options exercised                                          (12,491)           (294,657)             (7,840)
 Options cancelled                                         (882,528)           (588,916)           (279,987)
                                                          ---------            ---------           ---------
 Options outstanding end of year                          2,615,421           2,582,380           2,294,203
                                                          =========           =========           =========
 Options exercisable end of year                            760,162             748,803           1,020,674
                                                          =========           =========           =========
 Weighted average option prices per share:
    Granted                                                $  4.893            $  5.030            $  4.878
    Exercised                                              $  4.500            $  4.989            $  2.168
    Cancelled                                              $  5.044            $  9.461            $  9.640
 Outstanding at year end                                   $  4.832            $  4.881            $  6.028

 Options exercisable end of year                           $  4.369            $  4.973            $  7.891

     The Company has adopted the disclosure provisions of Statement of Financial
Accounting  Standards No. 123,  "Accounting for Stock-Based  Compensation."  The
Company will continue to account for stock option awards in accordance  with APB
Opinion No. 25. Had compensation  cost for the Plan been determined based on the
fair value at the grant date for awards in 1999,  1998, and 1997 consistent with
the  provisions  of SFAS No. 123,  the  Company's  net earnings and earnings per
share would have been reduced to the pro forma amounts  indicated below (amounts
in thousands except per share information):

                                      F-30

                                         1999              1998              1997
                                       --------          --------          --------
                                                                  
 As reported:

   Net earnings (loss)                 $(17,562)         $  3,414          $  5,573
                                       ========          ========          ========

   Earnings (loss) per share           $  (0.83)         $  0.16           $  0.27
                                       ========          ========          ========
 Pro forma:

   Net earnings (loss)                 $(19,266)         $  2,655          $  5,142
                                       ========          ========          ========

   Earnings (loss) per share           $  (0.91)         $  0.13           $  0.25
                                       ========          ========          ========

     Basic and diluted earnings per share are the same for each year.

     The fair value of each option grant is estimated on the date of grant using
the  Black-Scholes   option-pricing   model.  The  following   weighted  average
assumptions were used in the model:

                                         1999              1998              1997
                                       -------           -------           -------
                                                                    
 Dividend yield                          0.00%             0.00%             0.00%

 Expected volatility                       88%               76%               74%

 Risk free interest rates                 5.1%              4.9%              6.1%

 Expected lives (years)                   4.68             4.91              4.51

     The  following  table  shows  the  options   outstanding  and  the  options
exercisable with pertinent data related to each:

                                                 Options Outstanding                    Options Exercisable
- -------------------------------------------------------------------------------------------------------------
                                                      Weighted
                                                       Average        Weighted        Number        Weighted
                                       Number         Remaining        Average      Exercisable      Average
    Range of                        Outstanding      Contractual      Exercise         As of        Exercise
    Exercise Prices                 as of 1/1/00        Life            Price         1/1/00          Price
- --------------------------------------------------------------------------------------------------------------

$1.62 - $4.82                          937,510         6.72            $3.765        483,562          $3.896
$4.83 - $5.32                        1,111,550         7.38            $5.260        256,100          $5.181
$5.33 - $7.88                          566,361         5.97            $5.758         20,500          $5.375
- ------------------------------------------------------------------------------------------------------------
$1.62 - $7.88                        2,615,421         6.84            $4.832        760,162          $4.369

                                      F-31

     Restricted Stock Awards
     -----------------------

     Restricted stock grants,  with an outstanding  balance of 106,000 shares at
January  1, 2000,  were  awarded to certain  officers  and key  employees  which
require  five  years of  continuous  employment  from  the date of grant  before
vesting and receiving the shares without restriction. The number of shares to be
received without restriction is based on the Company's performance relative to a
peer group of  companies.  For awards made in 1998,  restricted  shares,  to the
extent  not  awarded  after  five  years,  vest  after ten years of  employment.
Unamortized  deferred  compensation expense with respect to the restricted stock
was $302,000, and $430,000 at January 1, 2000 and January 2, 1999, respectively,
and is being amortized over the five-year vesting period.  Deferred compensation
expense aggregated $131,000 and $120,000 in 1999 and 1998,  respectively.  There
were no new grants or  forfeitures  of  restricted  stock in 1999.  A summary of
restricted stock granted during 1998 is as follows:

                                                             1998
                                                           -------
 Shares granted                                             67,000
 Shares forfeited                                           15,000
 Weighted-average fair value of
    stock granted during year                              $  5.34

      Preferred Stock
     ---------------

     The Company is  authorized  to issue up to  5,000,000  shares of  preferred
stock, par value $1 per share, with such terms, characteristics and designations
as may be determined  by the Board of  Directors.  No such shares are issued and
outstanding.

     Shareholder Rights Plan
     -----------------------

     In  January  of  1997,  the  Company's   Board  of  Directors   approved  a
Shareholders  Rights Plan (the "Rights Plan").  The Rights Plan provides for the
distribution  of one Right for each  outstanding  share of the Company's  Common
Stock held of record as of the close of  business  on January  27,  1997 or that
thereafter becomes outstanding prior to the earlier of the final expiration date
of the Rights or the first date upon which the Rights become  exercisable.  Each
Right  entitles  the  registered  holder to  purchase  from the Company one one-
hundredth of a share of Series A Participating  Cumulative  Preferred Stock, par
value $0.01 per share, at a price of $40.00 (the "Purchase  Price"),  subject to
adjustment.  The  Rights are not  exercisable  until ten  calendar  days after a
person or group (an "Acquiring Person") buys or announces a tender offer for 15%
or more of the Company's  Common  Stock,  or if any person or group has acquired
such an interest, the acquisition by that person or group of an additional 2% of
the Company's  Common Stock.  In the event the Rights become  exercisable,  then
each Right will entitle the holder to receive that number of shares of Common

                                      F-32

Stock (or, under certain circumstances,  an economically  equivalent security or
securities  of the Company)  having a market value equal to the Purchase  Price.
If, after any person has become an Acquiring Person (other than through a tender
offer approved by qualifying members of the Board of Directors),  the Company is
involved in a merger or other business  combination where the Company is not the
surviving corporation, or the Company sells 50% or more of its assets, operating
income,  or cash flow, then each Right will entitle the holder to purchase,  for
the Purchase  Price,  that number of shares of common or other  capital stock of
the acquiring  entity which at the time of such  transaction have a market value
of twice the Purchase Price. The Rights will expire on January 26, 2007,  unless
extended,  unless  the Rights are  earlier  exchanged,  or unless the Rights are
earlier  redeemed by the Company in whole, but not in part, at a price of $0.001
per Right. In February 1998, the Company's Board of Directors amended the Rights
Plan  effective  March 1, 1998 to  provide  that  Rights  under this plan can be
redeemed  and  certain  amendments  to this plan can be  effected  only with the
approval of the  Continuing  Directors,  which are defined in the Rights Plan as
the current  directors and any future directors that are approved or recommended
by Continuing Directors.

     On April 22,  1999,  the Company  permitted  a group,  of which a director,
Campbell B.Lanier,  III, is a member, to acquire  beneficial  ownership of up to
25% of the  Company's  common stock  without  triggering  the  provisions of the
Rights Plan. By an agreement  dated as of September 9, 1999, the Company further
permitted  the same  group to acquire up to 28% of the  Company's  common  stock
(inclusive of amounts previously  purchased by the group) without triggering the
provisions  of the Rights Plan.  The group agreed that, if it acquired more than
25% of the  outstanding  common stock of the Company,  the group would vote such
additional  shares in the same ratio as all other shares  voted by  shareholders
other than the members of the group and their affiliates.

15.  SELECTED QUARTERLY FINANCIAL DATA (Unaudited)

     Selected  quarterly data for the Company for the fiscal years ended January
1, 2000 and January 2, 1999 is as follows (amounts in thousands except per share
information).

                                      F-33

FISCAL 1999                                                           Quarter Ended
- --------------------------------------------------------------------------------------------------------------
                                              April 3             July 3          October 2        January 1
                                            -----------         ----------      -------------    -------------
Net sales                                   $ 86,634          $   82,531        $  83,262          $  76,628
Cost of goods sold                            37,088              36,745           37,474             36,461
                                            --------            --------          --------          --------
Gross profit                                  49,546              45,786           45,788             40,167
Selling, general, and administrative expense  42,446              42,937           45,355             46,424
Impairment loss on long-lived assets              --                  --               --              1,952
                                            --------            --------          --------          --------
Operating income (loss)                        7,100               2,849              433             (8,209)
Interest expense, net                          4,665               4,743            4,809              5,112
                                            --------            --------          --------          --------
Income (loss) before income taxes              2,435              (1,894)          (4,376)           (13,321)
Provision (benefit) for income taxes             970                (584)          (1,396)             1,010
                                            --------            --------          --------          --------
Income/(loss) before extraordinary item        1,465              (1,310)          (2,980)           (14,331)
Extraordinary item, net of tax                    --                  --               --               (406)
                                             -------            --------          --------          --------
Net income/(loss)                           $  1,465            $ (1,310)         $(2,980)          $(14,737)
                                            ========            ========          ========          ========
Basic earnings (loss) per common share:
 Earnings/(loss) before extraordinary item  $   0.07            $  (0.06)         $ (0.14)          $  (0.68)
 Extraordinary loss                               --                  --               --              (0.02)
                                            --------            --------          --------          --------
Net income/(loss)                               0.07               (0.06)           (0.14)             (0.70)
                                            ========            ========          ========          ========
Diluted earnings (loss) per common share
Earnings/(loss) before extraordinary item  $    0.07            $  (0.06)         $ (0.14)          $  (0.68)
 Extraordinary loss                               --                  --               --              (0.02)
                                            --------            --------          --------          --------
Net income/(loss)                               0.07               (0.06)           (0.14)             (0.70)
                                            ========            ========          ========          ========

 FISCAL 1998                                                          Quarter Ended
- --------------------------------------------------------------------------------------------------------------
                                              April 4             July 4          October 3        January 2
                                            -----------         ----------      -------------    -------------
                                                                                        
Net sales                                   $ 54,408            $ 51,037          $ 67,654          $ 72,232
Cost of goods sold                            24,465              23,890            30,757            33,817
                                            --------            --------          --------          --------
Gross profit                                  29,943              27,147            36,897            38,415
Selling, general, and administrative expense  25,557              23,286            32,995            39,575
                                            --------            --------          --------          --------
Operating income (loss)                        4,386               3,861             3,902            (1,160)
Interest expense, net                            277                 235               736             4,290
                                            --------            --------          --------          --------
Income (loss) before income taxes              4,109               3,626             3,166            (5,450)
Provision (benefit) for income taxes           1,657               1,483             1,314            (2,417)
                                            --------            --------          --------          --------
Net income (loss)                              2,452               2,143             1,852            (3,033)
                                            ========            ========          ========          ========
Basic earnings (loss) per common share      $   0.12            $   0.10          $   0.09          ($  0.14)
                                            ========            ========          ========          ========
Diluted earnings (loss) per common share    $   0.12            $   0.10          $   0.09          ($  0.14)
                                            ========            ========          ========          =========

                                      F-34

16.  REPORTABLE BUSINESS SEGMENTS

     The Company's  operating  business  segments provide quality retail optical
services  and  products  that  represent  high  value  and  satisfaction  to the
customer.  The separate  businesses  within the Company use the same  production
processes  for eyeglass  lens  manufacturing,  offer  products and services to a
broad  range of  customers  and  utilize the  Company's  central  administrative
offices to coordinate product purchases and distribution to retail locations.  A
field  organization  provides  management support to individual store locations.
The Mexico operation has a separate laboratory and distribution center in Mexico
and buys a majority of its products from local vendors. However, market demands,
customer requirements,  laboratory  manufacturing and distribution processes, as
well as product  offerings,  are  substantially  the same for the  domestic  and
Mexico  business.  Consequently,  the Company  considers its domestic and Mexico
businesses as one reportable segment under the definitions  required by SFAS No.
131 - "Disclosures about Segments of an Enterprise and Related Information."

     Information relative to sales and identifiable assets for the United States
and Mexico for the fiscal  years  ended  January 1, 2000,  January 2, 1999,  and
January 3, 1998 are summarized in the following  tables  (amounts in thousands).
Identifiable  assets  include  all  assets  associated  with  operations  in the
indicated   reportable   segment   excluding   inter-company   receivables   and
investments.

                                          United States         Mexico           Other        Consolidated
                                          -------------         ------           -----        ------------
                                                                                   
  1999

     Sales                                  $  325,101         $  3,954         $    --        $  329,055
                                            ==========         ========          ======        ==========
     Identifiable Assets                    $  217,690         $  2,328         $   201        $  220,219
                                            ==========         ========          ======        ==========

  1998

     Sales                                  $  241,705         $  3,429          $  197        $  245,331
                                            ==========         ========          ======        ==========
     Identifiable Assets                    $  226,323         $  2,147          $  627        $  229,097
                                            ==========         ========          ======        ==========

 1997

     Sales                                  $  182,333         $  2,988         $ 1,033        $  186,354
                                            ==========         ========          ======        ==========
     Identifiable Assets                    $   80,284         $  2,279         $   687        $   83,250
                                            ==========         ========          ======        ==========

                                      F-35

                                                     SCHEDULE II

                                        VISTA EYECARE, INC. AND SUBSIDIARIES
                                          VALUATION AND QUALIFYING ACCOUNTS
                               January 1, 2000, January 2, 1999, and January 3, 1998
                                                   (In thousands)

                                                          Additions
                                             ------------------------------------
  Description               Balance at          Charged to         Charged to                          Balance at
                        Beginning of Period  Cash and Expenses    Other Accounts      Deductions      End of Period
- --------------         -------------------   -----------------    ---------------     ----------      -------------
                                                                                         
  Year ended
  January 3, 1998
     Allowance for
     Uncollectible
     Accounts Receivable     $  353                $  928                 --              $  519          $    762

  Year ended
  January 2, 1999
     Allowance for
     Uncollectible
     Accounts Receivable     $  762                $  900               $  726            $  872          $  1,516

  Year ended
  January 1, 2000
     Allowance for
     Uncollectible
     Accounts Receivable     $1,516                $3,384               $  885            $1,382          $  4,403

                                      F-36

                                   SIGNATURES

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

                                         VISTA EYECARE, INC.

                                         By:  /s/James W. Krause
                                         ------------------
                                         James W. Krause
                                         Chairman of the Board & Chief Executive
                                         Officer and Director
Date: April ____, 2000

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant on March __, 2000, in the capacities indicated.

  Signature                             Title

  /s/James W. Krause
- -----------------------------
  James W. Krause                       Chairman of the Board and
                                        Chief Executive Officer and Director

  /s/Angus C. Morrison
- -----------------------------
  Angus C. Morrison                     Senior Vice President, Chief Financial
                                        Officer
                                        (Principal Financial Officer)
  /s/Timothy W. Ranney
- -----------------------------
  Timothy W. Ranney                     Vice President, Corporate Controller
                                        (Principal Accounting Officer)

  /s/Peter T. Socha
- -----------------------------
  Peter T. Socha                        Senior Vice President,
                                        Strategic Planning and Managed Care,
                                        Director
  /s/David I. Fuente
- -----------------------------
  David I. Fuente                       Director

  /s/Ronald J. Green
- -----------------------------
  Ronald J. Green                       Director

   /s/James E. Kanaley
- -----------------------------
  James E. Kanaley                      Director

  /s/Campbell B. Lanier, III
- -----------------------------
  Campbell B. Lanier, III               Director

   /s/J. Smith Lanier, II
- -----------------------------
  J. Smith Lanier, II                   Director

                                  EXHIBIT INDEX

10.15     Amended and Restated Credit Agreement dated as of November 12, 1999 by
          and between the Company and Foothill Capital Corporation.

10.16     Agreement  dated as of  September  9,  1999,  by and  among  the
          Company, ITC Service Company, and Campbell B. Lanier, III.

21        Subsidiaries of the Registrant.

23        Arthur Andersen LLP Consent.

27        Financial Data Schedule.

                      AMENDED AND RESTATED CREDIT AGREEMENT

                                 by and between

                               VISTA EYECARE, INC.
                    (f/k/a National Vision Associates, Ltd.)

                                       and

                          FOOTHILL CAPITAL CORPORATION

                          Dated as of November 12, 1999

                                        1

                                TABLE OF CONTENTS

                                                                         Page(s)

                             SCHEDULES AND EXHIBITS

Schedule C-1               Existing Collateral Access Agreements
Schedule E-1               Eligible Inventory Locations
Schedule S-1               Sub-Concentration Accounts
Schedule 3.1               Uniform Commercial Code Filings and Assignments
Schedule 5.5               Litigation
Schedule 5.10              Taxes
Schedule 5.11              Financial Condition
Schedule 5.12              Environmental Matters
Schedule 5.17              Subsidiaries
Schedule 5.18              Insurance
Schedule 5.25              Material Contracts
Schedule 6.14              Bank Accounts
Schedule 7.1               Permitted Liens
Schedule 7.5               Permitted Indebtedness
Schedule 7.8               Contingent Obligations
Schedule 7.14              Financial Covenants

Exhibit A                  Form of Compliance Certificate
Exhibit B                  Form of Credit Card Agreement
Exhibit C                  Form of Wal-Mart Lease
Exhibit D                  Form of Sam's Club Lease
Exhibit E                  Form of Fred Meyer, Inc. Lease

                                        2

                      AMENDED AND RESTATED CREDIT AGREEMENT

         THIS AMENDED AND  RESTATED  CREDIT  AGREEMENT  (this  "Agreement"),  is
entered into as of November 12, 1999,  between FOOTHILL CAPITAL  CORPORATION,  a
California  corporation,  as lender and as agent for itself and each Person that
purchases any portion of Foothill Capital  Corporation's  rights and obligations
under this Agreement pursuant to Section 15.2 (collectively,  "Lender"),  with a
place of business located at Northpark Town Center, Building 400, 1000 Abernathy
Road, N.E., Suite 1450, Atlanta,  Georgia 30328, and VISTA EYECARE,  INC. (f/k/a
National Vision Associates, Ltd.), a Georgia corporation ("Borrower"),  with its
chief executive  office located at 296 Grayson Highway,  Lawrenceville,  Georgia
30045-5737.

                                    RECITALS

         WHEREAS,  Borrower,  Bank of America, N.A. (f/k/a Bank of America, FSB)
("Bank of America"),  and First Union National Bank ("First  Union") are parties
to that certain  Credit  Agreement  dated as of October 8, 1998, as modified and
amended by that certain  Waiver and  Amendment  dated as of December 4, 1998, as
further  modified and amended by that certain  Waiver and Amendment  dated as of
December 21, 1998,  as further  modified and amended by that certain  Waiver and
Amendment dated as of February 2, 1999, as further  modified and amended by that
certain Amendment dated as of March 31, 1999, as further modified and amended by
that  certain  Waiver and Consent  dated as of September  21,  1999,  as further
modified and amended by that certain  Forbearance  Agreement dated as of October
26, 1999, and as further  modified and amended by the  Assignment  Agreement (as
defined below) (as heretofore  further  modified and amended,  the "Prior Credit
Agreement"); and

         WHEREAS, Lender, Borrower, Bank of America and First Union entered into
that certain  Assignment and  Acceptance of even date herewith (the  "Assignment
Agreement")  pursuant to which Lender (a) purchased all of the Loans (as defined
in the Prior Credit Agreement) and assumed all of the Commitments (as defined in
the Prior Credit  Agreement)  of Bank of America and First  Union,  (b) replaced
Bank  of  America  as  Documentation  Agent  (as  defined  in the  Prior  Credit
Agreement),  and (c)  replaced  First  Union as Issuing  Bank (as defined in the
Prior Credit  Agreement) and the  Administrative  Agent (as defined in the Prior
Credit Agreement); and

         WHEREAS,  Borrower  and Lender,  in its  capacity as the  Documentation
Agent, the Issuing Bank, the Administrative  Agent and the sole Bank (as defined
in the Prior Credit Agreement) under the Prior Credit Agreement, desire to amend
and restate the Prior Credit Agreement in its entirety as set forth herein; and

                                        3

         WHEREAS,  each of  Borrower  and Lender  acknowledges  and agrees  that
Lender shall, for all purposes under this Agreement and the other Loan Documents
(as  defined  herein),  act on its own  behalf  and as agent for itself and each
Person that purchases any portion of Foothill Capital  Corporation's  rights and
obligations  under  this  Agreement  pursuant  to  Section  15.2,  and as  such,
continued  reference  to the roles of the Bank,  the  Documentation  Agent,  the
Issuing Bank and the  Administrative  Agent is no longer necessary or desirable;
and

         WHEREAS,  Borrower  acknowledges and agrees that the security  interest
granted to Lender in its capacity as the Administrative  Agent, on behalf of the
Issuing  Bank,  the  Documentation  Agent and the Banks,  pursuant  to the Prior
Credit  Agreement  and the other Loan  Documents (as defined in the Prior Credit
Agreement),  shall remain outstanding and in full force and effect in accordance
with the Prior Credit Agreement and shall continue to secure the Obligations (as
defined herein); and

         WHEREAS,  each of Borrower and Lender  acknowledges and agrees that, in
view of the  consolidation  of the  roles of the Bank,  the  Issuing  Bank,  the
Documentation Agent and the Administrative  Agent, the security interest granted
to Lender in its  capacity  as the  Administrative  Agent shall  hereinafter  be
considered a security interest granted to Lender acting on its own behalf and as
agent for itself and each Person that purchases any portion of Foothill  Capital
Corporation's  rights and obligations  under this Agreement  pursuant to Section
15.2; and

         WHEREAS, each of Borrower and Lender acknowledges and confirms that (i)
the  Obligations  (as  defined  herein)  represent,   among  other  things,  the
amendment,  restatement,  renewal, extension,  consolidation and modification of
the Obligations (as defined in the Prior Credit Agreement) arising in connection
with the Prior  Credit  Agreement  and other Loan  Documents  (as defined in the
Prior Credit Agreement) executed in connection therewith;  (ii) the Prior Credit
Agreement  and  the  other  Loan  Documents  (as  defined  in the  Prior  Credit
Agreement)   executed  in  connection   therewith  and  the  collateral  pledged
thereunder  shall secure,  without  interruption  or impairment of any kind, all
existing Indebtedness (as defined in the Prior Credit Agreement) under the Prior
Credit  Agreement  and the other Loan  Documents (as defined in the Prior Credit
Agreement)  executed in  connection  therewith  as amended,  restated,  renewed,
extended,   consolidated  and  modified  hereunder,   together  with  all  other
obligations  hereunder;  (iii)  all  Liens  (as  defined  in  the  Prior  Credit
Agreement)  evidenced by the Prior Credit Agreement and the other Loan Documents
(as defined in the Prior Credit Agreement) executed in connection  therewith are
hereby  ratified,  confirmed  and  continued;  and (iv) the Loan  Documents  (as
defined herein) are intended to restate, renew, extend,  consolidate,  amend and
modify the Prior Credit  Agreement  and the other Loan  Documents (as defined in
the Prior Credit Agreement) executed in connection therewith; and

                                        4

         WHEREAS, each of Borrower and Lender intends that (i) the provisions of
the Prior Credit Agreement and the other Loan Documents (as defined in the Prior
Credit  Agreement)  executed in connection  therewith,  to the extent  restated,
renewed,  extended,  consolidated,   amended  and  modified  hereby,  be  hereby
superseded and replaced by the provisions hereof and of the other Loan Documents
(as defined  herein);  and (ii) by entering into and performing their respective
obligations hereunder, this transaction shall not constitute a novation;

         NOW, THEREFORE,  in consideration of the mutual agreements,  provisions
and covenants  contained herein,  the parties hereby amend and restate the Prior
Credit Agreement in its entirety and hereby further agree as follows:

         1.       DEFINITIONS AND CONSTRUCTION.

                  1.1  Definitions.  As used in this  Agreement,  the  following
terms shall have the following definitions:

                           "Account Debtor" means any Person  who  is or who may
become obligated under, with respect to, or on account of, an Account.

                           "Accounts" means all currently existing and hereafter
arising accounts,  contract rights,  and all other forms of obligations owing to
Borrower or any Restricted  Subsidiary arising out of the sale or lease of goods
or the  rendition  of  services  by  Borrower  or  such  Restricted  Subsidiary,
irrespective of whether earned by performance, and any and all credit insurance,
guaranties, or security therefor.

                           "Acquisition"  means, with respect to any Person, any
transaction or series of related  transactions  for the purpose of or resulting,
directly or indirectly,  in (a) the acquisition of all or  substantially  all of
the assets of any other  Person,  or of any  business  or  division of any other
Person,  (b) the  acquisition  of more than fifty  percent  (50%) of the capital
stock,  partnership  interests,  membership  interests  or  equity  of any other
Person,  or otherwise  causing any other  Person to become a Subsidiary  of such
Person, or (c) a merger or consolidation or any other combination with any other
Person  (other  than a Person  that is an existing  Subsidiary  of such  Person)
provided  that  such  Person or a  Subsidiary  of such  Person is the  surviving
entity. The term "Acquisition"  shall not include the formation by Borrower of a
new Subsidiary provided that its Investment therein does not violate Section 7.4
hereof.

                           "Adjusted  Eurodollar  Rate"  means,  with respect to
each  Interest  Period  for any  Eurodollar  Rate  Advance,  the rate per  annum
(rounded  upwards,  if necessary,  to the next 1/16%) determined by dividing (a)
Eurodollar  Rate for such Interest  Period by (b) a percentage  equal to (i) one
hundred  percent  (100%)  minus  (ii)  the  Reserve  Percentage.   The  Adjusted
Eurodollar  Rate shall be adjusted on and as of the  effective day of any change
in the Reserve Percentage.

                           "Adjusted  Net  Worth"  means,   as  of  any  date of
determination,  the sum of (a) net worth of Borrower and i ts  Subsidiaries on a
consolidated basis determined in accordance with GAAP, plus (b) non-cash charges
reasonably acceptable to Lender taken after the Amendment Closing Date.

                                        5

                           "Adjustment  Date"  has  the  meaning  set forth  in
Section 2.3(a).

                           "Administrative Agent" has the  meaning  set forth in
the Prior Credit Agreement.

                           "Advances"  has  the  meaning  set  forth  in Section
2.1(a).

                           "Affiliate"  means,  as applied  to  any Person,  any
other Person who directly or indirectly  controls,  is  controlled  by, is under
common control with or is a director or officer of such Person.  For purposes of
this definition,  "control" means the possession, directly or indirectly, of the
power to vote five percent (5%) or more of the securities having ordinary voting
power for the election of  directors  or the direct or indirect  power to direct
the management and policies of a Person.

                           "Agreement" has the meaning set forth in the preamble
hereto.

                           "Amendment Closing  Date" means the date of the first
to occur of the making of the  initial  Advance,  the  issuance  of the  initial
Letter of Credit or the funding of the Term Loans under this Agreement.

                           "Assignment  Agreement"  has the meaning set forth in
the recitals to this Agreement.

                           "Assignment  of  LLC  Interests"  means  that certain
Amended and Restated  Assignment of Limited  Liability Company Interests of even
date herewith  among New West  Eyeworks,  Inc., as pledger,  the  Administrative
Agent and Lender, in form and substance satisfactory to Lender.

                           "Assignment of Notes" means that certain  Amended and
Restated   Assignment  of  Notes  of  even  date  herewith  among Borrower,  the
Administrative  Agent and Lender,  and acknowledged by Mexican Vision Associate
Operadora S. de R.L. de C.V., in form and substance satisfactory to Lender.

                           "Authorized   Person"  means  any  officer  or  other
employee of Borrower.

                          "Availability" means, as of the date of determination,
the  result (so long as such  result is a positive  number) of (a) the lesser of
the  Borrowing  Base or the Maximum  Revolving  Amount,  less (b) the  Revolving
Facility Usage.

                                        6

                           "Average Unused Portion of Maximum Revolving  Amount"
means, as of any date of determination,  (a) the lesser of the Borrowing Base or
the Maximum Revolving Amount,  less (b) the sum of (i) the average Daily Balance
of Advances that were outstanding  during the immediately  preceding month, plus
(ii) the  average  Daily  Balance of the  undrawn  Letters  of Credit  that were
outstanding during the immediately preceding month.

                           "Bank  of  America"  has the meaning set forth in the
recitals to this Agreement.

                           "Bankruptcy  Code" means the United States Bankruptcy
Code (11 U.S.C.ss. 101 et seq.), as amended,  and any successor statute.

                           "Blocked  Account  Agreements"  means  those  certain
Blocked Account  Agreements,  in form and substance  reasonably  satisfactory to
Lender,  each of which is among  Borrower,  Lender  and a bank at which a Retail
Store Account is located.

                           "Borrower" has the meaning set forth in the  preamble
to this Agreement.

                           "Books and Records"  means all books and  records  of
Borrower and each of its Restricted  Subsidiaries  including:  ledgers;  records
indicating,   summarizing,   or  evidencing   Borrower's   or  such   Restricted
Subsidiary's properties or assets (including the Collateral) or liabilities; all
information  relating to Borrower's  or such  Restricted  Subsidiary's  business
operations  or  financial  condition;  and all computer  programs,  disk or tape
files, printouts, runs, or other computer prepared information.

                           "Borrowing Base" has the meaning set forth in Section
2.1(a).

                           "Business  Day" means any day that is not a Saturday,
Sunday,  or other day on which national banks located in Atlanta,  Georgia,  New
York, New York or Los Angeles, California are authorized or required to close.

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

                           "CERCLA"   means   the   Comprehensive  Environmental
Response, Compensation and Liability Act of 1980.

                                        7

                           "Change of Control" means (a) any "person" or "group"
(within the meaning of Sections  13(d) and 14(d)(2) of the Exchange Act) becomes
the  "beneficial  owner"  (as  defined in Rule 13d-3  under the  Exchange  Act),
directly or  indirectly,  of more than  thirty-five  percent  (35%) of the total
voting power of all classes of stock then  outstanding  of Borrower  entitled to
vote in the election of directors or (b) during any period of  twenty-four  (24)
consecutive months,  individuals who at the beginning of such period constituted
the Board of  Directors  of  Borrower  (together  with any new  directors  whose
election by such Board or whose  nomination for election by the  stockholders of
Borrower  was approved by a majority of the  directors  then still in office who
were either  directors  at the  beginning  of such  period or whose  election or
nomination  for election  was  previously  so approved)  cease for any reason to
constitute a majority of such Board of Directors then in office.

                           "Code"  means  the  Uniform  Commercial  Code,  as in
effect in the State of Georgia from time to time.

                           "Collateral"  means all  property  and  interests  in
property and proceeds thereof now owned or hereafter acquired by Borrower or any
Restricted  Subsidiary  in or  upon  which a Lien  to  secure  any or all of the
Obligations  now or  hereafter  exists  in  favor  of  Lender,  pursuant  to the
Collateral Documents.

                           "Collateral   Documents"  means,  collectively,   (i)
the Security  Agreement,  the Pledge  Agreement,  the  Assignment of Notes,  the
Subsidiary  Guaranty,  the Subsidiary Security Agreement,  the Assignment of LLC
Interests,  the  Collateral  Assignment  of Deed of Trust,  the Blocked  Account
Agreements,  the Concentration Account Agreements,  the Lockbox Agreements,  the
Credit Card Agreements,  and all other security agreements,  mortgages, deeds of
trust,  patent  and  trademark  assignments,   lease  assignments,   guarantees,
assignments  and other similar  agreements  between  Borrower or any  Restricted
Subsidiary  and Lender now or hereafter  delivered  to Lender  pursuant to or in
connection  with  the  transactions   contemplated  hereby,  and  all  financing
statements (or comparable  documents now or hereafter  filed in accordance  with
the  Uniform  Commercial  Code  or  comparable  law)  against  Borrower  or  any
Restricted  Subsidiary as debtor in favor of Lender as secured  party,  and (ii)
any   amendments,    supplements,    modifications,    renewals,   replacements,
consolidations, substitutions and extensions of any of the foregoing.

                           "Collateral  Access   Agreement"  means  a   landlord
waiver,  mortgagee waiver,  bailee letter,  or  acknowledgment  agreement of any
warehouseman,  processor,  lessor,  consignee, or other Person in possession of,
having a Lien upon, or having rights or interests in the Equipment or Inventory,
in each case, in form and substance satisfactory to Lender,  including,  without
limitation,  the landlord  waiver  agreements set forth on Schedule C-1 attached
hereto.

                           "Collateral  Assignment of Deed of Trust" means  that
certain Collateral  Assignment of Beneficial  Interest under Deed of Trust dated
September 3, 1999, between Alexis Holdings,  Inc. and the Administrative  Agent,
with respect to certain real property in Tempe, Arizona.

                                        8

                           "Collections"   means   all   cash,   checks,  notes,
instruments, and other items of payment (including, insurance proceeds, proceeds
of cash sales, rental proceeds, and tax refunds).

                           "Compliance    Certificate"   means   a   certificate
substantially  in the form of Exhibit A and  delivered  by the chief  accounting
officer of Borrower to Lender.

                           "Concentration  Accounts"  means,  collectively,  the
Sub-Concentration  Accounts and the Master Concentration  Account, and each such
Concentration Account shall be referred to herein as a "Concentration Account".

                           "Concentration   Account  Agreement"  means a Blocked
Account Agreement among Borrower,  the Concentration Account Bank and Lender, in
form and  substance  satisfactory  to Lender,  applicable  to one or more of the
Concentration Accounts.

                           "Concentration  Account  Bank" means First Union,  or
such other Person or Persons as Lender and Borrower may  designate  from time to
time.

                           "Contingent  Obligation" means,  with  respect to any
Person,  any  direct  or  indirect  liability  of that  Person,  whether  or not
contingent,  with or without  recourse,  (a) with  respect to any  Indebtedness,
lease,   dividend,   letter  of  credit  or  other   obligation   (the  "primary
obligations")  of  another  Person  (the  "primary   obligor"),   including  any
obligation of that Person (i) to purchase,  repurchase or otherwise acquire such
primary  obligations or any security therefor,  (ii) to advance or provide funds
for the payment or  discharge  of any such  primary  obligation,  or to maintain
working  capital  or equity  capital of the  primary  obligor  or  otherwise  to
maintain the net worth or solvency or any balance sheet item, level of income or
financial  condition  of  the  primary  obligor,  (iii)  to  purchase  property,
securities  or services  primarily  for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation, or (iv) otherwise to assure or hold harmless the holder
of any  such  primary  obligation  against  loss in  respect  thereof  (each,  a
"Guaranty  Obligation");  (b) with respect to any Surety  Instrument (other than
any Letter of Credit)  issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings or payments;  or (c) to
purchase  any  materials,  supplies  or other  property  from,  or to obtain the
services of, another Person if the relevant  contract or other related  document
or  obligation  requires  that  payment  for such  materials,  supplies or other
property, or for such services,  shall be made regardless of whether delivery of
such  materials,  supplies or other  property is ever made or tendered,  or such
services are ever performed or tendered.

                           "Contractual Obligation"  means,  with respect to any
Person, any provision of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other instrument,

                                        9

document or  agreement  to which such Person is a party or by which it or any of
its property is bound.

                           "Cost" means, with respect to any Eligible  Inventory
of Borrower or any of its Restricted  Subsidiaries,  the lower of cost or market
value of such  Eligible  Inventory  as  determined  on a basis  consistent  with
Borrower's or such  Restricted  Subsidiary's  current and historical  accounting
practices.

                           "Credit Card Agreement" means each  letter  agreement
between  Borrower  and a credit  card  processor,  substantially  in the form of
Exhibit B.

                           "Daily  Balance"  means  the  amount of an Obligation
owed at the end of a given day.

                           "Default" means an event, condition, or default that,
with the giving of notice,  the passage of time,  or both,  would be an Event of
Default.

                           "Deficiency"  has  the  meaning  set forth in Section
7.16.

                           "Designated    Account"    means    account    number
2090003164485 of Borrower maintained with Borrower's Designated Account Bank, or
such other deposit account of Borrower  (located within the United States) which
has been designated, in writing and from time to time, by Borrower to Lender.

                           "Designated  Account  Bank" means First Union,  whose
office is  located  at  Charlotte,  North  Carolina,  and  whose  ABA  number is
061000227 or such other bank as may be  determined  by Lender and Borrower  from
time to time.

                           "Dilution"   means,  in  each  case  based  upon  the
experience of the immediately  prior three (3) month, the result of dividing the
Dollar  amount of (a) bad debt  write-downs,  discounts,  advertising,  returns,
promotions,  credits, or other dilution with respect to the Accounts during such
period, by (b) Collections  (excluding  extraordinary items) of Borrower and its
Restricted Subsidiaries plus the Dollar amount of clause (a).

                           "Dilution   Reserve"   means,   as   of   any date of
determination,  an amount  sufficient  to reduce  Lender's  advance rate against
Eligible  Accounts by one percentage  point for each  percentage  point by which
Dilution is in excess of five percent (5%).

                           "Disbursement  Letter" means an instructional  letter
executed and delivered by Borrower to Lender  regarding the extensions of credit
to be made on the Amendment  Closing Date, the form and substance of which shall
be satisfactory to Lender.

                                       10

                           "Disposition"  means (i) the sale,  lease, conveyance
or other  disposition  of  property  (other  than  sales  or other  dispositions
expressly permitted under Section 7.2(a) or Section 7.2(b),  operating leases or
subleases  entered  into in the  ordinary  course  of  business  or  Investments
permitted  under Section 7.4 or Liens permitted under Section 7.1), and (ii) the
sale  or  transfer  to  any  Person  (other  than  Borrower  or  any  Restricted
Subsidiary) by Borrower or any  Subsidiary of Borrower of any equity  securities
issued by any Subsidiary of Borrower and held by such transferor Person.

                           "Dollars or $" means United States dollars.

                           "Early Termination Premium" has the meaning set forth
in Section 3.6.

                           "EBITDA"  means,  with  respect  to  Borrower  on  a
consolidated  basis  with its  Subsidiaries  for any  period,  the Net Income of
Borrower  for such  period,  (a) plus,  without  duplication  and to the  extent
deducted in computing  Net Income for such period,  the sum of (i) income taxes,
(ii) Interest Expense,  (iii)  depreciation and amortization  expense,  and (iv)
other non-cash charges reasonably acceptable to Lender, (b) minus, to the extent
included in Net Income for such period,  extraordinary gains; provided, however,
that the EBITDA with respect to any Person or substantially all of the assets of
a Person that became a Subsidiary of, or was merged with or  consolidated  into,
Borrower or any  Subsidiary  of Borrower  during such period  shall  include the
EBITDA of such Person or the EBITDA attributable to such assets for such period.

                           "Eligible  Accounts" means those Accounts  created by
Borrower or any Restricted  Subsidiary in the ordinary course of business,  that
arise  out of  Borrower's  or such  Restricted  Subsidiary's  sale of  goods  or
rendition  of  services,   that  strictly  comply  with  each  and  all  of  the
representations  and  warranties  respecting  Accounts  made by Borrower or such
Restricted  Subsidiary to Lender in the Loan Documents,  and that are and at all
times continue to be acceptable to Lender in its reasonable  credit  judgment in
all respects;  provided, however, that standards of eligibility may be fixed and
revised  from time to time by Lender in  Lender's  reasonable  credit  judgment.
Eligible Accounts shall not include the following:

                           (a)      Accounts that the Account  Debtor has failed
to pay within ninety (90) days of invoice date or one hundred  twenty (120) days
of date of service;

                           (b)      Retail customer Accounts;

                           (c)      Accounts  owed by an Account  Debtor  or its
Affiliates  where  fifty  percent  (50%)  or more of all  Accounts  owed by that
Account Debtor (or its Affiliates) are deemed ineligible under clause (a) above;

                           (d) Accounts with respect to which the Account Debtor
is an employee, Affiliate, or agent of Borrower or any Subsidiary of Borrower;

                                       11

                           (e)  Accounts  with respect to which goods are placed
on  consignment,  guaranteed  sale, sale or return,  sale on approval,  bill and
hold, or other terms by reason of which the payment by the Account Debtor may be
conditional;

                           (f)      Accounts  that are not payable in Dollars or
with  respect  to which the  Account  Debtor:  (i) does not  maintain  its chief
executive  office in the United States,  or (ii) is not organized under the laws
of the United  States or any State  thereof,  or (iii) is the  government of any
foreign country or sovereign state, or of any state, province,  municipality, or
other  political  subdivision  thereof,  or of any  department,  agency,  public
corporation,  or  other  instrumentality  thereof,  unless  (y) the  Account  is
supported by an irrevocable letter of credit satisfactory to Lender (as to form,
substance,  and issuer or domestic  confirming  bank) that has been delivered to
Lender and is  directly  drawable  by Lender,  or (z) the  Account is covered by
credit insurance in form and amount, and by an insurer, satisfactory to Lender;

                           (g) Accounts with respect to which the Account Debtor
is either (i) the United States or any department, agency, or instrumentality of
the  United  States  (exclusive,  however,  of  Accounts  with  respect to which
Borrower  or  the  applicable   Restricted   Subsidiary  has  complied,  to  the
satisfaction of Lender,  with the Assignment of Claims Act, 31 U.S.C. ss. 3727),
or (ii) any State of the United States (exclusive,  however, of Accounts owed by
any State that does not have a statutory counterpart to the Assignment of Claims
Act);

                           (h) Accounts with respect to which the Account Debtor
is a creditor of Borrower or any  Subsidiary of Borrower,  has or has asserted a
right of setoff, has disputed its liability,  or has made any claim with respect
to the Account (but only to the extent of such setoff, dispute or claim);

                           (i) Accounts with respect to an Account  Debtor whose
total obligations owing to Borrower and its Restricted Subsidiaries,  taken as a
whole,  exceed ten percent (10%) of all Eligible Accounts,  to the extent of the
obligations owing by such Account Debtor in excess of such percentage;

                           (j) Accounts with respect to which the Account Debtor
is subject to any Insolvency  Proceeding,  or becomes insolvent,  or goes out of
business;

                           (k)      Accounts  the  collection  of which  Lender,
in its  reasonable  credit  judgment,  believes  to be doubtful by reason of the
Account Debtor's financial condition;

                           (l)      Accounts  with  respect  to  which the goods
giving  rise to such  Account  have not been  shipped  and billed to the Account
Debtor,  the services  giving rise to such Account have not been  performed  and
accepted by the Account  Debtor,  or the Account  otherwise does not represent a
final sale;

                                       12

                           (m)      Accounts  with  respect to which the Account
Debtor is located in the states of New Jersey,  Minnesota  or West  Virginia (or
any other state that requires a creditor to file a Business  Activity  Report or
similar  document  in order to bring  suit or  otherwise  enforce  its  remedies
against  such Account  Debtor in the courts or through any  judicial  process of
such  state),  unless  Borrower  or the  applicable  Restricted  Subsidiary  has
qualified to do business in New Jersey,  Minnesota, West Virginia, or such other
states, or has filed a Notice of Business  Activities Report with the applicable
division  of  taxation,  the  department  of  revenue,  or with such other state
offices,  as  appropriate,  for the  then-current  year,  or is exempt from such
filing requirement;

                           (n)  Accounts  that  represent  progress  payments or
other advance  billings that are due prior to the  completion of  performance by
Borrower or the  applicable  Restricted  Subsidiary of the subject  contract for
goods or services;

                           (o)  Accounts  arising  other  than  from the sale of
goods or  rendition  of services in the  ordinary  course of  Borrower's  or the
applicable Restricted Subsidiary's business;

                           (p)  Accounts representing  lease  payments  due from
doctors or optometrists;

                           (q)  Accounts  with  respect to which Lender does not
have a valid and perfected first priority security interest; and

                           (r)  To the extent determined appropriate  by  Lender
in its reasonable credit judgment,  Accounts subject to collection by an outside
claims  processor  where such Account has not yet been billed by such processor,
and credit card Accounts.

                           "Eligible   Inventory"   means  Inventory   owned  by
Borrower or any Restricted Subsidiary consisting of first quality finished goods
(including  eyeglass  frames,  eyeglass lenses,  contact lenses,  sunglasses and
related  accessories) held for sale in the ordinary course of Borrower's or such
Restricted Subsidiary's business and raw materials for such finished goods, that
are located at or in-transit between Borrower's or such Restricted  Subsidiary's
premises  identified on Schedule E-1 (as supplemented  from time to time upon at
least ten (10) days' prior written notice to Lender),  that strictly comply with
each and all of the representations and warranties  respecting Inventory made by
Borrower or such Restricted Subsidiary to Lender in the Loan Documents, and that
are and at all times  continue  to be  acceptable  to  Lender in its  reasonable
credit  judgment  in  all  respects;   provided,   however,  that  standards  of
eligibility  may be fixed and  revised  from time to time by Lender in  Lender's
reasonable  credit  judgment.  An item of  Inventory  shall not be  included  in
Eligible Inventory if:
                           (a)  it  is  not  owned  solely   by  Borrower  or  a
Restricted  Subsidiary,  or Borrower or a  Restricted  Subsidiary  does not have
good, valid, and marketable title thereto;

                                       13

                           (b)  it  is  not  located  in the  United  States at
one of the  locations  set forth on Schedule E-1 (as  supplemented  from time to
time upon at least ten (10) days' prior written notice to Lender);

                           (c)  it  is  Inventory  located  within a Sam's Club,
a Meijers store or another leased  department within a retail store (i.e., not a
"free-standing"  store) which is not subject to a Collateral Access Agreement in
form and substance satisfactory to Lender;

                           (d)  it is not subject to a valid and perfected first
priority security interest in favor of Lender;

                           (e)  it  consists  of  goods  returned or rejected by
customers  of  Borrower or the  applicable  Restricted  Subsidiary,  or goods in
transit;

                           (f)  it  is  used,   obsolete  or  slow   moving,   a
restrictive or custom item,  work-in-process,  packaging and shipping materials,
supplies used or consumed in Borrower's or a Restricted  Subsidiary's  business,
Inventory  subject to a Lien in favor of any third Person,  bill and hold goods,
defective goods, "seconds," or Inventory acquired on consignment;

                           (g)  it is located on property within a United States
military  base or on property  leased by Borrower or any  Restricted  Subsidiary
from the United States government;

                           (h)      to  the  extent  determined  appropriate  by
Lender in its  reasonable  credit  judgment,  (i) it is Inventory  classified by
Borrower or a  Restricted  Subsidiary,  as  applicable,  on its general  ledger,
prepared in a manner consistent with Borrower's and the Restricted Subsidiaries'
general  ledgers  disclosed to Lender prior to the  Amendment  Closing  Date, as
either  "close  out"  or  "discontinued"  Inventory  and  which  "close  out" or
"discontinued"  Inventory has been owned by Borrower or a Restricted  Subsidiary
for an aggregate of more than six (6) months after being so classified,  (ii) it
is Inventory  constituting  non-retail  supplies,  or (iii) it is not located on
property owned or leased by Borrower or a Restricted Subsidiary or in a contract
warehouse,  in each case,  subject to a Collateral Access Agreement  executed by
the mortgagee,  lessor, the warehouseman,  or other third party, as the case may
be, and segregated or otherwise separately identifiable from goods of others, if
any, stored on the premises; or

                           (i) it is Inventory bearing a servicemark,  trademark
or name of any Person other than Borrower or a Restricted Subsidiary,  unless it
is  Inventory  which  is sold to  Borrower  or a  Restricted  Subsidiary  in the
ordinary course of Borrower's or a Restricted Subsidiary's,  as the case may be,
business for distribution and is not subject to any licensing,  patent, royalty,
trademark,  trade name or copyright  agreement  between Borrower or a Restricted
Subsidiary,  as the  case  may be,  and any  other  Person  which  prohibits  or
restricts  Lender's sale or other disposition of such Inventory pursuant to Loan
Documents.

                                       14

                           "Environmental  Claims"  means  all  claims,  however
asserted,  by any  Governmental  Authority  or other Person  alleging  potential
liability  or  responsibility  for  violation of any  Environmental  Law, or for
release or injury to the environment or threat to public health, personal injury
(including  sickness,  disease or death),  property  damage,  natural  resources
damage, or otherwise  alleging liability or responsibility for damages (punitive
or otherwise),  cleanup, removal, remedial or response costs, restitution, civil
or criminal  penalties,  injunctive  relief, or other type of relief,  resulting
from or based  upon the  presence,  placement,  discharge,  emission  or release
(including intentional and unintentional, negligent and non-negligent, sudden or
non-sudden, accidental or non-accidental,  placement, spills, leaks, discharges,
emissions  or  releases) of any  Hazardous  Material  at, in, or from  Property,
whether or not owned by Borrower or any Subsidiary.

                           "Environmental   Laws"  means  all  federal, state or
local laws,  statutes,  common law duties,  rules,  regulations,  ordinances and
codes,  together with all  administrative  orders,  directed  duties,  requests,
licenses,  authorizations  and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and land use
matters;  including  CERCLA,  the Clean Air Act,  the  Federal  Water  Pollution
Control  Act of 1972,  the  Solid  Waste  Disposal  Act,  the  Federal  Resource
Conservation and Recovery Act, the Toxic  Substances  Control Act, the Emergency
Planning and Community Right-to-Know Act, the California Hazardous Waste Control
Law, the California  Solid Waste  Management,  Resource,  Recovery and Recycling
Act, the California Water Code and the California Health and Safety Code.

                           "Environmental Permits" has the meaning set  forth in
Section 5.12(b).

                           "Equipment" means all present and hereafter  acquired
machinery, machine tools, motors, equipment, furniture,  furnishings,  fixtures,
vehicles (including motor vehicles and trailers),  tools, parts and goods (other
than consumer  goods,  farm products,  or Inventory),  of Borrower or any of its
Restricted  Subsidiaries,  wherever  located,  including,  (a) any  interest  of
Borrower or any of its Restricted  Subsidiaries  in any of the foregoing and (b)
all   attachments,   accessories,   accessions,   replacements,   substitutions,
additions, and improvements to any of the foregoing.

                           "ERISA" means the Employee Retirement Income Security
Act of 1974, and regulations promulgated thereunder.

                                       15

                           "ERISA   Affiliate"  means  any   trade  or  business
(whether or not  incorporated)  under common  control with  Borrower  within the
meaning of Section 414(b) or (c) of the IRC (and Sections  414(m) and (o) of the
IRC for purposes of provisions relating to Section 412 of the IRC).

                           "ERISA Event"  means  (a)  a   Reportable  Event with
respect to a Pension Plan;  (b) a withdrawal by Borrower or any ERISA  Affiliate
from a Pension Plan subject to Section 4063 of ERISA during a plan year in which
it was a substantial  employer (as defined in Section  4001(a)(2) of ERISA) or a
cessation  of  operations  which is treated as such a withdrawal  under  Section
4062(e) of ERISA; (c) a complete or partial  withdrawal by Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in  reorganization;  (d) the  filing of a notice of  intent  to  terminate,  the
treatment of a Plan  amendment as a  termination  under Section 4041 or 4041A of
ERISA,  or the  commencement  of  proceedings by the PBGC to terminate a Pension
Plan or Multiemployer  Plan; (e) an event or condition which might reasonably be
expected to constitute  grounds under Section 4042 of ERISA for the  termination
of,  or the  appointment  of a  trustee  to  administer,  any  Pension  Plan  or
Multiemployer  Plan; or (f) the  imposition  of any liability  under Title IV of
ERISA,  other than PBGC  premiums due but not  delinquent  under Section 4007 of
ERISA, upon Borrower or any ERISA Affiliate.

                           "Eurodollar Rate" means, with respect to the Interest
Period for a  Eurodollar  Rate  Advance,  the  interest  rate per annum at which
United  States  dollar  deposits  are  offered  to Wells  Fargo  Bank,  National
Association,  by major banks in the London interbank market (or other Eurodollar
Rate market  selected by Lender) on or about 11:00 a.m.  (Eastern  time) two (2)
Business  Days  prior to the  commencement  of such  Interest  Period in amounts
comparable  to the  amount of the  Eurodollar  Rate  Advances  requested  by and
available  to Borrower in  accordance  with this  Agreement,  with a maturity of
comparable duration to the Interest Period selected by Borrower.

                           "Eurodollar Rate Advances" means any Advance (or  any
portion  thereof) made or outstanding  hereunder during any period when interest
on such Advance (or portion thereof) is payable based on the Adjusted Eurodollar
Rate.

                           "Event  of  Default"  has  the  meaning set forth in
Article 8.

                           "Excess  Availability"  means,  as  of  any  date  of
determination,  the result (so long as such result is a positive  number) of (a)
Availability,  less (b) the  accounts  payable of  Borrower  and its  Restricted
Subsidiaries over sixty (60) days past due.

                           "Exchange Act" means the  Securities  Exchange Act of
1934, and regulations promulgated thereunder.

                           "Existing  Defaults"  means,  collectively,  (i)  all
defaults or events of default (other than any payment  defaults)  existing as of
the  Amendment  Closing  Date  under the Lease  Agreement  dated  April 6, 1997,
between Frame-N-Lens  Optical,  Inc. and Banc One Leasing Corporation,  and (ii)
the interest  payment  default  existing as of the  Amendment  Closing Date with
respect to the Senior Notes.

                                       16

                           "Fee  Letter"  means  that  certain  agreement  dated
as of the Amendment  Closing Date setting forth the  applicable  fees for Lender
relating to this Agreement and the Loans.

                           "FEIN" means Federal Employer Identification Number.

                           "First Union"  has  the  meaning  set  forth  in  the
recitals to this Agreement.

                           "Foreign Subsidiary" means any Subsidiary of Borrower
which is organized or incorporated  under the laws of a jurisdiction  other than
the United States or any state or territory thereof.

                           "GAAP" means generally accepted accounting principles
as in effect from time to time in the United States, consistently applied.

                           "General  Intangibles"  means  all  of Borrower's and
each Restricted  Subsidiary's  present and future general  intangibles and other
personal property (including  contract rights,  rights arising under common law,
statutes, or regulations,  choses or things in action, goodwill,  patents, trade
names,  trademarks,   servicemarks,   trade  secrets,  copyrights,   blueprints,
drawings,  purchase  orders,  customer  lists,  monies due or  recoverable  from
pension funds, route lists, rights to payment and other rights under any royalty
or licensing  agreements,  infringement claims,  computer programs,  information
contained on computer disks or tapes,  literature,  reports,  catalogs,  deposit
accounts,  insurance premium rebates, tax refunds, and tax refund claims), other
than goods, Accounts, and Negotiable Collateral.

                           "GOB  Rate"  means  the  percentages determined, from
time to time,  by an appraiser  acceptable  to Foothill and using a  methodology
acceptable to Foothill in its  reasonable  credit  judgment as the percentage of
Cost of Inventory  recoverable on a going-out of business  basis,  multiplied by
eighty-five percent (85%).

                           "Governing  Documents"   means   the  certificate  or
articles  of  incorporation,  by-laws,  or  other  organizational  or  governing
documents of any Person.

                           "Governmental   Authority"   means   any   nation  or
government,  any state or other political  subdivision thereof, any central bank
(or similar monetary or regulatory  authority)  thereof,  any entity  exercising
executive,  legislative,  judicial, regulatory or administrative functions of or
pertaining  to  government,  and  any  corporation  or  other  entity  owned  or
controlled,  through  stock or capital  ownership  or  otherwise,  by any of the
foregoing.

                           "Guaranty Obligation" has the meaning  set  forth  in
the definition of "Contingent Obligation."

                                       17

                           "Hazardous  Materials"  means  all  those  substances
that are  regulated  by,  or which may form the basis of  liability  under,  any
Environmental  Law,  including any substance  identified under any Environmental
Law as a pollutant, contaminant, hazardous waste, hazardous constituent, special
waste, hazardous substance, hazardous material, or toxic substance, or petroleum
or petroleum derived substance or waste.

                           "Indebtedness"  means,  with respect to  any  Person,
(a) all  obligations of such Person for borrowed  money,  (b) all obligations of
such Person evidenced by bonds, debentures,  notes, or other similar instruments
and all  reimbursement or other obligations of such Person in respect of letters
of  credit,  bankers  acceptances,  interest  rate  swaps,  or  other  financial
products,  (c) all  obligations  of such Person under  capital  leases,  (d) all
obligations  or liabilities of others secured by a Lien on any property or asset
of such Person, irrespective of whether such obligation or liability is assumed,
and (e) any  obligation  of such Person  guaranteeing  or intended to  guarantee
(whether guaranteed,  endorsed,  co-made,  discounted,  or sold with recourse to
such  Person) any  indebtedness,  lease,  dividend,  letter of credit,  or other
obligation of any other Person.

                           "Indemnified Liabilities" has the  meaning  set forth
in Section 11.3.

                           "Indemnified Person" has  the  meaning set  forth  in
Section 11.3.

                           "Indenture"  means   that   certain  Indenture  dated
as of October 8, 1998 among Borrower,  as issuer,  the guarantors  named therein
and State Street Bank and Trust company, as trustee.

                           "Independent  Auditor"  has  the meaning set forth in
Section 6.1(a).

                           "Insolvency   proceeding"   means   any    proceeding
commenced by or against any Person under any provision of the Bankruptcy Code or
under any other  bankruptcy or insolvency  law,  assignments  for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization,  arrangement, or other similar
relief.

                           "Intangible  Assets"  means,  with   respect  to  any
Person, that portion of the book value of all of such Person's assets that would
be treated as intangibles under GAAP.

                           "Interest Expense" means, with  respect to any Person
on a  consolidated  basis  for  any  period,  interest  expense  and  loan  fees
determined   in   accordance   with  GAAP,   and   including   capitalized   and
non-capitalized  interest  and  the  interest  component  of  Capitalized  Lease
Obligations.  Unless the context clearly  provides  otherwise,  any reference to
Interest  Expense in this Agreement shall be to the Interest Expense of Borrower
and its Subsidiaries on a consolidated basis.

                                       18

                           "Interest  Payment  Date"  means  any  date  for  the
scheduled  payment of interest on the Senior  Notes  under the  Indenture  as in
effect on the date hereof.

                           "Interest  Period" means,  for  any  Eurodollar  Rate
Advance,  the period commencing on the Business Day such Eurodollar Rate Advance
is disbursed  or  continued,  or on the  Business Day on which a Reference  Rate
Advance is converted to such  Eurodollar  Rate  Advance,  and ending on the date
ninety (90) days thereafter.

                           "Inventory"  means  all present and future  inventory
in which Borrower or a Restricted  Subsidiary has any interest,  including goods
held for sale or lease or to be furnished under a contract of service and all of
Borrower's and each  Restricted  Subsidiary's  present and future raw materials,
work in process,  finished goods, and packing and shipping  materials,  wherever
located.

                           "Inventory Reserves" means reserves (determined  from
time to time by Lender in its discretion) for the estimated  reclamation  claims
of unpaid sellers of Inventory sold to Borrower or any Restricted Subsidiary.

                           "Investments"   has    the   meaning   specified   in
Section 7.4.

                           "IRC"  means  the  Internal  Revenue Code of 1986, as
amended, and the regulations thereunder.

                           "IRS"  means  the  Internal  Revenue Service, and any
Governmental  Authority  succeeding to any of its principal  functions under the
IRC.

                           "Joint Venture" means a  single-purpose  corporation,
partnership,  limited  liability  company,  joint venture or other similar legal
arrangement  (whether created by contract or conducted  through a separate legal
entity) now or  hereafter  formed by Borrower  or any of its  Subsidiaries  with
another  Person (other than Borrower or one of its Restricted  Subsidiaries)  in
order to conduct a common venture or enterprise with such Person.

                           "L/C" has the meaning set forth in Section 2.2(a).

                           "L/C  Guaranty"  has   the   meaning   set  forth  in
Section 2.2(a).

                           "Lender" has the meaning set forth in the preamble to
this Agreement.

                           "Lender Account"  has   the   meaning  set  forth  in
Section 2.7.

                                       19

                           "Lender  Expenses"  means   all:  costs  or  expenses
(including taxes, and insurance premiums) required to be paid by Borrower or any
Subsidiary of Borrower under any of the Loan Documents that are paid or incurred
by  Lender;  fees or  charges  paid or  incurred  by Lender in  connection  with
Lender's  transactions  with Borrower and its Subsidiaries,  including,  fees or
charges   for    photocopying,    notarization,    couriers   and    messengers,
telecommunication,  public record searches (including tax lien, litigation,  and
UCC searches and including  searches with the patent and trademark  office,  the
copyright  office,  or the  department of motor  vehicles),  filing,  recording,
publication, and appraisal (including periodic Collateral appraisals); costs and
expenses  incurred by Lender in the  disbursement  of funds to Borrower (by wire
transfer or  otherwise);  charges paid or incurred by Lender  resulting from the
dishonor of checks; costs and expenses paid or incurred by Lender to correct any
default or enforce any provision of the Loan Documents, or in gaining possession
of, maintaining, handling, preserving, storing, shipping, selling, preparing for
sale,  or  advertising  to  sell  the  Collateral,   or  any  portion   thereof,
irrespective  of  whether  a sale is  consummated;  costs and  expenses  paid or
incurred by Lender in  examining  the Books and  Records;  costs and expenses of
third party  claims or any other suit paid or incurred by Lender in enforcing or
defending the Loan Documents or in connection with the transactions contemplated
by the Loan Documents or Lender's  relationship  with Borrower or any guarantor;
and Lender's  reasonable  attorneys'  fees and  expenses,  actually  incurred in
advising,   structuring,   drafting,   reviewing,    administering,    amending,
terminating,  enforcing  (including,  without limitation,  reasonable attorneys'
fees  and  expenses   actually  incurred  in  connection  with  a  "workout,"  a
"restructuring,"  or  an  Insolvency   Proceeding  concerning  Borrower  or  any
guarantor of the  Obligations),  defending,  or concerning  the Loan  Documents,
irrespective of whether suit is brought.

                           "Letter of Credit" means an L/C  or  an L/C Guaranty,
as the context requires.

                           "Lien"  means  any  interest in property  securing an
obligation  owed to,  or a claim  by,  any  Person  other  than the owner of the
property,  whether such interest shall be based on the common law,  statute,  or
contract, whether such interest shall be recorded or perfected, and whether such
interest shall be contingent  upon the occurrence of some future event or events
or the existence of some future  circumstance  or  circumstances,  including the
lien or security interest arising from a mortgage,  deed of trust,  encumbrance,
pledge,  hypothecation,  assignment,  deposit  arrangement,  security agreement,
adverse claim or charge,  conditional  sale or trust  receipt,  or from a lease,
consignment,  or bailment for security purposes and also including reservations,
exceptions,  encroachments,  easements,  rights-of-way,  covenants,  conditions,
restrictions, leases, and other title exceptions and encumbrances affecting Real
Property.

                           "Loan  Account"  has  the   meaning   set   forth  in
Section 2.10.

                                       20

                           "Loan   Documents"   means   this    Agreement,   the
Disbursement Letter, the Letters of Credit, the Collateral  Documents,  any note
or notes  executed by Borrower  and payable to Lender,  and any other  agreement
entered into, now or in the future, in connection with this Agreement.

                           "Loans"  means,  collectively,  the  Advances and the
Term Loans.

                           "Lockbox  Account"  shall mean a  depositary  account
established pursuant to one of the Lockbox Agreements.

                           "Lockbox  Agreements"  means  those  certain  Lockbox
Operating Procedural Agreements and those certain Depository Account Agreements,
in form and substance  satisfactory to Lender,  each of which is among Borrower,
Lender and one of the Lockbox Banks.

                           "Lockbox   Banks"  means  First Union,  or such other
Person or Persons as Lender and Borrower may designate from time to time.

                           "Lockboxes" has the meaning set forth in Section 2.7.

                           "Managed   Care   Subsidiary"  shall   mean  (a  NVAL
VisionCare  Systems  of  California,  Inc.,  ProCare  Eye  Exam,  Inc.  and NVAL
VisionCare  Systems of North  Carolina,  Inc.  and (b) any other  Subsidiary  of
Borrower  formed or acquired  after the Amendment  Closing Date whose  financial
condition or activities are regulated  under the laws of any state in connection
with its  provision  of health or vision care  products or services  (or related
administrative  services) and shall include,  and without  limitation,  a health
maintenance   organization  (whether  single  or  multi  service),  third  party
administrator or any entity similar to any of the foregoing.

                           "Margin  Stock" means "margin  stock" as such term is
defined in Regulation U or X of the Board of Governors
of the Federal Reserve System.

                           "Master Concentration  Account" means account  number
2080000695022 of Borrower maintained at the Concentration  Account Bank, or such
other deposit  account of Borrower  (located in the United  States),  into which
cash  received in the  Lockbox,  the other  Concentration  Accounts  and certain
Retail Store Accounts is wire transferred as provided in Section 2.7.

                           "Material  Adverse   Effect"  means  (a)  a  material
adverse change in, or a material adverse effect upon, the operations,  business,
properties,  condition  (financial  or otherwise) or prospects of Borrower or of
Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the
ability of  Borrower  or any  Restricted  Subsidiary  to perform  under any Loan
Document;  or (c) a material  adverse  effect upon (i) the  legality,  validity,
binding effect or enforceability  against Borrower or any Restricted  Subsidiary
of any Loan  Document,  or (ii) the  perfection  or priority of any Lien granted
under any of the Collateral Documents.

                                       21

                           "Material  Contracts"  has  the  meaning set forth in
Section 5.25.

                           "Maturity  Date"  has   the  meaning   set  forth  in
Section 3.4.

                           "Maximum Amount" means $25,000,000.

                           "Maximum  Revolving  Amount" means, as of any date of
determination,  the  result  of (a) the  Maximum  Amount,  minus  (b)  the  then
outstanding aggregate principal balance of the Term Loans.

                           "Meijer" means Meijer, Inc.

                           "Multiemployer  Plan"  means a "multiemployer  plan",
within the  meaning of Section  4001(a)(3)  of ERISA,  to which  Borrower or any
ERISA Affiliate  makes,  is making,  or is obligated to make  contributions  or,
during the preceding three calendar years,  has made, or been obligated to make,
contributions.

                           "Negotiable  Collateral" means all of  Borrower's and
each  Restricted  Subsidiary's  present  and future  letters  of credit,  notes,
drafts,  instruments,  investment property,  security  entitlements,  securities
(including  the shares of stock of  Subsidiaries  of Borrower or any  Restricted
Subsidiary),  documents,  personal  property  leases  (wherein  Borrower  or any
Restricted  Subsidiary  is the  lessor),  chattel  paper,  and Books and Records
relating to any of the foregoing.

                           "Net Income" means,  with respect to any Person on  a
consolidated  basis for any period,  its net income (or deficit)  determined  in
accordance  with GAAP.  Unless  the  context  clearly  provides  otherwise,  any
reference to Net Income in this Agreement shall be to the Net Income of Borrower
and its Subsidiaries on a consolidated basis.

                           "Net  Proceeds"  means,  as  to  any Disposition by a
Person,  proceeds in cash, checks or other cash equivalent financial instruments
as and when  received by such Person,  net of: (a) the direct costs  relating to
such  Disposition  excluding  amounts payable to such Person or any Affiliate of
such Person, (b) income, sale, use or other transaction taxes paid or payable by
such Person as a direct result thereof,  and (c) amounts  required to be applied
to  repay  principal,   interest  and  prepayment   premiums  and  penalties  on
Indebtedness  secured  by a Lien  on the  asset  which  is the  subject  of such
Disposition  and (d)  appropriate  amounts  to be set aside by such  Person as a
reserve,  in accordance with GAAP, against any liabilities  associated with such
Disposition  and  retained  by such  Person  after such  Disposition,  including
without  limitation  pension  and  other  post-employment  benefit  liabilities,
liabilities   related  to  environment   matters  and   liabilities   under  any
indemnification obligations associated with such Disposition.

                                       22

                           "Obligations"  means  all  Loans,  debts,  principal,
interest  (including any interest that, but for the provisions of the Bankruptcy
Code,  would  have  accrued),  contingent  reimbursement  obligations  under any
outstanding Letters of Credit,  premiums (including Early Termination Premiums),
liabilities  (including all amounts charged to Borrower's Loan Account  pursuant
hereto),  obligations,  fees, charges,  costs, or Lender Expenses (including any
fees or expenses that, but for the provisions of the Bankruptcy Code, would have
accrued), lease payments, guaranties, covenants, and duties owing by Borrower to
Lender of any kind and description (whether pursuant to or evidenced by the Loan
Documents or pursuant to any other  agreement  between Lender and Borrower,  and
irrespective  of whether for the payment of money),  whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
and including any debt,  liability,  or obligation owing from Borrower to others
that Lender may have obtained by assignment or otherwise,  and further including
all interest not paid when due and all Lender Expenses that Borrower is required
to pay or reimburse by the Loan Documents, by law, or otherwise.

                           "Overadvance"   has   the   meaning   set   forth  in
Section 2.5.

                           "Participant"  means any Person to which  Lender  has
sold a participation interest in its rights under the Loan Documents.

                           "PBGC"   means    the   Pension    Benefit   Guaranty
Corporation,  or any Governmental  Authority  succeeding to any of its principal
functions under ERISA.

                           "Pension  Plan" means a pension  plan (as  defined in
Section  3(2) of ERISA)  subject to Title IV of ERISA which  Borrower  sponsors,
maintains,   or  to  which  it  makes,  is  making,  or  is  obligated  to  make
contributions,  or in the case of a  multiple  employer  plan (as  described  in
Section  4064(a)  of  ERISA)  has  made  contributions  at any time  during  the
immediately preceding five (5) plan years.

                           "Permitted  Liens"  has  the  meaning  set  forth  in
Section 7.1.

                           "Permitted  Protest"  means  the right of Borrower or
any  Restricted  Subsidiary  to  protest  any Lien other than any such Lien that
secures  the  Obligations,  provided  that (a) a reserve  with  respect  to such
obligation is established on the books of Borrower or such Restricted Subsidiary
in an amount that is reasonably  satisfactory to Lender in its reasonable credit
judgment,  (b) any such  protest is  instituted  and  diligently  prosecuted  by
Borrower  or such  Restricted  Subsidiary  in good  faith,  and  (c)  Lender  is
satisfied that,  while any such protest is pending,  there will be no impairment
of the  enforceability,  validity,  or priority of any of the Liens of Lender in
and to the Collateral.

                                       23

                           "Person   means   and   includes   natural   persons,
corporations,   limited  liability  companies,  limited  partnerships,   general
partnerships,  limited  liability  partnerships,  joint ventures,  trusts,  land
trusts,  business trusts, or other  organizations,  irrespective of whether they
are legal  entities,  and  governments  and agencies and political  subdivisions
thereof.

                           "Plan" means an employee  benefit plan (as defined in
Section 3(3) of ERISA) which Borrower sponsors or maintains or to which Borrower
makes, is making, or is obligated to make contributions and includes any Pension
Plan.

                           "Pledge  Agreement"  means  that certain  Amended and
Restated   Pledge   Agreement  of  even  date  herewith  among   Borrower,   the
Administrative  Agent and Lender, in form and substance  satisfactory to Lender,
together  with any  supplement  thereto  executed and  delivered  after the date
hereof between Borrower and Lender.

                           "Pledged Collateral" has the meaning specified in the
Pledge Agreement.

                           "Prior Credit Agreement" has the meaning set forth in
the recitals to this Agreement.

                           "Purchase Money Indebtedness " means any Indebtedness
of Borrower or its Restricted Subsidiaries incurred for the purpose of financing
all or any part of the purchase price or the cost of installation,  construction
or improvement of any property.

                           "Qualified  Proceeds " means any of the  following or
any combination of the following: (i) cash, (ii) cash equivalents,  (iii) assets
that  are  used or  usable  in the  business  of  Borrower  and  its  Restricted
Subsidiaries as existing on the Amendment Closing Date or a business  reasonably
related or  complimentary  thereto and (iv) capital stock of any Person  engaged
primarily  in the  business  of  Borrower  and its  Restricted  Subsidiaries  as
existing  on the  Amendment  Closing  Date or a business  reasonably  related or
complimentary  thereto so long as, in connection with the receipt by Borrower or
any  Restricted  Subsidiary of Borrower of such capital  stock,  (A) such Person
becomes a  Restricted  Subsidiary  or (B) such  Person is merged with or into or
transfers or conveys substantially all or all of its assets to, or is liquidated
into, Borrower or any Restricted Subsidiary.

"Reference Rate" means the variable rate of interest,  per annum,  most recently
announced by Wells Fargo Bank, National  Association,  or any successor thereto,
as its "base rate," irrespective of whether such announced rate is the best rate
available from such financial institution.

                                       24

                           "Requirement of Law" means, as to any Person, any law
(statutory  or  common),  treaty,  rule or  regulation  or  determination  of an
arbitrator or of a Governmental Authority, in each case applicable to or binding
upon the  Person or any of its  property  or to which  the  Person or any of its
property is subject.

                           "Reserve  Percentage" means and refers to, as  of the
date of  determination  thereof;  the maximum  percentage  (rounded  upward,  if
necessary to the nearest  1/100th of one percent (1%)),  as determined by Lender
(or its Affiliates) in accordance with its (or their ) usual  procedures  (which
determination  shall be conclusive in the absence of manifest error), that is in
effect on such date as prescribed by the Federal  Reserve Board for  determining
the  reserve  requirements  (including  supplemental,  marginal,  and  emergency
reserve  requirements) with respect to eurocurrency  funding (currently referred
to as "eurocurrency liabilities") by Lender or its Affiliates.

                           "Responsible   Officer"  means  the  chief  executive
officer, the chief financial officer or the president of Borrower,  or any other
officer having  substantially  the same authority and  responsibility;  or, with
respect to compliance with financial covenants, the chief financial officer, the
controller  or  the  treasurer  of  Borrower,   or  any  other  officer   having
substantially the same authority and responsibility.

                           "Restricted  Payments"  has  the meaning set forth in
Section 7.10.

                           "Restricted Subsidiary"  means any direct or indirect
Subsidiary of Borrower other than an Unrestricted Subsidiary.

                           "Retail Store Accounts" means those bank accounts set
forth on  Schedule  6.14 other  than the  Lockbox  Account or the  Concentration
Accounts.

                           "Revolving  Facility Usage" means,  as of any date of
determination,  the  aggregate  amount of Advances  and undrawn or  unreimbursed
Letters of Credit outstanding.

                           "Sam's Club" means Sam's Club a division of Wal-Mart.

                           "SEC"  means  the Securities and Exchange Commission,
or any Governmental Authority succeeding to any of its principal functions.

                           "Security  Agreement" means that certain Amended  and
Restated  Security   Agreement  of  even  date  herewith  among  Borrower,   the
Administrative Agent and Lender, in form and substance satisfactory to Lender.

                           "Senior Notes" means those certain  senior  unsecured
notes due 2005 issued by Borrower pursuant to the Indenture.

                                       25

                           "Solvent"  means,  as to any Person at any time, that
(a) the fair value of the  property of such Person is greater than the amount of
such Person's  liabilities  (including  disputed,  contingent  and  unliquidated
liabilities) as such value is established and liabilities evaluated for purposes
of Section  101(31) of the Bankruptcy  Code; (b) the present fair saleable value
of the property of such Person is not less than the amount that will be required
to pay the  probable  liability  of such  Person  on its  debts  as they  become
absolute and  matured;  (c) such Person is able to realize upon its property and
pay  its  debts  and  other  liabilities  (including  disputed,  contingent  and
unliquidated  liabilities) as they mature in the normal course of business;  (d)
such Person does not intend to, and does not believe  that it will,  incur debts
or liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (e) such Person is not engaged in business or a transaction,  and is
not  about to engage in  business  or a  transaction,  for which  such  Person's
property would constitute unreasonably small capital.

                           "Sub-Concentration   Accounts"   means   those   bank
accounts  of Borrower at the  Concentration  Account  Bank set forth on Schedule
S-1.

                           "Subsidiary"  of  a  Person  means  any  corporation,
association,  partnership,  limited  liability  company,  joint venture or other
business  entity of which more than  fifty  percent  (50%) of the voting  stock,
membership  interests or other equity  interests  (in the case of Persons  other
than corporations), is owned or controlled directly or indirectly by the Person,
or one or more of the  Subsidiaries  of the Person,  or a  combination  thereof.
Unless  the  context  otherwise   clearly  requires,   references  herein  to  a
"Subsidiary" refer to a Subsidiary of Borrower.

                           "Subsidiary Guaranty"  eans that certain  Amended and
Restated  Subsidiary  Guaranty  of  even  date  herewith  among  the  Restricted
Subsidiaries,  the  Administrative  Agent  and  Lender,  in form  and  substance
satisfactory to Lender, together with any supplement thereto.

                           "Subsidiary  Pledge  Agreement"  means  that  certain
Amended and Restated Subsidiary Pledge Agreement of even date herewith among the
Restricted  Subsidiaries,  the  Administrative  Agent  and  Lender,  in form and
substance satisfactory to Lender, together with any supplement thereto.

                           "Subsidiary  Security  Agreement" means that  certain
Amended and Restated  Subsidiary  Security Agreement of even date herewith among
the Restricted  Subsidiaries,  the Administrative  Agent and Lender, in form and
substance satisfactory to Lender, together with any supplement thereto.

                           "Surety  Instruments"  means  all  letters  of credit
(including  standby and  commercial),  banker's  acceptances,  bank  guaranties,
shipside bonds, surety bonds and similar instruments.

                                       26

                           "Term A Monthly  Interest  Rate  Adjustment"  has the
meaning set forth in Section 2.6(a)(iii).

                           "Term  A  Option Fee"  has  the  meaning set forth in
Section 2.3(a).

                           "Term  A   Rate"  has   the   meaning  set  forth  in
Section 2.6(a)(iii).

                           "Term B Monthly  Interest  Rate  Adjustment"  has the
meaning set forth in Section 2.6(a)(iv).

                           "Term  B  Option  Fee"  has  the meaning set forth in
Section 2.3(b).

                           "Term   B  Rate"  has   the   meaning  set  forth  in
Section 2.6(a)(iv).

                           "Term   Loan   A"   has  the  meaning  set  forth  in
Section 2.3(a).

                           "Term   Loan   B"   has   the   meaning  set forth in
Section 2.3(b).

                           "Term  Loans"  means,  collectively,  Term Loan A and
Term Loan B.

                           "Unfunded  Pension  Liability"  means the excess of a
Plan's benefit  liabilities under Section 4001(a)(16) of ERISA, over the current
value of that Plan's assets,  determined in accordance with the assumptions used
for  funding  the  Pension  Plan  pursuant  to  Section  412 of the  IRC for the
applicable plan year.

                           "Unrestricted   Subsidiaries"   means   the   Foreign
Subsidiaries,  the Managed Care  Subsidiaries  and each other direct or indirect
Subsidiary of Borrower  designated as an  "Unrestricted  Subsidiary" by Borrower
and such  designation is consented to by Lender;  provided,  however,  that each
Managed Care  Subsidiary  existing on the  Amendment  Closing Date shall use its
reasonable efforts to obtain the approval of the requisite regulatory entity for
it to become a  Restricted  Subsidiary  as  promptly  as  practicable  after the
Amendment  Closing Date and each Person which becomes a Managed Care  Subsidiary
after the Amendment Closing Date shall use its reasonable  efforts to obtain the
requisite  regulatory  approval  for it to  become a  Restricted  Subsidiary  as
promptly as  practicable  after it becomes a Managed Care  Subsidiary;  provided
further that with regard to any domestic Subsidiary of Borrower formed after the
Amendment  Closing  Date which is or seeks to become a Managed  Care  Subsidiary
such  Subsidiary's  obligations  as a Restricted  Subsidiary  under a Subsidiary
Guaranty, Subsidiary Security Agreement and Subsidiary Pledge Agreement (if

                                       27

applicable) to be issued  pursuant to Section 6.16 of this Agreement  shall only
become  effective  if (a) the  approval of the  requisite  regulatory  entity is
obtained (if such approval is required)  and (b) the granting of the  Subsidiary
Guaranty,  Subsidiary  Security  Agreement and Subsidiary  Pledge  Agreement (if
applicable) by such Subsidiary shall not have a material adverse effect upon the
business, operations, assets, condition (financial or otherwise) or prospects of
such  Subsidiary (a "material  adverse  effect");  provided that if a Subsidiary
Guaranty,  Subsidiary  Security  Agreement and Subsidiary  Pledge  Agreement (if
applicable)  is not issued by such  Subsidiary in reliance on the  provisions of
this clause (b),  Borrower  shall  deliver an  officers'  certificate  to Lender
stating  that the  granting of such  Subsidiary  Guaranty,  Subsidiary  Security
Agreement and Subsidiary  Pledge Agreement (if applicable) would have a material
adverse effect, and provided,  further that such obligation under the Subsidiary
Guaranty shall be limited to the maximum amount which such  Subsidiary  would be
permitted  to declare or pay as a dividend  in  compliance  with the  applicable
rules or regulations of, or undertakings  made to, any regulatory  entity having
jurisdiction and authority over such  Subsidiary.  No Subsidiary of Borrower may
be designated as an Unrestricted  Subsidiary hereunder if it is a "Guarantor" as
defined in the Indenture as in effect on the Amendment Closing Date.

                           "Voidable  Transfer"  has  the  meaning  set forth in
Section 15.8.

                           "Wachovia Swap Obligations" has the meaning set forth
in Section 7.5(e).

                           "Wal-Mart   means  Wal-Mart  Stores, Inc., a Delaware
corporation.

                           "Wal-Mart Master Lease Agreement"  means that certain
Vision Center Master License Agreement dated as of June 16, 1994, by and between
Wal-Mart and Borrower, and all Addenda and Attachments thereto.

                  1.2 Accounting  Terms.  All accounting  terms not specifically
defined herein shall be construed in accordance with GAAP. When used herein, the
term  "financial  statements"  shall  include the notes and  schedules  thereto.
Whenever  the term  "Borrower"  is used in respect of a financial  covenant or a
related  definition,  it shall be understood to mean Borrower on a  consolidated
basis with its Subsidiaries unless the context clearly requires otherwise.

                  1.3 Code. Any terms used in this Agreement that are defined in
the  Code  shall be  construed  and  defined  as set  forth  in the Code  unless
otherwise defined herein.

                  1.4 Construction. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural,  the term "including" is not limiting,  and the
term "or" has, except where otherwise indicated, the inclusive meaning

                                       28

represented  by the phrase  "and/or." The words  "hereof,"  "herein,"  "hereby,"
"hereunder,"  and similar terms in this  Agreement  refer to this Agreement as a
whole and not to any particular provision of this Agreement. An Event of Default
shall  "exist",  "continue" or be  "continuing"  until such Event of Default has
been waived in writing by Lender.  Section,  subsection,  clause,  schedule, and
exhibit  references  are to  this  Agreement  unless  otherwise  specified.  Any
reference in this Agreement or in the Loan Documents to this Agreement or any of
the  Loan  Documents  shall  include  all  alterations,   amendments,   changes,
extensions,   modifications,   renewals,   replacements,    substitutions,   and
supplements, thereto and thereof, as applicable.

                  1.5 Schedules and Exhibits.  All of the schedules and exhibits
attached to this Agreement shall be deemed incorporated herein by reference.

         20       LOAN AND TERMS OF PAYMENT.

                  2.1      Revolving Advances.

                           (a)      Subject to the terms and conditions of this
Agreement,  Lender  agrees  to make  advances  ("Advances")  to  Borrower  in an
aggregate amount outstanding not to exceed at any one time the lesser of (i) the
Maximum Revolving Amount less the aggregate  outstanding  balance of all undrawn
or unreimbursed Letters of Credit, or (ii) the Borrowing Base less the aggregate
outstanding  balance of all  undrawn  or  unreimbursed  Letters  of Credit.  For
purposes of this Agreement,  "Borrowing  Base", as of any date of determination,
shall mean the result of:

                           (I)      the lowest of:

                                    (v) seventy-five percent (75%) of EBITDA for
                  the most recent  twelve (12) month period for which  financial
                  statements  have been  provided to Lender  pursuant to Section
                  6.1(c);

                                    (w) one  hundred  fifty  percent  (150%)  of
                  EBITDA for the most recent  twelve (12) month period for which
                  financial  statements have been provided to Lender pursuant to
                  Section  6.1(c),  less the aggregate  principal  amount of the
                  Term Loans then outstanding; and

                                    (x)     the sum of:

                                                     (A)      the lowest  of (i)
                          $7,500,000, (ii) eighty-five percent (85%) of Eligible
                          accounts,  less the amount,  if any,  of the  Dilution
                          Reserve,  and (iii) an amount equal to one-sixth (1/6)
                          of   Collections   of  Borrower  and  its   Restricted
                          Subsidiaries   with   respect  to  Accounts   for  the
                          immediately preceding sixty (60) day period, plus

                                       29

                                                     (B)      the lowest  of (i)
                          $12,000,000,  (ii) thirty percent (30%) of the Cost of
                          Eligible  Inventory,  less the aggregate amount of the
                          Inventory Reserves, and (iii) the GOB Rate of the Cost
                          of Eligible  Inventory as determined based on the most
                          recent appraisals thereof less the aggregate amount of
                          the Inventory Reserves; and

                                    (y) an amount  equal to  one-third  (1/3) of
                  Collections of Borrower and its Restricted  Subsidiaries  with
                  respect to Accounts for the  immediately  preceding sixty (60)
                  day period; and

                                    (z) an amount equal to  two-thirds  (2/3) of
                  Collections of Borrower and its Restricted  Subsidiaries  with
                  respect to Accounts for the  immediately  preceding sixty (60)
                  day period,  less the aggregate  principal  amount of the Term
                  Loans then outstanding,

                           minus,

                           (II) (without  duplication)  the aggregate  amount of
                  reserves,  if any, established by Lender under Section 2.1(b),
                  Section 2.1(c) and Article 10 hereof.

                           (b)      Anything  to  the  contrary  in this Section
notwithstanding,  Lender shall have the right to establish  reserves against the
Borrowing Base or adjust the standards of eligibility in such amounts as Lender,
in its reasonable judgment (from the perspective of an asset-based lender) shall
deem  necessary or  appropriate,  including  (x) reserves on account of (i) sums
that  Borrower  is  required  to pay  (such  as  taxes,  assessments,  insurance
premiums, or, in the case of leased assets, rents or other amounts payable under
such  leases) and has failed to pay under any Section of this  Agreement  or any
other Loan Document, (ii) without duplication of the foregoing, amounts owing by
Borrower to any Person to the extent secured by a Lien on, or trust over, any of
the Collateral,  which Lien or trust, in the reasonable  determination of Lender
(from  the  perspective  of an  asset-based  lender),  would be likely to have a
priority  superior to the Liens of Lender  (such as landlord  liens,  ad valorem
taxes, or sales taxes where given priority under  applicable law) in and to such
item of  Collateral,  and (y)  reserves  to the extent  that the final audit and
appraisal  referenced in Section 3.3(c) received by Foothill after the Amendment
Closing Date reveal any material negative variances from the preliminary results
of such reports delivered to Lender prior to the Amendment Closing Date.

                           (c)  Lender  shall  have  the  right to  establish  a
reserve  against the  Borrowing  Base,  commencing  on December 1, 1999,  in the
amount of $1,000,000,  which reserve shall increase by an additional  $1,000,000
as of the first day of each month thereafter, provided that such reserve shall

                                       30

reduce to zero on that date which is two (2) Business Days prior to any Interest
Payment Date and  increased by an  additional  $1,000,000 as of the first day of
the immediately succeeding month and each month thereafter.

                           (d) Lender shall have no  obligation to make Advances
hereunder to the extent they would cause the  outstanding  Obligations to exceed
the Maximum Revolving Amount.

                           (e)      Amounts borrowed  pursuant  to this  Section
2.1 may be repaid and,  subject to the terms and  conditions of this  Agreement,
reborrowed at any time during the term of this Agreement.

                  2.2      Letters of Credit.

                           (a)      Subject to the terms and conditions  of this
Agreement,  Lender agrees to issue letters of credit for the account of Borrower
(each, an "L/C") or to issue guarantees of payment (each such guaranty,  an "L/C
Guaranty")  with respect to letters of credit  issued by an issuing bank for the
account of Borrower. Lender shall have no obligation to issue a Letter of Credit
if any of the following would result:

                                    (i) The  aggregate  amount  of all  types of
                  undrawn and  unreimbursed  Letters of Credit  would exceed the
                  Borrowing  Base less the amount of  outstanding  Advances less
                  the  aggregate  amount  of  Inventory  Reserves  and  reserves
                  established under Section 2.1(b) and Section 2.1(c); or

                                    (ii) the aggregate  amount of all undrawn or
                  unreimbursed  Letters of Credit would exceed the lower of: (x)
                  the Maximum  Revolving  Amount less the amount of  outstanding
                  Advances less the aggregate  amount of Inventory  Reserves and
                  reserves established under Section 2.1(b),  Section 2.1(c) and
                  Article 10 hereof; or (y) $3,000,000; or

                                    (iii)  the  outstanding   Obligations  would
                  exceed the Maximum Amount.

Borrower  expressly  understands and agrees that Lender shall have no obligation
to arrange for the  issuance by issuing  banks of the letters of credit that are
to be the subject of L/C Guaranties.  Borrower and Lender  acknowledge and agree
that  certain  of the  letters  of  credit  that  are to be the  subject  of L/C
Guaranties  may be  outstanding  on the Amendment  Closing Date.  Each Letter of
Credit shall have an expiry date no later than sixty (60) days prior to the date
on which this  Agreement is scheduled  to terminate  under  Section 3.4 (without
regard to any potential renewal term) and all such Letters of Credit shall be in
form and  substance  acceptable to Lender in its sole  discretion.  If Lender is
obligated to advance funds under a Letter of Credit,  Borrower immediately shall
reimburse such amount to Lender and, in the absence of such  reimbursement,  the
amount  so  advanced  immediately  and  automatically  shall be  deemed to be an
Advance  hereunder  and,  thereafter,  shall  bear  interest  at the  rate  then
applicable to Advances under Section 2.6.

                                       31

                           (b)  Borrower  hereby  agrees  to  indemnify,   save,
defend,  and hold Lender harmless from any loss,  cost,  expense,  or liability,
including  payments  made  by  Lender,   expenses,  and  actual  and  reasonable
attorneys'  fees  incurred by Lender  arising out of or in  connection  with any
Letter  of  Credit,  except  to the  extent  arising  from  Lender's  own  gross
negligence  or wilful  misconduct.  Borrower  agrees to be bound by the  issuing
bank's  regulations and  interpretations  of any Letters of Credit guaranteed by
Lender and opened to or for Borrower's account or by Lender's interpretations of
any L/C  issued  by  Lender  to or for  Borrower's  account,  even  though  this
interpretation  may be different from Borrower's  own, and Borrower  understands
and  agrees  that  Lender  shall not be liable  for any  error,  negligence,  or
mistake, whether of omission or commission, in following Borrower's instructions
or those contained in the Letter of Credit or any modifications,  amendments, or
supplements  thereto.  Borrower  understands that the L/C Guaranties may require
Lender to indemnify  the issuing bank for certain costs or  liabilities  arising
out of claims by Borrower  against such issuing bank.  Borrower hereby agrees to
indemnify,  save,  defend,  and hold Lender  harmless  with respect to any loss,
cost, expense (including,  without limitation,  actual and reasonable attorneys'
fees),  or  liability  incurred by Lender  under any L/C Guaranty as a result of
Lender's  indemnification of any such issuing bank, except to the extent arising
from Lender's own gross negligence or wilful misconduct.

                           (c) Borrower  hereby  authorizes and directs any bank
that  issues a letter of credit  guaranteed  by Lender to  deliver to Lender all
instruments,  documents, and other writings and property received by the issuing
bank  pursuant  to such letter of credit,  and to accept and rely upon  Lender's
instructions  and agreements  with respect to all matters  arising in connection
with such letter of credit and the related application.  Borrower may or may not
be the "applicant" or "account party" with respect to such letter of credit.

                           (d) Any and all charges, commissions, fees, and costs
incurred by Lender relating to the letters of credit  guaranteed by Lender shall
be  considered  Lender  Expenses  for  purposes of this  Agreement  and shall be
reimbursable by Borrower to Lender on demand.

                           (e)   Immediately   upon  the   termination  of  this
Agreement,  Borrower  agrees to either (i) provide cash collateral to be held by
Lender in an amount  equal to one  hundred  five  percent  (105%) of the maximum
amount of Lender's  obligations  under  outstanding  Letters of Credit,  or (ii)
cause to be delivered to Lender  releases of all of Lender's  obligations  under
outstanding  Letters  of  Credit.  Such cash  collateral  shall be  returned  to
Borrower  when  there are no longer  any  Letters  of  Credit  outstanding,  all
Obligations  have  been  paid in  full  in cash  and  this  Agreement  has  been
terminated.  At Lender's  discretion,  any  proceeds of  Collateral  received by
Lender after the occurrence and during the  continuation  of an Event of Default
may be held as the cash collateral required by this Section 2.2(e).

                                       32

                           (f) If by reason of (i) any change in any  applicable
law,  treaty,  rule,  or  regulation  or any  change  in the  interpretation  or
application by any  governmental  authority of any such applicable law,  treaty,
rule, or regulation,  or (ii)  compliance by the issuing bank or Lender with any
direction,  request, or requirement (irrespective of whether having the force of
law) of any  governmental  authority or monetary  authority  including,  without
limitation, Regulation D of the Board of Governors of the Federal Reserve System
as from time to time in effect (and any successor thereto):

                                    (A)     any  reserve,  deposit,  or  similar
requirement  is or shall be imposed  or  modified  in respect of any  Letters of
Credit issued hereunder, or

                                    (B)     there   shall   be  imposed  on  the
issuing bank or Lender any other  condition  regarding any letter of credit,  or
Letter of Credit, as applicable, issued pursuant hereto;

and the result of the foregoing is to increase, directly or indirectly, the cost
to the issuing bank or Lender of issuing, making,  guaranteeing,  or maintaining
any  letter of  credit,  or Letter of Credit,  as  applicable,  or to reduce the
amount  receivable in respect thereof by such issuing bank or Lender,  then, and
in any such case,  Lender may, at any time within a reasonable  period after the
additional cost is incurred or the amount received is reduced,  notify Borrower,
and Borrower  shall pay on demand such amounts as the issuing bank or Lender may
specify  to be  necessary  to  compensate  the  issuing  bank or Lender for such
additional cost or reduced  receipt,  together with interest on such amount from
the date of such demand  until  payment in full thereof at the rate set forth in
Section  2.6(a)(i) or (c)(i),  as applicable.  The  determination by the issuing
bank or Lender,  as the case may be, of any amount due  pursuant to this Section
2.2(f), as set forth in a certificate  setting forth the calculation  thereof in
reasonable detail,  shall, in the absence of manifest or demonstrable  error, be
final and conclusive and binding on all of the parties hereto.

                  2.3 Term  Loan.  (a) Term  Loan A.  Subject  to the  terms and
conditions  of this  Agreement,  Lender  has  agreed  to make a term loan on the
Amendment Closing Date (the "Term Loan A") to Borrower in the original principal
amount of $2,500,000.  The outstanding  unpaid principal balance and all accrued
and  unpaid  interest  under  the Term  Loan A shall be due and  payable  on the
earlier of (x) the  Maturity  Date and (y) the  termination  of this  Agreement,
whether by its terms, by prepayment, by acceleration, or otherwise. In the event
that  Borrower  shall not have  prepaid the Term Loan A in full by December  15,
2000 (the "Adjustment  Date"),  Borrower shall, at its option,  pay to Lender on
the  Adjustment  Date in immediately  available  funds a fee (the "Term A Option
Fee") in an amount equal to one percent (1.00%) of the principal  balance of the
Term Loan A then outstanding.  If Borrower fails to pay the Term A Option Fee on
the  Adjustment  Date,  the  interest  rate  payable on the Term Loan A shall be
increased by the Term A Monthly  Interest Rate  Adjustment  set forth in Section
2.6(a)(iii)  from the  Adjustment  Date through the Maturity  Date.  All amounts
outstanding under the Term Loan A shall constitute Obligations.

                                       33

                           (b)      Term  Loan  B.  Subject  to  the  terms  and
conditions  of this  Agreement,  Lender  has  agreed  to make a term loan on the
Amendment Closing Date (the "Term Loan B") to Borrower in the original principal
amount of $10,000,000.  The outstanding unpaid principal balance and all accrued
and  unpaid  interest  under  the Term  Loan B shall be due and  payable  on the
earlier of (x) the  Maturity  Date and (y) the  termination  of this  Agreement,
whether by its terms, by prepayment, by acceleration, or otherwise. In the event
that Borrower  shall not have prepaid the Term Loan B in full by the  Adjustment
Date,  Borrower  shall,  at its option,  pay to Lender on each of the Adjustment
Date and on January 15, 2001 in immediately  available  funds a fee (the "Term B
Option Fee") in an amount equal to two percent (2.00%) of the principal  balance
of the Term Loan B then outstanding.  If Borrower fails to pay the Term B Option
Fee on the  Adjustment  Date, the interest rate payable on the Term Loan B shall
be increased by the Term B Monthly Interest Rate Adjustment set forth in Section
2.6(a)(iv)  from the  Adjustment  Date  through the Maturity  Date.  All amounts
outstanding under the Term Loan B shall constitute Obligations.

                           (c) Prepayments.  The unpaid principal balance of the
Term Loans may be  voluntarily  prepaid by Borrower in whole or in part  without
penalty or premium at any time during the term of this  Agreement so long as (i)
at the time of such  prepayment  no Default or Event of Default  then  exists or
would be caused thereby,  and (ii) immediately before and after giving effect to
such prepayment,  Availability  (less a reasonable reserve for past due accounts
payable) shall be not less than  $3,000,000.  All  prepayments of the Term Loans
shall be in an amount not less than $1,000,000.  Notwithstanding anything to the
contrary  contained  herein,  so long as no  Default  or Event of  Default  then
exists,  all prepayments of the Term Loans shall be applied pro rata between the
Term Loan A and the Term Loan B.

                  2.4      [Intentionally Omitted].

                  2.5  Overadvances.  If,  at any  time or for any  reason,  the
amount of  Obligations  owed by Borrower to Lender  pursuant to Sections 2.1 and
2.2 is greater than the applicable Dollar or percentage limitations set forth in
Sections  2.1 or 2.2  (an  "Overadvance"),  Borrower  immediately  shall  pay to
Lender,  in cash, the amount of such excess to be used by Lender first, to repay
Advances outstanding under Section 2.1 and, thereafter,  to be held by Lender as
cash collateral to secure Borrower's  obligation to repay Lender for all amounts
paid pursuant to Letters of Credit.

                  2.6      Interest and Letter of Credit Fees:  Rates, Payments,
and Calculations; Promise to Pay.

                           (a)      Interest Rate.  Except as provided in clause
(b) below,  (i) all  Advances  which are  Eurodollar  Rate  Advances  shall bear
interest  on the  Daily  Balance  thereof  at a per  annum  rate  of  three  and
one-quarter  percentage points (3.25%) above the Adjusted  Eurodollar Rate, (ii)
all Advances which are Reference Rate Advances shall bear interest on the Daily

                                       34

Balance  thereof at a per annum rate of two percent  (2.00%) above the Reference
Rate,  (iii) the Term Loan A shall bear interest on the Daily Balance thereof at
a per annum rate of fifteen percent (15.00%);  provided,  however,  that, in the
event Borrower  fails to pay the Term A Option Fee on the  Adjustment  Date, the
interest  rate on the Term Loan A shall  increase  each month  commencing on the
Adjustment Date through the Maturity Date (such monthly increase in the interest
rate is referred to herein as the "Term A Monthly  Interest Rate Adjustment" and
the  interest  rate on the Term Loan A as so  increased is referred to herein as
the "Term A Rate") by an  additional  one-eighth  of one percent  (0.125%) , and
(iv) the Term Loan B shall bear interest on the Daily  Balance  thereof at a per
annum rate of fifteen percent (15.00%);  provided,  however,  that, in the event
Borrower fails to pay the Term B Option Fee on the Adjustment Date, the interest
rate on the Term Loan B shall  increase each month  commencing on the Adjustment
Date through the Maturity  Date (such  monthly  increase in the interest rate is
referred  to herein as the "Term B Monthly  Interest  Rate  Adjustment"  and the
interest  rate on the Term Loan B as so  increased  is referred to herein as the
"Term B Rate") by an additional three-eighths of one percent (0.375%).

                           (b)      Letter  of  Credit Fee.  Borrower  shall pay
Lender a fee (in addition to the charges, commissions, fees, and costs set forth
in Section 2.2(d)) equal to one and one-half percent (1.50%) per annum times the
aggregate  undrawn amount of all Letters of Credit that were outstanding  during
the immediately preceding month.

                           (c)      Default  Rate.   Upon  the   occurrence  and
during the continuation of an Event of Default,  (i) all Obligations (except for
undrawn  Letters of Credit and the Term Loan)  shall bear  interest on the Daily
Balance  thereof  at a per annum rate equal to four  percentage  points  (4.00%)
percentage  points  above the  Reference  Rate,  (ii) the Term Loan A shall bear
interest  on  the  Daily  Balance  thereof  at a per  annum  rate  equal  to two
percentage  points  (2.00%)  above the Term A Rate,  (iii) the Term Loan B shall
bear  interest  on the Daily  Balance  thereof  at a per annum rate equal to two
percentage  points  (2.00%) above the Term B Rate, and (iv) the Letter of Credit
fee provided in Section 2.6(b) shall be increased to three and one-half  percent
(3.50%) per annum  times the amount of the  undrawn  Letters of Credit that were
outstanding during the immediately preceding month.

                          (d) [Intentionally Omitted].

                           (e)  Payments.  Interest  and  Letter of Credit  fees
payable hereunder shall be due and payable, in arrears, on the first day of each
month during the term hereof.  Borrower hereby authorizes Lender, at its option,
without  prior notice to Borrower,  to charge such interest and Letter of Credit
fees,  all Lender  Expenses (as and when  incurred),  the charges,  commissions,
fees,  and  costs  provided  for in  Section  2.2(d)  (as and  when  accrued  or
incurred),  the fees  and  charges  provided  for in  Section  2.11 (as and when
accrued or incurred),  and all installments or other payments due under the Term
Loans or any Loan Document to Borrower's Loan Account,  which amounts thereafter
shall accrue interest at the rate then applicable to Advances hereunder.

                                       35

                           (f)  Computation.  The Reference Rate as of  the date
of this Agreement is eight and  one-quarter  percent  (8.25%) per annum.  In the
event the Reference Rate is changed from time to time hereafter,  the applicable
rate of interest  hereunder  automatically and immediately shall be increased or
decreased by an amount equal to such change in the Reference  Rate. All interest
and fees chargeable under the Loan Documents shall be computed on the basis of a
three hundred sixty (360) day year for the actual number of days elapsed.

                           (g)  Intent to Limit Charges to Maximum  Lawful Rate.
Borrower and Lender  hereby agree and  stipulate  that the only charges  imposed
upon  Borrower for the use of money in  connection  with this  Agreement are and
shall be the specific  interest and fees  described in this Article 2 and in any
other Loan Document.  Notwithstanding the foregoing, Borrower and Lender further
agree and  stipulate  that all agency fees,  syndication  fees,  facility  fees,
underwriting fees, default charges, late charges, funding or "breakage" charges,
increased cost charges,  the Early Termination  Premium,  "float" or "clearance"
charges, attorneys' fees and reimbursement for costs and expenses paid by Lender
to third  parties or for damages  incurred  by Lender are charges to  compensate
Lender  for  underwriting  and  administrative  services  and  costs  or  losses
performed or incurred, and to be performed and incurred, by Lender in connection
with  this   Agreement  and  the  other  Loan   Documents  and  shall  under  no
circumstances  be deemed to be charges for the use of money pursuant to Official
Code of Georgia  Annotated  Sections  7-4-2 and  7-4-18.  In no event  shall the
amount of interest  and other  charges for the use of money  payable  under this
Agreement exceed the maximum amounts  permissible  under any law that a court of
competent  jurisdiction  shall,  in  a  final  determination,  deem  applicable.
Borrower and Lender, in executing and delivering this Agreement,  intend legally
to agree upon the rate or rates of  interest  and other  charges  for the use of
money and manner of payment stated within it; provided,  however, that, anything
contained herein to the contrary notwithstanding, if the amount of such interest
and other charges for the use of money or manner of payment  exceeds the maximum
amount  allowable under  applicable law, then, ipso facto as of the date of this
Agreement,  Borrower is and shall be liable only for the payment of such maximum
as allowed by law, and payment  received  from  Borrower in excess of such legal
maximum,  whenever received, shall be applied to reduce the principal balance of
the Obligations to the extent of such excess.

                           (h)   Promise to Pay. Borrower hereby promises to pay
in full to Lender the amount of all Obligations,  including the principal amount
of all  Advances,  together  with accrued  interest,  fees and other amounts due
thereon, all in accordance with the terms of this Agreement.

                                       36

                  2.7      Collection of Accounts.

                           (a)  Collections. Borrower  shall,  promptly  (but in
no event  later than  December  15,  1999)  after the  Amendment  Closing  Date,
instruct all Account Debtors (other than retail customers and optometrists) with
respect to the  Accounts,  General  Intangibles  and  Negotiable  Collateral  of
Borrower and the  Restricted  Subsidiaries  to remit,  on each Business Day, all
Collections  in respect  thereof  directly to the Lockbox or to a  Concentration
Account  via  electronic  funds  transfer  (including,  but not  limited  to ACH
transfers).  From and after the Amendment Closing Date, Borrower shall cause all
Collections and other amounts received by Borrower or any Restricted  Subsidiary
at any retail  store  location  to be  deposited  on a daily basis into a Retail
Store Account or a Concentration Account. In addition,  Borrower agrees that all
other  Collections  and other  amounts  received  directly  by  Borrower  or any
Restricted  Subsidiary  from any Account Debtor or any other source  immediately
upon receipt shall be deposited  into a  Concentration  Account.  Borrower shall
cause all funds in excess of $500 on deposit in each Retail Store  Account to be
sent by electronic funds transfer (including, but not limited to, ACH transfers)
on each Business Day to a Concentration Account.

                           (b)  Lockbox   and   Concentration   Accounts.   With
respect to each Lockbox,  Borrower, Lender and the applicable Lockbox Bank shall
have entered into a Lockbox  Agreement,  which among other things shall  provide
(i) for the opening or  maintenance  of a Lockbox  Account at such  Lockbox Bank
into which all  Collections  received in such  Lockbox  shall be  deposited on a
daily basis and (ii) that all cash deposited into such Lockbox  Account shall be
sent by electronic funds transfer (including,  but not limited to ACH transfers)
on each Business Day to the Master  Concentration  Account.  With respect to the
Sub-Concentration Accounts,  Borrower, Lender and First Union shall have entered
into a Concentration  Account Agreement,  which among other things shall provide
that all cash  deposited  into each  Sub-Concentration  Account shall be sent by
electronic funds transfer (including,  but not limited to ACH transfers) on each
Business Day to the Master Concentration  Account. Upon the terms and subject to
the conditions set forth in the Concentration  Account Agreement with respect to
the  Master   Concentration   Account,   all  amounts  received  in  the  Master
Concentration  Account  shall be wired each  Business  Day into an account  (the
"Lender Account") maintained by Lender at a depository selected by Lender.

                           (c)  Retail Store Accounts. Promptly (but in no event
later than thirty (30) days) after the Amendment  Closing Date,  Borrower shall,
with  respect to each  Retail  Store  Account,  deliver  to Lender  either (i) a
Blocked  Account  Agreement  with respect to such Retail  Store  Account or (ii)
evidence  that  Borrower  has  provided to the bank at which such  Retail  Store
Account is  located  notice in writing of  Lender's  security  interest  in such
Retail  Store  Account  and  irrevocable  directions  in  writing,  in form  and
substance   satisfactory  to  Lender,  to  send  by  electronic  funds  transfer
(including,  but not  limited  to,  ACH  transfers)  on each  Business  Day to a
Concentration Account all funds in excess of $500 on deposit in such Retail

                                       37

Store  Account  and that each  bank has  agreed  to do so.  Notwithstanding  the
foregoing, promptly upon the request of Lender, Borrower shall deliver a Blocked
Account Agreement to Lender with respect to any Retail Store Account  identified
by Lender (which shall include,  without  limitation,  each Retail Store Account
with Wells Fargo Bank,  National  Association).  Each Blocked Account  Agreement
shall  provide,  among other things,  that all cash in excess of $500  deposited
into the Retail Store Accounts covered thereby shall be sent by electronic funds
transfer (including, but not limited to ACH transfers) on each Business Day to a
Concentration Account.

                           (d)  Miscellaneous.     No     Lockbox     Agreement,
Concentration Account Agreement,  Blocked Account Agreement or other arrangement
contemplated in this Section 2.7 shall be modified by Borrower without the prior
written consent of Lender.

                  2.8  Crediting  Payments;   Application  of  Collections.  The
receipt of any  Collections  by Lender  (whether from transfers to Lender by the
Concentration  Account Bank pursuant to the  Concentration  Account Agreement or
otherwise)  immediately shall be applied provisionally to reduce the Obligations
in the order as determined by Lender,  in its sole discretion,  but shall not be
considered a payment on account unless such  Collection  item is a wire transfer
of  immediately  available  federal  funds and is made to the Lender  Account or
unless and until such  Collection  item is honored when  presented  for payment.
From and after the Amendment  Closing  Date,  Lender shall be entitled to charge
Borrower for two (2)  Business  Days of  `clearance'  or `float' at the rate set
forth  in  Section  2.6(a)(i),  Section  2.6(a)(ii)  or  Section  2.6(c)(i),  as
applicable,  on all  Collections  that are  received  by Lender  (regardless  of
whether  forwarded  by  the  Concentration  Account  Bank  to  Lender,   whether
provisionally   applied  to  reduce  the  Obligations   under  Section  2.1,  or
otherwise). This across-the-board two (2) Business Day clearance or float charge
on all  Collections  is  acknowledged  by the parties to  constitute an integral
aspect of the  pricing  of  Lender's  financing  of  Borrower,  and shall  apply
irrespective of the  characterization  of whether receipts are owned by Borrower
or Lender, and whether or not there are any outstanding Advances,  the effect of
such clearance or float charge being the equivalent of charging two (2) Business
Days of interest on such Collections.  Should any Collection item not be honored
when presented for payment,  then Borrower shall be deemed not to have made such
payment,  and  interest  shall  be  recalculated  accordingly.  Anything  to the
contrary contained herein  notwithstanding,  any Collection item shall be deemed
received by Lender only if it is received into the Lender  Account on a Business
Day on or before 2:00 p.m.  (Eastern  time).  If any Collection item is received
into the Lender Account on a non-Business Day or after 2:00 p.m.  (Eastern time)
on a Business  Day, it shall be deemed to have been received by Lender as of the
opening of business on the immediately  following Business Day.  Notwithstanding
the foregoing,  (i) any Collections or other amounts received by Lender prior to
the occurrence of an Event of Default that are not directed to be applied to the
Loans in any particular  order by Borrower or elsewhere in this Agreement  shall
be applied to the Obligations as Lender, in its sole discretion, shall

                                       38

determine,  and (ii) any  Collections or other amounts  received by Lender after
the  occurrence  of an Event of Default shall be applied to the  Obligations  as
Lender, in its sole discretion, shall determine.

                  2.9  Designated  Account.  Lender  is  authorized  to make the
Advances,  the Letters of Credit and the Term Loans under this  Agreement  based
upon telephonic or other  instructions  received from anyone purporting to be an
Authorized  Person,  or without  instructions  if  pursuant  to Section  2.6(e).
Borrower  agrees to  establish  and  maintain  the  Designated  Account with the
Designated  Account  Bank for the  purpose  of  receiving  the  proceeds  of the
Advances  requested by Borrower and made by Lender  hereunder.  Unless otherwise
agreed by Lender and  Borrower,  any Advance  requested  by Borrower and made by
Lender hereunder shall be made to the Designated Account.

                  2.10  Maintenance of Loan Account;  Statements of Obligations.
Lender shall maintain an account on its books in the name of Borrower (the "Loan
Account") on which Borrower will be charged with all Advances and the Term Loans
made by  Lender  to  Borrower  or for  Borrower's  account,  including,  accrued
interest,  Lender Expenses,  and any other payment  Obligations of Borrower.  In
accordance with Section 2.8, the Loan Account will be credited with all payments
received  by Lender from  Borrower  or for  Borrower's  account,  including  all
amounts  received in the Lender  Account from the  Concentration  Account  Bank.
Lender shall render statements regarding the Loan Account to Borrower, including
principal,  interest,  fees,  and  including an  itemization  of all charges and
expenses  constituting  Lender  Expenses  owing,  and such  statements  shall be
conclusively  presumed  to be correct and  accurate  and  constitute  an account
stated between  Borrower and Lender unless,  within  forty-five  (45) days after
receipt thereof by Borrower,  Borrower shall deliver to Lender written objection
thereto describing the error or errors contained in any such statements.

                  2.11     Fees.

                           (a)     Fee Letter.  Borrower shall pay to Lender the
fees set forth in the Fee Letter.

                           (b)  Unused Line Fee.  On the first day of each month
during the term of this Agreement,  Borrower shall pay to Lender, in arrears, an
unused line fee in an amount equal to one-half of one percent  (0.50%) per annum
times the Average Unused Portion of the Maximum Revolving Amount.

                           (f)  Miscellaneous.   The   fees   set   forth  above
shall be fully earned when due and non-refundable  when paid and, if applicable,
computed  on the basis of a three  hundred  sixty  (360) day year for the actual
number of days elapsed.

                  2.12     Eurodollar Rate Advances. Any other provisions herein
to the contrary  notwithstanding,  the  following  provisions  shall govern with
respect to Eurodollar Rate Advances as to the matters covered:

                                       39

                           (a)  Borrowing;  Conversion;  Continuation.  Borrower
may from time to time,  on or after  the  Amendment  Closing  Date,  request  in
written or  telephonic  communication  with Lender:  (i) Advances to  constitute
Eurodollar  Rate  Advances;  (ii) that Reference Rate Advances be converted into
Eurodollar  Rate  Advances;  or (iii) that  existing  Eurodollar  Rate  Advances
continue for an additional  Interest Period.  Any such request shall specify the
aggregate amount of the requested Eurodollar Rate Advances, the proposed funding
date  therefor  (which  shall be a Business  Day,  and with respect to continued
Eurodollar  Rate  Advances  shall be the last day of the Interest  Period of the
existing  Eurodollar Rate Advances being  continued),  and the proposed Interest
Period, in each case subject to the limitations set forth below. Eurodollar Rate
Advances may only be made, continued, or extended if, as of the proposed funding
date therefor each of the following conditions is satisfied:

                                    (v)   no Event of Default exists;

                                    (w)   no more than five (5) Eurodollar  Rate
Advances may be in effect at any one time;

                                    (x)   the amount  of  each  Eurodollar  Rate
Advance  borrowed,  converted,  or continued  must be in an amount not less than
$1,000,000 and integral multiples of $500,000 in excess thereof;

                                    (y)   Lender  shall have determined that the
Adjusted Eurodollar Rate is available to Lender and can be readily determined as
of the date of the request for such Eurodollar Rate Advance by Borrower; and

                                    (z) Lender shall have  received such request
at least three (3) Business Days prior to the proposed funding date therefor.

Any request by Borrower to borrow Eurodollar Rate Advances, to convert Reference
Rate  Advances  to  Eurodollar  Rate  Advances,  or  to  continue  any  existing
Eurodollar Rate Advances shall be irrevocable,  except to the extent that Lender
shall determine under Sections  2.12(a),  2.13 or 2.14 that such Eurodollar Rate
Advances cannot be made or continued.

                  (b) Determination of Interest Period. Eurodollar Rate Advances
shall  only  be  available  for  Interest  Periods  of  ninety  (90)  days.  The
determination of Interest Periods shall be subject to the following provisions:

                           (i)   in the case of immediately successive  Interest
Periods,  each successive Interest Period shall commence on the day on which the
next preceding Interest Period expires;

                           (ii)  if any   Interest Period would otherwise expire
on a day which is not a Business  Day, the Interest  Period shall be extended to
expire on the next succeeding Business Day; provided,  however, that if the next
succeeding Business Day occurs in the following calendar month, then such

                                       40

Interest  Period shall end on the last Business Day of the calendar month at the
end of such Interest Period;

                           (iii) if  any  Interest  Period  begins  on the  last
Business  Day  of a  month  or on a  day  for  which  there  is  no  numerically
corresponding day in the calendar month at the end of such Interest Period, then
the Interest  Period shall end on the last Business Day of the calendar month at
the end of such Interest Period; and

                           (iv)  Borrower  may not  request  a  Eurodollar  Rate
Advance with an Interest Period which expires later than the applicable  Renewal
Date.

                  (c) Automatic  Conversion;  Optional Conversion by Lender. Any
Eurodollar Rate Advance shall automatically  convert to a Reference Rate Advance
upon (x) the  occurrence  of any  Event of  Default,  or (y) the last day of the
applicable  Interest  Period,  unless  Lender has received a request to continue
such  Eurodollar  Rate Advance at least three (3) Business Days prior to the end
of such Interest  Period in accordance  with the terms of Section 2.12 (a) . Any
Eurodollar  Rate Advance  shall,  at Lender's  option,  upon notice to Borrower,
convert to a  Reference  Rate  Advance in the event that (i) an Event of Default
shall have occurred and be continuing as of the last day of the Interest  Period
for such Eurodollar Rate Advance,  or (ii) this Agreement shall  terminate,  and
Borrower  shall pay to Lender any amounts  required by Section  2.15 as a result
thereof.

                  2.13  Illegality.  Any other provision  herein to the contrary
notwithstanding,  if the adoption of or any change in any  Requirement of Law or
in the  interpretation or application  thereof shall make it unlawful for Lender
to make or maintain  Eurodollar Rate Advances as contemplated by this Agreement,
(a) the  obligation  of  Lender  hereunder  to make  Eurodollar  Rate  Advances,
continue  Eurodollar Rate Advances as such, and convert  Reference Rate Advances
to Eurodollar  Rate Advances shall  forthwith be suspended and (b) Lender's then
outstanding  Eurodollar Rate Advances, if any, shall be converted  automatically
to  Reference  Rate  Advances on the  respective  last days of the then  current
Interest  Periods with respect thereto or within such earlier period as required
by law; provided,  however, that before making any such demand, Lender agrees to
use  reasonable  efforts  (consistent  with its  internal  policy  and legal and
regulatory restrictions and so long as such efforts would not be disadvantageous
to it, in its  reasonable  discretion,  in any legal,  economic,  or  regulatory
manner)  to  designate  a  different  lending  office  if the  making  of such a
designation  would allow Lender or its lending office to continue to perform its
obligations  to make  Eurodollar  Rate  Advances.  If any such  conversion  of a
Eurodollar  Rate  Advance  occurs on a day which is not the last day of the then
current Interest Period with respect thereto,  Borrower shall pay to Lender such
amounts,  if any, as may be required  pursuant to Section 2.15. If circumstances
subsequently  change  so that  Lender  shall  determine  that it is no longer so
affected, Lender will promptly notify Borrower, and upon receipt of such notice,
the  obligations  of Lender to make or continue  Eurodollar  Rate Advances or to
convert   Reference  Rate  Advances  into  Eurodollar  Rate  Advances  shall  be
reinstated.

                                       41

                  2.14 Requirements of Law. (a) If the adoption of or any change
in any  Requirement of Law or in the  interpretation  or application  thereof or
compliance  by Lender with any request or  directive  (whether or not having the
force  of law)  from  any  central  bank or other  Governmental  Authority  made
subsequent to the date hereof:

                  (i)  shall  subject  Lender  to any tax,  levy,  charge,  fee,
         reduction,  or withholding of any kind  whatsoever with respect to this
         Agreement or any  Advance,  or change the basis of taxation of payments
         to Lender in respect  thereof  (except for the  establishment  of a tax
         based on the net  income of Lender or changes in the rate of tax on the
         net income of Lender);

                  (ii) shall  impose,  modify or hold  applicable  any  reserve,
         special deposit, compulsory loan, or similar requirement against assets
         held  by,  deposits  or other  liabilities  in or for the  account  of,
         Eurodollar Rate Advances or other extensions of credit by, or any other
         acquisition of funds by, any office of Lender; or

                  (iii) shall impose on Lender any other  condition with respect
         to this Agreement or any Eurodollar Rate Advance;

and the  result of any of the  foregoing  is to  increase  the cost to Lender of
making,  converting into, continuing, or maintaining Eurodollar Rate Advances or
to reduce any amount  receivable  hereunder in respect of such  Advances,  or to
forego any other sum payable  thereunder or make any payment on account thereof,
then, in any such case, Borrower shall promptly pay Lender, upon its demand, any
additional  amounts  necessary to compensate  Lender for such  increased cost or
reduced  amount  receivable;  provided,  however,  that  before  making any such
demand,  Lender agrees to use reasonable  efforts  (consistent with its internal
policy and legal and regulatory  restrictions  and so long as such efforts would
not be  disadvantageous  to it,  in its  reasonable  discretion,  in any  legal,
economic,  or  regulatory  manner) to designate a different  Eurodollar  lending
office if the making of such  designation  would allow Lender or its  Eurodollar
lending office to continue to perform its  obligations to make  Eurodollar  Rate
Advances or to continue to fund or maintain  Eurodollar  Rate Advances and avoid
the need for, or materially reduce the amount of, such increased cost. If Lender
becomes entitled to claim any additional  amounts pursuant to this Section 2.14,
Lender  shall  notify  Borrower of the event by reason of which it has become so
entitled.  A certificate as to any additional  amounts payable  pursuant to this
Section 2.14  submitted by Lender to Borrower shall be conclusive in the absence
of manifest  error. If Borrower so notifies Lender within five (5) Business Days
after Lender  notifies  Borrower of any increased cost pursuant to the foregoing
provisions of this Section 2.14 and reimburses Lender for any cost in accordance
with Section  2.15.,  Borrower may convert all  Eurodollar  Rate  Advances  then
outstanding  into Reference Rate Advances in accordance  with Section 2.12. This
covenant shall survive the  termination of this Agreement and the payment of the
Obligations.

                                       42

                  (b) If Lender  shall have  determined  that the adoption of or
any  change in any  Requirement  of Law  regarding  capital  adequacy  or in the
interpretation  or  application  thereof or  compliance  by Lender or any Person
controlling  Lender with any request or  directive  regarding  capital  adequacy
(whether or not having the force of law) from any  Governmental  Authority  made
subsequent  to the date hereof does or shall have the effect of  increasing  the
amount of capital  required to be  maintained  or reducing the rate of return on
Lender's or such Person's capital as a consequence of its obligations  hereunder
to a level below that which such Lender or such Person  could have  achieved but
for such  change or  compliance  (taking  into  consideration  Lender's  or such
Person's  policies  with  respect to capital  adequacy)  by an amount  deemed by
Lender to be material,  then from time to time,  after  submission  by Lender to
Borrower of a prompt written request therefor, Borrower shall pay to Lender such
additional  amount or amounts as will compensate  Lender or such Person for such
reduction. This covenant shall survive the termination of this Agreement and the
payment of the Obligations.

                  2.15  Indemnity.  Borrower  agrees to indemnify  Lender and to
hold Lender  harmless from any loss or expense which Lender may sustain or incur
as a  consequence  of (a) a  default  by  Borrower  in  payment  when due of the
principal amount of or interest on any Eurodollar Rate Advance, (b) a default by
Borrower  in  making  a  borrowing  of,  conversion  into,  or  continuation  of
Eurodollar  Rate Advances after Borrower has given a notice  requesting the same
in accordance with the provisions of this  Agreement,  (c) a default by Borrower
in making any prepayment of any Eurodollar Rate Advance after Borrower has given
a notice thereof in accordance with the provisions of this Agreement, or (d) the
making of a prepayment  of  Eurodollar  Rate  Advances on a day which is not the
last  day  of an  Interest  Period  with  respect  thereto  (whether  due to the
termination of this Agreement upon an Event of Default or otherwise), including,
in each case, any such loss or expenses  arising from the  reemployment of funds
obtained by it or from fees  payable to terminate  the deposits  from which such
funds were  obtained.  Calculation  of all amounts  payable to Lender under this
Section  2.15 shall be made as though  Lender had  actually  funded the relevant
Eurodollar Rate Advance  through the purchase of a deposit  bearing  interest at
the  Eurodollar  Rate in an amount equal to the amount of such  Eurodollar  Rate
Advance  and having a  maturity  comparable  to the  relevant  Interest  Period;
provided,  however, that Lender may fund each of the Eurodollar Rate Advances in
a manner it sees fit, and the  foregoing  assumption  shall be utilized only for
the  calculation of amounts payable under this Section 2.15. This covenant shall
survive the termination of this Agreement and the payment of the Obligations.

         3.       CONDITIONS; TERM OF AGREEMENT.

                  3.1  Conditions  Precedent to the Initial  Advance,  Letter of
Credit and the Term Loans. The obligation of Lender to make the initial Advance,
to issue the  initial  Letter of Credit or to make the Term  Loans is subject to
the fulfillment,  to the satisfaction of Lender and its counsel,  of each of the
following conditions on or before the Amendment Closing Date:

                                       43

                           (a)     the Amendment Closing Date shall occur on  or
before November 30, 1999;

                           (b)     Lender    shall    have   received   searches
reflecting the filing of Uniform Commercial Code assignments with respect to the
financing statements and fixture filings set forth on Schedule 3.1;

                           (c)     Lender  shall  have  received  each  of   the
following  documents,  duly  executed,  and each such document  shall be in full
force and effect:

                                    a.     the Lockbox Agreements;

                                    b.     the Concentration Account Agreements;

                                    c.     the Disbursement Letter;

                                    d.     the Security Agreement;

                                    e.     the Pledge Agreement;

                                    f.     the Assignment of Notes;

                                    g.     the Subsidiary Guaranty;

                                    h.     the Subsidiary Security Agreement;

                                    i.     the Subsidiary Pledge Agreement; and

                                    j.     the Assignment of LLC Interests;

                           (d)      Lender  shall  have  received a  certificate
from the Secretary of Borrower and each Restricted  Subsidiary  attesting to the
resolutions of the Board of Directors of Borrower or such Restricted Subsidiary,
as the case may be, authorizing its execution, delivery, and performance of this
Agreement  and the other Loan  Documents  to which  Borrower or such  Restricted
Subsidiary,  as  applicable,  is a party and  authorizing  specific  officers of
Borrower to execute the same;

                           (e)      Lender shal  have  received  copies  of  the
Governing  Documents of Borrower  and each  Restricted  Subsidiary,  as amended,
modified,  or  supplemented  to the  Amendment  Closing  Date,  certified by the
Secretary of Borrower or such Restricted Subsidiary, as applicable;

                           (f)      Lender shall  have  received  a  certificate
of status with respect to Borrower and each Restricted Subsidiary,  dated within
twenty (20) days of the Amendment Closing Date, such certificate to be issued by
the appropriate  officer of the jurisdiction of organization of Borrower or such
Restricted  Subsidiary,  as applicable,  which  certificate  shall indicate that
Borrower or such Restricted  Subsidiary,  as applicable,  is in good standing in
such jurisdiction;

                                       44

                           (g)      Lender  shall  have   received  certificates
of status with respect to Borrower and each  Restricted  Subsidiary,  each dated
within twenty (20) days of the Amendment  Closing Date, such  certificates to be
issued by the appropriate officer of the jurisdictions in which Borrower or such
Restricted Subsidiary, as applicable, is required to be qualified to do business
as a foreign  corporation (except where the failure to be so qualified could not
reasonably be expected to have a Material  Adverse Effect),  which  certificates
shall indicate that Borrower or such Restricted Subsidiary, as applicable, is in
good standing in such jurisdictions;

                           (h)      Lender shall have received a certificate  of
insurance,  together with the endorsements  thereto,  as are required by Section
6.6,  the form and  substance of which shall be  satisfactory  to Lender and its
counsel;

                           (i)      Lender  shall  have  received  duly executed
certificates  of title with  respect to that portion of the  Collateral  that is
subject to certificates of title;

                           (j)      Lender   shall   have   received    evidence
satisfactory  to it that,  immediately  after the funding of the  initial  loans
under this  Agreement,  the interest  payment default with respect to the Senior
Notes shall be cured;

                           (k)      Lender  shall  have  received  an opinion of
Kilpatrick Stockton LLP, counsel to Borrower and its Restricted  Subsidiary,  in
form and substance satisfactory to Lender in its sole discretion;

                           (l)      Lender  shall   have  received  satisfactory
reference, credit and background checks on key management of Borrower;

                           (m)      Lender  shall  have  received the results of
lien  searches  against  Borrower  and  its  Subsidiaries  from  all  applicable
jurisdictions,  which shall  evidence that there are no Liens of record  against
Borrower or any of its Subsidiaries, other than Permitted Liens;

                           (n)      Lender  shall  have   received  satisfactory
evidence that all tax returns  required to be filed by Borrower have been timely
filed and all taxes  upon  Borrower  and its  Subsidiaries  or their  respective
properties,  assets,  income, and franchises  (including real property taxes and
payroll taxes) have been paid prior to  delinquency,  except such taxes that are
the subject of a Permitted Protest;

                           (o)      Lender   shall   have    received   evidence
satisfactory  to it that,  after  making the initial  Advance  hereunder  on the
Amendment  Closing Date,  Borrower shall have on the Amendment Closing Date cash
on hand or Excess Availability in an amount equal to or greater than $3,000,000;
and

                           (p)      all  other  documents  and  legal matters in
connection with the transactions  contemplated by this Agreement shall have been
delivered, executed, or recorded and shall be in form and substance satisfactory
to Lender and its counsel.

                                       45

                  3.2  Conditions  Precedent  to all  Advances,  all  Letters of
Credit and the Term Loans.  The following  shall be conditions  precedent to all
Advances, all Letters of Credit and the Term Loans hereunder:

                           (a)      the representations and warranties contained
in this Agreement and the other Loan Documents  shall be true and correct in all
respects on and as of the date of such  extension  of credit,  as though made on
and as of  such  date  (except  to the  extent  that  such  representations  and
warranties relate solely to an earlier date);

                           (b)      no Default  or  Event  of Default shall have
occurred and be  continuing on the date of such  extension of credit,  nor shall
either result from the making thereof; and

                           (c)      no injunction, writ, restraining  order,  or
other order of any nature prohibiting,  directly or indirectly, the extending of
such  credit  shall have been  issued  and  remain in force by any  Governmental
Authority against Borrower, Lender, or any of their Affiliates.

                  3.3 Condition Subsequent. As a condition subsequent to initial
closing hereunder, Borrower shall perform or cause to be performed the following
(the failure by Borrower to so perform or cause to be performed  constituting an
Event of Default):

                           (a)      Within   ninety  (90) days of the  Amendment
Closing  Date,  Borrower  shall  deliver to Lender the  certified  copies of the
policies of insurance, as are required by Section 6.6, the form and substance of
which shall be satisfactory to Lender and its counsel;  provided,  however, that
copies of all endorsements to such insurance  policies shall be delivered within
thirty (30) days after the Amendment Closing Date.

                           (b)      Within thirty (30) days after the  Amendment
Closing Date,  Borrower shall deliver to Lender evidence  satisfactory to Lender
that all defaults and events of default under the Lease Agreement dated April 6,
1997, between Frame-N-Lens  Optical,  Inc. and Banc One Leasing Corporation have
been cured.

                           (c)      Within thirty (30) days after the  Amendment
Closing  Date,  Lender  shall  have (i)  received  appraisals  of the  Inventory
satisfactory  to Lender and (ii)  completed a field  examination or audit of the
assets of Borrower and its  Subsidiaries  and an inspection of each warehouse or
distribution  center  storing any  Inventory,  and the results  thereof shall be
acceptable to Lender in its sole discretion.

                           (d)      On  or  before May 31, 2000,  Borrower shall
deliver  to  Lender  evidence  satisfactory  to  Lender  that  Borrower  and its
Subsidiaries have completed the  implementation of a new automated point of sale
system.

                                       46

                           (e)      Within   sixty (60) days  of  the  Amendment
Closing Date, Lender shall have received a complete business valuation appraisal
from  Ernst & Young of  Borrower  and its  Subsidiaries,  in form and  substance
satisfactory to Lender.

                           (f)      Within  thirty  (30)  days  of the Amendment
Closing Date,  Borrower shall deliver to Lender Blocked Account  Agreements with
respect to the Retail Store Accounts at Wells Fargo Bank, National Association.

                           (g)      On  or  before  December 31, 1999,  Borrower
shall deliver to Lender evidence that (i) Borrower and each of its  Subsidiaries
is duly  qualified as a foreign  corporation  or limited  liability  and in good
standing under the laws of each  jurisdiction  where their  ownership,  lease or
operation of property or conduct of their business requires such  qualification,
and (ii) Borrower has filed in each  jurisdiction in which it is qualified to do
business an amendment to its  qualification  to the effect that  Borrower's name
has changed from "National Vision Associates,  Ltd." to "Vista Eyecare, Inc." to
the extent that Borrower is permitted to use such name in such jurisdiction.

                           (h)      Within  five  (5) days  of   the   Amendment
Closing Date,  Lender shall have  received an  assignment,  in recordable  form,
assigning the Administrative Agent's rights and obligations under the Collateral
Assignment of Deed of Trust to Lender.

                           (i)      On  or  before  December 31, 1999,  Borrower
will provide a reconciliation  between the October month end perpetual inventory
and the October month end general ledger.

                  3.4 Term.  This  Agreement  shall  become  effective  upon the
execution and delivery  hereof by Borrower and Lender and shall continue in full
force and  effect for a term  ending May 31,  2002 (the  "Maturity  Date").  The
foregoing  notwithstanding,  Lender  shall  have  the  right  to  terminate  its
obligations  under  this  Agreement  immediately  and  without  notice  upon the
occurrence and during the continuation of an Event of Default.

                  3.5 Effect of Termination.  On the date of termination of this
Agreement,  all Obligations (including contingent  reimbursement  obligations of
Borrower with respect to any outstanding  Letters of Credit)  immediately  shall
become  due and  payable  without  notice  or  demand.  No  termination  of this
Agreement,  however,  shall relieve or discharge  Borrower of Borrower's duties,
Obligations,  or covenants hereunder, and Lender's continuing security interests
in the Collateral  shall remain in effect until all Obligations  have been fully
and finally  discharged  and Lender's  obligation to provide  additional  credit
hereunder is terminated.

                                       47

                  3.6 Early  Termination by Borrower.  The provisions of Section
3.4 that allow  termination  of this  Agreement by Borrower only on the Maturity
Date (but not any extension thereof),  Borrower has the option, at any time upon
ninety (90) days' prior written notice to Lender, to terminate this Agreement by
paying to Lender,  in cash,  the  Obligations  (including an amount equal to one
hundred five percent (105%) of the undrawn amount of the Letters of Credit),  in
full,  together with a premium (the "Early  Termination  Premium")  equal to one
percent (1.00%) of the Maximum Revolving Amount as determined  immediately prior
to termination.

                  3.7 Termination  Upon Event of Default.  If Lender  terminates
this Agreement  prior to the Maturity Date (but not any extension  thereof) upon
the  occurrence  of an Event of  Default,  in view of the  impracticability  and
extreme difficulty of ascertaining actual damages and by mutual agreement of the
parties as to a  reasonable  calculation  of Lender's  lost  profits as a result
thereof,  Borrower  shall  pay  to  Lender  upon  the  effective  date  of  such
termination,  a premium  in an amount  equal to the Early  Termination  Premium;
provided,  however,  that if this Agreement is terminated upon the occurrence of
an Event of Default  which has not been wilfully  caused by Borrower,  the Early
Termination  Premium  shall  be  reduced  by  fifty  percent  (50%).  The  Early
Termination  Premium shall be presumed to be the amount of damages  sustained by
Lender as the result of the early  termination  and  Borrower  agrees that it is
reasonable under the  circumstances  currently  existing.  The Early Termination
Premium  provided  for in this  Section  3.7  shall be  deemed  included  in the
Obligations.

         4.       [Intentionally Omitted]

         5.       REPRESENTATIONS AND WARRANTIES.

                  In order  to  induce  Lender  to enter  into  this  Agreement,
Borrower makes the following representations and warranties which shall be true,
correct,  and complete in all respects as of the date hereof, and shall be true,
correct,  and complete in all respects as of the Amendment  Closing Date, and at
and as of the date of the making of each Advance,  Letter of Credit or Term Loan
made thereafter, as though made on and as of the date of such Advance, Letter of
Credit  or Term  Loan  (except  to the  extent  that  such  representations  and
warranties  relate  solely  to an  earlier  date) and such  representations  and
warranties shall survive the execution and delivery of this Agreement:

                  5.1      Corporate Existence and Power.  Borrower and  each of
its Subsidiaries:

                           (a)     is a corporation or limited liability company
duly  organized,  validly  existing and in good  standing  under the laws of the
jurisdiction of its incorporation or organization;

                           (b)     has   the  power  and   authority   and   all
governmental licenses, authorizations, consents and approvals to own its assets,
carry on its business and, as applicable,  to execute,  deliver, and perform its
obligations under the Loan Documents;

                                       48

                           (c)     is duly  qualified  as a foreign  corporation
or limited liability company and is licensed and in good standing under the laws
of each jurisdiction where its ownership,  lease or operation of property or the
conduct of its business  requires  such  qualification  or license and where the
failure to be so qualified or licensed  could  reasonably  be expected to have a
Material Adverse Effect; and

                           (d)     is  in  compliance  in  all material respects
with all Requirements of Law;

                  5.2 Corporate Authorization; No Contravention.  The execution,
delivery and  performance  by Borrower and its Restricted  Subsidiaries  of this
Agreement and each other Loan Document to which such Person is party,  have been
duly authorized by all necessary corporate action, and do not and will not:

                           (a)     contravene  the terms of any of that Person's
Governing Documents;

                           (b)     conflict  with  or  result  in  any breach or
contravention of, or the creation of any Lien under, any document evidencing any
Contractual Obligation to which such Person is a party or any order, injunction,
writ or  decree  of any  Governmental  Authority  to which  such  Person  or its
property is subject; or

                           (c)     violate any Requirement of Law.

                  5.3   Governmental   Authorization.   No  approval,   consent,
exemption,  authorization, or other action by, or notice to, or filing with, any
Governmental  Authority (except for recordings or filings in connection with the
Liens granted to Lender under the Collateral Documents) is necessary or required
in connection  with the execution,  delivery or  performance  by, or enforcement
against,  Borrower or any of its Restricted Subsidiaries of the Agreement or any
other Loan Document.

                  5.4  Binding  Effect.  This  Agreement  and  each  other  Loan
Document to which  Borrower  or any of its  Restricted  Subsidiaries  is a party
constitute the legal,  valid and binding  obligations of Borrower and any of its
Restricted Subsidiaries to the extent it is a party thereto, enforceable against
such Person in accordance with their respective terms,  except as enforceability
may be limited by applicable bankruptcy,  insolvency,  or similar laws affecting
the  enforcement  of  creditors'  rights  generally or by  equitable  principles
relating to enforceability.

                  5.5 Litigation.  Except as specifically  disclosed in Schedule
5.5, there are no actions, suits, proceedings, claims or disputes pending, or to
the best knowledge of Borrower,  threatened or contemplated,  at law, in equity,
in arbitration or before any  Governmental  Authority,  against  Borrower or its
Subsidiaries or any of their respective properties.  None of the items disclosed
on Schedule 5.5:

                                       49

                           (a)     purport  to  affect  this  Agreement  or  any
other Loan Document, or any of the transactions  contemplated hereby or thereby;
or

                           (b)     if determined adversely to Borrower or any of
its  Subsidiaries,  could  reasonably  be  expected  to have a Material  Adverse
Effect.

No injunction,  writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin or
restrain the  execution,  delivery or performance of this Agreement or any other
Loan Document, or directing that the transactions provided for herein or therein
not be consummated as herein or therein provided.

                  5.6 No Default. No Default or Event of Default exists or would
result from the  incurring of any  Obligations  by Borrower or from the grant or
perfection  of the Liens of Lender on the  Collateral.  Except for the  Existing
Defaults,  as of the  Amendment  Closing Date,  neither  Borrower nor any of its
Subsidiaries is in default under or with respect to any  Contractual  Obligation
(other than any agreement relating to the lease of real property) in any respect
which,  individually  or together with all such  defaults,  could  reasonably be
expected to have a Material  Adverse Effect,  or that would, if such default had
occurred  after the  Amendment  Closing  Date,  create an Event of Default under
Section 8.5. Except for the Existing  Defaults,  neither Borrower nor any of its
Subsidiaries  is in default under or with respect to any  agreement  relating to
the lease of real  property,  which  default,  with  respect to any such  lease,
individually or together with all such defaults, could reasonably be expected to
have a Material  Adverse  Effect,  or that would,  if such  default had occurred
after the Amendment  Closing Date, create an Event of Default under Section 8.5.
As of the Amendment Closing Date, Borrower and its Restricted  Subsidiaries have
made all lease payments required to be made under all agreements relating to the
lease of real property.  As of the Amendment  Closing Date, no material  default
exists with respect to any of the leases described in Section 5.22.

                  5.7      ERISA Compliance.

                           (a)      Each  Plan  is in compliance in all material
respects with the applicable  provisions of ERISA,  the IRC and other federal or
state law. Each Plan which is intended to qualify  under  Section  401(a) of the
IRC has received a favorable  determination letter from the IRS and, to the best
knowledge of Borrower,  nothing has occurred  which would cause the loss of such
qualification.   Borrower  and  each  ERISA  Affiliate  has  made  all  required
contributions  to any Plan subject to Section 412 of the IRC, and no application
for a funding  waiver or an extension  of any  amortization  period  pursuant to
Section 412 of the IRC has been made with respect to any Plan;

                           (b)      There  are  no  pending  or,  to   the  best
knowledge of Borrower,  threatened claims, actions or lawsuits, or action by any
Governmental  Authority,  with  respect to any Plan which has  resulted or could
reasonably be expected to result in a Material Adverse Effect. There has been no

                                       50

prohibited  transaction or violation of the fiduciary  responsibility rules with
respect to any Plan which has resulted or could reasonably be expected to result
in a Material Adverse Effect; and

                           (c)      (i)  No  ERISA  Event  has  occurred  or  is
reasonably  expected to occur;  (ii) no Pension  Plan has any  Unfunded  Pension
Liability;  (iii) neither  Borrower nor any ERISA  Affiliate  has  incurred,  or
reasonably  expects to incur, any liability under Title IV of ERISA with respect
to any Pension Plan (other than  premiums due and not  delinquent  under Section
4007 of ERISA);  (iv) neither Borrower nor any ERISA Affiliate has incurred,  or
reasonably  expects to incur,  any liability  (and no event has occurred  which,
with the giving of notice  under  Section  4219 of ERISA,  would  result in such
liability)  under Section 4201 or 4243 of ERISA with respect to a  Multiemployer
Plan;  and (v)  neither  Borrower  nor any  ERISA  Affiliate  has  engaged  in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA,  which in
the case of any occurrence described in any of clauses (i) through (v) above has
resulted in or could reasonably be expected to result in a liability of Borrower
and its Subsidiaries in excess of $250,000.

                  5.8 Use of Proceeds;  Margin Regulations.  The proceeds of the
Loans are to be used  solely  for the  purposes  set forth in and  permitted  by
Section 6.12 and Section 7.7.  Neither  Borrower nor any Subsidiary is generally
engaged in the  business of  purchasing  or selling  Margin  Stock or  extending
credit for the purpose of purchasing or carrying Margin Stock.

                  5.9 Title to Properties. Each of Borrower and its Subsidiaries
has good  record  and  marketable  title in fee  simple  to, or valid  leasehold
interests in, all real property necessary or used in the ordinary conduct of its
businesses, except for such defects in title as could not reasonably be expected
to have a  Material  Adverse  Effect.  As of the  Amendment  Closing  Date,  the
property of Borrower  and its  Restricted  Subsidiaries  is subject to no Liens,
other than Permitted Liens.

                  5.10 Taxes.  Each of Borrower and its  Subsidiaries  has filed
all Federal and other material tax returns and reports required to be filed, and
has paid all  Federal  and other  material  taxes,  assessments,  fees and other
governmental  charges  levied or imposed  upon it or its  properties,  income or
assets otherwise due and payable,  except those which are subject to a Permitted
Protest. There is no material proposed tax assessment against Borrower or any of
its  Subsidiaries.  The  amounts and types of all  estimated  accrued and unpaid
taxes (including,  without  limitation,  any sales or ad valorem taxes) owing by
Borrower or any of its  Subsidiaries  is set forth,  as of October 31, 1999,  on
Schedule 5.10.

                  5.11     Financial Condition.

                           (a)     The audited consolidated financial statements
of  Borrower  and its  Subsidiaries  dated  January  2,  1999,  and the  related
consolidated  statements of income or operations,  shareholders' equity and cash
flows for the fiscal  year ended on that date,  and the  unaudited  consolidated
financial  statements of Borrower and its  Subsidiaries  dated July 3, 1999, and
the  related  consolidated  statements  of income or  operations,  shareholder's
equity and cash flows for the fiscal quarter ended on that date:

                                       51

                                    (i)    were prepared in accordance with GAAP
          consistently applied throughout the period covered thereby,  except as
          otherwise  expressly noted therein,  and, in the case of the quarterly
          statements  dated July 3, 1999,  subject to ordinary,  good faith year
          end audit adjustments;

                                    (ii) fairly present the financial  condition
          of Borrower and its Subsidiaries as of the date thereof and results of
          operations for the period covered thereby; and

                                    (iii)  except as  specifically  disclosed in
          Schedule 5.11, show all material  indebtedness and other  liabilities,
          direct or contingent, of Borrower and its consolidated Subsidiaries as
          of  the  date  thereof,  including  liabilities  for  taxes,  material
          commitments and Contingent Obligations.

                           (b)      Since January 2, 1999, there has occurred no
event which has had a Material Adverse Effect.

                           (c)      Borrower's  and  its   Subsidiaries'  fiscal
year end is a 52/53 week retail calendar year ending on the Saturday  closest to
December  31st (except that  certain of the Managed  Care  Subsidiaries  and the
Foreign Subsidiaries may have a calendar year end).

                  5.12     Environmental Matters.

                           (a)      Except as specifically disclosed in Schedule
5.12, the on-going operations of Borrower and each of its Subsidiaries comply in
all respects with all Environmental Laws, except such non-compliance which would
not (if  enforced in  accordance  with  applicable  law) result in  liability in
excess of $250,000 in the aggregate.

                           (b)      Except as specifically disclosed in Schedule
5.12, Borrower and each of its Subsidiaries have obtained all material licenses,
permits,  authorizations and registrations  required under any Environmental Law
("Environmental  Permits") and necessary for their  respective  ordinary  course
operations,  all such Environmental  Permits are in good standing,  and Borrower
and each of its  Subsidiaries  are in  compliance  with all  material  terms and
conditions of such Environmental Permits.

                           (c)      Except as specifically disclosed in Schedule
5.12,  none of  Borrower,  any of its  Subsidiaries  or any of their  respective
present property or operations, is subject to any outstanding written order from
or agreement  with any  Governmental  Authority,  nor subject to any judicial or
docketed   administrative   proceeding,   respecting  any   Environmental   Law,
Environmental Claim or Hazardous Material, which would reasonably be expected to
give rise to Environmental  Claims with potential  liability of Borrower and its
Subsidiaries in excess of $250,000 in the aggregate.

                                       52

                           (d)  Except as  specifically  disclosed  in  Schedule
5.12,  there are no Hazardous  Materials or other  conditions  or  circumstances
existing with respect to any property of Borrower or any of its Subsidiaries, or
arising from operations prior to the Amendment  Closing Date, of Borrower or any
of  its  Subsidiaries  that  would  reasonably  be  expected  to  give  rise  to
Environmental Claims with a potential liability of Borrower and its Subsidiaries
in excess of $250,000 in the aggregate for any such  condition,  circumstance or
property. In addition,  (i) neither Borrower nor any of its Subsidiaries has any
underground  storage  tanks (x) that are not  properly  registered  or permitted
under  applicable  Environmental  Laws,  or (y) that are leaking or disposing of
Hazardous Materials off-site,  and which in the case of any occurrence described
in clause (x) or (y) could  reasonably  be expected to give rise to  Environment
Claims with potential  liability of Borrower and its  Subsidiaries  in excess of
$250,000 in the aggregate,  and (ii) Borrower and its Subsidiaries have notified
all of their respective employees of the existence, if any, of any health hazard
arising from the conditions of their  employment  and have met all  notification
requirements under Title III of CERCLA and all other Environmental Laws.

                  5.13     Collateral Documents.

                           (a)      The  provisions  of each of  the  Collateral
Documents are  effective to create in favor of Lender,  acting on its own behalf
and for its own benefit,  a legal, valid and enforceable first priority security
interest in all right,  title and interest of Borrower and its  Subsidiaries  in
the Collateral described therein,  subject to Permitted Liens, if any, which are
not  subordinated  to the Liens under the  Collateral  Documents;  and financing
statements have been filed in the offices in all of the jurisdictions  listed in
the schedule to the Security  Agreement and the Subsidiary  Security  Agreement.
Each of the applicable patent security agreements, trademark security agreements
and copyright  security  agreements  attached to the Security  Agreement and the
Subsidiary  Security Agreement as Exhibits has been filed in the U.S. Patent and
Trademark Office and the U.S. Copyright Office.

                           (b)      All   representations  and   warranties   of
Borrower and each of its Restricted  Subsidiaries party thereto contained in the
Collateral Documents are true and correct.

                  5.14  Regulated  Entities.   None  of  Borrower,   any  Person
controlling  Borrower, or any Subsidiary of Borrower, is an "Investment Company"
within the  meaning  of the  Investment  Company  Act of 1940.  Borrower  is not
subject to regulation  under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act, any state public utilities code,
or any other  Federal or state  statute or  regulation  limiting  its ability to
incur Indebtedness.

                  5.15 No Burdensome  Restrictions.  Neither Borrower nor any of
its  Subsidiaries  is a party  to or  bound by any  Contractual  Obligation,  or
subject to any restriction in any Governing Document, or any Requirement of Law,
which could reasonably be expected to have a Material Adverse Effect.

                                       53

                  5.16 Copyrights,  Patents,  Trademarks and Licenses, Etc. Each
of Borrower and its Subsidiaries own or are licensed or otherwise have the right
to use all of the material  patents,  trademarks,  service  marks,  trade names,
copyrights,  contractual  franchises,  authorizations  and other rights that are
reasonably necessary for the operation of their respective  businesses,  without
conflict with the rights of any other Person. To the best knowledge of Borrower,
no slogan or other advertising device, product, process, method, substance, part
or other material now employed,  or now contemplated to be employed, by Borrower
or any of its  Subsidiaries  infringes  upon any rights held by any other Person
which could  reasonably  be expected to result in a claim by any other Person in
excess of $250,000.  Except as specifically  disclosed in Schedule 5.5, no claim
or litigation  regarding any of the foregoing is pending or  threatened,  and no
patent,  invention,  device,  application,  principle or any statute, law, rule,
regulation,  standard  or code is  pending  or, to the  knowledge  of  Borrower,
proposed.

                  5.17  Subsidiaries.  Borrower has no  Subsidiaries  other than
those specifically disclosed in part (a) of Schedule 5.17 hereto (which Schedule
designates whether each Subsidiary is a Restricted Subsidiary or an Unrestricted
Subsidiary as of the Amendment  Closing Date) and has no equity  investments  in
any other corporation or entity other than those specifically  disclosed in part
(b) of Schedule 5.17.

                  5.18 Insurance.  Except as specifically  disclosed in Schedule
5.18,  the  properties  of  Borrower  and  its  Subsidiaries  are  insured  with
financially sound and reputable  insurance companies which are not Affiliates of
Borrower,  in such amounts, with such deductibles and covering such risks as are
customarily  carried  by  companies  engaged in  similar  businesses  and owning
similar properties in localities where Borrower or such Subsidiary operates.

                  5.19  Solvency.  Borrower and  eac   of  its  Subsidiaries are
Solvent.

                  5.20  Full  Disclosure.   None  of  the   representations   or
warranties  made by Borrower or any Restricted  Subsidiary in the Loan Documents
as of the date such  representations and warranties are made or deemed made, and
none  of  the  statements  contained  in  any  exhibit,   report,  statement  or
certificate  furnished by or on behalf of Borrower or any Restricted  Subsidiary
in  connection  with the Loan  Documents  contains  any  untrue  statement  of a
material  fact or omits any  material  fact  required  to be stated  therein  or
necessary to make the  statements  made therein,  in light of the  circumstances
under which they are made, not misleading as of the time when made or delivered.

                  5.21     Accounts and Inventory.

                                       54

                           (a) (i) The Eligible  Accounts are and will  continue
to be bona fide existing obligations created by the sale of goods, the rendering
of services, or the furnishing of other good and sufficient consideration to the
relevant  Account  Debtors in the regular course of business;  (ii) all shipping
and delivery receipts and other documents furnished or to be furnished to Lender
in connection  therewith are and will be genuine; and (iii) none of the Accounts
identified  or  included  on any  schedule,  certificate  or report as  Eligible
Accounts  will,  to  Borrower's  knowledge,  fail at the time so  identified  or
included to satisfy any of the  requirements  for  eligibility  set forth in the
definition of Eligible Accounts.

                           (b) As to each  schedule of  Inventory  delivered  to
Lender, to Borrower's knowledge:

                                    (i)   the  descriptions,   origins,   sizes,
qualities,  quantities, weights, and markings of all goods stated thereon, or on
any attachment thereto, are true and correct in all material respects; and

                                    (ii)  none of the goods  are  defective,  of
second quality,  used, or goods returned after shipment,  except where described
as such.

                  5.22     Leases.

                           (a) Each  of  the  supplements  to  the  master lease
between  Wal-Mart and Borrower  with respect to retail  locations of Borrower or
any of its  Subsidiaries  located in a Wal-Mart retail store is substantially in
the form of Exhibit C;

                           (b) Each of the leases between  Wal-Mart and Borrower
with respect to retail locations of Borrower or any of its Subsidiaries  located
in a Sam's Club retail store is substantially in the form of Exhibit D; and

                           (c) Each of the leases  between Fred Meyer,  Inc. and
Borrower is substantially in the form of Exhibit E.

                  5.23   Compliance   With  Laws.   Each  of  Borrower  and  its
Subsidiaries  has  timely  filed  all  material  reports,  documents  and  other
materials  required to be filed by it under all applicable  Requirements  of Law
with any Governmental Authority, has retained all material records and documents
required to be retained by it under all applicable  Requirements  of Law, and is
otherwise in material  compliance  with all  applicable  Requirements  of Law in
respect of the conduct of its business and the  ownership  and  operation of its
properties.

                                       55

                  5.24  Year  2000  Compatibility.  Any  reprogramming  by or on
behalf of  Borrower  or any of its  Subsidiaries,  required to permit the proper
functioning,  before,  on and after  January  1,  2000,  of  Borrower's  and its
Subsidiaries' (i) computer-based  systems and (ii) equipment containing embedded
microchips  (including  systems and  equipment  supplied by others or with which
Borrower's or any of its Subsidiaries'  systems  interface),  and the testing of
all such  systems  and  equipment,  as so  reprogrammed,  will be  completed  by
November  30,  1999.  The  cost  to  Borrower  and  its   Subsidiaries  of  such
reprogramming and testing and of the reasonably foreseeable  consequences of the
year 2000 to  Borrower  and its  Subsidiaries  (including,  without  limitation,
reprogramming  errors and the failure of others'  systems or equipment) will not
result  in a  Default  or  Material  Adverse  Effect.  Except  for  such  of the
reprogramming  referred to in the preceding  sentence as may be  necessary,  the
computer and management information systems of Borrower and its Subsidiaries are
and, with ordinary course  upgrading and maintenance  will continue for the term
of this Agreement to be,  sufficient to permit Borrower and its  Subsidiaries to
conduct their respective businesses without a Material Adverse Effect.

                  5.25  Material  Contracts.  Schedule  5.25  lists,  as of  the
Amendment  Closing Date,  each "material  contract"  (within the meaning of Item
601(b)(10) of Regulation S-K under the Exchange Act) to which Borrower or any of
its Subsidiaries is a party, by which any of them or their respective properties
is  bound  or  to  which  any  of  them  is  subject  (collectively,   "Material
Contracts").  As of the Amendment Closing Date, (i) each Material Contract is in
full force and effect and is enforceable in all material respects by Borrower or
the Subsidiary of Borrower that is a party thereto in accordance with its terms,
and (ii) neither Borrower nor any of its Subsidiaries  (nor, to the knowledge of
Borrower, any other party thereto) is in breach of or default under any Material
Contract  in any  material  respect  or  has  given  notice  of  termination  or
cancellation  of any  Material  Contract.  Schedule  5.25 also lists,  as of the
Amendment Closing Date, all of the Credit Card Agreements then in effect.

         6.       AFFIRMATIVE COVENANTS.

                  Borrower  covenants  and  agrees  that,  so long as any credit
hereunder   shall  be  available  and  until  full  and  final  payment  of  the
Obligations,  and unless  Lender shall  otherwise  consent in writing,  Borrower
shall do all of the following:

                  6.1   Financial Statements.  Borrower shall deliver to Lender:

                  (a) as soon as available,  but not later than ninety (90) days
after  the end of each  fiscal  year,  a copy of the  audited  consolidated  and
unaudited consolidating balance sheet of Borrower and its Subsidiaries as at the
end  of  such  year  and  the  related   audited   consolidated   and  unaudited
consolidating statements of income or operations,  shareholders' equity and cash
flows for such year,  setting forth in each case in comparative form the figures
for the previous fiscal year, and accompanied by the opinion of a

                                       56

nationally-recognized independent public accounting firm ("Independent Auditor")
which  report shall state that such  consolidated  and  consolidating  financial
statements  present fairly the financial  position for the periods  indicated in
conformity with GAAP applied on a basis consistent with prior fiscal years. Such
opinion  shall not be  qualified or limited  because of a restricted  or limited
examination by the Independent  Auditor of any material portion of Borrower's or
any Subsidiary's records and shall be delivered to Lender;

                  (b) as soon as available,  but not later than  forty-five (45)
days after the end of each of the first three (3) fiscal quarters of each fiscal
year (commencing with the fiscal quarter ended closest to September 30, 1999), a
copy of the unaudited  consolidated and consolidating  balance sheet of Borrower
and  its  Subsidiaries   (and  separate  balance  sheet  for  each  Unrestricted
Subsidiary),   as  of  the  end  of  such  quarter  and  the  related  unaudited
consolidated and consolidating  statements of income,  shareholders'  equity and
cash flows for the period commencing on the first day and ending on the last day
of such quarter, and certified by a Responsible Officer as fairly presenting, in
accordance   with  GAAP  (subject  to  ordinary,   good  faith   year-end  audit
adjustments),  the  financial  position and the results of operations of each of
Borrower and its  Subsidiaries  (and separate  statements for each  Unrestricted
Subsidiary);

                  (c) as soon as available,  but not later than thirty (30) days
after the end of each month  (commencing with the month ended October 31, 1999),
a copy  of the  unaudited  consolidated  and  consolidating  balance  sheets  of
Borrower  and its  Subsidiaries  and the  related  consolidating  statements  of
income,  shareholders'  equity and cash flows for such month and a statement  of
EBITDA  for the  twelve  (12)  month  period  then  ended,  all  certified  by a
Responsible  Officer as fairly  presenting,  in accordance with GAAP (subject to
ordinary, good faith year-end audit adjustments), the financial position and the
results of operations of each of Borrower and its Subsidiaries.

                  6.2   Certificates; Other Information.  Borrower shall furnish
to Lender:

                           (a)      The  following  documents  at the  following
times in form  satisfactory  to Lender:  (i) on each Business Day, a flash sales
report, collection journal, and credit register, (ii) on a monthly basis and, in
any event,  by no later than the  thirtieth  (30th) day of each month during the
term of this  Agreement,  (x) a detailed  calculation of the Borrowing Base, and
(y) a detailed aging,  by total, of the Accounts,  (iii) on a monthly basis and,
in any event, by no later than the thirtieth (30th) day of each month during the
term of this Agreement,  a summary aging, by vendor, of the accounts payable and
any book overdraft of Borrower and its Restricted Subsidiaries, (iv) on a weekly
basis,  Inventory  reports  specifying  Borrower's or the applicable  Restricted
Subsidiary's  cost of its Inventory by category,  with additional detail showing
additions to and deletions from the  Inventory,  (v) to the extent not delivered
under clause (i) above, on each Business Day, notice of all returns, disputes,

                                       57

or  claims,  (vi)  upon  request,  copies of  invoices  in  connection  with the
Accounts,  customer  statements,  credit memos,  remittance advices and reports,
deposit slips,  shipping and delivery  documents in connection with the Accounts
and  for  Inventory  and  Equipment  acquired  by  Borrower  or  any  Restricted
Subsidiary,  purchase orders and invoices,  (vii) a monthly basis, a calculation
of the Dilution for the prior month; (viii) promptly upon the opening of any new
location  of Borrower  or any  Restricted  Subsidiary,  a report  detailing  the
address of such new location and whether Borrower or such Restricted  Subsidiary
has delivered to Lender (A) a Uniform  Commercial Code financing  statement with
respect  to the  jurisdiction  in which  such  location  is  situated  and (B) a
Collateral  Access Agreement with respect to such location;  and (ix) such other
reports, including, without limitation, electronic data, as to the Collateral as
Lender may request from time to time;

                           (b)      concurrently   with   the  delivery  of  the
financial  statements  referred  to in  Section  6.1(a),  a  certificate  of the
Independent Auditor stating that in making the examination necessary therefor no
knowledge  was obtained of any Default or Event of Default  under  Section 7.14,
except as specified in such certificate;

                           (c)      concurrently  with  the  delivery   of   the
financial  statements  referred  to in Section  6.1(a)  and  Section  6.1(b),  a
Compliance Certificate executed by a Responsible Officer;

                           (d)      concurrently  with  the   delivery   of  the
financial  statements referred to in Section 6.1(b), a certificate executed by a
Responsible  Officer  setting  forth  dividends  and  other  distributions  from
Unrestricted  Subsidiaries  to Borrower  or any  Restricted  Subsidiary  for the
immediately preceding fiscal quarter;

                           (e)      (i) a  monthly  budget for each  fiscal year
on or before the date  thirty  (30) days after the first day of such fiscal year
and (ii) a projected monthly budget forecast,  in form and substance  acceptable
to Lender,  for each upcoming fiscal year on or before the date thirty (30) days
prior to the first day of such upcoming fiscal year;

                           (f) promptly,  copies of all financial statements and
reports that  Borrower  sends to its  shareholders,  and copies of all financial
statements and regular,  periodical or special reports (including Forms 10K, 10Q
and 8K) that Borrower or any Subsidiary may make to, or file with, the SEC;

                           (g) promptly upon receipt,  a copy of any "management
letter"  received  by it that has  been  prepared  by its  internal  or  outside
accountants;

                           (h) promptly,  such additional  information regarding
the business,  financial or corporate  affairs of Borrower or any  Subsidiary as
Lender may from time to time reasonably request; and

                                       58

                           (i) at least fifteen (15) days  prior to the  closing
of any  retail  store  location,  notice of the  closing  of such  retail  store
location,  together  with an estimate of  reasonably  anticipated  cash  closing
expenses for such closing and a calculation  of the total cash closing  expenses
for all retail store closings from the Amendment Closing Date.

                  6.3      Notices.  Borrower shall promptly notify Lender:

                           (a)      of the occurrence of any Default or Event of
Default;

                           (b)      of (i)  any  breach or  non-performance  of,
or any  default  under,  any  Contractual  Obligation  of Borrower or any of its
Subsidiaries  which could reasonably be expected to result in a Material Adverse
Effect;  and  (ii)  any  dispute,  litigation,   investigation,   proceeding  or
suspension  which  may  exist  at  any  time  between  Borrower  or  any  of its
Subsidiaries and any  Governmental  Authority which could reasonably be expected
to result in a Material Adverse Effect;

                           (c)      of  the  commencement  of, or  any  material
development  in, any litigation or proceeding  affecting  Borrower or any of its
Subsidiaries  (i) in which the amount of damages  claimed  is  $250,000  (or its
equivalent in another  currency or currencies) or more, (ii) in which injunctive
or similar relief is sought and which, if adversely determined, would reasonably
be  expected  to have a Material  Adverse  Effect,  or (iii) in which the relief
sought is an injunction or other stay of the  performance  of this  Agreement or
any Loan Document;

                           (d)      upon, but in no event  later  than  ten (10)
days after, becoming aware of (i) any and all enforcement,  cleanup,  removal or
other  governmental or regulatory  actions  instituted,  completed or threatened
against  Borrower  or any  of  its  Subsidiaries  or  any  of  their  respective
properties  pursuant  to any  applicable  Environmental  Laws,  (ii)  all  other
Environmental  Claims,  and (iii) any  environmental or similar condition on any
real property adjoining or in the vicinity of the property of Borrower or any of
its Subsidiaries  that could reasonably be anticipated to cause such property or
any part thereof to be subject to any restrictions on the ownership,  occupancy,
transferability or use of such property under any Environmental  Laws, and which
in the case of any  event  described  in  clause  (i),  (ii) or (iii)  above has
resulted or could  reasonably be expected to result in liability of Borrower and
its Subsidiaries in excess of $250,000 in the aggregate;

                           (e)      of  any  other  litigation   or   proceeding
affecting  Borrower or any of its Subsidiaries  which Borrower would be required
to report to the SEC  pursuant to the Exchange  Act,  within four (4) days after
reporting the same to the SEC;

                                       59

                           (f)      of  the occurrence  of  any of the following
events  affecting  Borrower or any ERISA  Affiliate  which has resulted or could
reasonably  be expected to result in liability of Borrower and its  Subsidiaries
in excess of $250,000 in the aggregate  (but in no event more than ten (10) days
after such  event),  and deliver to Lender a copy of any notice with  respect to
such event that is filed with a Governmental  Authority and any notice delivered
by a Governmental  Authority to Borrower or any ERISA  Affiliate with respect to
such event:

                                    (i)  an ERISA Event;

                                    (ii) a  material  increase  in the  Unfunded
     Pension Liability of any Pension Plan;

                                    (iii) the adoption  of, or the  commencement
     of contributions to, any Plan subject to Section 412 of the IRC by Borrower
     or any ERISA Affiliate; or

                                    (iv) the  adoption  of any  amendment  to  a
     Plan  subject to Section  412 of the IRC,  if such  amendment  results in a
     material increase in contributions or Unfunded Pension Liability.

                           (g)      of   any   material   change  in  accounting
policies or financial reporting practices by Borrower or any of its consolidated
Subsidiaries; and

                           (h)      at  least  thirty  (30) days prior  thereto,
that Borrower or any of its  Subsidiaries  intends to change its name or address
from that  disclosed to Lender as of the Amendment  Closing Date,  together with
disclosures of such new name or address.

                           Each notice under this Section  shall be  accompanied
by a written  statement by a  Responsible  Officer  setting forth details of the
occurrence referred to therein, and stating what action Borrower or any affected
Subsidiary of Borrower  proposes to take with respect  thereto and at what time.
Each notice under Section 6.3(a) shall describe with  particularity  any and all
clauses or  provisions  of this  Agreement or other Loan Document that have been
(or foreseeably will be) breached or violated.

                  6.4      Preservation  of  Corporate Existence, Etc.  Borrower
shall, and shall cause each Subsidiary to:

                           (a)      preserve  and  maintain  in  full  force and
effect its corporate  existence and good standing under the laws of its state or
jurisdiction of incorporation.

                           (b)      preserve   and   maintain   in   full  force
and  effect  all  governmental  rights,  privileges,  qualifications,   permits,
licenses and  franchises  necessary  or  desirable in the normal  conduct of its
business  except in connection  with  transactions  permitted by Section 7.3 and
sales of assets permitted by Section 7.2;

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                           (c)      use  reasonable  efforts,  in  the  ordinary
course of business, to preserve its business organization and goodwill; and

                           (d)      preserve   or  renew  all of  its   material
registered patents, trademarks, trade names and service marks.

Nothing in this Section 6.4 shall prohibit the liquidation or dissolution of any
Subsidiary  into  Borrower  or  another  Subsidiary  of  Borrower  (but  if  the
liquidating  or  dissolving  Subsidiary  is a  Restricted  Subsidiary,  it  must
liquidate or dissolve into Borrower or another Restricted Subsidiary).

                  6.5  Maintenance  of Property.  Borrower shall  maintain,  and
shall cause each of its Subsidiaries to maintain,  and preserve all its property
which is used or useful in its  business in good  working  order and  condition,
ordinary wear and tear  excepted,  except as permitted by Section 7.2.  Borrower
and each  Subsidiary  shall use the  standard of care typical in the industry in
the operation and maintenance of its facilities; provided, however, that nothing
in this  Section  6.5 shall  prevent  Borrower or any of its  Subsidiaries  from
discontinuing  the use,  operation or maintenance of any of its  properties,  or
disposing of any of them, if such discontinuance or disposal is, in the judgment
of the  Board of  Directors  of  Borrower  or of the Board of  Directors  of the
Subsidiary  concerned,  or of an officer (or other agent employed by Borrower or
any of its  Subsidiaries)  of  Borrower  or such  Subsidiary  having  managerial
responsibility  for such  property,  desirable in the conduct of the business of
Borrower or such Subsidiary; provided further, however, that any disposal of any
property  pursuant to the immediately  preceding proviso shall be subject to the
terms and conditions of Article 7 of this Agreement.

                  6.6      Insurance.

                           (a)      At  Borrower's  expense,  Borrower  and  its
Subsidiaries  shall keep the Collateral  insured against loss or damage by fire,
theft,  explosion,  sprinklers,  and all other  hazards  and risks,  and in such
amounts,   as  are  ordinarily  insured  against  by  other  owners  in  similar
businesses.   Borrower  and  its  Subsidiaries   also  shall  maintain  business
interruption, public liability, product liability, and property damage insurance
relating to their  ownership  and use of the  Collateral,  as well as  insurance
against larceny, embezzlement, and criminal misappropriation. All such insurance
shall contain an  endorsement  showing  Lender as an additional  insured or loss
payee, as applicable.

                           (b)      All such  policies of insurance  shall be in
such  form,  with  such  companies,  and in such  amounts  as may be  reasonably
satisfactory  to  Lender.  All  insurance  required  herein  shall be written by
companies  which  are  authorized  to do  insurance  business  in the  State  of
California.  All hazard  insurance  and such  other  insurance  as Lender  shall
specify, shall contain a California Form 438BFU (NS) mortgagee  endorsement,  or
an equivalent endorsement satisfactory to Lender, showing Lender as sole loss

                                       61

payee  thereof,  and  shall  contain  a waiver of  warranties.  Every  policy of
insurance  referred to in this  Section 6.6 shall  contain an  agreement  by the
insurer that it will not cancel such policy  except after thirty (30) days prior
written notice to Lender and that any loss payable  thereunder  shall be payable
notwithstanding  any act or negligence of Borrower,  any of its  Subsidiaries or
Lender which might,  absent such  agreement,  result in a forfeiture of all or a
part of such  insurance  payment.  Borrower  shall  deliver to Lender  certified
copies of such policies of insurance and evidence of the payment of all premiums
therefor within ninety (90) days of the Amendment Closing Date.

                           (c)      Original  policies or  certificates  thereof
satisfactory to Lender evidencing such insurance shall be delivered to Lender at
least  thirty (30) days prior to the  expiration  of the  existing or  preceding
policies.  Borrower  shall give  Lender  prompt  notice of any loss in excess of
$250,000  covered by such  insurance,  and Lender shall have the right to adjust
any loss.  Lender shall have the  exclusive  right to adjust all losses  payable
under any such  insurance  policies  without any liability to Borrower or any of
its Subsidiaries whatsoever in respect of such adjustments.  Any monies received
as  payment  for any loss in  excess of  $250,000  under  any  insurance  policy
including the insurance  policies  mentioned above, shall be paid over to Lender
to be  applied  at  the  option  of  Lender  either  to  the  prepayment  of the
Obligations  without  premium,  in such order or manner as Lender may elect,  or
shall be disbursed to Borrower or any of its  Subsidiaries  under stage  payment
terms   satisfactory   to  Lender  for  application  to  the  cost  of  repairs,
replacements,  or restorations;  provided,  however, that all insurance proceeds
received by Borrower  after the  occurrence  and during the  continuation  of an
Event of  Default  shall be  promptly  paid over to Lender to be  applied to the
Obligations  as  determined  by  Lender  in its sole  discretion.  All  repairs,
replacements,  or restorations shall be effected with reasonable  promptness and
shall be of a value  at  least  equal  to the  value  of the  items or  property
destroyed prior to such damage or  destruction.  Upon the occurrence of an Event
of Default,  Lender  shall have the right to apply all  prepaid  premiums to the
payment of the Obligations in such order or form as Lender shall determine.

                           (d)      Neither Borrower nor any of its Subsidiaries
shall take out separate  insurance  concurrent  in form or  contributing  in the
event of loss with that required to be maintained under this Section 6.6, unless
Lender is  included  thereon as named  insured  with the loss  payable to Lender
under a standard  California  438BFU (NS)  Mortgagee  endorsement,  or its local
equivalent.  Borrower  immediately  shall notify  Lender  whenever such separate
insurance is taken out,  specifying the insurer  thereunder and full particulars
as to  the  policies  evidencing  the  same,  and  originals  of  such  policies
immediately shall be provided to Lender.

                  6.7 Payment of Obligations.  Borrower  shall,  and shall cause
each of its  Subsidiaries to, pay and discharge as the same shall become due and
payable, all of the following obligations and liabilities:

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                           (a)      all  tax   liabilities,    assessments   and
governmental  charges or levies upon it or its properties or assets,  unless the
same are the subject of a Permitted Protest; and

                           (b)      all lawful claims which, if unpaid, would by
law  become a Lien  upon its  property,  unless  the same are the  subject  of a
Permitted Protest; and

                           (c)      after  the   Amendment  Closing   Date,  all
interest payments due in respect of the Senior Notes.

                  6.8 Compliance  with Laws.  Borrower  shall comply,  and shall
cause each of its  Subsidiaries  to comply,  in all material  respects  with all
Requirements of Law of any Governmental Authority having jurisdiction over it or
its business  (including the Federal Fair Labor Standards  Act),  except such as
may be contested in good faith or as to which a bona fide dispute may exist.

                  6.9 Compliance  with ERISA.  Borrower  shall,  and shall cause
each of its ERISA  Affiliates  to: (a) maintain  each Plan in  compliance in all
material  respects with the  applicable  provisions of ERISA,  the IRC and other
federal or state  law;  (b) cause each Plan  which is  qualified  under  Section
401(a) of the IRC to  maintain  such  qualification;  and (c) make all  required
contributions  to any Plan  subject  to  Section  412 of the IRC,  except  where
Borrower  failure to comply with the requirements of (a), (b) and (c) hereof has
not  resulted or could not  reasonably  be expected  to result in  liability  of
Borrower and its Subsidiaries in excess of $250,000 in the aggregate.

                  6.10  Inspection  of Property and Books and Records.  Borrower
shall maintain,  and shall cause each of its  Subsidiaries  to maintain,  proper
books of  record  and  account,  in which  full,  true and  correct  entries  in
conformity  with  GAAP  consistently  applied  shall  be made  of all  financial
transactions and matters  involving the assets and business of Borrower and such
Subsidiary  (which shall include,  without  limitation,  accurate records of all
intercompany  transfers  among  Borrower and its  Subsidiaries).  Borrower shall
permit, and shall cause each of its Subsidiaries to permit,  representatives and
independent  contractors of Lender to visit and inspect any of their  respective
Books and Records, properties, to examine their respective corporate,  financial
and operating records,  and make copies thereof or abstracts  therefrom,  and to
discuss their  respective  affairs,  finances and accounts with their respective
directors,  officers, and independent public accountants, and to check, test and
appraise  the  Collateral  (including,  but not limited to,  appraisals  for the
purpose  of  determining  the GOB  Rate)  in order to  verify  their  respective
financial condition or the amount,  quality,  value,  condition of, or any other
matter relating to, the  Collateral,  all at the expense of Borrower and at such
reasonable  times during normal business hours and as often as may be reasonably
desired, upon reasonable advance notice to Borrower;  provided, however, when an
Event of Default  exists  Lender may do any of the  foregoing  at the expense of
Borrower at any time during normal business hours and without advance notice

                                       63

                  6.11     Environmental Laws.

                           (a)      Borrower shall,  and shall cause each of its
Subsidiaries  to,  conduct its  operations and keep and maintain its property in
compliance in all material respects with all Environmental Laws.

                           (b)      Upon   the   written   request  of   Lender,
Borrower shall submit and cause each of its  Subsidiaries to submit,  to Lender,
at Borrower's sole cost and expense, at reasonable intervals, a report providing
an  update  of the  status of any  environmental,  health or safety  compliance,
hazard or liability issue  identified in any notice or report required  pursuant
to Section  6.3(d),  that could,  individually  or in the  aggregate,  result in
liability in excess of $250,000.

                  6.12 Use of Proceeds.  Borrower  shall use the proceeds of the
Loans to refinance Indebtedness outstanding under the Prior Credit Agreement, to
finance capital expenditures and for working capital and other general corporate
purposes  including (i) to make interest  payments when due on the Senior Notes,
and (ii) to make investments in and loans to Restricted  Subsidiaries so long as
such investments and loans are accurately  accounted for in Borrower's Books and
Records.

                  6.13     Further Assurances.

                           (a)      Borrower  shall  ensure   that  all  written
information,  exhibits  and  reports  furnished  to  Lender  do not and will not
contain any untrue  statement of a material fact and do not and will not omit to
state any material fact or any fact necessary to make the  statements  contained
therein not  misleading in light of the  circumstances  in which made,  and will
promptly  disclose  to  Lender  and  correct  any  defect  or error  that may be
discovered  therein or in any Loan Document or in the execution,  acknowledgment
or recordation thereof.

                           (b)      Promptly  upon  request by Lender,  Borrower
shall (and shall cause any of its  Subsidiaries  to) do,  execute,  acknowledge,
deliver, record, re-record, file, re-file, register and re-register, any and all
such  further  acts,  deeds,   conveyances,   security  agreements,   mortgages,
assignments,  estoppel  certificates,  financing  statements  and  continuations
thereof, termination statements, notices of assignment, transfers, certificates,
assurances and other instruments Lender may reasonably require from time to time
in order (i) to carry out more effectively the purposes of this Agreement or any
other  Loan  Document,  (ii)  to  subject  to the  Liens  created  by any of the
Collateral  Documents any of the properties,  rights or interests covered by any
of the  Collateral  Documents,  (iii) to  perfect  and  maintain  the  validity,
effectiveness  and  priority of any of the  Collateral  Documents  and the Liens
intended  to be  created  thereby,  and (iv) to better  assure,  convey,  grant,
assign, transfer,  preserve, protect and confirm to Lender the rights granted or
now or  hereafter  intended to be granted to Lender  under any Loan  Document or
under any other document executed in connection therewith.

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                           (c)      Original  sales  invoices  evidencing  daily
sales  shall  be  mailed  by  Borrower  and  its  Restricted  Subsidiaries,   as
applicable,  to each  Account  Debtor  (other  than  retail  customers)  and, at
Lender's  direction after the occurrence and during the continuation of an Event
of Default,  the invoices shall indicate on their face that the Account has been
assigned to Lender and that all payments are to be made directly to Lender.

                  6.14 Bank  Accounts.  Borrower shall not, and shall not permit
any Restricted Subsidiary to, open or maintain any deposit or investment account
with any bank or other financial  institution other than the accounts  described
on Schedule 6.14 as supplemented on a quarterly basis by notice of Lender.

                  6.15 Year 2000  Compatibility.  Borrower  will, and will cause
each of its  Subsidiaries  to,  take all  action  necessary  to ensure  that its
computer-based  systems  are  able  to  operate  and  effectively  process  data
including dates on and after January 1, 2000,  except where the failure to do so
could not reasonably be expected to result in a Material Adverse Effect.  At the
request of Lender,  Borrower  will provide  reasonable  assurance of its and its
Subsidiaries' year 2000 compatibility.

                  6.16 Covenants  Regarding  Formation of  Subsidiaries.  At any
time of (a)  the  formation  of any new  Subsidiary  by  Borrower  or any of its
Subsidiaries whether pursuant to a permitted Acquisition or otherwise or (b) any
Unrestricted  Subsidiary becoming a Restricted  Subsidiary  hereunder,  Borrower
will, and will cause any such Restricted  Subsidiaries  (a) to provide to Lender
supplements  to  the  Subsidiary  Guaranty  and  Subsidiary  Security  Agreement
executed by such new  Restricted  Subsidiary,  together with  appropriate  UCC-1
financing  statements  and  appropriate  attachments,  all in form and substance
satisfactory to Lender, and (b) to provide to Lender, a duly executed supplement
to the Pledge  Agreement or the Subsidiary  Pledge  Agreement,  as  appropriate,
together  with such  other  documentation  as is, in the  reasonable  opinion of
Lender,  appropriate  to  give  effect  to the  pledge  of the  shares  of  such
Restricted Subsidiary, in form and substance satisfactory to Lender. In addition
to the  foregoing,  Borrower  shall  provide to Lender such  opinions  and other
documentation  as  shall be  reasonably  requested  by  Lender.  Each  document,
agreement or instrument  executed or issued  pursuant to this Section 6.16 shall
be a "Collateral Document" for purposes of this Credit Agreement.

                  6.17 Tax Returns.  Borrower  shall deliver to Lender copies of
each of Borrower's and its Subsidiaries'  future federal income tax returns, and
any amendments  thereto,  within thirty (30) days of the filing thereof with the
IRS.

                  6.18 Returns. Cause returns and allowances, if any, as between
Borrower and its Restricted Subsidiaries and their respective Account Debtors to
be on the same basis and in  accordance  with the usual  customary  practices of
Borrower  and its  Restricted  Subsidiaries,  as they  exist  at the time of the
execution and delivery of this Agreement. If, at a time when no Event of Default

                                       65

has occurred and is  continuing,  any Account  Debtor  returns any  Inventory to
Borrower or any Restricted Subsidiary,  such Person promptly shall determine the
reason for such return and, if such Person  accepts such return,  issue a credit
memorandum in the appropriate  amount to such Account Debtor. If, at a time when
an Event of Default has occurred and is  continuing,  any Account  Debtor (other
than a retail  customer)  returns any  Inventory  to Borrower or any  Restricted
Subsidiary,  such Person  promptly  shall  determine the reason for such return,
issue a credit  memorandum (with a copy to be sent to Lender) in the appropriate
amount to such Account Debtor.

                  6.19  Title to  Equipment.  Upon  Lender's  request,  Borrower
immediately shall deliver to Lender, properly endorsed, any and all certificates
of title or applications  for certificates of title to any items of Equipment of
Borrower and its Restricted Subsidiaries.

         7.       NEGATIVE COVENANTS.

                  Borrower  covenants  and  agrees  that,  so long as any credit
hereunder   shall  be  available  and  until  full  and  final  payment  of  the
Obligations,  Borrower will not do any of the following  without  Lender's prior
written consent:

                  7.1  Limitation  on Liens.  Borrower  shall not, and shall not
suffer or permit any of its  Subsidiaries  to,  directly  or  indirectly,  make,
create,  incur,  assume or suffer to exist any Lien upon or with  respect to any
part of its property,  whether now owned or hereafter  acquired,  other than the
following ("Permitted Liens"):

                           (a)      any   Lien   (other   than   a  Lien  on the
Collateral)  existing on property of Borrower or any of its  Subsidiaries on the
Amendment  Closing  Date and set forth in  Schedule  7.1  securing  Indebtedness
outstanding  on such date or any extension,  renewal or  refinancing  thereof so
long as the Indebtedness  secured by such Lien is not increased and the terms of
such extension,  renewal or refinancing are not more onerous on Borrower and its
Subsidiaries than the Indebtedness so extended, renewed or refinanced;

                           (b)      any Lien created under any Loan Document;

                           (c)      Liens   for   taxes,  fees,  assessments  or
other  governmental  charges which are not delinquent or remain payable  without
penalty,  or to the extent that non-payment thereof is permitted by Section 6.7,
provided that no notice of lien has been filed or recorded under the IRC;

                           (d)      carriers',    warehousemen's,    mechanics',
landlords',  materialmen's,  repairmen's  or other  similar Liens arising in the
ordinary  course of business which are not delinquent or remain payable  without
penalty  or  which  are  being  contested  in  good  faith  and  by  appropriate
proceedings,  which  proceedings have the effect of preventing the forfeiture or
sale of the property subject thereto;

                                       66

                           (e)      Liens  (other  than  any  Lien   imposed  by
ERISA and other  than on the  Collateral)  consisting  of  pledges  or  deposits
required  in the  ordinary  course  of  business  in  connection  with  workers'
compensation, unemployment insurance and other social security legislation;

                           (f)      Liens  on the  property of  Borrower  or any
of its Subsidiaries  securing (i) the non-delinquent  performance of bids, trade
contracts (other than for borrowed money), leases,  statutory obligations,  (ii)
contingent   obligations   on  surety  and  appeal   bonds,   and  (iii)   other
non-delinquent  obligations  of a like  nature;  in each case,  incurred  in the
ordinary course of business,  provided all such Liens in the aggregate would not
(even if enforced) cause a Material Adverse Effect;

                           (g)      Liens  consisting of  judgment  or  judicial
attachment liens that do not constitute Events of Default under Section 8.1(i);

                           (h)      easements,    rights-of-way,    restrictions
and other  similar  encumbrances  incurred  in the  ordinary  course of business
which, in the aggregate,  are not substantial in amount, and which do not in any
case  materially  detract  from the value of the  property  subject  thereto  or
interfere  with the  ordinary  conduct of the  businesses  of  Borrower  and its
Subsidiaries;

                           (i)      Liens  on   assets  of   corporations  which
become Subsidiaries after the date of this Agreement;  provided,  however,  that
such Liens existed at the time the respective  corporations  became Subsidiaries
and were not  created in  anticipation  thereof,  and the  Indebtedness  secured
thereby shall be permitted under Section 7.5(f);

                           (j)      purchase  money  security  interests  on any
property acquired or held by Borrower or its Subsidiaries  securing Indebtedness
incurred or assumed for the purpose of financing  all or any part of the cost of
acquiring  such  property;  provided  that (i) any such  Lien  attaches  to such
property  concurrently with or within forty-five (45) days after the acquisition
thereof,  (ii) such Lien  attaches  solely to the  property  so acquired in such
transaction,  (iii) the  principal  amount of the debt secured  thereby does not
exceed one hundred  percent  (100%) of the cost of such  property,  and (iv) the
Purchase Money Indebtedness  secured by any and all such purchase money security
interests shall be permitted under Section 7.5(f);

                           (k)      Liens securing Capitalized Lease Obligations
on assets subject to such leases, provided that the Indebtedness secured thereby
shall be permitted under Section 7.5(f);

                           (l)      Liens  arising   solely  by  virtue  of  any
statutory or common law provision relating to banker's liens,  rights of set-off
or similar rights and remedies as to deposit  accounts or other funds maintained
with a creditor depository institution; provided that (i) such deposit account

                                       67

is not a dedicated cash  collateral  account and is not subject to  restrictions
against  access  by  Borrower  in  excess  of those  set  forth  by  regulations
promulgated by the Board of Governors of the Federal  Reserve  System,  and (ii)
such deposit  account is not intended by Borrower or any of its  Subsidiaries to
provide collateral to the depository institution;

                           (m)      Liens   on   any  Managed   Care  Subsidiary
pursuant to the applicable  rules and regulations  of, or undertakings  made to,
any regulatory  entity having  jurisdiction and authority over such Managed Care
Subsidiary; and

                           (n)      Liens on intercompany Indebtedness permitted
under Section 7.5(c) hereof.

                  7.2  Disposition of Assets.  Borrower shall not, and shall not
suffer or permit any Subsidiary to, directly or indirectly, sell, assign, lease,
convey,  transfer  or  otherwise  dispose  of  (whether  in one or a  series  of
transactions) any property  (including  accounts and notes  receivable,  with or
without  recourse)  or enter  into  any  agreement  to do any of the  foregoing,
except:

                  (a)  dispositions  of (i) Inventory in the ordinary  course of
business,  or (ii) used, worn-out or surplus Equipment in the ordinary course of
business in an amount not to exceed $250,000 in the aggregate during the term of
this Agreement;

                  (b)  the  sales  of  equipment,  in an  amount  not to  exceed
$250,000 in the aggregate during the term of this Agreement,  to the extent that
such  Equipment is exchanged  for credit  against the purchase  price of similar
replacement  Equipment,  or the  proceeds of such sale are  reasonably  promptly
applied to the purchase price of such replacement Equipment;  provided, that (i)
Lender shall have a first priority perfected Lien on such replacement  Equipment
and (ii) any cash  proceeds  remaining  after the  purchase of such  Replacement
Equipment shall be applied as a repayment of the Obligations;

                  (c)  Disposition not otherwise  permitted  hereunder which are
made for fair market value;  provided,  that (i) at the time of any disposition,
no Event of Default shall exist or shall result from such Disposition,  (ii) the
aggregate sales price from such disposition shall be paid in Qualified Proceeds,
(iii)  (x) the  aggregate  value  of all  assets  so sold  by  Borrower  and its
Subsidiaries, together, shall not exceed $100,000, or (y) such Disposition shall
constitute a  Disposition  of a retail store  location  permitted  under Section
7.18(b),  and  (iv)  the  cash  portion  of Net  Proceeds  relating  to any such
Disposition  promptly  shall be used to make a  prepayment  of the Loans and the
non-cash portion of any such Net Proceeds promptly shall be pledged to Lender to
secure the  Obligations  pursuant  to  documentation  reasonably  acceptable  to
Lender; and

                                       68

                  (d)  subleases of real  property and Equipment in the ordinary
course of business to independent eye care professionals.

                  7.3 Consolidations and Mergers.  Borrower shall not, and shall
not  suffer  or  permit  any  of  its   Subsidiaries   to,  merge,   reorganize,
recapitalize,   reclassify   its  capital  stock  or  other  equity   interests,
consolidate  with or into, or convey,  transfer,  lease or otherwise  dispose of
(whether in one transaction or in a series of transactions  all or substantially
all of its assets  (whether now owned or  hereafter  acquired) to or in favor of
any Person, form any new subsidiary,  or liquidate,  wind up, or dissolve itself
(or suffer any liquidation or dissolution), except:

                           (a)      any   Subsidiary  may merge  with  Borrower,
provided that Borrower shall be the continuing or surviving corporation, or with
any one or more Restricted Subsidiaries,  provided that if any transaction shall
be  between  an  Unrestricted  Subsidiary  and  a  Restricted  Subsidiary,   the
Restricted Subsidiary shall be the continuing or surviving corporation,  and any
Unrestricted Subsidiary may merge with another Unrestricted Subsidiary; and

                           (b)      any  Subsidiary  may sell  or  transfer  all
or substantially all of its assets (upon voluntary liquidation or otherwise), to
Borrower or a Restricted Subsidiary, and any Unrestricted Subsidiary may sell or
transfer all or substantially  all of its assets (upon voluntary  liquidation or
otherwise) to another Unrestricted Subsidiary.

                  7.4 Loans and  Investments.  Borrower  shall not  purchase  or
acquire,  or suffer or permit any Subsidiary to purchase or acquire, or make any
commitment therefor,  any capital stock, equity interest,  or any obligations or
other  securities of, or any interest in, any Person,  or make or commit to make
any  Acquisitions,  or make or commit to make any  advance,  loan,  extension of
credit  or  capital  contribution  to or any other  investment  in,  any  Person
including any Affiliate of Borrower (together, "Investments"), except for:

                           (a)      Investments  held   by   Borrower   or   any
Subsidiary in the form of cash equivalents;

                           (b)      extensions  of  credi   in   the  nature  of
accounts  receivable  arising from the sale or lease of goods or services in the
ordinary course of business;

                           (c)      Investments  by   Borrower  in  any  of  its
Restricted  Subsidiaries or by any of its Restricted  Subsidiaries in another of
its Restricted Subsidiaries;

                           (d)      so long as Borrower has Excess Availability,
on the date of such  Investment  and after giving  effect  thereto,  of at least
$1,500,000,  Investments made or after the Amendment Closing Date by Borrower or
any Restricted  Subsidiary in existing  Unrestricted  Subsidiaries not to exceed
$750,000 in the aggregate; and

                                       69

                           (e)      Loans  to   employees  of  Borrower  or  its
Subsidiaries not to exceed $200,000 at any time outstanding.

                  7.5 Limitation on Indebtedness.  Borrower shall not, and shall
not suffer or permit any Subsidiary to, create,  incur, assume, suffer to exist,
or otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:

                           (a)      Indebtedness   incurred   pursuant  to  this
Agreement;

                           (b)      Indebtedness    consisting   of   Contingent
Obligations permitted pursuant to Section 7.8;

                           (c)      Intercompany Indebtedness issued to Borrower
by its Restricted  Subsidiaries  and, to the extent permitted by Section 7.4(e),
intercompany  Indebtedness  issued  to  Borrower  by  Unrestricted  Subsidiaries
provided  that  any  and  all of  such  Indebtedness  shall  be  evidenced  by a
promissory  note or notes  which  shall be  assigned  and  delivered  to  Lender
pursuant to the Security Agreement;

                           (d)      Indebtedness  existing   on   the  Amendment
Closing Date and set forth in Schedule 7.5;

                           (e)      prior    to   March   1,   2000,   unsecured
Indebtedness of Borrower  pursuant to its interest rate swap  arrangements  with
Wachovia Bank,  N.A., in an aggregate  notional amount not to exceed  $5,000,000
(the "Wachovia Swap Obligations");

                           (f)      Indebtedness  in  an  aggregate  amount  not
to exceed $1,000,000 at any time secured by Liens otherwise permitted by Section
7.1(i), (j) and (k);

                           (g)      Indebtedness  outstanding  under  the Senior
Notes; and

                           (h)      Any  extension,  renewal  or  refinancing of
any of the foregoing Indebtedness so long as the principal amount thereof is not
increased  as a result  thereof  and the terms  thereof  are no more  adverse to
Borrower  and its  Subsidiaries  or Lender than the  Indebtedness  so  extended,
renewed or refinanced.

                  7.6  Transactions  with  Affiliates.  Borrower  shall not, and
shall not suffer or permit any  Subsidiary to, enter into any  transaction  with
any  Affiliate  of  Borrower,  except  upon  fair and  reasonable  terms no less
favorable  to  Borrower or such  Subsidiary  than would  obtain in a  comparable
arm's-length  transaction  with a Person not an  Affiliate  of  Borrower or such
Subsidiary.

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                  7.7 Use of Proceeds.  Borrower shall not, and shall not suffer
or permit any Subsidiary to, use any portion of the proceeds of the Loans or any
Letter of Credit, directly or indirectly, (i) to purchase or carry Margin Stock,
(ii) to repay or otherwise refinance Indebtedness of Borrower or others incurred
to purchase or carry  Margin  Stock,  (iii) to extend  credit for the purpose of
purchasing or carrying any Margin Stock,  or (iv) to acquire any security in any
transaction  that is subject to Section 13 or 14 of the Exchange Act,  except in
compliance with such Sections.

                  7.8 Contingent Obligations.  Borrower shall not, and shall not
suffer or permit any Subsidiary to, create, incur, assume or suffer to exist any
Contingent Obligations except:

                           (a)      endorsements  for  collection  or deposit in
the ordinary course of business;

                           (b)      prior  to  March 1, 2000, the  Wachovia Swap
Obligations;

                           (c)      Contingent  Obligations of Borrower and  its
Subsidiaries  existing as of the  Amendment  Closing Date and listed in Schedule
7.8;

                           (d)  Contingent  Obligations  with  respect to Surety
Instruments  incurred to provide  security  for  workers'  compensation  claims,
payment obligations in connection with  self-insurance or similar  requirements,
in  each  case  incurred  in  the  ordinary  course  of  business  and  securing
obligations not constituting Indebtedness;

                           (e)  Contingent  Obligations  with  respect to Surety
Instruments incurred in respect of trade letters of
credit,  standby  letters of credit or  performance,  surety or appeal bonds, in
each case incurred in the ordinary  course of business and securing  obligations
not  constituting  Indebtedness  and not  exceeding at any time  $250,000 in the
aggregate in respect of Borrower and its Subsidiaries together; and

                           (f)      Contingent Obligations with  respect  to any
liability of Borrower or any Restricted  Subsidiary which is otherwise permitted
under this Agreement.

                  7.9 Joint  Ventures.  Borrower shall not, and shall not suffer
or permit any Subsidiary to enter into any Joint  Venture,  except that Borrower
and its  Subsidiaries  may enter into alliances with other  retailers or managed
care companies to solicit and perform  managed care contracts  which  agreements
must be reasonably acceptable to Lender.

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                  7.10  Restricted  Payments.  Borrower shall not, and shall not
suffer or permit any  Subsidiary  to,  declare or make any  dividend  payment or
other  distribution  of  assets,   properties,   cash,  rights,  obligations  or
securities  on  account  of any  shares of any class of its  capital  stock,  or
purchase,  redeem or otherwise acquire for value any shares of its capital stock
or any  warrants,  rights or options to acquire  such  shares,  now or hereafter
outstanding  (all  such  dividends,  distributions,  purchases,  redemptions  or
acquisitions  are herein  referred  to as  "Restricted  Payments"),  except that
Borrower and any Restricted Subsidiary may:

                           (a)      declare  and make dividend payments or other
distributions payable solely in its common stock;

                           (b)      make  repurchases  of  the  common  stock of
Borrower  from  employees  of  Borrower  or  any of its  Subsidiaries  or  their
authorized   representatives  or  successors  upon  the  death,   disability  or
termination of employment of such employees in an aggregate amount not to exceed
$100,000 in any  calendar  year as long as no Default or Event of Default  shall
have occurred and be continuing or result therefrom; and

                           (c)      make  repurchases  of  the  common  stock of
Borrower  pursuant to the terms of the Put Option  Agreement,  dated  October 1,
1997, by and between  Borrower and Myrel Neumann,  O.D., as such agreement is in
effect in all material  respects on the  Amendment  Closing  Date, as long as no
Default or Event of Default  shall have  occurred  and be  continuing  or result
therefrom,  in an aggregate amount not to exceed $900,000 during the period from
January 1, 2000 until February 1, 2000.

                  7.11 ERISA. Borrower shall not, and shall not suffer or permit
any of its ERISA  Affiliates  to:  (a)  engage in a  prohibited  transaction  or
violation of the fiduciary  responsibility  rules with respect to any Plan which
has resulted or could reasonably  expected to result in liability of Borrower in
an aggregate  amount in excess of $250,000;  or (b) engage in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA which has resulted or could
reasonably be expected to result in liability by Borrower in an aggregate amount
in excess of $250,000.

                  7.12 Change in Business;  Change of Name.  Borrower shall not,
and shall not suffer or permit any Subsidiary to, engage in any material line of
business  which is not  reasonably  related or  complimentary  to those lines of
business  carried on by Borrower and its  Subsidiaries on the Amendment  Closing
Date.  Borrower  shall not,  and shall not suffer or permit any  Subsidiary  to,
change its corporate or other  organizational  structure  (within the meaning of
Section  11-9-402(7)  of the Code) without  Foothill's  prior  written  consent.
Borrower shall not, and shall not suffer or permit any Subsidiary to, change its
name, or identity,  or add any new  fictitious  name,  without thirty (30) days'
prior written notice to Lender.

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                  7.13  Accounting  Changes.  Borrower  shall not, and shall not
suffer or permit any  Subsidiary to, make any  significant  change in accounting
treatment  or  reporting  practices,  except as required by GAAP,  or change the
fiscal year of Borrower or of any Subsidiary.

                  7.14  Financial Covenants. Borrower shall not fail to maintain
the financial covenants as set forth on Schedule 7.14.

                  7.15 Amendments.  Borrower shall not, and shall not permit any
Subsidiary  to,  permit  or  suffer  any  material  amendments,   modifications,
supplements,  or restatements of (a) its certificate of incorporation,  by-laws,
or other  governing  documents,  as applicable,  or (b) in any manner adverse to
Lender, the Senior Notes, the Indenture,  any leases referred to in Section 5.22
or any of its other Material  Contracts,  or any  Indebtedness  permitted  under
Section 7.5.

                  7.16 No Other  Negative  Pledges.  Borrower will not, and will
not permit or cause any of its  Subsidiaries  to, directly or indirectly,  enter
into or  suffer  to  exist  any  agreement  or  restriction  that  prohibits  or
conditions  the  creation,  incurrence  or  assumption  of any Lien upon or with
respect to any part of its  property or assets,  whether now owned or  hereafter
acquired,  or agree to do any of the  foregoing,  other than as set forth in (i)
this Agreement, the Collateral Documents or the Indenture, (ii) any agreement or
instrument  creating a Permitted  Lien (but only to the extent such agreement or
restriction  applies to the assets  subject to such Permitted  Lien),  and (iii)
operating leases of real or personal property entered into by Borrower or any of
its Subsidiaries as lessee in the ordinary course of business.

                  7.17  Prepayments.  Except in  connection  with a  refinancing
permitted by Section 7.5(f),  prepay,  redeem,  retire,  defease,  purchase,  or
otherwise  acquire any  Indebtedness  owing to any third Person,  other than the
Obligations in accordance with this Agreement.

                  7.18 Real Estate; Store Locations. Borrower will not, and will
not permit or cause any of its  Subsidiaries  to, (a) purchase any real property
or (b) close any of its retail store locations without the prior written consent
of Lender which shall not be unreasonably withheld.

                  7.19 Capital  Expenditures.  Borrower shall not, and shall not
permit any of its Subsidiaries to, make (a) capital  expenditures related to the
opening  of new  retail  store  locations  in an  aggregate  amount in excess of
$3,500,000  during any fiscal year, or (b) capital  expenditures in an aggregate
amount in excess of $10,000,000 during any fiscal year.

         8. EVENTS OF DEFAULT.  Any of the following shall  constitute an "Event
of Default":

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                  8.1 Non-Payment. If Borrower fails to pay when due and payable
or when  declared due and payable,  any portion of the  Obligations  (whether of
principal, interest (including any interest which, but for the provisions of the
Bankruptcy  Code,  would have  accrued on such  amounts),  fees and  charges due
Lender,   reimbursement  of  Lender  Expenses,  or  other  amounts  constituting
Obligations); or

                  8.2 Representation or Warranty. Any representation or warranty
by Borrower or any of its Subsidiaries made or deemed made herein (other than in
Section  5.20),  in any  other  Loan  Document  or  which  is  contained  in any
certificate,  document or financial or other  statement by Borrower,  any of its
Subsidiaries  or any  Authorized  Person,  furnished  at  any  time  under  this
Agreement,  or in or under any other Loan Document, is incorrect in any material
respect on or as of the date made or deemed made; or

                  8.3 Specific  Defaults.  Borrower  fails to perform or observe
any term, covenant or agreement contained in any of Sections 6.1, 6.2, 6.3, 6.6,
6.9 or 6..12 or in Article 7; or

                  8.4 Other Defaults.  Borrower or any of its Subsidiaries party
thereto fails to perform or observe any other term or covenant contained in this
Agreement or any other Loan Document, and such default shall continue unremedied
for a period of five (5) Business  Days after the date upon which an  Authorized
Person knew or reasonably should have known of such failure; or

                  8.5 Cross-Default. (i) Borrower or any of its Subsidiaries (A)
fails  to  make  any  payment  in  respect  of any  Indebtedness  or  Contingent
Obligation, having an aggregate principal amount (including undrawn committed or
available  amounts  and  including  amounts  owing to all  creditors  under  any
combined  or  syndicated  credit  arrangement)  of more than  $250,000  when due
(whether by scheduled maturity,  required prepayment,  acceleration,  demand, or
otherwise);  or (B) fails to perform or observe any other condition or covenant,
or any other  event shall  occur or  condition  exist,  under any  agreement  or
instrument  relating to any such Indebtedness or Contingent  Obligation,  if the
effect of such failure,  event or condition is to cause, or to permit the holder
or  holders  of  such  Indebtedness  or  beneficiary  or  beneficiaries  of such
Indebtedness  (or a  trustee  or agent on behalf of such  holder or  holders  or
beneficiary or  beneficiaries)  to cause such  Indebtedness to be declared to be
due and payable prior to its stated maturity,  or such Contingent  Obligation to
become  payable or cash  collateral  in respect  thereof to be  demanded or (ii)
Borrower  or  any  of  its  Subsidiaries  (A)  shall  have  received  notice  of
termination  with respect to, or notice of an intent to terminate,  the Wal-Mart
Master Lease Agreement,  (B) shall be in default with respect to fifteen (15) or
more leases of real property  related to retail store locations  within Wal-Mart
stores to the extent the defaults  under such leases  would  permit  termination
thereof,  or (c) shall be in default  with respect to  twenty-five  (25) or more
leases of real property  related to retail store locations (other than locations
within Wal-Mart stores ) to the extent the defaults under such leases would

                                       74

permit  termination  thereof;  provided,  however,  that the foregoing shall not
apply to the Existing  Defaults so long as such  Existing  Defaults are cured as
provided in Section 3.1(j) and Section 3.3(b); or

                  8.6 Insolvency; Voluntary Proceedings.  Borrower or any of its
Subsidiaries  (i) ceases or fails to be solvent,  or generally  fails to pay, or
admits in writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or otherwise;  (ii)
voluntarily  ceases to  conduct  its  business  in the  ordinary  course;  (iii)
commences any Insolvency  Proceeding  with respect to itself;  or (iv) takes any
action to effectuate or authorize any of the foregoing; or

                  8.7 Involuntary  Proceedings.  (i) Any involuntary  Insolvency
Proceeding is commenced or filed against Borrower or any of its Subsidiaries, or
any writ,  judgment,  warrant of attachment,  execution or similar  process,  is
issued  or  levied  against  a  substantial  part  of  Borrower's  or any of its
Subsidiaries'  properties,  and any such  proceeding  or  petition  shall not be
dismissed, or such writ, judgment,  warrant of attachment,  execution or similar
process  shall not be released,  vacated or fully bonded  within sixty (60) days
after  commencement,  filing or levy;  (ii) Borrower or any of its  Subsidiaries
admits  the  material  allegations  of a petition  against it in any  Insolvency
Proceeding,  or an order for relief (or  similar  order under  non-U.S.  law) is
ordered  in  any  Insolvency  Proceeding;  or  (iii)  Borrower  or  any  of  its
Subsidiaries  acquiesces in the appointment of a receiver,  trustee,  custodian,
conservator,  liquidator,  mortgagee in possession (or agent therefor), or other
similar Person for itself or a substantial  portion of its property or business;
or

                  8.8 ERISA.  (i) An ERISA Event  shall occur with  respect to a
Pension Plan or  Multiemployer  Plan which has resulted or could  reasonably  be
expected  to result in  liability  of  Borrower  under  Title IV of ERISA to the
Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of
$250,000;  or (ii) the aggregate amount of Unfunded Pension  Liability among all
Pension  Plans at any time  exceeds  $250,000;  or (iii)  Borrower  or any ERISA
Affiliate  shall fail to pay when due,  after the  expiration of any  applicable
grace period, any installment  payment with respect to its withdrawal  liability
under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in
excess of $250,000; or

                  8.9  Monetary   Judgments.   One  or  more   non-interlocutory
judgments,  non-interlocutory  orders,  decrees or arbitration awards is entered
against  Borrower  or any of  its  Subsidiaries  involving  in the  aggregate  a
liability (to the extent not covered by independent  third-party insurance as to
which the insurer does not dispute  coverage) as to any single or related series
of  transactions,  incidents or  conditions,  of $250,000 or more,  and the same
shall remain unsatisfied,  unvacated and unstayed pending appeal for a period of
twenty (20) days after the entry thereof; or

                                       75

                  8.10 Non-Monetary Judgments.  Any non-monetary judgment, order
or decree is entered against Borrower or any of its  Subsidiaries  which does or
would reasonably be expected to have a Material Adverse Effect,  and there shall
be any period of twenty (20) consecutive days during which a stay of enforcement
of such judgment or order, by reason of a pending appeal or otherwise, shall not
be in effect; or

                  8.11 Change of Control. There occurs any Change of Control; or

                  8.12 Loss of Licenses.  Any Governmental  Authority revokes or
fails to renew any material  license,  permit or franchise of Borrower or any of
its  Subsidiaries,  or Borrower or any of its  Subsidiaries for any reason loses
any material  license,  permit or franchise,  or Borrower or of its Subsidiaries
suffers the imposition of any restraining order,  escrow,  suspension or impound
of funds in connection  with any proceeding  (judicial or  administrative)  with
respect to any material license,  permit or franchise,  provided that such event
results in or could reasonably be expected to result in a loss of annual revenue
or  potential  revenue  of at least  the  lesser of (i)  $3,000,000  or (ii) one
percent (1%) of the gross revenues of Borrower (on a consolidated basis with its
Subsidiaries) for the most recently ended twelve (12) month period; or

                 8.13 Adverse Change. There occurs a Material Adverse Effect; or

                 8.14 Collateral.

                           (a) any material provision of any Collateral Document
         shall for any reason  cease to be valid and  binding on or  enforceable
         against Borrower or any of its  Subsidiaries  party thereto or Borrower
         or any of its Subsidiaries shall so state in writing or bring an action
         to limit its obligations or liabilities thereunder; or

                           (b) any  Collateral  Document  shall  for any  reason
         (other  than  pursuant  to the terms  thereof)  cease to create a valid
         security interest in the Collateral  purported to be covered thereby or
         such security interest shall for any reason cease to be a perfected and
         first priority security interest subject only to Permitted Liens; or

                  8.15 There shall occur a default or event of default under the
Senior Notes; or

                  8.16 James W. Krause  shall cease to be the chairman and chief
executive  officer of Borrower and shall not have been replaced by a new officer
reasonably acceptable to Lender within ninety (90) days; or

                  8.17  Borrower  or any of its  Subsidiaries  shall at any time
disavow  any of its  obligations  under,  or  shall  assert  the  invalidity  or
enforceability of, any of the Collateral Documents; or

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                  8.18  If  Borrower  or any of its  Subsidiaries  is  enjoined,
restrained,  or in any way  prevented by court order from  continuing to conduct
all or any material part of its business affairs; or

                  8.19 If Borrower or any of its Subsidiaries  makes any payment
on account of Indebtedness that has been contractually  subordinated in right of
payment to the payment of the Obligations,  except to the extent such payment is
permitted  by the  terms  of the  subordination  provisions  applicable  to such
Indebtedness.

                  8.20 (a) If a notice of Lien,  levy, or assessment is filed of
record with  respect to any of  Borrower's  or any  Subsidiary's  properties  or
assets in an amount in excess of $150,000 by the United  States  government,  or
any department,  agency, or instrumentality  thereof,  or by any state,  county,
municipal or governmental agency (except with respect to any taxes which are the
subject of a Permitted Protest),  or (b) if any taxes or debts owing at any time
hereafter  to any one or more of such  entities  becomes  a Lien in an amount in
excess of $150,000,  whether choate or otherwise,  upon any of Borrower's or any
Subsidiary's  properties  or assets and the same is not paid on the payment date
thereof  (except  with respect to any taxes which are the subject of a Permitted
Protest);  provided  that  Lender  shall have the right to  establish  a reserve
against the  Borrowing  Base in an amount of any such Lien  without  waiving its
rights and  remedies  with  respect to an Event of  Default  arising  under this
Section 8.20.

         9.       LENDER'S RIGHTS AND REMEDIES.

                  9.1 Rights and Remedies.  Upon the occurrence,  and during the
continuation,  of an Event of  Default,  Lender may,  at its  election,  without
notice of its election and without demand,  do any one or more of the following,
all of which are authorized by Borrower:

                           (a) Declare  all  Obligations,  whether evidenced  by
this Agreement,  by any of the other Loan Documents,  or otherwise,  immediately
due and payable;

                           (b) Cease advancing  money or extending  credit to or
for the  benefit  of  Borrower  under  this  Agreement,  under  any of the  Loan
Documents, or under any other agreement between Borrower and Lender;

                           (c) Terminate  this  Agreement  and  any of the other
Loan Documents as to any future  liability or obligation of Lender,  but without
affecting  Lender's rights and security  interests in the Collateral and without
affecting the Obligations;

                           (d) Settle or adjust  disputes  and  claims  directly
with  Account  Debtors  for  amounts  and  upon  terms  which  Lender  considers
advisable, and in such cases, Lender will credit Borrower's Loan Account with

                                       77

only the net  amounts  received by Lender in payment of such  disputed  Accounts
after  deducting  all  Lender  Expenses   incurred  or  expended  in  connection
therewith;

                           (e) Cause Borrower to hold all returned  Inventory in
trust for Lender,  segregate all returned  Inventory  from all other property of
Borrower or in  Borrower's  possession  and  conspicuously  label said  returned
Inventory as the property of Lender;

                           (f) Without  notice to or demand upon Borrower or any
guarantor,  make such payments and do such acts as Lender considers necessary or
reasonable to protect its security interests in the Collateral.  Borrower agrees
to assemble the  Collateral  if Lender so requires,  and to make the  Collateral
available  to Lender as Lender may  reasonably  designate.  Borrower  authorizes
Lender to enter  the  premises  where the  Collateral  is  located,  to take and
maintain possession of the Collateral,  or any part of it, and to pay, purchase,
contest,  or  compromise  any  encumbrance,  charge,  or Lien  that in  Lender's
determination  appears to conflict  with its security  interests  and to pay all
expenses  incurred in  connection  therewith.  With respect to any of Borrower's
owned or leased premises,  Borrower hereby grants Lender a license to enter into
possession of such premises and to occupy the same,  without  charge,  for up to
one hundred  twenty  (120) days in order to exercise  any of Lender's  rights or
remedies provided herein, at law, in equity, or otherwise;

                           (g) Without  notice to Borrower  (such  notice  being
expressly  waived),  and without  constituting  a retention of any collateral in
satisfaction  of an  obligation  (within the meaning of Section  11-9-505 of the
Code),  set off and  apply  to the  Obligations  any  and all (i)  balances  and
deposits  of Borrower  held by Lender  (including  any  amounts  received in the
Blocked  Accounts),  or (ii) indebtedness at any time owing to or for the credit
or the account of Borrower held by Lender;

                           (h) Hold, as cash  collateral,  any  and all balances
and deposits of Borrower held by Lender, and any amounts received in the Blocked
Accounts, to secure the full and final repayment of all of the Obligations;

                           (i) Seek the  appointment  of a receiver or keeper to
take  possession of the Collateral and to enforce any of Lender's  remedies with
respect to such appointment without prior notice or hearing, and Borrower hereby
consents  to such right and such  appointment  and hereby  waives any  objection
Borrower may have thereto or the right to have a bond or other  security  posted
by Lender in connection therewith;

                           (j) Ship, reclaim,  recover, store, finish, maintain,
repair,  prepare for sale,  advertise for sale, and sell (in the manner provided
for herein) the Collateral.  Lender is hereby granted a non-exclusive license or
other right to use,  without charge,  Borrower's  labels,  patents,  copyrights,
rights of use of any name, trade secrets, trade names, trademarks, service

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marks,  and  advertising  matter,  or any  property of a similar  nature,  as it
pertains to the Collateral,  in completing  production of, advertising for sale,
and selling any  Collateral  and  Borrower's  rights  under all licenses and all
franchise  agreements shall inure to Lender's  benefit(to the extent it does not
cause a violation or forfeiture thereof);

                           (k) Sell the Collateral at either a public or private
sale, or both, by way of one or more contracts or  transactions,  for cash or on
terms,  in such manner and at such places  (including  Borrower's  premises)  as
Lender  determines is  commercially  reasonable.  It is not  necessary  that the
Collateral be present at any such sale;

                           (l) Lender  shall give notice of the  disposition  of
the Collateral as follows:

                                    (1)     Lender shall give  Borrower and each
holder of a security  interest  in the  Collateral  who has filed with  Lender a
written request for notice,  a notice in writing of the time and place of public
sale, or, if the sale is a private sale or some other  disposition  other than a
public sale is to be made of the Collateral, then the time on or after which the
private sale or other disposition is to be made;

                                    (2)     The   notice  shall  be   personally
delivered or mailed,  postage prepaid, to Borrower as provided in Section 12, at
least five (5) days  before  the date  fixed for the sale,  or at least five (5)
days before the date on or after which the private sale or other  disposition is
to be made; no notice needs to be given prior to the  disposition of any portion
of the Collateral  that is perishable or threatens to decline  speedily in value
or that is of a type customarily sold on a recognized market.  Notice to Persons
other than Borrower claiming an interest in the Collateral shall be sent to such
addresses as they have furnished to Lender;

                                    (3)     If the sale is to be a public  sale,
Lender also shall give notice of the time and place by  publishing  a notice one
time at least  five  (5) days  before  the  date of the sale in a  newspaper  of
general circulation in the county in which the sale is to be held;

                           (m) Lender may credit bid and purchase at any  public
sale;

                           (n) Any deficiency  that exists after  disposition of
the  Collateral  as provided  above will be paid  immediately  by Borrower.  Any
excess will be  returned,  without  interest  and subject to the rights of third
Persons, by Lender to Borrower; and

                           (o) Borrower  acknowledges that the Obligations arose
out of a  commercial  transaction,  and agree that if an Event of Default  shall
occur,  Lender shall have the right to an immediate  writ of possession  without
notice of a hearing.

                                       79

                  9.2 Remedies  Cumulative.  Lender's  rights and remedies under
this  Agreement,   the  Loan  Documents,  and  all  other  agreements  shall  be
cumulative.  Lender shall have all other  rights and  remedies not  inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by Lender
of one right or remedy shall be deemed an  election,  and no waiver by Lender of
any Event of Default  shall be deemed a  continuing  waiver.  No delay by Lender
shall constitute a waiver, election, or acquiescence by it.

         10.      TAXES AND EXPENSES.

                  If  Borrower   fails  to  pay  any  monies   (whether   taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons, or fails
to make any deposits or furnish any required proof of payment or deposit, all as
required  under the terms of this  Agreement,  then,  to the extent  that Lender
determines that such failure by Borrower could  reasonably be expected to have a
Material Adverse Effect, in its discretion and without prior notice to Borrower,
Lender may do any or all of the  following:  (a) make payment of the same or any
part  thereof;  (b) set up such  reserves in  Borrower's  Loan Account as Lender
deems necessary to protect Lender from the exposure created by such failure;  or
(c) obtain and maintain insurance policies of the type described in Section 6.6,
and take any action with respect to such policies as Lender deems  prudent.  Any
such amounts paid by Lender shall constitute Lender Expenses.  Any such payments
made by Lender  shall not  constitute  an  agreement  by Lender to make  similar
payments in the future or a waiver by Lender of any Event of Default  under this
Agreement.  Lender need not inquire as to, or contest the  validity of, any such
expense,  tax,  or Lien and the  receipt  of the usual  official  notice for the
payment  thereof shall be conclusive  evidence that the same was validly due and
owing.

         11.      WAIVERS; INDEMNIFICATION.

                  11.1 Demand;  Protest;  etc. Borrower waives demand,  protest,
notice of  protest,  notice of  default  or  dishonor,  notice  of  payment  and
nonpayment, nonpayment at maturity, release, compromise,  settlement, extension,
or renewal of accounts, documents, instruments, chattel paper, and guarantees at
any time held by Lender on which Borrower may in any way be liable.

                  11.2  Lender's  Liability  for  Collateral.  So long as Lender
complies  with its  obligations,  if any,  under  Section  11-9-207 of the Code,
Lender  shall not in any way or manner be  liable or  responsible  for:  (a) the
safekeeping  of the  Collateral;  (b) any loss or damage  thereto  occurring  or
arising in any manner or fashion from any cause; (c) any diminution in the value
thereof;  or (d)  any  act or  default  of any  carrier,  warehouseman,  bailee,
forwarding  agency, or other Person. All risk of loss, damage, or destruction of
the Collateral shall be borne by Borrower.

                                       80

                  11.3 Indemnification.  Borrower shall pay, indemnify,  defend,
and hold  Lender,  each  Participant,  and each of  their  respective  officers,
directors,   employees,   counsel,   agents,  and  attorneys-in-fact  (each,  an
"Indemnified Person") harmless (to the fullest extent permitted by law) from and
against  any  and  all  claims,   demands,   suits,   actions,   investigations,
proceedings,  and damages, and all reasonable  attorneys' fees and disbursements
and other costs and expenses actually  incurred in connection  therewith (as and
when they are incurred and irrespective of whether suit is brought), at any time
asserted against, imposed upon, or incurred by any of them in connection with or
as a result of or related to the execution, delivery, enforcement,  performance,
and  administration  of this  Agreement  and any  other  Loan  Documents  or the
transactions  contemplated  herein,  and  with  respect  to  any  investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the  proceeds  of the  credit  provided  hereunder  (irrespective  of
whether any Indemnified Person is a party thereto), or any act, omission,  event
or circumstance in any manner related thereto (all the foregoing,  collectively,
the  "Indemnified  Liabilities").  Borrower  shall  have  no  obligation  to any
Indemnified  Person  under this  Section  11.3 with  respect to any  Indemnified
Liability  that a court of competent  jurisdiction  finally  determines  to have
resulted  from the gross  negligence or willful  misconduct of such  Indemnified
Person.  This provision  shall survive the termination of this Agreement and the
repayment of the Obligations.

         12.      NOTICES.

                  Unless  otherwise  provided in this Agreement,  all notices or
demands by any party relating to this Agreement or any other Loan Document shall
be in writing and  (except  for  financial  statements  and other  informational
documents  which may be sent by  first-class  mail,  postage  prepaid)  shall be
personally  delivered or sent by registered or certified mail (postage  prepaid,
return receipt  requested),  overnight  courier,  or facsimile to Borrower or to
Lender, as the case may be, at its address set forth below:

                  If to Borrower:   VISTA EYECARE, INC.
                                    296 Grayson Highway
                                    Lawrenceville, Georgia 30045-5737
                                    Attn: Chief Financial Officer
                                    Fax No. (770) 822-2027

                  with copies to:   VISTA EYECARE, INC.
                                    296 Grayson Highway
                                    Lawrenceville, Georgia 30045-5737
                                    Attn: General Counsel
                                    Fax No. (770) 822-2029

                  If to Lender:     FOOTHILL CAPITAL CORPORATION
                                    Northpark Town Center, Building 400
                                    1000 Abernathy Road, N.E., Suite 1450
                                    Atlanta, Georgia 30328
                                    Attn:  Business Finance Division Manager
                                    Fax No. (770) 508-1370

                                       81

                  with copies to:   Paul, Hastings, Janofsky & Walker LLP
                                    600 Peachtree Street, N.E., Suite 2400
                                    Atlanta, Georgia 30308
                                    Attn: Chris D. Molen, Esq.
                                    Fax No. (404) 815-2424

                  The parties hereto may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other. All notices or demands sent in accordance with this Section 12, other
than notices by Lender in connection  with Sections  11-9-504 or 11-9-505 of the
Code,  shall be deemed  received on the earlier of the date of actual receipt or
three  (3)  Business  Days  after the  deposit  thereof  in the  mail.  Borrower
acknowledges  and agrees that notices sent by Lender in connection with Sections
11-9-504 or 11-9-505 of the Code shall be deemed sent when deposited in the mail
or personally  delivered,  or, where permitted by law, transmitted  facsimile or
other similar method set forth above.

         13.      CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

                  THE VALIDITY OF THIS  AGREEMENT  AND THE OTHER LOAN  DOCUMENTS
(UNLESS  EXPRESSLY  PROVIDED TO THE  CONTRARY IN ANY OTHER LOAN  DOCUMENT),  THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS
OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING  HEREUNDER
OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED  UNDER,  GOVERNED
BY, AND  CONSTRUED  IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF  GEORGIA.  THE
PARTIES AGREE THAT ALL ACTIONS OR  PROCEEDINGS  ARISING IN CONNECTION  WITH THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS  SHALL BE TRIED AND LITIGATED ONLY IN THE
STATE AND FEDERAL COURTS  LOCATED IN THE COUNTY OF FULTON,  STATE OF GEORGIA OR,
AT THE SOLE OPTION OF LENDER,  IN ANY OTHER COURT IN WHICH LENDER SHALL INITIATE
LEGAL OR EQUITABLE  PROCEEDINGS AND WHICH HAS SUBJECT MATTER  JURISDICTION  OVER
THE MATTER IN  CONTROVERSY.  EACH OF BORROWER AND LENDER  WAIVES,  TO THE EXTENT
PERMITTED  UNDER  APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE
OF FORUM NON  CONVENIENS  OR TO OBJECT TO VENUE TO THE EXTENT ANY  PROCEEDING IS
BROUGHT IN ACCORDANCE WITH THIS SECTION 13. BORROWER AND LENDER HEREBY WAIVE, TO
THE EXTENT  PERMITTED UNDER  APPLICABLE LAW, THEIR  RESPECTIVE  RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION  BASED UPON OR  ARISING  OUT OF ANY OF THE
LOAN  DOCUMENTS  OR ANY  OF THE  TRANSACTIONS  CONTEMPLATED  THEREIN,  INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY  CLAIMS.  EACH OF BORROWER AND LENDER  REPRESENTS THAT IT HAS REVIEWED
THIS WAIVER AND EACH  KNOWINGLY  AND  VOLUNTARILY  WAIVES ITS JURY TRIAL  RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

         14.      DESTRUCTION OF BORROWER'S DOCUMENTS.

                  All documents,  schedules,  invoices,  agings, or other papers
delivered to Lender may be destroyed or otherwise disposed of by Lender four (4)
months after they are delivered to or received by Lender, unless Borrower

                                       82

requests, in writing, the return of said documents,  schedules,  or other papers
and makes arrangements, at Borrower's expense, for their return.

         15.      GENERAL PROVISIONS.

                  15.1 Effectiveness. This Agreement shall be binding and deemed
effective when executed by Borrower and Lender.

                  15.2  Successors and Assigns.  This  Agreement  shall bind and
inure to the  benefit of the  respective  successors  and assigns of each of the
parties;  provided,  however, that Borrower may not assign this Agreement or any
rights or duties  hereunder  without  Lender's  prior  written  consent  and any
prohibited  assignment  shall be absolutely void. No consent to an assignment by
Lender  shall  release  Borrower  from its  Obligations.  Lender may assign this
Agreement  and its rights and duties  hereunder  and no consent or  approval  by
Borrower is required in connection with any such assignment. Lender reserves the
right to sell, assign,  transfer,  negotiate,  or grant participations in all or
any part of, or any  interest  in Lender's  rights and  benefits  hereunder.  In
connection  with any such assignment or  participation,  Lender may disclose all
documents  and  information  which Lender now or hereafter  may have relating to
Borrower or Borrower's  business.  To the extent that Lender  assigns its rights
and  obligations  with  respect to the Loans and the  commitment  hereunder to a
third Person, Lender thereafter shall be released from such assigned obligations
to Borrower and such  assignment  shall effect a novation  between  Borrower and
such third  Person.  With  respect to any Person that  purchases  any portion of
Lender's  rights and obligations  under this Agreement  pursuant to the terms of
this Section  15.2,  such Person shall be entitled (i) to all of the benefits of
Section 11.3 hereof and (ii) to the payment of all Lender  Expenses and expenses
of the type  described in paragraph (c) of the Fee Letter as if such Person were
the "Lender" as defined herein and in the Fee Letter.

                  15.3  Section  Headings.  Headings  and numbers  have been set
forth  herein for  convenience  only.  Unless the  contrary is  compelled by the
context,  everything  contained in each section  applies  equally to this entire
Agreement.

                  15.4   Interpretation.   Neither   this   Agreement   nor  any
uncertainty or ambiguity herein shall be construed or resolved against Lender or
Borrower,  whether under any rule of construction or otherwise. On the contrary,
this  Agreement  has been  reviewed by all parties  and shall be  construed  and
interpreted  according to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of all parties hereto.

                  15.5  Severability  of  Provisions.  Each  provision  of  this
Agreement  shall be severable  from every other  provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.

                  15.6  Amendments  in  Writing.  This  Agreement  can  only  be
amended by a writing signed by both Lender and Borrower.

                                       83

                  15.7 Counterparts;  Facsimile Execution. This Agreement may be
executed  in any number of  counterparts  and by  different  parties on separate
counterparts,  each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same  Agreement.  Delivery of an executed  counterpart  of this Agreement by
facsimile  shall be equally as  effective  as delivery  of an original  executed
counterpart of this Agreement.  Any party delivering an executed  counterpart of
this Agreement by facsimile also shall deliver an original executed  counterpart
of this  Agreement but the failure to deliver an original  executed  counterpart
shall not  affect  the  validity,  enforceability,  and  binding  effect of this
Agreement.

                  15.8  Revival  and   Reinstatement  of  Obligations.   If  the
incurrence  or payment of the  Obligations  by Borrower or any  guarantor of the
Obligations  or the  transfer by either or both of such parties to Lender of any
property of either or both of such parties should for any reason subsequently be
declared  to be void or  voidable  under any state or federal  law  relating  to
creditors'  rights,  including  provisions  of the  Bankruptcy  Code relating to
fraudulent conveyances,  preferences, and other voidable or recoverable payments
of money or transfers of property (collectively,  a "Voidable Transfer"), and if
Lender is required to repay or restore,  in whole or in part,  any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then, as
to any such Voidable Transfer,  or the amount thereof that Lender is required or
elects  to repay or  restore,  and as to all  reasonable  costs,  expenses,  and
attorneys'  fees of Lender  related  thereto,  the liability of Borrower or such
guarantor  automatically  shall be revived,  reinstated,  and restored and shall
exist as though such Voidable Transfer had never been made.

                  15.9 Integration. This Agreement, together with the other Loan
Documents,  reflects the entire understanding of the parties with respect to the
transactions  contemplated  hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.

                  15.10 Time is of the  Essence.  Time is of the essence of this
Agreement.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                       84

                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Agreement to be executed in Atlanta, Georgia.

                                            VISTA EYECARE, INC.,
                                            a Georgia corporation

                                            By      /s/  Mitchell Goodman
                                            Name:   Mitchell Goodman
                                            Title:  Executive Vice President

                                            FOOTHILL  CAPITAL   CORPORATION,   a
                                            California   corporation   with   an
                                            office  in  Atlanta,   Georgia,   as
                                            lender  and as agent for  itself and
                                            certain other Persons

                                            By       /s/ Patricia McLoughlin
                                            Name:    Patricia McLoughlin
                                            Title:   Vice President

                                            FOOTHILL  CAPITAL   CORPORATION,   a
                                            California   corporation   with   an
                                            office in Atlanta,  Georgia,  as the
                                            sole Bank,  the  Issuing  Bank,  the
                                            Documentation    Agent    and    the
                                            Administrative Agent under the Prior
                                            Credit Agreement

                                            By       /s/ Patricia McLoughlin
                                            Name:    Patricia McLoughlin
                                            Title:   Vice President

                                       85

                                TABLE OF CONTENTS

                                                                            Page

1.       DEFINITIONS AND CONSTRUCTION.........................................3
         1.1      Definitions.................................................3
         1.2      Accounting Terms...........................................25
         1.3      Code.......................................................25
         1.4      Construction...............................................25
         1.5      Schedules and Exhibits.....................................25

2.       LOAN AND TERMS OF PAYMENT...........................................25
         2.1      Revolving Advances.........................................25
         2.2      Letters of Credit..........................................27
         2.3      Term Loan..................................................29
         2.4      [Intentionally Omitted]....................................30
         2.5      Overadvances...............................................30
         2.6      Interest and Letter of Credit Fees:  Rates, Payments, and
                    Calculations; Promise to Pay.............................30
         2.7      Collection of Accounts.....................................32
         2.8      Crediting Payments; Application of Collections.............34
         2.9      Designated Account.........................................34
         2.10     Maintenance of Loan Account; Statements of Obligations.....35
         2.11     Fees.......................................................35
         2.12     Eurodollar Rate Advances...................................35
         2.13     Illegality.................................................37
         2.14     Requirements of Law........................................37
         2.15     Indemnity..................................................39

3.       CONDITIONS; TERM OF AGREEMENT.......................................39
         3.1      Conditions Precedent to the Initial Advance, Letter of
                    Credit and the Term Loans................................39
         3.2      Conditions Precedent to all Advances, all Letters of
                    Credit and the Term Loans................................41
         3.3      Condition Subsequent.......................................42
         3.4      Term.......................................................43
         3.5      Effect of Termination......................................43
         3.6      Early Termination by Borrower..............................43
         3.7      Termination Upon Event of Default..........................43

4.       [Intentionally Omitted].............................................44

                                       86

5.       REPRESENTATIONS AND WARRANTIES......................................44
         5.1      Corporate Existence and Power..............................44
         5.2      Corporate Authorization; No Contravention..................44
         5.3      Governmental Authorization. ...............................45
         5.4      Binding Effect.............................................45
         5.5      Litigation.................................................45
         5.6      No Default.................................................45
         5.7      ERISA Compliance...........................................46
         5.8      Use of Proceeds; Margin Regulations........................46
         5.9      Title to Properties........................................47
         5.10     Taxes......................................................47
         5.11     Financial Condition........................................47
         5.12     Environmental Matters......................................48
         5.13     Collateral Documents.......................................48
         5.14     Regulated Entities.........................................49
         5.15     No Burdensome Restrictions.................................49
         5.16     Copyrights, Patents, Trademarks and Licenses, Etc..........49
         5.17     Subsidiaries...............................................49
         5.18     Insurance..................................................50
         5.19     Solvency...................................................50
         5.20     Full Disclosure............................................50
         5.21     Accounts and Inventory.....................................50
         5.22     Leases.....................................................50
         5.23     Compliance With Laws.......................................51
         5.24     Year 2000 Compatibility....................................51
         5.25     Material Contracts.........................................51

6.       AFFIRMATIVE COVENANTS...............................................51
         6.1      Financial Statements.......................................52
         6.2      Certificates; Other Information............................52
         6.3      Notices....................................................54
         6.4      Preservation of Corporate Existence, Etc...................55
         6.5      Maintenance of Property....................................56
         6.6      Insurance..................................................56
         6.7      Payment of Obligations.....................................57
         6.8      Compliance with Laws.......................................58
         6.9      Compliance with ERISA......................................58
         6.10     Inspection of Property and Books and Records...............58
         6.11     Environmental Laws.........................................58
         6.12     Use of Proceeds............................................59
         6.13     Further Assurances.........................................59
         6.14     Bank Accounts..............................................59
         6.15     Year 2000 Compatibility....................................60
         6.16     Covenants Regarding Formation of Subsidiaries..............60
         6.17     Tax Returns................................................60
         6.18     Returns....................................................60
         6.19     Title to Equipment.........................................60

                                       87

7.       NEGATIVE COVENANTS..................................................60
         7.1      Limitation on Liens........................................61
         7.2      Disposition of Assets......................................62
         7.3      Consolidations and Mergers.................................63
         7.4      Loans and Investments......................................64
         7.5      Limitation on Indebtedness.................................64
         7.6      Transactions with Affiliates...............................65
         7.7      Use of Proceeds............................................65
         7.8      Contingent Obligations.....................................65
         7.9      Joint Ventures.............................................66
         7.10     Restricted Payments........................................66
         7.11     ERISA......................................................66
         7.12     Change in Business; Change of Name.........................67
         7.13     Accounting Changes.........................................67
         7.14     Financial Covenants........................................67
         7.15     Amendments.................................................67
         7.16     No Other Negative Pledges..................................67
         7.17     Prepayments................................................67
         7.18     Real Estate; Store Locations...............................67

8.       EVENTS OF DEFAULT...................................................68

9.       LENDER'S RIGHTS AND REMEDIES........................................71
         9.1      Rights and Remedies........................................71
         9.2      Remedies Cumulative........................................73

10.      TAXES AND EXPENSES..................................................73

11.      WAIVERS; INDEMNIFICATION............................................74
         11.1     Demand; Protest; etc.......................................74
         11.2     Lender's Liability for Collateral..........................74
         11.3     Indemnification............................................74

12.      NOTICES.............................................................75

13.      CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER..........................76

14.      DESTRUCTION OF BORROWER'S DOCUMENTS.................................76

15.      GENERAL PROVISIONS..................................................76
         15.1     Effectiveness..............................................76
         15.2     Successors and Assigns.....................................77
         15.3     Section Headings...........................................77
         15.4     Interpretation.............................................77
         15.5     Severability of Provisions.................................77
         15.6     Amendments in Writing......................................77
         15.7     Counterparts; Facsimile Execution..........................77
         15.8     Revival and Reinstatement of Obligations...................78
         15.9     Integration................................................78
         15.10    Time is of the Essence.....................................78

                                       88

                                    AGREEMENT

        THIS  AGREEMENT  (the  "Agreement")  is entered  into as of September 9,
1999, by and among VISTA EYECARE,  INC., a Georgia  corporation (the "Company"),
ITC SERVICE COMPANY, a Delaware corporation ("ITC"), and CAMPBELL B. LANIER, III
("Lanier").

                              W I T N E S S E T H:

         WHEREAS, the Company entered into a Rights Agreement with Wachovia Bank
of North Carolina,  N.A. dated as of January 17, 1997, as  subsequently  amended
(the "Rights Agreement"),  pursuant to which the ownership of 15% or more shares
of Common Stockby any Acquiring Person would trigger certain consequences; and

         WHEREAS,  a group of which ITC and Lanier are members (the "13D Group")
has  previously  requested  of the  Company  that it be  allowed  to become  the
Beneficial Owner of up to 25% of the outstanding  shares of Common Stock without
triggering the provisions of the Rights Agreement,  which request was granted by
the Company on April 22, 1999; and

         WHEREAS,  the  Company  has  agreed  to  a  further  exception  to  the
restrictions  of the Rights  Agreement  to  increase  such amount to 28%, on the
condition  that ITC and Lanier enter into this  Agreement  providing for certain
restrictions on the voting of certain of such shares;

         NOW, THEREFORE, in consideration of the foregoing premises and promises
and other good and valuable  consideration,  the  sufficiency of which is hereby
acknowledged, the parties agree as follows:

Definitions

A.  Undefined  Capitalized  Terms.  Undefined  capitalized  terms  used  in this
Agreement  (and the recitals  thereto)  shall have the meanings given to them in
the Rights Agreement.

B.  Other.  The  following  terms  shall  have the  following  meanings  in this
Agreement:

                  "Covered  Shares"  means any Group  Shares in excess of 25% of
                  the  outstanding  shares of Common  Stock,  but the  number of
                  Covered Shares shall not exceed 3% of the  outstanding  shares
                  of Common Stock.

                  "Group  Shares"  means  Common Stock of which the 13D Group is
                  the Beneficial Owner.

         2. During such time as there exist any Covered  Shares,  ITC and Lanier
agree to vote a number of shares of Common  Stock  owned by either of them equal
to  the  number  of  such  Covered  Shares  on  any  matters  presented  to  the
shareholders of the Company in the same ratio as all shares voted by any holders
of  Common  Stock  other  than  (a) any  member  of the 13D  Group,  and (b) any
Affiliates and Associates of the 13D Group. which for purposes of this Paragraph
of this Agreement shall include, without limitation, all directors and executive
officers of ITC and ITC Holding Company, Inc., the parent corporation of ITC.

         3.  Promptly  upon the request of the Company,  ITC and Lanier agree to
irrevocably  appoint the Company's  designee as their lawful  attorney and proxy
with full power of substitution  for and in their  respective  names to vote (in
accordance with Paragraph 2 of this Agreement) shares owned by them equal to the
number  of  Covered  Shares,  at all  annual,  special  and  other  meetings  of
shareholders  of the Company (or by written  consent in lieu thereof) and at all
other  times the  Covered  Shares are  required  to be or may be voted.  ITC and
Lanier understand and agree that the appointment and proxy, if granted,  will be
irrevocable  and coupled with an interest and will not terminate by operation of
law. Any such  appointment  and proxy  arrangement  shall  terminate  (a) to the
extent that shares of Common Stock cease to be Covered Shares or (b) as provided
in Paragraph 4 of this Agreement.

         4. ITC and Lanier  agree that they will not sell shares of Common Stock
in an amount that would cause them to  collectively  own less than the number of
Covered  Shares  without  having first caused another person in the 13D Group to
have duly  executed and  delivered to the Company a copy of this  Agreement or a
substantially  similar  agreement  in form  and  substance  satisfactory  to the
Company,  covering a number of shares that together with the shares owned by ITC
and Lanier would equal at least the number of Covered Shares. Upon the execution
and delivery of such agreement,  the appointment and proxy arrangement described
in Paragraph 3 of this Agreement  shall  terminate with respect to the shares of
Common Stock sold by ITC or Lanier.

         5. Nothing in this Agreement  shall (a) be deemed an admission that any
Person  is or is not an  Affiliate  or  Associate  of any  other  Person  or (b)
preclude a Person from  becoming or ceasing to be an  Affiliate  or Associate of
any other Person.  Neither this  Agreement nor any of its terms shall create any
implied  or  express  obligation  on the  part of the  Company  to agree to make
further exceptions or take any additional action under the Rights Agreement.

         6. All  determinations  as to the  number of  shares  of  Common  Stock
outstanding  shall be made in  accordance  with  the  provisions  of the  Rights
Agreement.

         7. This  Agreement  shall be governed by, and construed and enforced in
accordance with, the laws of the State of Georgia, without regard to conflict of
laws principles. This Agreement may be executed in several counterparts, each of
which  shall  be  deemed  to be an  original,  and all of which  together  shall
constitute  one  and  the  same  Agreement.  All of the  terms,  provisions  and
covenants  of this  Agreement  shall be binding upon and inure to the benefit of
and be  enforceable  by the  parties  to this  Agreement  and  their  respective
successors and assigns.

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

                                                   VISTA EYECARE, INC.

                                                     /s/ Mitchell Goodman
                                                    By:  Mitchell Goodman
                                                    Title: Senior Vice President

                                                    ITC SERVICE COMPANY

                                                    /s/ William H. Scott, III
                                                    By: William H. Scott, III
                                                    Title: President

                                                    /s/ Campbell B. Lanier, III
                                                    CAMPBELL B. LANIER, III

                               VISTA EYECARE, INC.

                              SUBSIDIARY COMPANIES

Name of Subsidiary                                Jurisdiction of Incorporation
- ------------------                                -----------------------------

Midwest Vision, Inc.                                          Minnesota

NVAL Healthcare Systems, Inc.                                  Georgia

NVAL Visioncare Systems of California, Inc.                  California

NVAL Visioncare Systems of North Carolina, Inc.            North Carolina

International Vision Associates, Ltd.                          Georgia

Mexican Vision Associates, S.A. de C.V.                        Mexico

Mexican Vision Associates Operadora,
S. de R.L. de C.V.                                             Mexico

Mexican Vision Associates Servicios,
S. de R.L. de C.V.                                             Mexico

New West Eyeworks, Inc.                                       Delaware

Frame-n-Lens Optical, Inc.                                   California

Vision Administrators, Inc                                   California

ProCare Eye Exam, Inc.                                       California

Family Vision Centers, Inc.                                   Delaware

                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

     As independent public  accountants,  we hereby consent to the incorporation
of our report  included in this Form 10-K, into the Company's  previously  filed
Registration Statement File No. 333-06579 and File No. 333-21782.

/s/  Arthur Andersen LLP

Atlanta, Georgia
April 5, 2000

                     5
                                        0000868263
                              Vista Eyecare, Inc.
                                      1,000

                                    12-Mos
                           Jan-01-2000
                              Jan-03-1999
                                Jan-01-2000
                                            2,886
                                          0
                                    14,819
                                      4,403
                                      34,373
                                 50,436
                                          116,235
                                   62,329
                                  220,219
                            62,150
                                         130,612
                                 0
                                           0
                                            211
                                       26,346
                    220,219
                                         329,055
                                329,055
                                           147,768
                                   147,768
                                179,114
                                      0
                               19,329
                                 (17,156)
                                          0
                             (17,156)
                                        0
                                    (406)
                                             0
                                    (17,562)
                                       (0.83)
                                     (0.83)