In a Dickensian fashion, the children's new guardian, Sir, makes them work at his mill under terrible conditions and compensates their labor with coupons. While working, a foreman causes Klaus to trip and break his glasses. Klaus visits a local optometrist named Dr. Georgina Orwell (yes, Lemony Snicket is punny), who hypnotizes him during his appointment. Sunny and Violet learn that the receptionist Shirley is actually Olaf, and that Olaf is working with the optometrist to trap the children. The stakes build up as Sir leaves a note threatening to ship them off with Shirley if they're involved in any more accidents.
Klaus, still hypnotized, operates a saw that's about to cut Charles, Sir's business partner, in half. Violet figures out the keyword to snap Klaus out of his trance and they Charles. Orwell, however, runs into the saw and instantly dies.