10-K405

TABLE OF CONTENTS

PART I
	Item 1. Business
	Item 2. Properties
	Item 3. Legal Proceedings
	Item 4. Submission of Matters to a Vote of Security-Holders
	Item 4A. Executive Officers of Cole National Corporation
PART II
	Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters
	Item 6. Selected Financial Data
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 7a. Quantitative and Qualitative Disclosures About Market Risk
	Item 8. Financial Statements and Supplementary Data
	Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
	Item 10. Directors and Executive Officers of the Registrant
	Item 11. Executive Compensation
	Item 12. Security Ownership of Certain Beneficial Owners and Management
	Item 13. Certain Relationships and Related Transactions
PART IV
	Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
SIGNATURES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
	Report of Independent Public Accountants
	Consolidated Balance Sheets
	Consolidated Statements of Operations
	Consolidated Statements of Cash Flows
	Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss)
	Notes to Consolidated Financial Statements
	Financial Statement Schedules
	Report of Independent Public Accountants of the Financial Statements Schedules
	Schedule I
	Schedule II
EXHIBIT INDEX

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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 29, 2000, or
	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _________________ to __________________.

Commission file number 1-12814

COLE NATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization) 34-1453189
(I.R.S. employer identification no.)

5915 Landerbrook Drive, Mayfield Heights, Ohio
(Address of principal executive offices) 44124
(Zip code)

Registrant’s telephone number, including area code: (440) 449-4100

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

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $.001 Par Value	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
NONE

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.    X  YES        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. [ X ]

The aggregate market value of the voting stock held by non-affiliates of the registrant as of March 24, 2000 was approximately $95,059,479, based upon the last price reported for such date by the New York Stock Exchange.

As of March 24, 2000, 15,518,812 shares of the registrant’s common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Proxy Statement for the Annual Meeting of Stockholders to be held on June 15, 2000 are incorporated herein by reference into Part III.

PART I

Item 1. Business

General

      Cole National Corporation was incorporated as a Delaware corporation in 1984. Cole National Corporation, primarily through the subsidiaries owned by its direct subsidiary, Cole National Group, Inc. is a leading provider of eyewear products, optometric services and personalized gifts with 2,722 retail locations in 50 states, Canada and the Caribbean. References herein to the “Company” include Cole National Corporation, its direct and indirect subsidiaries, and its predecessor companies. The Company’s businesses are conducted through two principal operating units: Cole Vision and Things Remembered. Cole Vision consists of Cole Licensed Brands, Cole Managed Vision Care and Pearle. The Company believes that, based on industry data, Cole Vision is one of the largest optical retail companies in the world. Things Remembered operates the only nationwide chain of personalized gift stores. The Company differentiates itself from other specialty retailers by providing value-added services at the point of sale at all of its retail locations.

Cole Vision

      Cole Vision contributed 76% of the Company’s net revenue in fiscal 1999 with 1,926 company-owned and franchised locations throughout the United States, Canada and the Caribbean as of January 29, 2000. The Cole Managed Vision Care programs provide vision care services giving participants access to a network of company-owned, franchised and third-party optical locations.

Cole Licensed Brands

      Cole Licensed Brands operates principally under the “Sears Optical,” “Target Optical” and “BJ’s Optical Department” names. As of January 29, 2000, Cole Licensed Brands operated 1,056 locations in 46 states and Canada, including 802 departments on the premises of Sears department stores, 93 departments in BJ’s Wholesale Club stores, 25 departments in Target stores, 134 freestanding stores operated under the name “Sears Optical” and two other locations. In December 1999, the Company closed 150 optical departments located in Montgomery Ward stores. Retail locations are generally operated under a lease or license arrangement through which the host store collects the sales receipts, retains an agreed upon percentage of sales and remits the remainder to Cole Licensed Brands on a weekly basis.

      Cole Licensed Brands’ locations are, in most cases, full-service retail eyecare stores offering brand name and private label prescription eyeglasses, contact lenses and accessories, with an on-premises doctor of optometry who performs complete eye examinations and prescribes eyeglasses and contact lenses. Most optical departments, which are typically 1,000 square feet in size, operate with a doctor of optometry, a department manager, and from one to seven opticians depending on store sales volume. The majority of the doctors of optometry are independent, as is often required by state law, with the remainder being employed by Cole Licensed Brands. The independent doctors sublease space and equipment from Cole Licensed Brands where permitted by law, or from the host, and retain their examination fees.

      Each of the United States retail locations is computer linked to five centralized manufacturing laboratories, which grind, cut and fit lenses to order and ship them to the stores. The Canadian retail locations have manufacturing done at a centralized distribution center. Cole Licensed Brands provides next day delivery on most of the eyewear it offers when requested by its customers. All of the frames and lenses used in its eyeglasses are purchased from outside suppliers, both in the United States and several foreign countries.

      A variety of marketing and promotional efforts, primarily newspaper, direct mail, yellow pages and host advertising, are used to build and maintain its customer base. Host advertising includes the placement of promotional material within sales circulars or credit card billings sent out by the host store to its customers.

Pearle

      At January 29, 2000, Pearle’s operations consisted of 454 company-owned and 416 franchised stores located in 44 states, Canada, and the Caribbean. Most Pearle stores operate in either an “Express” or “Mainline” store format. Express stores contain a full surfacing lab that can manufacture most glasses in approximately one hour. Mainline stores can manufacture over 50% of prescriptions on-site in approximately one hour. Other prescriptions are sent to the laboratory in

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Dallas. At January 29, 2000, 290 of the company-owned stores and 148 of the franchised stores were Express, with the balance being Mainline.

      The Express stores typically are located in high traffic freestanding, strip centers and mall locations with most stores averaging 3,000 square feet. The Express stores are usually staffed with two managers and a support staff of four to eight people. Mainline stores have an average size of 1,700 square feet and are also located in freestanding buildings, or in smaller strip or regional centers. Mainline stores generally carry a smaller assortment of inventory than Express stores and are usually staffed with one manager and two to three associates. Most Pearle stores have a doctor of optometry on site with approximately 80% leasing space from Pearle on an independent basis and the remaining being direct employees of Pearle.

      Pearle’s marketing strategy employs a wide range of media at both the national and local levels. The franchised and company-owned stores each contribute a percentage of revenues to Pearle’s marketing budget with approximately half of Pearle’s marketing expenditures devoted to television. Pearle’s brand positioning of high quality eyecare products and services has been reinforced by an advertising and promotions program, which includes Pearle’s advertising slogans, Nobody Cares for Eyes More Than Pearle and The Doctor Is In.

      Pearle operates a warehouse facility in Dallas that inventories and distributes a comprehensive product line, including frames, eyeglass lenses, contact lenses, optical supplies and eyewear accessories to company-owned and franchised locations.

      Pearle has maintained a franchise program since 1980. Most of the franchised stores are single franchise operations, with no franchisee operating more than ten stores. With the proper financial approvals, a franchise purchase can be financed through Pearle. Currently, Pearle offers financing over periods up to ten years at variable interest rates ranging from prime plus one point to prime plus three points adjusted periodically.

      Each franchisee is required to enter into a franchise agreement requiring payment of an initial franchise fee. The term of the typical franchise agreement is equal to the earlier of ten years or the expiration or termination of the underlying base lease. Royalty and advertising contributions typically are based on a percentage of the franchisee’s gross revenues from the retail operation, excluding non-surgical professional fee and 3rd party revenues. The total monthly advertising contribution is distributed between Pearle’s system-wide advertising fund and the local co-op market advertising fund. Franchisees are generally eligible to participate in Cole Vision’s managed vision care programs.

      Cole National Corporation also has an approximate 24% equity interest in Pearle Europe B.V., which operates 531 company-owned and franchised optical locations in the Netherlands, Belgium, Germany, Austria and Italy. In terms of market share, Pearle Europe is the largest optical retailer in the Netherlands, Belgium and Austria, and second largest in Germany.

Cole Managed Vision Care

      Cole Vision’s managed vision care programs provide comprehensive eyecare benefits marketed directly to large employers, HMO’s and other organizations. It’s Vision One discount program gives plan sponsors the opportunity to offer their members a group discount at locations within Cole’s managed vision care network with minimal direct cost to the plan sponsor. It also offers enhanced programs to plan sponsors to provide their members with prepaid eye examinations, as well as pricing discounts or funded materials benefits.

      Cole Managed Vision Care’s network has over 4,700 points of service, including virtually all Cole Vision company-owned retail locations, approximately 92% of franchised locations, 650 locations in a nationwide chain store’s optical departments, 640 independent full-service providers, and 1,600 exam-only providers. Cole Managed Vision Care generated approximately 35% of Cole Vision’s revenues in fiscal 1999.

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Things Remembered

      Things Remembered contributed 24% of the Company’s net revenue in fiscal 1999. As of January 29, 2000, Things Remembered operated 796 stores and kiosks generally located in large, enclosed shopping malls located in 46 states. Each location carries a wide assortment of engravable items and provides “while you shop” personalization services for any occasion including holiday, business and special occasion gift events. Things Remembered offers engraving for items purchased at the store as well as for items purchased elsewhere.

      Merchandise sold at Things Remembered stores consists of a broad assortment of gift categories and items at prices generally ranging from $10 to $75. Things Remembered’s offering of gifts includes writing instruments, clocks, music boxes, picture frames and albums, executive desk sets and accessories, ID bracelets, glassware, lighters, keys and key rings, door knockers and Christmas ornaments. Things Remembered features brand name merchandise as well as higher margin private label merchandise. At some locations, computer-controlled embroidery equipment is utilized for the personalization of merchandise such as throws, sweaters, bathrobes, jackets, baseball caps, towels and baby blankets. These softgoods are also available in most of Things Remembered’s other locations with personalization services provided from a central fulfillment facility.

      At January 29, 2000, Things Remembered locations consisted of 437 stores and 359 kiosks. The typical store consists of about 1,300 square feet, while kiosks, which are units generally located in the center of the common mall area, are typically 200 square feet in size.

      Things Remembered locations are usually operated by one or two employees during non-peak periods and up to 15 employees during the peak Christmas season. Locations typically employ a store manager on a full-time basis, an assistant store manager on a full or part-time basis, and the balance of employees as part-time sales associates.

      Nearly all locations are equipped with computerized engravers and key duplicating machines. Many stores also have equipment for etching glassware items. All locations are equipped with point-of-sale terminals.

      Most of Things Remembered’s store merchandise is shipped through its centralized warehouse and distribution facility located near Youngstown, Ohio. The warehouse utilizes a computerized carousel system to automate the process of locating merchandise needed to fill a store order.

Host Relationships

      The Company believes it has developed excellent relationships with the host stores in which Cole Licensed Brands operates. The Company has maintained its relationships in the optical business with Sears for over 35 years. Approximately 90% of the Sears stores, and all of the BJ’s Wholesale Club and Target Optical stores that offer optometric services are operated by Cole Licensed Brands. Although leases with major hosts are terminable by either party upon relatively short notice, Cole Licensed Brands has never had a lease terminated other than in connection with a store closing, relocation or major remodeling.

Purchasing

      The merchandise, supplies and component parts required for the various products sold by the Company are purchased from a large number of suppliers and manufacturers and are generally readily available. In most cases, such purchases are not made under long-term contracts. The Company believes that the loss of any one supplier or manufacturer should not have a material adverse effect on its operations.

Competition

      The Company operates in highly competitive businesses.  Cole Vision competes with other optical companies, private ophthalmologists, optometrists and opticians and a growing number of HMOs in a highly fragmented marketplace on the basis of the patient service it provides, as well as price and product quality. In addition, Pearle competes on the basis of its highly recognized brand name and one-hour express service. The Company believes that, based on industry data, Cole Vision is one of the largest optical retail companies in the world. Although Things Remembered operates the only nation-wide chain of gift stores offering “while you shop” gift engraving, key duplicating, glass etching and monogramming, as well as related merchandise, it competes with many other retailers that sell gift items. Things

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Remembered competes with such other retailers primarily on the basis of the value-added point of sale services, as well as price and product quality. Some competitors have greater financial resources than the Company.

Employees

      As of January 29, 2000, the Company and its subsidiaries had approximately 9,000 full-time and 3,800 part-time employees. During October, November and December, the Company employs additional full- and part-time employees. In fiscal 1999, approximately 3,500 additional employees were employed during such period. Approximately 130 employees at certain Pearle locations are represented by labor unions. The Company considers its present labor relations to be satisfactory.

Item 2. Properties

      The Company leases an office in Highland Heights, Ohio, and leases its executive offices and an office in Cleveland, Ohio.

      During fiscal 1998, the Company purchased a building in Twinsburg, Ohio, which comprises approximately 175,000 square feet of office space. All of Cole Vision’s home office functions moved to this facility during fiscal 1998.

      All Cole Licensed Brands retail locations are leased or operated under a license with the host store, and none of the individual retail locations is material to operations. Leases for departments operated in Sears stores and freestanding stores operated under the name “Sears Optical” are generally for terms of 90 days and five years, respectively.

      Pearle leases most of their retail stores under non-cancelable operating leases with terms generally ranging from five to ten years and which generally contain renewal options for additional periods. Pearle is the principal lessee on a majority of stores operated by franchisees who sublease the facilities from Pearle.

      Cole Vision leases five optical laboratories, located in Knoxville, Tennessee (two labs); Memphis, Tennessee; Salt Lake City, Utah; and Richmond, Virginia, pursuant to leases expiring (including renewals at the option of Cole Vision) in 2001, 2002, 2002, 2001 and 2012, respectively. In 1999, Cole Vision entered into an agreement to lease a facility in Columbus, Ohio, which comprises approximately 43,00 square feet of space. This facility consists of an optical laboratory, a distribution center and a general office space. Cole Vision also leases a home office, an optical laboratory and a distribution center facility for its Canadian operations pursuant to leases expiring in 2000.

      Pearle owns its Dallas Support Center, which comprises 88,721 square feet of office space and 147,336 square feet of laboratory and distribution facilities. Pearle also owns a small headquarters and a laboratory in Puerto Rico.

      Leases for Things Remembered stores and kiosks are generally for terms of ten and five years, respectively. During the first quarter of fiscal 1999, Things Remembered moved its home office functions to the leased facility in Highland Heights, Ohio. In fiscal 1997, a 210,000 square foot warehouse and distribution facility was constructed for Things Remembered. On December 31, 1998, Things Remembered entered into an agreement with a third party for the sale and leaseback of this distribution center that expires in 2013 and includes three options to renew the lease for five-year terms.

Item 3. Legal Proceedings

      From time to time during the ordinary course of business, the Company is threatened with, or may become a party to a variety of legal actions and other proceedings incidental to its business.

Item 4. Submission of Matters to a Vote of Security-Holders

      There were no matters submitted to a vote of security holders through the solicitation of proxies or otherwise during the fourth quarter of the fiscal year ended January 29, 2000.

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Item 4A. Executive Officers of Cole National Corporation

(a) The following persons are the executive officers of Cole National Corporation who are not members of its Board of Directors, having been elected to their respective offices by the Board of Directors to serve until the election and qualification of their respective successors:

Name	Age		Office
Thomas T.S. Kaung		62	Executive Vice President and Chief Financial Officer
Leslie D. Dunn		55	Senior Vice President — Business Development, General Counsel and Secretary
Joseph Gaglioti		54	Vice President and Treasurer
William P. Lahiff, Jr.		46	Vice President and Controller

(b) The following is a brief account of the positions held during the past five years by each of the above named executive officers:

      Mr. Kaung has been Executive Vice President and Chief Financial Officer since March 23, 2000. Mr. Kaung had been serving as a consultant for the Company since October 18, 1999. Since 1991, Mr. Kaung provided financial consulting and interim financial executive services to a variety of corporations through his own company, River International. Mr. Kaung had previously been the Chief Financial Officer of the Company from 1983 to 1991.

      Ms. Dunn has been Senior Vice President — Business Development, General Counsel and Secretary since September 1997. Prior to joining the Company, she was a partner in the law firm of Jones Day Reavis & Pogue for more than five years.

      Mr. Gaglioti has been Vice President since 1992 and Treasurer since 1991. Mr. Gaglioti joined the Company in 1981.

      Mr. Lahiff has been Vice President and Controller, Assistant Secretary and Assistant Treasurer since January 2000. Prior to joining the Company, he was a Management Consultant with RHI Management Resources from August 1998 to December 1999 and a Consulting Manager with LakeWest Group, Ltd. from June 1997 to August 1998. Mr. Lahiff was previously employed by the Company from 1987 to 1997 serving most recently as Vice President, Systems and Administration for Things Remembered, Inc. from January 1995 to February 1997.

      Information concerning Jeffrey A. Cole and Larry Pollock, the Company's executive officers who are also Directors, will be included in Cole National Corporation's Proxy Statement for the 2000 Annual Meeting of Stockholders.

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PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters

      Cole National Corporation’s common stock is traded on the New York Stock Exchange (NYSE) under the symbol “CNJ”. The following table sets forth, for the fiscal periods indicated, the high and low sales prices per share.

	Fiscal 1999				Fiscal 1998
Quarter	High		Low		High		Low
First	$	18  5/8	$	15  3/16	$	41	$	32  3/4
Second	$	15  15/16	$	7	$	40  3/8	$	33
Third	$	8  5/8	$	5  13/16	$	33	$	16  5/8
Fourth	$	7  1/2	$	3  7/8	$	21  3/16	$	13  3/16

      The Company’s dividend policy has been, and for the foreseeable future will continue to be, to retain earnings to support its growth strategy. No dividends were paid during the last three fiscal years, except for a $0.01 per share dividend paid in December 1999 in connection with the redemption of the original stockholders’ rights plan .

      As of March 24, 2000 there were 214 shareholders of record.

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Item 6. Selected Financial Data

      The selected financial data set forth below reflect continuing operations only and should be read in conjunction with the consolidated financial statements and the notes thereto and other information contained elsewhere in this report (dollars in thousands, except per share amounts).

			1999			1998			1997			1996			1995
Net revenue			$	1,066,422		$	1,068,182		$	1,000,198		$	628,496		$	515,892
Operating income (loss) (1)			$	29,113		$	42,346		$	62,864		$	(11,486	)	$	43,651
Income (loss) from continuing operations (1) (2)			$	2,008		$	14,276		$	19,933		$	(24,698	)	$	13,798
Income (loss) from continuing operations per common share (1) (2)
	Basic		$	0.13		$	0.96		$	1.48		$	(2.18	)	$	1.32
	Diluted		$	0.13		$	0.94		$	1.43		$	(2.18	)	$	1.31
Weighted average number of shares outstanding (000’s)
		Basic		14,887			14,802			13,481			11,333			10,415
		Diluted		14,941			15,176			13,981			11,333			10,565
Total assets (4)			$	588,271		$	622,844		$	647,701		$	571,969		$	296,669
Working capital (4)			$	63,899		$	76,732		$	77,323		$	63,276		$	61,275
Stockholders’ equity at year end (4)			$	146,516		$	145,360		$	132,015		$	19,718		$	17,133
Current ratio (4)				1.45			1.44			1.37			1.31			1.68
Long-term obligations and redeemable preferred stock			$	284,584		$	276,013		$	277,401		$	317,547		$	181,903
Number of stores at year end (3)				2,722			2,884			2,833			2,657			1,834
Comparable store sales growth				(0.8	)%		3.1	%		3.6	%		7.2	%		4.5	%

(1)	Fiscal 1998 amounts include a $23,120 pretax charge for restructuring and other unusual items, of which $5,247 relates to inventory markdowns that are included in cost of sales; fiscal 1997 amounts include an $8,000 pretax charge for business integration related to the acquisition of American Vision Centers; and fiscal 1996 amounts include a $61,091 pretax charge for business integration and other non-recurring items primarily related to the acquisition of Pearle.
(2)	Fiscal 1998 amounts also include $6,000 of income from cash received in a nontaxable settlement of claims against the former owner of Pearle.
(3)	Includes Pearle and American Vision Centers franchise locations.
(4)	Amounts have been restated to conform to the 1999 presentation.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

      Fiscal years end on the Saturday closest to January 31 and are identified according to the calendar year in which they begin. For example, the fiscal year ended January 29, 2000 is referred to as “fiscal 1999.” Fiscal 1999, 1998 and 1997 each consisted of 52-week periods.

      The Company has two reportable segments: Cole Vision, which accounted for 76% of total revenue, and Things Remembered, which accounted for 24% of total revenue. Most of Cole Vision’s revenue is provided by sales of prescription eyewear, accessories and services through its Cole Licensed Brands and Pearle retail locations. Cole Vision’s revenue is also provided by sales of merchandise to franchisees and other outside customers, by royalties based on sales, interest income on notes receivable and initial franchise fees from franchisees and by fees from managed vision care programs. Things Remembered’s revenue is provided by sales of engravable gift merchandise and personalization and other services primarily through retail stores and kiosks. See Note 12 of the Notes to Consolidated Financial Statements for further discussion of reportable segments.

      In December 1999, the Company closed 150 optical departments in Montgomery Ward stores. Charges related to the write-off of inventory, fixed assets and other closing costs totaling $2.0 million are included in cost of sales and operating expenses in fiscal 1999.

      On January 13, 1998, the Company announced the closing of its Cole Gift Centers business that included 445 key duplicating, greeting card and gift departments on the premises of hosts’ stores. Cole Gift Centers has been accounted for as a discontinued operation in the accompanying financial statements. Accordingly, the results of operations and loss on disposition of Cole Gift Centers have been excluded from the results of continuing operations. See Note 4 of the Notes to Consolidated Financial Statements for further discussion of discontinued operations.

      On August 5, 1997, the Company acquired all of the issued and outstanding common stock of American Vision Centers, Inc. (“AVC”). The acquisition was accounted for using the purchase method of accounting. Accordingly, AVC’s results of operations, which included 80 company-owned optical stores and 75 franchised locations at January 31, 1998, have been included in the consolidated statements of operations since the date of acquisition. For the six-month period ended January 31, 1998, AVC’s net revenue was approximately $25.0 million. See Notes 2 and 3 of the Notes to Consolidated Financial Statements for further discussion of this acquisition.

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Results of Operations

      The following is a discussion of the results of continuing operations for the three fiscal years ended January 29, 2000. This discussion should be read in conjunction with the consolidated financial statements and notes thereto included in Item 8 of the Form 10-K. The following table sets forth certain operating information for each period (dollars in millions):

													Change
													1999 vs.			1998 vs.
				1999			1998			1997			1998			1997
Net Revenue-
	Cole Vision			$	807.8		$	826.3		$	774.5			(2.2	%)		6.7	%
	Things Remembered				258.6			241.9			225.7			6.9	%		7.2	%
		Total net revenue		$	1,066.4		$	1,068.2		$	1,000.2			(0.2	%)		6.8	%
Gross profit				$	706.7		$	704.0		$	659.4			0.4	%		6.8	%
Operating expenses					636.6			610.1			558.5			4.3	%		9.2	%
Depreciation & amortization					41.0			33.7			30.0			21.7	%		12.3	%
Restructuring & other unusual charges					—			17.9			8.0			(100.0	%)		123.8	%
		Operating income		$	29.1		$	42.3		$	62.9			(31.2	%)		(32.8	%)
Percentage of Net Revenue-
	Gross margin				66.3	%		65.9	%		65.9	%		0.4			0.0
	Operating expenses				59.8			57.0			55.8			2.8			1.2
	Depreciation & amortization				3.8			3.2			3.0			0.6			0.2
	Restructuring & other unusual charges				—			1.7			0.8			(1.7	)		0.9
		Operating income			2.7	%		4.0	%		6.3	%		(1.3	)		(2.3	)
Number of Retail Locations at the End of the Period-
		Cole Licensed Brands			1,056			1,186			1,157
		Pearle company-owned			454			471			444
		Pearle franchised			416			409			401
			Total Cole Vision		1,926			2,066			2,002
		Things Remembered			796			818			831
			Total Cole National		2,722			2,884			2,833
Comparable Store Sales Growth-
		Cole Licensed Brands (U.S.)			(2.7	)%		2.9	%		6.1	%
		Pearle company-owned (U.S.)			(5.5	)		(1.5	)		2.5
			Total Cole Vision		(3.5	)		1.6			5.9
		Things Remembered			7.2			7.4			(0.5	)
			Total Cole National		(0.8	)%		3.1	%		3.6	%

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Fiscal 1999 Compared to Fiscal 1998

      The softness in consolidated net revenue for fiscal 1999 was primarily attributable to the decrease in consolidated comparable store sales at Cole Vision. Sales at Cole Licensed Brands have been negatively impacted by a competitive promotional environment. Licensed Brands’ response, which began at the end of the second quarter, produced an improvement in the second half sales trend as comparable store sales were nearly flat to last year. Sales this year at Pearle have also been impacted by the competitive promotional environment and Pearle’s focus, earlier in the year, on long-term, brand-building in its advertising campaign, as well as operating and systems integration issues that the Company is addressing. Pearle refocused its marketing efforts to become more promotional beginning in the second quarter of fiscal 1999. Pearle achieved some improvement in comparable store sales trends during the fourth quarter. Pearle’s comparable store sales for the fourth quarter of fiscal 1999 were a negative 3.0%, as compared to a negative 5.5% full-year comparable store sales. The sales decrease at Cole Vision reflected a lower average selling price for spectacles and contact lenses due primarily to more promotional pricing. At Things Remembered, the comparable store sales increase reflected increased sales of additional personalization and new merchandise at higher average unit retails, along with the benefits from marketing directly to its existing customer base. The total number of transactions at Things Remembered was slightly behind a year ago. During the fiscal year, the Company (including franchised locations) opened a total of 115 new locations and closed 277 locations, including 150 optical departments located in Montgomery Ward stores.

      The gross profit improvement in fiscal 1999 compared to fiscal 1998 was primarily attributable to increased revenue at Things Remembered and inventory markdowns at Pearle in 1998, partially offset by lower revenue at Cole Vision. Excluding the 1998 inventory markdowns at Pearle, gross margin at Cole Vision declined 0.5 percentage points to 64.6% in fiscal 1999 and consolidated gross margins were 66.3% and 66.4% in fiscal 1999 and fiscal 1998, respectively. The lower gross margin at Cole Vision was primarily due to the impact of more promotional pricing and lower margins on contact lenses. In addition, the integration of new manufacturing and merchandise/inventory management systems with Pearle’s existing warehouse management system resulted in manufacturing and distribution inefficiencies that led to increased costs and lost sales in the third and fourth quarters of fiscal 1999. Progress has been made to date in bringing the system up to pre-installation expectations, however some continuing inefficiencies are expected to have a negative impact on fiscal 2000. Gross margin at Things Remembered improved 0.4 percentage points to 71.4% in fiscal 1999, benefiting from increased sales of additional personalization and higher margins from new products.

      The unfavorable leverage in operating expenses for the fiscal year was primarily attributable to a 0.8 percentage point increase in payroll costs, a 1.4 percentage point increase in managed vision care costs, a 0.4 percentage point increase from the third quarter severance costs and a 0.4 percentage point increase in net advertising expenditures. The unfavorable payroll leverage was primarily due to the comparable store sales decrease at Cole Vision and staffing increases in managed vision care, partly offset by payroll leverage gains on the sales increase at Things Remembered. The increase in managed vision care expenses was primarily attributable to growth in call and claims volumes associated with increases in sponsor-funded programs. The unfavorable advertising leverage was due to increased advertising at Cole Licensed Brands in response to the competitive pricing environment, partly offset by reduced spending at Pearle. Severance costs for the Company’s former president and several other executives totaled $4.7 million in the third quarter of fiscal 1999, of which $0.7 million was charged to amortization relating to restricted stock compensation. Depreciation and amortization expense increases were attributable to increases in amortization of systems development and software costs and amortization of restricted stock awards, due in part to the executive severance, plus certain charges to recognize asset impairments in accordance with Statement of Financial Accounting Standards (SFAS) No. 121.

      The decrease in income from operations was primarily the result of the decrease in net revenue and the increases in operating expenses and depreciation and amortization. Interest and other income includes the recognition of $6.0 million of income in the third quarter of fiscal 1998 from a nontaxable cash settlement with the former owner of Pearle. Excluding the Pearle settlement, net interest and other expense in fiscal 1999 decreased slightly from fiscal 1998.

      Net interest expense and other income for fiscal 1999 of $24.4 million increased $5.7 million compared to fiscal 1998. The increase was primarily attributable to the recognition of $6.0 million of other income in the third quarter of fiscal 1998 from cash received in the non-taxable settlement of certain contingencies related to several claims against and indemnifications from the former owner of Pearle. Excluding this settlement, interest and other income

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increased by $0.7 million, which was partially offset by a $0.4 million increase in interest expense that was due primarily to the 5% promissory note payable.

      The effective income tax rate was 57.0% in fiscal 1999. The income tax provision for fiscal 1998 includes $7.4 million of income tax benefits related to the charges for restructuring and other unusual items. The effective rate on income excluding these charges and the $6.0 million settlement included in other income was 41.0% in fiscal 1998. The effective income tax rates reflect the significant impact of non-deductible amortization of goodwill in both years and non-deductible amortization of unearned compensation in fiscal 1999. A more complete discussion of income taxes is included in Note 10 of the Notes to Consolidated Financial Statements.

Fiscal 1998 Compared to Fiscal 1997

      Net revenue increased 6.8% to $1.1 billion in fiscal 1998 from $1.0 billion in fiscal 1997. The increase in revenue was primarily attributable to the inclusion in fiscal 1998 of additional Cole Vision units, including the AVC stores acquired in August 1997, and the consolidated comparable store sales increase. The Cole Licensed Brands sales increase reflected an increase in the number of transactions due to more locations, as the average selling price was essentially flat between years. The Pearle comparable store sales were impacted by a weaker than expected reception to marketing and merchandising programs implemented in the first quarter, as well as increased competitive pressures in the optical business and a general softening in the retail optical market. At Things Remembered, the comparable store sales growth reflected increased sales of additional personalization and new products increasing the average transaction amount, while the number of transactions in fiscal 1998 was similar to fiscal 1997.

      The gross profit increase was primarily attributable to the increased revenue at both Cole Vision and Things Remembered, partially offset by $5.2 million of inventory markdowns at Pearle in connection with restructuring its operations. Excluding the inventory markdowns, gross margins were 66.4% and 65.9% in fiscal 1998 and fiscal 1997, respectively. Gross margin at Things Remembered improved to 71.0% in fiscal 1998 from 68.7% the prior year with most of the improvement from increased personalization sales. At Cole Vision gross margins were 65.1% in both fiscal 1998 and fiscal 1997.

      The unfavorable operating expense leverage was attributable to a 0.6 percentage point increase in managed vision care expenses, a 0.6 percentage point increase in information systems costs including $2.4 million incurred in connection with the Company’s Year 2000 Readiness Program (see Year 2000 below for additional information) and a 0.5 percentage point increase in advertising expenditures, partially offset by a 0.4 percentage point leverage gain in store occupancy costs. The increase in managed vision care expenses was primarily the result of increased administrative costs necessary to handle the growth in call and claims volume. The increase in advertising expenditures as a percentage of revenue was mainly due to inefficient advertising efforts at Cole Vision, a result of the optical market conditions mentioned above and the unexpected weakness of Pearle’s first quarter marketing and merchandising programs. Store occupancy expenses increased as a result of more locations and higher percentage rents caused by increased comparable store sales but gained leverage from the strong comparable store sales increase at Things Remembered. Payroll costs also increased primarily because of more retail units open in 1998 and additional payroll to support increased sales, maintaining leverage to last year. Fiscal 1998 depreciation and amortization expense increased from fiscal 1997 reflecting increased amortization of systems development costs and the AVC acquisition in fiscal 1997.

      Fiscal 1998 included a $23.1 million pretax charge for restructuring and other unusual items, including the inventory markdowns at Pearle, and fiscal 1997 included an $8.0 million pretax charge for non-recurring items related to the integration of AVC into the Company’s operations. See Restructuring, Business Integration and Other Unusual Charges below.

      Operating income, excluding the charges for restructuring, business integration and other unusual charges from each year, decreased 7.6% to $65.5 million in fiscal 1998 from $70.9 million the prior year, as improved sales and earnings at Things Remembered and Cole Licensed Brands were more than offset by the disappointing results at Pearle.

      Net interest expense and other income for fiscal 1998 of $18.7 million decreased $9.2 million compared to fiscal 1997. The decrease was primarily attributable to the recognition of $6.0 million of other income in the third quarter of fiscal 1998 from cash received in the non-taxable settlement of certain contingencies related to several claims against and indemnifications from the former owner of Pearle, and lower interest expense following the purchase and retirement of $150.9 million of 11-1/4% Senior Notes in connection with a tender offer in September 1997, partially

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offset by additional interest expense on $125.0 million of 8-5/8% Senior Subordinated Notes due 2007 issued in August 1997.

      The income tax provisions for fiscal 1998 and 1997 include $7.4 million and $3.4 million, respectively, of income tax benefits related to the charges for restructuring and other unusual items. The effective tax rate on income excluding these charges and the $6.0 million settlement included in other income was 41.0% in fiscal 1998 and 43.0% in fiscal 1997. These rates reflect the significant impact of non-deductible amortization of goodwill in both years. A more complete discussion of income taxes is included in Note 10 of the Notes to Consolidated Financial Statements.

      Net income increased to $14.3 million in fiscal 1998 from a net loss of $6.2 million the prior year. The net loss in fiscal 1997 included a $14.0 million loss, net of an income tax benefit of $8.5 million, related to the operations and closing of Cole Gift Centers and a $12.2 million extraordinary loss, net of an income tax benefit of $7.5 million, recorded in the third quarter of fiscal 1997 in connection with the early extinguishment of debt. The loss on early extinguishment of debt represented the tender premium, write-off of related unamortized debt discount and other costs associated with redemption of the 11-1/4% Senior Notes.

Restructuring, Business Integration and Other Unusual Charges

      In the fourth quarter of fiscal 1996, the Company recorded a $61.1 million pretax charge primarily related to its acquisition of Pearle, which included costs related to the integration and consolidation of Pearle into the Company’s operations, as well as other unusual charges. The charge included $15.8 million for store closings, $1.8 million for other facility closings, $21.6 million related to computer systems, which included the settlement costs of terminating an outsourcing agreement, $6.1 million for the writeoff of goodwill pursuant to SFAS No. 121 and $15.8 of other unusual charges. The other charges related to employee matters, including severance and hiring costs, costs associated with developing and implementing a new franchise agreement, and compensation costs associated with accelerated vesting of a stock option grant to executives.

      In connection with the 1996 business integration charge, management developed a plan, approved by the Board of Directors, that among other things identified 29 Pearle stores that would be closed and 112 in-store labs that would be taken out of stores. This plan consisted of a store-by-store analysis of profitability, size, lease term and type of lab. In addition, the Company decided to retain Pearle’s distribution and central lab facilities, but close the home office facility in Dallas, Texas. The Company’s intent was to close the stores, on average, over a six month period and labs, on average, over an eighteen month period following February 1, 1997. The estimated costs of closure, primarily related to lease obligations and impairment of fixed assets, were determined based upon management’s and Pearle’s past experience in closing stores and represented a portion of the remaining noncancellable term of the operating leases after the expected closing dates. The estimate assumed the Company would be able to avoid certain lease penalty provisions through negotiations with landlords. This resulted in an accrual of $12.9 million being recorded pursuant to EITF No. 94-3 as part of the original charge discussed above.

      The Company, whose integration efforts were initially focused primarily on the new franchise agreement, closed one store in each of the first and second quarters of fiscal 1997. The Company then acquired AVC in August 1997, and recorded an additional $8.0 million integration charge in fiscal 1997, which included costs of closing an additional 12 stores, six in-store labs, the AVC central lab and the AVC home office, transitional costs incurred to change the brand identity to Pearle and duplicate costs incurred through fiscal year end in connection with the consolidation of the AVC home office functions.

      The expected benefits of these business integration activities included a stronger franchise network and reductions in (1) home office personnel and occupancy costs, (2) purchasing costs for materials, (3) manufacturing costs upon the completion of the removal of full in-store labs and closing of the AVC lab, and (4) operating losses upon closure of certain unprofitable stores. The consolidation of Pearle’s home office and purchasing functions was substantially completed in fiscal 1997, with the exception of lab systems, which were completed in fiscal 1999. The consolidation of AVC functions, including the shutdown of its central lab, was completed by the third quarter of fiscal 1998.

      Negotiations with various landlords throughout fiscal 1997 proved more difficult than originally anticipated. Also, due to other priorities of integrating Pearle and the acquisition of AVC in mid-fiscal 1997, the original plan was not fully implemented by the end of fiscal 1997. At the end of fiscal 1997 management reaffirmed its intent to close the remaining 27 stores and convert the 112 lab locations as soon as practicable. The estimated cost of closure was revised to equal the remaining lease liability assuming, on average, stores would be closed six months after January 31, 1998.

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      This revised estimate did not differ materially from the previously established accrual and therefore no adjustment to the reserve was required. Had management’s original plan corresponded to only the actual stores closed prior to January 31, 1998, the restructuring charges would have been reduced by $9.1 million and $1.6 million for the fiscal years ended February 1, 1997 and January 31, 1998, respectively.

      Of the facilities originally identified for closing, five stores were closed in the first quarter and one store was closed in the second quarter of fiscal 1998, and 17 full service labs were closed in the third quarter of fiscal 1998.

      In the third quarter of fiscal 1998, several consultants were retained to help assess various aspects of Cole National Corporation’s optical operations. As a result, in the fourth quarter of 1998, the original restructuring plan was revised and a net pretax charge of $23.1 million was recorded, related to further restructuring of its Pearle business along with other unusual charges. The net pretax charge consisted of charges associated with the restructuring of $13.9 million, a reversal of previously established restructuring accruals of $12.3 million and other unusual charges totaling $21.5 million.

      The restructuring charge of $13.9 million related to changes made to the Pearle operating model and structure of the home office organization. Consultants conducted market research and helped develop and implement changes to Pearle’s marketing message, merchandise offerings and presentation, store locations, organizational structure and other operational opportunities. In addition, home office facilities and personnel, including Cole Managed Vision Care administration and systems were relocated and consolidated into one central facility. The results of these efforts resulted in charges for inventory writedowns related to products that were no longer carried, severance and hiring costs primarily related to home office organizational changes, consolidation of the home office facilities, including the writeoff of fixed assets at the old facilities, consultant fees and changing the Pearle brand message through signing, production and other costs. The charge related to the inventory writedown was reflected in cost of sales in accordance with EITF No. 96-9.

      As part of the revised plan, which was approved by the Board of Directors in March 1999, it was determined that certain stores originally identified for closure would either remain open or be closed at a much lower cost than originally estimated. The plan was to close 26 stores, of which nine were identified in the original store closing plan, over the next 12 months and remove surfacing equipment from full service labs of 226 stores over the next six to eighteen months. As a result of the revised plan, the expected cost of closure was $1.0 million, requiring a reversal of $12.3 million of the previous accrual. The primary reasons for the significant reduction in the accrual were the passage of time of not closing stores earlier, many of the stores now will be closed at the end of their lease terms, and the shift in strategy in that only surfacing equipment would be removed from full-service stores as opposed to the original plan of completely removing labs.

      In the fourth quarter of fiscal 1999, the Company determined that it no longer planned to remove any labs from Pearle stores. Since there were no costs accrued at January 30, 1999 related to closing of any in-store labs, this decision had no effect on the restructuring reserves in fiscal 1999.

      For the restructuring charges recorded in 1996, 1997 and 1998, approximately $29.4 million represented non-cash charges and $41.2 million represented cash outlays through January 29, 2000, including a total of $10.6 million that had been incurred and paid during the respective periods that each charge was initially recorded. At the end of fiscal 1999, approximately $0.1 million of the reserve relating to facilities relocations was reversed into income. At January 29, 2000, there were no balances remaining in the restructuring reserves.

      The unusual charges in fiscal 1998 related to the writeoff of $8.8 million associated with the abandonment in the fourth quarter of previously capitalized system development costs (including $1.9 million of incurred costs that were paid in the first half of fiscal 1999) and $2.7 million primarily related to restricted stock issued to two senior executive officers. Cole National Corporation also made an unconditional commitment in the fourth quarter of fiscal 1998 to contribute $10 million through 2009, with principal payments beginning in 2004, to a leading medical institution supporting the development of a premier eye care research and surgical facility.

      Refer to Note 3 of the Notes to Consolidated Financial Statements for additional information regarding the restructuring, business integration and other unusual charges.

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Liquidity and Capital Resources

      Cole National Corporation’s primary source of liquidity is funds provided from operations of its operating subsidiaries. In addition, its wholly-owned subsidiary, Cole National Group, Inc. and its operating subsidiaries have a working capital line of credit of $75.0 million. By amendment, the working capital commitment has been reduced to $50.0 million (less commitments under letters of credit) for the period January 30, 2000 to June 29, 2000, and certain covenants were modified.

      The credit facility requires the principal operating subsidiaries of Cole National Group to comply with various operating covenants that restrict corporate activities, including covenants restricting the ability of the subsidiaries to incur additional indebtedness, pay dividends, prepay subordinated indebtedness, dispose of certain investments or make acquisitions. The credit facility also requires the subsidiaries to comply with certain financial covenants, including covenants regarding minimum interest coverage, maximum leverage and consolidated net worth.

      There were no working capital borrowings outstanding as of January 29, 2000 or during fiscal 1999 and the maximum amount outstanding at any time during fiscal 1998 was $13.6 million. There were no working capital borrowings outstanding during fiscal 1997.

      During the second quarter of fiscal 1997, Cole National Corporation completed a public offering of 2,587,500 shares of its common stock at an offering price of $47.00 per share. The net proceeds of approximately $116.0 million were used for general corporate purposes including reducing outstanding indebtedness and financing acquisitions, including the purchase of AVC.

      In August 1997, Cole National Group issued $125.0 million of 8-5/8% Notes. The net proceeds of the issuance were $121.8 million. Cole National Group also commenced a tender offer which expired on September 12, 1997, to purchase up to all of its $165.8 million outstanding 11-1/4% Senior Notes at $1,105.61 per $1,000 principal amount, plus accrued interest thereon, using the net proceeds of the 8-5/8% Notes issuance and cash on hand. A total of $151.3 million of 11-1/4% Senior Notes was tendered, with the remaining amount redeemed in October 1998.

      In November 1998, the Board of Directors authorized the repurchase from time to time of up to 1 million shares of common stock, or approximately 6.7% of Cole National Corporation’s outstanding shares, through open market or block transactions. It is expected that the purchase price will be from internally generated funds and that the shares purchased will be used, in part, to offset dilution from stock options and in connection with other benefit plans. As of January 29, 2000, Cole National Corporation had purchased a total of 318,000 shares of common stock, and has authority to purchase up to 687,000 shares of common stock in the open market and block purchases.

      At year end, $150.0 million of 9-7/8% Notes and $125.0 million of 8-5/8% Notes were outstanding. The 9-7/8% Notes and the 8-5/8% Notes are unsecured and mature December 31, 2006 and August 15, 2007, respectively, with no earlier scheduled redemption or sinking fund payment. Interest on the 9-7/8% Notes is payable semi-annually on each June 30 and December 31, while the interest on the 8-5/8% Notes is payable semi-annually on each February 15 and August 15. The indentures pursuant to which the 9-7/8% Notes and the 8-5/8% Notes were issued contain certain optional and mandatory redemption features and other financial covenants, including restrictions on the ability of Cole National Group to pay dividends or make other restricted payments to Cole National Corporation. The indentures permit dividend payments equal to one-half of Cole National Group’s consolidated net income, provided that no default or event of default has occurred under the indentures and that Cole National Group has met a specified fixed charge coverage ratio test. The indentures also permit payments to Cole National Corporation for certain tax obligations and for administrative expenses not to exceed .25% of net sales. See Note 6 of the Notes to Consolidated Financial Statements.

      No significant principal payment obligations are due under its outstanding indebtedness until a $5.0 million principal payment in 2004 under a 5% promissory note. The ability of Cole National Corporation and its subsidiaries to satisfy these obligations will be primarily dependent upon future financial and operating performance of the subsidiaries and upon its ability to renew or refinance borrowings or to raise additional capital through equity financing or sales of assets.

      Cash balances at year end were $29.0 million compared to $51.1 million at January 30, 1999. Operations generated net cash of $23.8 million in fiscal 1999, $62.4 million in fiscal 1998 and $8.0 million in fiscal 1997. The $38.6 million decrease in cash provided from operations in fiscal 1999 compared to fiscal 1998 was primarily a result

15

of a $31.1 million decrease in operating income (excluding restructuring and other unusual charges last year), a $12.9 million from a larger decrease in accounts payable, accrued liabilities and other liabilities and a $6.9 million decrease in accounts and notes receivable, prepaid expenses and other assets. These cash flow decreases were partially offset by a $7.3 million increase in depreciation and amortization expense and a $3.4 million decrease in inventories versus an increase of $4.4 million in fiscal 1998. The primary sources of the $54.4 million improvement in cash provided from operations in fiscal 1998 compared to fiscal 1997 were from net income tax refunds received in fiscal 1998 of $7.1 million compared to income taxes paid in fiscal 1997 of $19.9 million, $21.5 million from a decrease in accounts and notes receivable, prepaid expenses and other assets versus an increase last year and $6.8 million from a smaller increase in inventories in fiscal 1998, partially offset by a $6.4 million larger decrease in accounts payable and accrued liabilities.

      Net capital additions were $25.9 million, $37.6 million and $32.6 million in fiscal 1999, 1998 and 1997, respectively. The majority of the capital additions was for store fixtures, equipment and leasehold improvements for new stores and the remodeling of existing stores. Capital expenditures for fiscal 1998 include the purchase and furnishing of Cole Vision’s headquarters office building for $15.3 million. In fiscal 1997 construction of a new warehouse and distribution facility for Things Remembered was completed at a cost of approximately $9.3 million (of which $6.6 million is included in capital expenditures in fiscal 1997). In fiscal 1998, proceeds of $8.8 million were received from the sale and leaseback of this facility and a portion of the land. In addition, the Company used $2.1 million, $10.3 million, and $2.8 million for additional net investment in Pearle Europe in fiscal 1999, 1998, and 1997, respectively, in connection with Pearle Europe’s various acquisitions of optical retailers in Italy, Germany and Austria. The Company also used $3.0 million and $7.2 million to acquire the managed vision care business of MetLife and several local optical chains in fiscal 1999 and 1998, respectively, and $27.8 million for the purchase of AVC. In addition, Cole National Corporation paid approximately $13.6 million, $16.8 million and $17.9 million for systems development costs in fiscal 1999, 1998 and 1997, respectively. Such costs have been capitalized and are being amortized over their estimated useful lives.

      For fiscal 2000, management plans to expand the number of stores, as well as remodel and relocate stores, and currently estimates that capital expenditures in fiscal 2000 will be approximately $40.0 million, excluding acquisitions and systems development costs. Management estimates that it will incur approximately $8.5 million in systems development costs in 2000 that will be capitalized and subsequently amortized.

      Cole National Corporation believes that funds provided from operations along with funds available under the credit facility will provide adequate sources of liquidity to allow its operating subsidiaries to continue to expand the number of stores and to fund capital expenditures and systems development costs.

Year 2000

      During fiscal 1999, Cole National Corporation completed the implementation of its Year 2000 Readiness Program. As a result, no significant systems interruptions or business losses were experienced in fiscal 1999 or to date in fiscal 2000.

      Management estimates the total cost of the Year 2000 Readiness Program was $4.2 million, including $1.0 million of new hardware and software that has been capitalized. The remaining $3.2 million was expensed as incurred (approximately $2.4 million in fiscal 1998 and $0.8 million in fiscal 1999). These costs include only external costs as internal costs, which consist primarily of payroll-related costs of employees, were not tracked separately for the Year 2000 Readiness Program.

New Accounting Pronouncement

      In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, “Accounting for Derivative Instruments and Hedging Activities” (as amended by SFAS No. 137). SFAS No. 133 must first be applied in the first quarter of fiscal years that begin after June 15, 2000 (the first quarter of fiscal 2001 for the Company) and in general requires that entities recognize all derivative financial instruments as assets or liabilities, measured at fair value, and include in earnings the changes in the fair value of such assets and liabilities in either operations or comprehensive income (loss). The Company does not presently utilize derivative instruments, either for hedging or other purposes, and therefore it is expected that the adoption of the requirements of SFAS No. 133 will not impact the Company’s financial statements.

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Recent Developments and Forward-Looking Information

      In March 2000, the Company launched the reorganization of the operating structure of its optical business. It is believed that an essential ingredient to improved sales and profitability of the Company’s vision segment is the creation of distinct organizations that are dedicated to serving the needs of their respective customers. Pearle and Licensed Brands will be managed as independent business units, each of which has been strengthened by the addition of merchandising, manufacturing, distribution and finance responsibilities.

      The Company expects results in the first two quarters of fiscal 2000 to be below last year from continuing softness of sales at Pearle as well as start up expenses associated with the opening of an increased number of Target Optical stores. The first quarter of fiscal 2000 will also be impacted by severance costs incurred as a result of a personnel reduction at Cole Vision in March 2000. On a full year basis, it is expected that the severance costs incurred will be offset by savings due to the headcount reductions.

      Certain sections of this Form 10-K Report, including this Management’s Discussion and Analysis, contain forward-looking statements within the meaning of the Private Securities Litigation Act of 1995. Actual results may differ materially from those forecast due to a variety of factors that can adversely affect operating results, liquidity and financial condition, such as risks associated with the timing and achievement of the continuing restructuring and improvements in the operations of the optical business, the integration of acquired operations, the ability to select, stock and price merchandise attractive to customers, competition in the optical industry, economic and weather factors affecting consumer spending, operating factors affecting customer satisfaction, including manufacturing quality of optical and engraved goods, relationships with host stores and franchisees, the mix of goods sold, pricing and other competitive factors, and the seasonality of the business. Forward-looking statements are made based upon management’s expectations and beliefs concerning future events impacting Cole National Corporation. All forward-looking statements involve risk and uncertainty.

Item 7a. Quantitative and Qualitative Disclosures About Market Risk

      The Company is exposed to market risk from changes in foreign currency exchange rates, which could impact its results of operations and financial condition. Foreign exchange risk arises from the Company’s exposure in fluctuations in foreign currency exchange rates because the Company’s reporting currency is the United States dollar. Management seeks to minimize the exposure to foreign currency fluctuations through natural internal offsets to the fullest extent possible.

Item 8. Financial Statements and Supplementary Data

      Information required by this item appears on pages F-1 through F-28 of this Form 10-K and is incorporated herein by reference. Other financial statements and schedules are filed herewith as “Financial Statement Schedules” pursuant to Item 14.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

      None.

Item 10. Directors and Executive Officers of the Registrant

      The information required by this item as to Directors will be included in Cole National Corporation’s Proxy Statement under the caption “Election of Directors” and is incorporated herein by reference. The information required by this item as to executive officers who are not Directors is included in Item 4A in Part I of this report.

Item 11. Executive Compensation

      The information required by this item will be included in Cole National Corporation’s Proxy Statement under the caption “Compensation of Executive Officers” and is incorporated herein by reference.

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Item 12. Security Ownership of Certain Beneficial Owners and Management

      The information required by this item will be included in Cole National Corporation’s Proxy Statement under the caption “Security Ownership of Management and Certain Beneficial Owners” and is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions

      The information required by this item will be included in Cole National Corporation’s Proxy Statement under the caption “Compensation Committee Interlocks, Insider Participation and Certain Transactions” and is incorporated herein by reference.

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PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)(1) and (2)	Financial Statements and Financial Statement Schedules
	The consolidated financial statements and the related financial statement schedules filed as part of this Form 10-K are located as set forth in the index on page F-1 of this report.
(a)(3)	Exhibits
	See Exhibit Index on pages X-1 through X-7.
(b)	Reports on Form 8-K
	Reports on Form 8-K dated November 24, 1999, November 23, 1999, March 5, 1999 and January 12, 1999.

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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.

	COLE NATIONAL CORPORATION
April 28, 2000	By:       /s/ William P. Lahiff, Jr.
	William P. Lahiff, Jr. Vice President and Controller

      Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

* Jeffrey A. Cole	Chairman and Chief Executive Officer and Director (Principal Executive Officer)	April 28, 2000
* Larry Pollock	President and Chief Operating Officer and Director	April 28, 2000
* Thomas T.S. Kaung	Executive Vice President and Chief Financial Officer (Principal Financial Officer)	April 28, 2000
/s/ William P. Lahiff, Jr. William P. Lahiff, Jr.	Vice President and Controller (Principal Accounting Officer)	April 28, 2000
* Timothy F. Finley	Director	April 28, 2000
* Irwin N. Gold	Director	April 28, 2000
* Peter V. Handal	Director	April 28, 2000
* Charles A. Ratner	Director	April 28, 2000
* Walter J. Salmon	Director	April 28, 2000

* The undersigned, by signing his name hereto, does sign and execute this report on Form 10-K pursuant to the Powers of Attorney executed by the above-named officers and directors of Cole National Corporation and which are being filed herewith with the Securities and Exchange Commission on behalf of such officers and directors.

/s/ William P. Lahiff , Jr.

William P. Lahiff , Jr., Attorney-in-Fact

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

	Page
Report of Independent Public Accountants	F — 2
Consolidated Balance Sheets as of January 29, 2000 and January 30, 1999	F — 3
Consolidated Statements of Operations for the 52 weeks ended January 29, 2000, January 30, 1999, and January 31, 1998	F — 4
Consolidated Statements of Cash Flows for the 52 weeks ended January 29, 2000, January 30, 1999, and January 31, 1998	F — 5
Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Loss) for the 52 weeks ended January 29, 2000, January 30, 1999, and January 31, 1998	F — 6
Notes to Consolidated Financial Statements	F — 7
Financial Statement Schedules:
Report of Independent Public Accountants on the Financial Statement Schedules	F — 24
Schedule I — Condensed Financial Information of Registrant	F — 25
Schedule II — Valuation and Qualifying Accounts	F — 28

All financial statement schedules not included have been omitted because they are not applicable or because the required information is otherwise furnished.

F-1

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

TO THE BOARD OF DIRECTORS OF COLE NATIONAL CORPORATION:

      We have audited the accompanying consolidated balance sheets of Cole National Corporation (a Delaware corporation) and Subsidiaries as of January 29, 2000 and January 30, 1999, and the related consolidated statements of operations, stockholders’ equity and comprehensive income (loss) and cash flows for each of the three years in the period ended January 29, 2000. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

      We conducted our audits in accordance with 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Cole National Corporation and Subsidiaries as of January 29, 2000 and January 30, 1999, and the results of their operations and their cash flows for each of the three years in the period ended January 29, 2000 in conformity with accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

Cleveland, Ohio,
March 23, 2000.

F-2

COLE NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

				January 29,			January 30,
				2000			1999
Assets
Current assets:
	Cash and temporary cash investments			$	28,953		$	51,057
	Accounts receivable, less allowance for doubtful accounts of $7,557 in 1999 and $7,149 in 1998				41,682			45,561
	Current portion of notes receivable				4,917			2,707
	Refundable income taxes				1,546			9,556
	Inventories				116,514			119,881
	Prepaid expenses and other				6,947			8,582
	Deferred and refundable income tax benefits				3,901			14,048
		Total current assets			204,460			251,392
Property and equipment, at cost					267,633			261,605
	Less — accumulated depreciation and amortization				(144,249	)		(136,331	)
		Total property and equipment, net			123,384			125,274
Notes receivable, excluding current portion and less reserves for uncollectible amounts of $4,196 in 1999 and $5,181 in 1998					25,948			27,459
Deferred income taxes and other assets					77,080			59,021
Intangible assets, net					157,399			159,698
			Total assets	$	588,271		$	622,844
Liabilities and Stockholders’ Equity
Current liabilities:
	Current portion of long-term debt			$	1,515		$	1,497
	Accounts payable				60,388			73,065
	Accrued interest				6,482			6,216
	Accrued liabilities				71,998			93,754
	Accrued income taxes				178			128
			Total current liabilities		140,561			174,660
Long-term debt, net of discount and current portion					284,584			276,013
Other long-term liabilities					16,610			26,811
Stockholders’ equity:
	Preferred stock				—			—
	Common stock				16			15
	Paid-in capital				261,835			257,981
	Accumulated deficit				(99,984	)		(101,843	)
	Accumulated other comprehensive loss				(3,358	)		(1,205	)
	Treasury stock at cost				(6,218	)		(6,084	)
	Unamortized restricted stock awards				(5,064	)		(2,598	)
	Notes receivable-stock option exercise				(711	)		(906	)
			Total stockholders’ equity		146,516			145,360
			Total liabilities and stockholders’ equity	$	588,271		$	622,844

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

F-3

COLE NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)

			52 Weeks Ended
			January 29,			January 30,			January 31,
			2000			1999			1998
Net revenue			$	1,066,422		$	1,068,182		$	1,000,198
Cost of goods sold				359,704			364,090			340,849
Operating expenses				636,605			610,131			558,531
Depreciation and amortization				41,000			33,742			29,954
Restructuring and other unusual charges				—			17,873			8,000
		Total costs and expenses		1,037,309			1,025,836			937,334
Operating income				29,113			42,346			62,864
Interest and other (income) expense:
	Interest expense			27,985			27,565			30,365
	Interest and other income			(3,537	)		(8,841	)		(2,472	)
		Total interest and other (income) expense		24,448			18,724			27,893
Income from continuing operations before income taxes				4,665			23,622			34,971
Income tax provision				2,657			9,346			15,038
Income from continuing operations				2,008			14,276			19,933
Discontinued operations:
	Operating loss, net of income tax benefit of $39			—			—			(67	)
	Loss on disposal, net of income tax benefit of $8,500			—			—			(13,900	)
	Loss from discontinued operations			—			—			(13,967	)
Income before extraordinary item				2,008			14,276			5,966
Extraordinary loss on early extinguishment of debt, net of income tax benefit of $7,467				—			—			(12,183	)
Net income (loss)			$	2,008		$	14,276		$	(6,217	)
Earnings (loss) per common share:
	Basic -
		Income from continuing operations	$	0.13		$	0.96		$	1.48
		Loss from discontinued operations		—			—			(1.04	)
		Extraordinary loss		—			—			(0.90	)
		Net income (loss)	$	0.13		$	0.96		$	(0.46	)
	Diluted -
		Income from continuing operations	$	0.13		$	0.94		$	1.43
		Loss from discontinued operations		—			—			(1.00	)
		Extraordinary loss		—			—			(0.87	)
		Net income (loss)	$	0.13		$	0.94		$	(0.44	)

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

F-4

COLE NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)

					52 Weeks Ended
					January 29,			January 30,			January 31,
					2000			1999			1998
Cash flows from operating activities:
	Net income (loss)				$	2,008		$	14,276		$	(6,217	)
	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
		Extraordinary loss on early extinguishment of debt				—			—			12,183
		Restructuring and other unusual charges				—			11,886			546
		Depreciation and amortization				41,000			33,742			29,954
		Non-cash interest, net				(1,596	)		(555	)		142
		Deferred income tax provision				2,318			13,001			12,823
		Change in assets and liabilities, net of effects from acquisitions:
			Decrease (increase) in accounts and notes receivable, prepaid expenses and other assets			5,155			12,028			(11,897	)
			Decrease (increase) in inventories			3,367			(4,404	)		(11,222	)
			Decrease in net assets of discontinued operations			—			—			19,926
			Decrease in accounts payable, accrued liabilities and other liabilities			(31,133	)		(18,221	)		(9,428	)
			Increase (decrease) in accrued interest			266			(399	)		(3,015	)
			Increase (decrease) in accrued, refundable and deferred income taxes			2,375			1,038			(25,826	)
				Net cash provided by operating activities		23,760			62,392			7,969
Cash flows from investing activities:
	Purchase of property and equipment, net					(25,877	)		(37,591	)		(32,645	)
	Proceeds from sale/leaseback, net					—			8,835			—
	Acquisitions of businesses, net					(2,956	)		(7,231	)		(27,926	)
	Investment in Pearle Europe					(2,129	)		(10,296	)		(2,819	)
	Repayment of loan by Pearle Europe					—			3,144			—
	Systems development costs					(13,589	)		(16,802	)		(17,922	)
	Other, net					275			277			(696	)
				Net cash used by investing activities		(44,276	)		(59,664	)		(82,008	)
Cash flows from financing activities:
	Repayment of long-term debt					(1,503	)		(16,040	)		(170,705	)
	Payment of deferred financing fees					—			—			(3,191	)
	Common stock repurchased					(562	)		(5,473	)		(611	)
	Net proceeds from public stock offering					—			—			115,878
	Net proceeds from long-term debt					—			—			125,000
	Net proceeds from exercise of stock options and warrants					190			1,998			2,903
	Dividends paid					(149	)		—			—
	Other					436			(209	)		(323	)
				Net cash provided (used) by financing activities		(1,588	)		(19,724	)		68,951
Cash and temporary cash investments:
	Net decrease during the period					(22,104	)		(16,996	)		(5,088	)
	Balance, beginning of the period					51,057			68,053			73,141
	Balance, end of the period				$	28,953		$	51,057		$	68,053

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

F-5

COLE NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME (LOSS)
(Dollars in thousands)

		January 29,			January 30,			January 31,
		2000			1999			1998
Common Stock:
	Balance at beginning of period	$	15		$	15		$	12
	Issuance of restricted stock		1			—			3
	Balance at end of period		16			15			15
Paid In Capital:
	Balance at beginning of period		257,981			251,405			131,238
	Net proceeds from sale of common stock		—			—			115,875
	Stock compensation		433			357			635
	Exercise of stock options and warrants		190			3,577			3,657
	Issuance of restricted stock		3,231			2,642			—
	Balance at end of period		261,835			257,981			251,405
Accumulated Deficit:
	Balance at beginning of period		(101,843	)		(116,119	)		(109,902	)
	Dividends paid		(149	)		—			—
	Net income (loss)		2,008			14,276			(6,217	)
	Balance at end of period		(99,984	)		(101,843	)		(116,119	)
Accumulated Other Comprehensive Income (Loss):
	Balance at beginning of period		(1,205	)		(1,749	)		(606	)
	Other comprehensive income (loss)		(2,153	)		544			(1,143	)
	Balance at end of period		(3,358	)		(1,205	)		(1,749	)
Treasury Stock:
	Balance at beginning of period		(6,084	)		(611	)		—
	Issuance of restricted stock		428			—			—
	Common stock repurchased		(562	)		(5,473	)		(611	)
	Balance at end of period		(6,218	)		(6,084	)		(611	)
Unamortized Restricted Stock Awards:
	Balance at beginning of period		(2,598	)		—			—
	Issuance of restricted stock		(3,659	)		(2,642	)		—
	Amortization of restricted stock awards		1,193			44			—
	Balance at end of period		(5,064	)		(2,598	)		—
Notes Receivable — Stock Option Exercise:
	Balance at beginning of period		(906	)		(926	)		(1,024	)
	Exercise of stock options		—			—			—
	Repayment of notes receivable		195			20			98
	Balance at end of period		(711	)		(906	)		(926	)
Total Stockholders’ Equity		$	146,516		$	145,360		$	132,015
Comprehensive Income (Loss):
	Net income (loss)	$	2,008		$	14,276		$	(6,217	)
	Cumulative translation adjustment		(2,153	)		544			(1,143	)
	Total comprehensive income (loss)	$	(145	)	$	14,820		$	(7,360	)

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

F-6

COLE NATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Summary of Significant Accounting Policies

Basis of Presentation -

      The consolidated financial statements include the accounts of Cole National Corporation (“the Parent”) and its wholly owned subsidiaries, including Cole National Group, Inc. and its wholly owned subsidiaries (collectively referred to as “the Company”). All significant intercompany transactions have been eliminated in consolidation.

      Fiscal years end on the Saturday closest to January 31 and are identified according to the calendar year in which they begin. Fiscal years 1999, 1998 and 1997 each consisted of 52-week periods.

Nature of Operations -

      The Company is a specialty service retailer operating in both host and non-host environments, whose primary lines of business are eyewear products and services and personalized gifts. The Company sells its products through 2,306 company-owned retail locations and 416 franchised locations in 50 states, Canada, and the Caribbean, and differentiates itself from other specialty retailers by providing value-added services at the point of sale at all of its retail locations. The Company has two reportable segments: Cole Vision and Things Remembered (see Note 12).

Inventories -

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

Property and Depreciation -

      The policy is to provide depreciation using the straight-line method over a period, which is sufficient to amortize the cost of the asset over its useful life or lease term.

      The estimated useful lives for depreciation purposes are:

Buildings and improvements	5 to 40 years
Equipment	3 to 10 years
Furniture and fixtures	2 to 10 years
Leasehold improvements	2 to 20 years

      Property and equipment, at cost, consist of the following at January 29, 2000 and January 30, 1999 (000’s omitted):

		2000		1999
Land and buildings		$	22,990	$	23,463
Furniture, fixtures and equipment			158,995		157,302
Leasehold improvements			85,648		80,840
	Total property and equipment	$	267,633	$	261,605

Store Opening Expenses -

      Store opening expenses are charged to operations in the period the expenses are incurred.

F-7

Investment in Pearle Europe B.V. -

      Included in other assets is Cole National Corporation’s minority investment in Pearle Europe B.V., which is in the retail optical business in Europe. HAL Holding N.V., an affiliate of the Company (see Note 9), owns a 73% interest, Cole National Corporation owns a 24% interest, and Pearle Europe’s management owns the remaining 3% interest.

      Cole National Corporation’s common equity investment of $4.7 million at January 29, 2000 is accounted for using the equity method. Included in interest and other income is Cole National Corporation’s equity share of Pearle Europe’s earnings, which totaled $1.4 million, $0.9 million and $0.3 million in fiscal 1999, 1998, and 1997, respectively. Pearle Europe’s fiscal 1999 sales were approximately $259.0 million.

      Included in notes receivable is $13.2 million and $13.5 million of net shareholder loans receivable from Pearle Europe and its subsidiaries at January 29, 2000 and January 30, 1999, respectively. The shareholder loans provide for interest at rates ranging from 8.0% to 12.7%. Cole National Corporation reported interest income of $1.3 million on the notes in fiscal 1999 as compared to $1.5 million and $0.5 million in fiscal 1998 and 1997, respectively. During fiscal 1999 and 1998, Cole National Corporation received interest payments against the balances accrued totaling $0.1 million and $0.9 million, respectively.

      In February 1998, Cole National Corporation repaid a $3.1 million note payable to a subsidiary of Pearle Europe and invested an additional $7.2 million in the form of 8% shareholder loans to Pearle Europe in connection with Pearle Europe’s acquisition of optical operations in Germany and Austria. In June 1998, Pearle Europe repaid to Cole National Corporation a shareholder loan, including interest thereon, in the amount of $3.7 million.

Notes Receivable -

      In addition to the notes receivable from Pearle Europe are notes receivable from Pearle’s franchisees throughout the United States. The franchise notes are collateralized by inventory, equipment, and leasehold improvements at each location, generally bear interest at the prime rate plus 3%, and require monthly payments of principal and interest over periods of up to ten years.

Intangible Assets -

      Intangible assets, net, consist of the following at January 29, 2000 and January 30, 1999 (000’s omitted):

	2000		1999
Goodwill	$	111,910	$	112,973
Tradenames		45,489		46,725
	$	157,399	$	159,698

      Goodwill is being amortized on a straight-line basis over periods from 10 to 40 years, based on management’s assessment of the estimated useful life, and is presented net of accumulated amortization of $41,615,000 and $37,880,000 at January 29, 2000 and January 30, 1999, respectively. Management regularly evaluates its accounting for goodwill considering primarily such factors as historical profitability, current operating profits and cash flows. The Company believes that, at January 29, 2000, the assets are realizable and the amortization periods are still appropriate.

      Tradenames acquired in connection with the Pearle acquisition are being amortized on a straight-line basis over 40 years and are presented net of accumulated amortization of $3,972,000 and $2,735,000 at January 29, 2000 and January 30, 1999, respectively.

Other Assets -

      Financing costs incurred in connection with obtaining long-term debt are capitalized in other assets and amortized over the life of the related debt using the effective interest method.

F-8

      Direct costs to develop or obtain internal use software, including internal costs, are capitalized in other assets and amortized over the estimated useful life of the software using a straight-line method. Amortization periods range from two to seven years and begin when the software is placed in service. At January 29, 2000 and January 30, 1999, these costs, net of accumulated amortization, were $38,127,000 and $34,267,000, respectively.

      Valuation of Long-Lived Assets -

      Long-lived assets, such as property, plant and equipment, goodwill and other intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the total of the expected future undiscounted cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and the carrying value of the asset.

      Other Long-Term Liabilities -

      Other long-term liabilities consist primarily of certain employee benefit obligations, deferred lease credits and other lease-related obligations, deferred revenue and other obligations not expected to be paid within 12 months. Deferred lease credits are amortized on a straight-line basis over the life of the applicable lease.

      Capital Stock -

      At January 29, 2000 and January 30, 1999, there were 15,496,882 and 14,835,746, respectively, shares of common stock, par value $.001 per share, outstanding. At January 29, 2000, there were 40,000,000 and 5,000,000 authorized shares of common stock and undesignated preferred stock, respectively.

      Foreign Currency Translation -

      The assets and liabilities of the Company’s foreign subsidiaries and its investment in Pearle Europe are translated to United States dollars at the rates of exchange on the balance sheet date. Income and expense items are translated at average monthly rates of exchange. Translation adjustments are presented as a component of accumulated other comprehensive income within stockholders’ equity.

      Revenues -

      Revenues include sales of goods and services to retail customers at company-operated stores, sales of merchandise inventory to franchisees and other outside customers, other revenues from franchisees such as royalties based on sales, interest income on notes receivable and initial franchise fees, and capitation and other fees associated with its managed vision care business.

      Franchise revenues based on sales by franchisees are accrued as earned. Initial franchise fees are recorded as revenue when all material services or conditions relating to the sale of the franchises have been substantially performed or satisfied by the Company and when the related store begins operations.

      Advertising -

      Advertising production costs and other advertising costs are expensed as incurred, a portion of which are reimbursed by franchisees based on a percentage of their sales. Advertising expense is summarized as follows (000’s omitted):

	1999			1998			1997
Gross advertising expense	$	88,525		$	82,492		$	74,553
Less: Franchisee contribution		(19,930	)		(20,244	)		(19,656	)
Net advertising expense	$	68,595		$	62,248		$	54,897

F-9

      Earnings Per Share -

      Statement of Financial Accounting Standards (SFAS) No. 128 requires that earnings per share be presented as two calculations: basic and diluted. Basic earnings per share for fiscal 1999, 1998 and 1997 have been based on 14,886,550; 14,802,023 and 13,480,792, respectively, weighted average number of common shares outstanding. Stock options and warrants that are outstanding are considered to be potentially dilutive common stock. Diluted earnings per share for fiscal 1999, 1998 and 1997 have been based on 14,940,900; 15,176,469 and 13,980,727, respectively, weighted average number of common shares outstanding after consideration of the dilutive effect, if any, for these common share equivalents.

      Cash Flows -

      For purposes of reporting cash flows, all temporary cash investments which have original maturities of three months or less, are considered to be cash equivalents. The carrying amounts of cash and cash equivalents approximate fair value due to the short maturity of those instruments.

      Net cash flows from operating activities reflect cash payments for income taxes and interest as follows (000’s omitted):

	1999		1998		1997
Income taxes	$	624	$	1,644	$	19,889
Interest		27,201		26,112		33,682

      Fiscal 1997 cash paid for income taxes includes $15.0 million of taxes due on the sale of Pearle Holdings B.V. that were reimbursed to Cole National Corporation by the seller in connection with the Pearle acquisition in fiscal 1996 and paid by Cole National Corporation in fiscal 1997.

      During fiscal 1999, 1998 and 1997, non-cash financing activities included incurring $-0-, $77,000 and $799,000, respectively, in capital lease obligations.

      Use of Estimates -

      The preparation of financial statements, in conformity with accounting principles generally accepted in the United States, 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.

      Reclassifications -

      Certain prior year amounts have been reclassified to conform with the current year presentation.

(2) Acquisitions and Dispositions of Businesses

      The Company made the following acquisitions, each of which has been accounted for under the purchase method of accounting, including any contingent payments that may be made in the future. Pro forma financial results have not been presented for these acquisitions, as they did not have a material effect on results of operations.

      During the third quarter of fiscal 1999, the Company acquired MetLife’s managed vision care benefits business. The business consists of vision care contracts with approximately 250 institutional customers and generates approximately $15.0 million of revenue annually. The initial purchase price totaled $2.0 million, with additional amounts contingently due upon certain conditions being met over the next four years.

F-10

      In fiscal 1998, the Company acquired ten Buckeye Optical stores in Columbus, Ohio, and all of the issued and outstanding common stock of Management Associates, Inc., whose operations consisted of four 20/20 Eyecare stores located in Las Vegas, Nevada. The total purchase price for these acquisitions was $7.2 million.

      On August 5, 1997, the Company acquired all of the issued and outstanding common stock of American Vision Centers, Inc. (AVC), whose operations consisted of 79 company-owned and 85 franchised optical stores, for an aggregate purchase price of approximately $28.9 million, including debt assumed. The purchase price was allocated to the assets acquired and liabilities assumed based upon their relative fair values as of the closing date. This resulted in an excess of purchase price over net assets acquired of $20.0 million. The relative fair values of the assets acquired and liabilities assumed included unfavorable leasehold interests of $3.4 million, accruals for involuntary severance and termination benefits of $0.5 million, write-off of deferred assets of $1.4 million and deferred tax assets of $7.5 million.

      In the fourth quarter of fiscal 1999, the Company announced its plan to close the 150 optical departments located in Montgomery Ward stores. The closings, which were completed by the end of fiscal 1999, resulted in a pretax loss of $2.0 million being recorded in the fourth quarter of fiscal 1999, consisting primarily of inventory and fixed asset writeoffs. The after tax cash cost of the closings was not significant. Annual revenues in fiscal 1999 for Ward’s Optical Departments were $21.2 million.

(3) Restructuring and Other Unusual Items

      In the fourth quarter of fiscal 1998, the Company began implementation of a restructuring plan and recorded a net pretax charge of $23.1 million, related to restructuring its Pearle business along with other unusual charges. The net pretax charge consisted of charges associated with the restructuring of $13.9 million, a reversal of previously established restructuring accruals of $12.3 million and other unusual charges totaling $21.5 million. The restructuring charge of $13.9 million related to changes made to the Pearle operating model and structure of the home office organization. These changes resulted in charges for inventory write-downs related to products that will no longer be carried, severance and hiring costs primarily related to home office organizational changes, consolidation of the home office facilities, including the write-off of fixed assets at the old facilities, consultant fees and changing the Pearle brand message through signing, production and other costs. The charge related to the inventory write-down ($5.2 million) has been included in cost of sales in fiscal 1998.

      Additionally, the Company had recorded restructuring and other nonrecurring charges of $8.0 million and $61.1 million in fiscal 1997 and 1996, respectively. These charges consisted primarily of costs of integrating and consolidating the acquisitions of both AVC and Pearle, including costs of store and other facility closings, a computer system termination fee and related asset impairment costs. The accrual established in fiscal 1996 was based in part upon the closure of certain stores and in-store labs. As part of the revised restructuring plan discussed above, it was determined that certain stores originally planned to be closed would either remain open or be closed at a much lower cost than originally estimated. In addition, management determined that, while it still planned to reduce the number of full service labs, the lease costs and equipment to be removed related to in-store labs would be less than originally anticipated. The 1998 plan identified 26 stores to be closed and 226 stores from which surfacing equipment would be removed. As a result, $12.3 million of previously established accruals were reversed into income in fiscal 1998 as a restructuring credit.

F-11

      The following summarizes the major components of the restructuring charges recorded in fiscal 1996, 1997 and 1998, along with cash and non-cash charges against the reserves (in millions):

					Charges to Reserve								Charges to Reserve
					1997								1998
			Remaining								Remaining											Remaining
	Original		Reserve					Non-			Reserve					Non-						Reserve
	Charge		at 2/1/97		Cash			Cash			at 1/31/98		Cash			Cash			Reversal			at 1/30/99
1996 Charge
Store and other facilities closing	$	17.6	$	17.4	$	(0.6	)	$	(0.2	)	$	16.6	$	(0.4	)	$	(5.7	)	$	(9.5	)	$	1.0
Computer systems		21.6		17.1		(12.6	)		—			4.5		(4.0	)		(0.5	)		—			—
Asset impairment		6.1		—		—			—			—		—			—			—			—
Other		15.8		4.2		(3.5	)		—			0.7		(0.2	)		—			(0.5	)		—
Total	$	61.1	$	38.7	$	(16.7	)	$	(0.2	)	$	21.8	$	(4.6	)	$	(6.2	)	$	(10.0	)	$	1.0
1997 Charge
Store and other facilities closing	$	2.5			$	—		$	—		$	2.5	$	(0.4	)	$	—		$	(2.1	)	$	—
Severance		0.9				(0.1	)		—			0.8		(1.0	)		—			0.2			—
Operating costs and losses		1.7				(1.6	)		(0.1	)		—		—			—			—			—
Marketing and brand conversion		1.5				(0.6	)		—			0.9		(0.7	)		—			(0.2	)		—
Other		1.4				(0.8	)		—			0.6		(0.2	)		(0.2	)		(0.2	)		—
Total	$	8.0			$	(3.1	)	$	(0.1	)	$	4.8	$	(2.3	)	$	(0.2	)	$	(2.3	)	$	—
1998 Charge
Facilities relocations	$	2.6											$	(0.5	)	$	(0.5	)	$	—		$	1.6
Inventory		5.2												—			(5.2	)		—			—
Marketing and brand conversion		2.3												(0.2	)		—			—			2.1
Professional fees		1.9												(0.8	)		(0.1	)		—			1.0
Severance/hiring		1.9												(0.5	)		—			—			1.4
Total	$	13.9											$	(2.0	)	$	(5.8	)	$	—		$	6.1

[Additional columns below]

[Continued from above table, first column(s) repeated]

	Charges to Reserve
	1999
							Remaining
							Reserve
	Cash			Reversal			at 1/29/00
1996 Charge
Store and other facilities closing	$	(1.0	)	$	—		$	—
Computer systems		—			—			—
Asset impairment		—			—			—
Other		—			—			—
Total	$	(1.0	)	$	—		$	—
1997 Charge
Store and other facilities closing	$	—		$	—		$	—
Severance		—			—			—
Operating costs and losses		—			—			—
Marketing and brand conversion		—			—			—
Other		—			—			—
Total	$	—		$	—		$	—
1998 Charge
Facilities relocations	$	(1.5	)	$	(0.1	)	$	—
Inventory		—			—			—
Marketing and brand conversion		(2.1	)		—			—
Professional fees		(1.0	)		—			—
Severance/hiring		(1.4	)		—			—
Total	$	(6.0	)	$	(0.1	)	$	—

      The costs of the 1998 restructuring approximated the original estimates. A remaining balance of approximately $0.1 million for the facilities relocations was reversed into income in fiscal 1999. During fiscal 1999, the Company closed a total of 25 Pearle stores, including 10 stores that were not part of the 1998 restructuring plan and, thus, were not charged to the reserve. In the fourth quarter of fiscal 1999, the Company determined that it no longer planned to remove any labs from Pearle stores. Since there were no costs accrued at January 30, 1999 related to closing of any in-store labs, this revision to the original plan had no effect on the restructuring reserves in fiscal 1999. As of January 29, 2000, there were no balances remaining for the 1996, 1997 or 1998 restructure reserves.

      The unusual charges in fiscal 1998 related to the write-off of $8.8 million associated with the abandonment in the fourth quarter of previously capitalized system development costs (including $1.9 million of incurred costs that were paid in the first half of fiscal 1999) and $2.7 million primarily related to restricted stock issued to two senior executive officers. See Note 8 for further discussion of the restricted stock grants. The Company also made an unconditional commitment in the fourth quarter of fiscal 1998 to contribute $10.0 million through 2009, with payments beginning in 2004, to a leading medical institution supporting the development of a premier eye care research and surgical facility. See Note 6 for further discussion of this obligation.

F-12

      The 1998 results include the recognition of $6.0 million of income from cash received in a nontaxable settlement of certain contingencies related to several claims against and indemnifications from the former owner of Pearle, which was acquired by the Company in fiscal 1996. In connection with this settlement, the Company assumed secondary liability for loans to certain franchisees held by a third party which totaled $3.6 million at January 29, 2000. The Company is contingently liable should any of these franchisees default, and also for prepayment penalties of up to $0.5 million at January 29, 2000. The Company has established reserves for potential losses on the loans, which mature through 2001. The settlement also included a release of the former owner of Pearle from certain future non-tax claims related to Pearle.

(4) Discontinued Operations

      On January 13, 1998, the Company announced the closing of its Cole Gift Centers chain of personalized gift and greeting card departments located in host stores. The decision to close Cole Gift Centers was based on declining sales and profitability trends in recent years and management’s desire to focus its gift retailing efforts on Things Remembered. For financial statement purposes, the results of operations and cash flows of Cole Gift Centers are included in the consolidated financial statements as discontinued operations. The estimated loss on disposal of $13.9 million (net of an applicable income tax benefit of $8.5 million) includes provisions for severance and other closing costs, inventory and other asset write-offs and estimated operating losses for the period from January 13, 1998 through February 1998 when all locations were closed.

      Cole Gift Centers’ net revenue was $50.9 million in 1997. Consolidated interest expense that was not directly attributable to other operations of the Company was allocated to discontinued operations based on the ratio of the net assets of discontinued operations to total net assets of the Company plus consolidated debt of the Company not directly attributable to other operations. As a result, the operating loss from discontinued operations includes allocated interest expense of $1.3 million in fiscal 1997.

(5) Public Offerings

      On July 18, 1997, Cole National Corporation completed a public offering of 2,587,500 shares of its common stock at a price of $47.00 per share. Net proceeds from the offering were approximately $116.0 million. The net proceeds from the offering were used for the purchase of AVC, for Cole National Group’s tender offer to purchase up to all of its $165.8 million outstanding 11-1/4% Senior Notes due 2001 (see Note 6) and for general corporate purposes, including reducing outstanding indebtedness and financing possible future acquisitions.

(6) Long-Term Debt

      Long-term debt at January 29, 2000 and January 30, 1999 is summarized as follows (000’s omitted):

			2000			1999
9-7/8% Senior Subordinated Notes:
	Face value			150,000			150,000
	Unamortized discount			(880	)		(964	)
		Total 9-7/8% Senior Subordinated Notes		149,120			149,036
8-5/8% Senior Subordinated Notes				125,000			125,000
5% Promissory Note				10,000			—
Capital lease obligations (see Note 13)				1,979			3,474
				286,099			277,510
Less current portion				(1,515	)		(1,497	)
Net long-term debt			$	284,584		$	276,013

F-13

      On August 22, 1997, Cole National Group issued $125.0 million of 8-5/8% Senior Subordinated Notes that mature in 2007 with no earlier scheduled redemption or sinking fund payments. Interest on the 8-5/8% Notes is payable semi-annually on February 15 and August 15. Proceeds from this debt issuance of approximately $121.8 million, along with cash on hand, were used to fund a tender offer to retire the Company’s then outstanding 11-1/4% Senior Notes. As a result of the tender offer, in the third quarter of fiscal 1997 the Company recorded an extraordinary charge of $12.2 million, representing the tender premium, the write-off of the related unamortized debt discount and other costs associated with redeeming the debt.

      On November 15, 1996, Cole National Group issued $150 million of 9-7/8% Senior Subordinated Notes that mature in 2006 with no earlier scheduled redemption or sinking fund payments. The 9-7/8% Notes were used to finance a portion of the Pearle acquisition. Interest on the 9-7/8% Notes is payable semi-annually on June 30 and December 31.

      The 8-5/8% Notes and the 9-7/8% Notes are general unsecured obligations of Cole National Group, subordinated in right of payment to senior indebtedness of Cole National Group and senior in right of payment to any current or future subordinated indebtedness of Cole National Group.

      The indentures pursuant to which the 8-5/8% Notes and the 9-7/8% Notes were issued restrict dividend payments to the Company to 50% of Cole National Group’s net income after October 31, 1993, plus amounts due to the Company under a tax sharing agreement and for administrative expenses of the Company not to exceed 0.25% of Cole National Group’s net revenue. The indentures also contain certain optional and mandatory redemption features and other financial covenants. Cole National Group was in compliance with these covenants at January 29, 2000.

      On April 23, 1999, the Company issued a $10.0 million promissory note bearing interest at 5% per annum in recognition of a commitment to contribute $10.0 million to a leading medical institution, supporting the development of a premier eye care research and surgical facility. At January 30, 1999, this obligation was classified with other long-term liabilities in the consolidated balance sheet. The note requires a $5.0 million principal payment to be made on April 23, 2004, and principal payments in the amount of $1.0 million to be made on the anniversary date of the note each successive year through 2009. Interest will be paid annually for the first 5 years, and thereafter with each payment of principal.

      At January 29, 2000, the fair value of long-term debt was approximately $207.5 million compared to a carrying value of $286.1 million. The fair value was estimated primarily by using quoted market prices. The Company has no significant principal payment obligations under its outstanding indebtedness until the $5.0 million principal payment in 2004 under the 5% promissory note.

(7) Credit Facility

      The operating subsidiaries of Cole National Group, Inc. have a working capital line of credit of $75.0 million, reduced by commitments under letters of credit. In August 1999, this credit facility was amended and extended until January 31, 2003. Borrowings under the credit facility initially bear interest based on leverage ratios at a rate equal to, at the option of the principal operating subsidiaries of Cole National Group, either (a) the Eurodollar Rate plus 2% or (b) 1% plus the highest of (i) the prime rate, (ii) the three-week moving average of the secondary market rates for three-month certificates of deposit plus 1% and (iii) the federal funds rate plus .5%. Cole National Group pays a commitment fee of between .375% and .75% per annum on the total unused portion of the facility based on the percentage of revolving credit commitments used.

      The credit facility requires the principal operating subsidiaries of Cole National Group to comply with various operating covenants that restrict corporate activities, including covenants restricting the ability of the subsidiaries to incur additional indebtedness, pay dividends, prepay subordinated indebtedness, dispose of certain investments or make acquisitions. The credit facility also requires the subsidiaries to comply with certain financial covenants, including covenants regarding minimum interest coverage, maximum leverage and consolidated net worth. The principal operating subsidiaries of Cole National Group were in compliance with these covenants at January 29, 2000.

F-14

      The credit facility was amended in March 2000 such that borrowings under the credit facility initially bear interest based on leverage ratios at a rate equal to, at the option of the principal operating subsidiaries of Cole National Group, either (a) the Eurodollar Rate plus 2.5% or (b) 1.5% plus the highest of (i) the prime rate, (ii) the three-week moving average of the secondary market rates for three-month certificates of deposit plus 1% and (iii) the federal funds rate plus .5%. By amendment, the working capital commitment has been reduced to $50.0 million (less commitments under letters of credit) for the period from January 30, 2000 to June 29, 2000. Cole National Corporation, the parent of the principal operating subsidiaries of Cole National Group, guarantees this credit facility.

      The credit facility restricts dividend payments to Cole National Group to amounts needed to pay interest on the 9-7/8% Notes and the 8-5/8% Notes, and certain amounts related to taxes, along with up to $8.0 million plus 0.25% of Cole National Group’s consolidated net revenue annually for other direct expenses of the Company or Cole National Group.

      No borrowings under the credit facility were outstanding as of January 29, 2000, or at any time during fiscal 1999. No borrowings under the credit facility were outstanding as of January 30, 1999, and the maximum amount of borrowings during fiscal 1998 was $13.6 million.

(8) Stock Compensation and Warrants

      At January 29, 2000, the Company had stock options outstanding under various stock option plans and agreements. The right to exercise these options generally commences between one and five years from the date of grant and expires ten years from the date of grant. Both the number of shares and the exercise price, which was based on the market price, were fixed at the dates of grant. As of January 29, 2000, there were 345,292 shares available for future grants to officers, key employees, non-employee Directors and consultants under the Company’s various stockholder approved stock plans. In addition, the Company may, from time to time, make additional option awards outside such plans.

      A summary of the status of stock options and related weighted average exercise prices (“Price”) as of the end of fiscal 1999, 1998 and 1997, and changes during each of the fiscal years is presented below:

	1999					1998					1997
	Shares			Price		Shares			Price		Shares			Price
Outstanding, beginning of year		2,087,146		$	15.46		1,471,906		$	14.30		1,443,788		$	12.29
Granted		206,500			9.38		818,303			16.89		122,000			35.13
Exercised		(24,536	)		7.69		(181,701	)		11.01		(80,856	)		8.27
Canceled		(233,523	)		16.42		(21,362	)		27.72		(13,026	)		24.49
Outstanding, end of year		2,035,587			14.83		2,087,146			15.46		1,471,906			14.30
Exercisable at end of year		1,064,087			14.59		707,343			13.59		595,838			11.57

      A summary of information for stock options outstanding at January 29, 2000 and related weighted average remaining contract life (“Life”) and Price is presented below:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Shares		Life		Price		Shares		Price
$3.00 to $9.75		218,345		8.0 years	$	6.99		61,845	$	6.38
$10.00 to $16.94		1,574,689		6.0		13.19		839,814		11.90
$26.13 to $44.94		242,553		7.0		32.51		162,428		31.64
		2,035,587		6.4		14.83		1,064,087		14.59

      Payment for certain options exercised between 1993 and 1996 have been made by executing promissory notes, of which $711,000 was outstanding at January 29, 2000. The promissory notes are secured by the shares of common stock acquired and are payable on various dates through April 2001 at interest rates ranging from 5.33% to 6.37%.

F-15

      On January 18, 2000, the Company granted two stock options not included in the tables above and awarded 525,000 shares of restricted common stock in connection with the employment of the Company’s president. One option grant was awarded for 262,500 shares of common stock at an above-market exercise price of $10.00 per share. The shares vest ratably on the first and second anniversary of the grant date and expire after ten years. Vesting may occur after the first anniversary of the grant date based upon the attainment of certain market prices for the Company’s common stock. The other option for 100,000 shares was issued at the market price, vested immediately and has a 90-day exercise period. The restricted shares become non-forfeitable over a four-year period. The shares may become non-forfeitable after the second anniversary of the grant date based upon the attainment of certain market prices for Cole National Corporation’s common stock. The restricted shares are subject to forfeiture if the executive fails to purchase a required number of shares of common stock within 180 days of the grant date.

      During 1999, the Company also granted 20,000 restricted shares to two executives. The shares may become non-forfeitable after the third anniversary of the grant date based upon the attainment of certain market prices for the Company’s common stock. Some or all of the shares are forfeitable on the sixth anniversary of the grant dates if the market prices are not attained.

      At January 29, 2000, 123,750 restricted shares of common stock are outstanding under an award made to a senior executive in December 1998 under the 1998 Equity and Incentive Performance Plan. Vesting may occur after the third anniversary of the grant date based upon the attainment of certain market prices for the Company’s common stock or on March 1, 2004. During 1999, 55,000 restricted shares issued to the Company’s former President were vested in connection with his termination arrangement.

      At January 29, 2000, there were warrants outstanding to purchase 2,625 shares of common stock at $1.00 per share that expire in September, 2000.

      In fiscal 1999, the Company established its Employee Stock Purchase Plan under which participants may contribute up to 15% of their annual compensation to acquire shares of common stock at 85% of the lower market price on one of two specified dates in each plan period. The initial plan period included the five months ended December 31, 1999. Subsequent plan periods will be semi-annual. Of the 400,000 shares of common stock authorized for purchase under the plan, 103,889 shares were purchased by 747 participating employees in fiscal 1999.

      The Company applies APB Opinion 25 and related Interpretations in accounting for its stock-based compensation plans. In connection with the restricted stock awards described above, compensation cost of $1.2 million and $2.3 million has been charged against income in fiscal 1999 and fiscal 1998, respectively, and unamortized restricted stock awards of $5.1 million are expected to be amortized over future vesting periods. Compensation cost of $0.1 million was also charged against income in fiscal 1998 for stock options granted in connection with certain consulting services. No compensation cost was recognized for stock-based plans in fiscal 1997. Had compensation cost for the Company’s stock-based compensation plans been determined based on the fair value at the dates of awards consistent with the method of SFAS No. 123, the Company’s net income and diluted earnings per share would have been $451,000 and $0.03 in fiscal 1999 and $13,589,000 and $0.90 in fiscal 1998, respectively. The Company’s net loss and diluted loss per share would have been increased to $6,731,000 and $.48 in fiscal 1997.

      The fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: risk-free interest rates of 5.9%, 4.7%, and 5.7% for grants in fiscal 1999, 1998 and 1997, respectively, volatility of 39 — 45%, 35 — 39%, and 35% in fiscal 1999, 1998 and 1997, respectively, and expected lives of six years for options granted in all fiscal years. The weighted average fair value of options granted during fiscal 1999, 1998 and 1997 were $4.58, $7.33 and $15.81, respectively. The fair value of each share granted under the Employee Stock Purchase Plan was similarly estimated using the following assumptions: risk-free interest rate of 5.2%, volatility of 42% and expected lives of 5 — 6 months. The weighted average fair value of purchase plan shares granted during fiscal 1999 was $1.63. The effects of applying SFAS No. 123 in the pro forma disclosure above are not indicative of future amounts. SFAS No. 123 does not apply to options granted prior to January 29, 1995 and additional awards in future years are anticipated.

F-16

      The Company’s Nonemployee Director Equity and Deferred Compensation Plan allows nonemployee directors to receive their annual retainer and other director fees in the form of shares of our common stock. The plan also allows them to defer payment of all or part of that income. During 1999, certain nonemployee directors elected to defer payment and received credits payable in shares of our common stock. Credits earned during fiscal 1999 and outstanding as of January 29, 2000 represented 11,304 shares and 14,983 shares, respectively.

(9) Stockholders’ Equity

      On November 18, 1999 the Board of Directors authorized redemption of the Company’s existing Stockholders’ Rights Plan, adopted in 1995, and replaced it with a new plan. The new plan eliminates the so-called “dead hand” provision of the former plan and permits HAL Holdings N.V. to acquire up to 25% of the Company’s stock. As of March 31, 2000, HAL Holdings N.V. owned 17% of the Company’s common stock. As a result of the redemption of the rights issued under the original plan, shareholders received payment of $0.01 per share of common stock in the fourth quarter of fiscal 1999. The Stockholders’ 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 December 6, 1999 or that thereafter become 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 Junior Participating Preferred Stock, without par value, at a price of $40, subject to adjustment. The rights are only exercisable if a person or group other than HAL Holdings N.V. buys or announces a tender offer for 15% or more of the Company’s common stock. In the event such a transaction occurs, rights that are beneficially owned by all other persons would be adjusted and such holders would thereafter have the right to receive, upon exercise thereof at the then current exercise price of the right, that number of shares of common stock (or, under certain circumstances, an economically equivalent security of the Company) having a market value of two times the exercise price of the right. The rights will expire on December 6, 2009, unless extended or unless the rights are earlier redeemed by the Company in whole, but not in part, at a price of $0.01 per right, or exchanged.

(10) Income Taxes

      The income tax provision for continuing operations reflected in the accompanying consolidated statements of operations for fiscal 1999, 1998 and 1997 are detailed below (000’s omitted):

			1999			1998			1997
Currently payable -
	Federal		$	—		$	(5,922	)	$	(270	)
	State and local			824			1,486			1,705
	Foreign			339			781			781
				1,163			(3,655	)		2,216
Deferred -
	Federal			7,811			13,545			12,817
	Foreign			(179	)		(544	)		5
	Tax benefit of net operating
		loss carryforward		(6,138	)		—			—
				1,494			13,001			12,822
Income tax provision			$	2,657		$	9,346		$	15,038

F-17

      The income tax provision (benefit) for continuing operations differs from the federal statutory rate as follows (000’s omitted):

					1999			1998			1997
Income tax provision at statutory rate					$	1,633		$	8,268		$	12,240
	Tax effect of -
		Amortization of goodwill				1,230			1,234			1,176
		State income taxes, net of federal
				tax benefit		536			1,095			1,216
		Nontaxable settlement				—			(2,100	)		—
		Non-recurring charges				—			537			—
		Decrease in valuation allowance				(669	)		—			—
		Other, net				(73	)		312			406
			Income tax provision		$	2,657		$	9,346		$	15,038

      The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets and deferred tax liabilities at January 29, 2000 and January 30, 1999 are as follows (000’s omitted):

			2000			1999
Deferred tax assets:
	Employee benefit accruals		$	2,821		$	3,540
	Restructure accruals			—			2,730
	Other non-deductible accruals			9,254			9,910
	State and local taxes			1,245			1,790
	Net operating loss carryforwards			10,971			4,118
	Intangibles			4,471			5,506
	Contribution carryforward			4,679			4,440
	Inventory reserves			3,518			2,348
	Bad debt reserves			185			2,516
	Other			2,703			967
	Total deferred tax assets			39,847			37,865
	Valuation allowance			(1,141	)		(1,810	)
		Net deferred tax assets		38,706			36,055
Deferred tax liabilities:
	Depreciation and amortization			(5,976	)		(7,856	)
	Other			(2,905	)		(1,728	)
		Total deferred tax liabilities		(8,881	)		(9,584	)
Net deferred taxes			$	29,825		$	26,471

      At January 30, 1999, the Company has approximately $29.5 million of tax net operating loss carryforwards in the United States that expire in years 2005 through 2019, $8.3 million of those net operating loss carryforwards resulted from the Company’s acquisition of AVC. Due to the change in ownership requirements of the Internal Revenue Code, utilization of the AVC net operating loss is limited to approximately $338,000 per year. A valuation allowance of $1.1 million has been established to reduce the deferred tax asset related to the net operating loss to the amount that will likely be realized.

      No provision of United States federal and state income taxes has been provided for the undistributed earnings of the Company’s foreign subsidiaries because those earnings are considered to be indefinitely reinvested. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to both United States income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable.

F-18

(11) Retirement Plans

      The Company maintains a noncontributory defined benefit pension plan that covers employees who have met eligibility service requirements and are not members of certain collective bargaining units. The pension plan calls for benefits to be paid to eligible employees at retirement based primarily upon years of service and their compensation levels near retirement.

      The Company’s policy is to fund amounts necessary to keep the pension plan in full force and effect, in accordance with the Internal Revenue Code and the Employee Retirement Income Security Act of 1974. Actuarial present values of benefit obligations are determined using the projected unit credit method.

      Pension expense for fiscal 1999, 1998 and 1997 includes the following components (000’s omitted):

				1999			1998			1997
Service cost — benefits earned during the period				$	1,636		$	1,446		$	637
Interest cost on the projected benefit obligation					1,733			1,582			1,490
Less:
	Return on plan assets -
		Actual			(2,205	)		(2,494	)		(2,424	)
		Deferred			19			690			893
					(2,186	)		(1,804	)		(1,531	)
Amortization of transition asset over 17.9 years					(179	)		(179	)		(179	)
			Net pension expense	$	1,004		$	1,045		$	417

      The following sets forth changes in the benefit obligation and the plan assets during the year and reconciles the funded status of the pension plan with the amounts recognized in the consolidated balance sheets (000’s omitted):

				1999			1998
Change in Benefit Obligation:
		Benefit obligation at beginning of period		$	24,599		$	21,272
		Service cost			1,636			1,446
		Interest cost			1,733			1,582
		Actuarial (gain) loss			(4,017	)		1,509
		Benefits paid			(956	)		(917	)
		Expenses paid			(335	)		(293	)
			Benefit obligation at end of period	$	22,660		$	24,599
Change in Plan Assets:
		Fair value of plan assets at beginning of year		$	23,216		$	19,751
		Actual return on plan assets			2,205			2,494
		Employer contributions			1,280			2,181
		Benefits paid			(956	)		(917	)
		Expenses paid			(335	)		(293	)
			Fair value of plan assets at end of year	$	25,410		$	23,216
Reconciliation of Funded Status:
	Benefit obligation at end of period			$	22,660		$	24,599
Fair value of plan assets, primarily money market and equity mutual funds					25,410			23,216
	Funded status				2,750			(1,383	)
	Unrecognized prior service cost				54			81
	Net unrecognized (gain) loss				(1,957	)		2,052
	Unamortized transition (asset) obligation				(878	)		(1,057	)
			Pension liability included in accrued liabilities	$	(31	)	$	(307	)

      The weighted average discount rate used to measure the projected benefit obligation was 7.25% in 1999 and 1998. For both years, the rate of increase in future compensation levels was 5.0% and the expected long-term rate of return on plan assets was 9.5%.

F-19

      The Company has a defined contribution plan, including features under Section 401(k) of the Internal Revenue Code, which provides retirement benefits to its employees. Eligible employees may contribute up to 17% of their compensation to the plan. Prior to January 1, 1998, there was no mandatory matching of employee contributions by the Company; effective January 1, 1998, the plan was amended to, among other things, provide for a mandatory company match of 10% of employee contributions. The Company may also make a discretionary matching contribution for each plan year equal to such dollar amount or percentage of employee contributions as determined by the Company’s board of directors. Total company matches of $534,000, $757,000 and $374,000 were recorded as expense for 1999, 1998 and 1997, respectively.

      Prior to January 1, 1998, the Company had separate contributory profit-sharing plans for Pearle and AVC employees meeting certain service requirements as defined in the plans. Company contributions to the Pearle plan consisted of a minimum matching contribution of $861,000 in 1997. There were no company contributions required or made in connection with the AVC plan in 1997. Effective January 1, 1998, eligible employees of Pearle and AVC became eligible to participate in the Company’s defined contribution plan. The Pearle and AVC plans will be merged into the Company’s plan.

      The Company has several Supplemental Executive Retirement Plans that provide for the payment of retirement benefits to participating executives supplementing amounts payable under the Company’s noncontributory defined benefit pension plan. The first plan is an excess benefit plan designed to replace benefits that would otherwise have been payable under the pension plan but that were limited as a result of certain tax law changes. The second plan is a defined contribution plan under which participants receive an annual credit based on a percentage of base salary, subject to vesting requirements. The third plan is a defined benefit plan designed to provide additional retirement benefits for certain management and highly compensated employees. Expenses for these plans for fiscal 1999, 1998 and 1997 were $696,000, $651,000, and $541,000, respectively.

(12) Segment Information

      The Company has two reportable segments: Cole Vision and Things Remembered. Most of Cole Vision’s revenue is provided by sales of prescription eyewear, accessories and services through its Cole Licensed Brands and Pearle retail locations. Cole Vision’s revenue is also provided by sales of merchandise to franchisees and other outside customers, by royalties based on sales, interest income on notes receivable and initial franchise fees from franchisees and by fees from managed vision care programs. The Cole Licensed Brands and Pearle segments have been aggregated in accordance with SFAS No. 131 based on the similarity of their economic characteristics, nature of products, services and production processes, types of customers, distribution methods and regulatory environment. Things Remembered’s revenue is provided by sales of engravable gift merchandise, personalization and other services primarily through retail stores and kiosks.

      The accounting policies of the segments are the same as those described in the Summary of Significant Accounting Policies (see Note 1). Performance is evaluated based on operating income from operations before interest, income taxes, and non-recurring or unusual charges.

      The reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies. Cole Vision is subject to various state regulations related to the dispensing of prescription eyewear and its relationship with the doctors of optometry.

F-20

      Reported segment revenue, depreciation and amortization, and income or loss, with reconciliations to consolidated amounts are as follows (000’s omitted):

			1999			1998			1997
Net revenue:
	Cole Vision		$	807,836		$	826,235		$	774,488
	Things Remembered			258,586			241,947			225,710
		Consolidated net revenue	$	1,066,422		$	1,068,182		$	1,000,198
Depreciation and amortization:
	Cole Vision		$	26,298		$	21,745		$	19,514
	Things Remembered			10,916			10,485			8,947
		Total segment depreciation and amortization		37,214			32,230			28,461
	Corporate			3,786			1,512			1,493
		Consolidated depreciation and amortization	$	41,000		$	33,742		$	29,954
Income or loss:
	Cole Vision		$	17,799		$	54,267		$	65,995
	Things Remembered			22,706			17,647			11,504
		Total segment profit		40,505			71,914			77,499
	Unallocated amounts:
		Restructuring and other unusual items		—			(23,120	)		(8,000	)
		Corporate expenses		(11,392	)		(6,448	)		(6,635	)
	Consolidated operating income (loss)			29,113			42,346			62,864
	Interest and other expense, net			(24,448	)		(18,724	)		(27,893	)
	Income (loss) from continuing operations before income taxes		$	4,665		$	23,622		$	34,971

      Reported segment assets, expenditures for capital additions and systems developments costs and acquisitions of businesses, with reconciliations to consolidated amounts, are as follows (000’s omitted):

			1999			1998			1997
Segment assets:
	Cole Vision		$	418,687		$	437,909		$	439,808
	Things Remembered			141,101			132,832			131,105
		Total segment assets		559,788			570,741			570,913
	Elimination of intercompany receivables			(52,917	)		(36,440	)		(11,754	)
Corporate cash and temporary cash investments				21,024			34,506			54,872
	Other corporate assets			60,376			54,037			37,353
		Consolidated assets	$	588,271		$	622,844		$	651,384
Expenditures for capital additions and systems development costs:
	Cole Vision		$	33,728		$	35,793		$	34,833
	Things Remembered			5,709			8,228			20,496
		Total segment expenditures		39,437			44,021			55,329
	Elimination of intercompany transfers			—			—			(5,300	)
	Corporate			29			10,372			538
		Consolidated expenditures	$	39,466		$	54,393		$	50,567
Expenditures for acquisitions of businesses, net of cash acquired:
	Cole Vision		$	2,956		$	7,231		$	27,926

F-21

      Revenue from external customers of each group of similar products and services is as follows (000’s omitted):

		1999		1998		1997
Sales of optical products and services		$	725,421	$	759,232	$	712,923
Royalties, interest income and initial fees from franchisees			23,611		21,518		19,743
Fees from managed vision care programs			58,804		45,485		41,822
	Total Cole Vision net revenue		807,836		826,235		774,488
Retail sales of gift merchandise and services			258,586		241,947		225,710
	Consolidated net revenue	$	1,066,422	$	1,068,182	$	1,000,198

      The Company operates primarily in the United States. Net revenue attributable to Cole Vision’s Canadian operations was $28.6 million, $27.5 million and $27.2 million in fiscal 1999, 1998 and 1997, respectively. Long-lived assets located in Canada totaled $3.1 million, $2.2 million and $2.1 million in fiscal 1999, 1998 and 1997, respectively. The Company also has an investment in and notes receivable from Pearle Europe (see Note 1).

(13) Commitments

      The Company leases a substantial portion of its facilities including laboratories, office and warehouse space, and retail store locations. These leases generally have initial terms of up to 10 years and often contain renewal options. Certain of the store locations have been sublet to franchisees. In most leases covering retail store locations, additional rents are payable based on store sales. In addition, Cole Vision operates departments in various host stores paying occupancy costs solely as a percentage of sales under agreements containing short-term cancellation clauses. Generally, the Company is required to pay taxes and normal expenses of operating the premises for laboratory, office, warehouse and retail store leases; the host stores pay these expenses for departments operated on a percentage-of-sales basis. The following amounts represent rental expense for fiscal 1999, 1998 and 1997 (000’s omitted):

	1999			1998			1997
Occupancy costs based on sales	$	52,623		$	54,563		$	52,300
All other rental expense		97,112			92,068			87,699
Sublease rental income		(21,672	)		(22,606	)		(21,725	)
	$	128,063		$	124,025		$	118,274

      At January 29, 2000 and January 30, 1999, property under capital leases consisted of $7,145,000 and $7,119,000 in equipment with accumulated amortization of $4,186,000 and $2,887,000, respectively.

      At January 29, 2000, future minimum lease payments and sublease income receipts under non-cancellable leases, and the present value of future minimum lease payments for capital leases are as follows (000’s omitted):

				Operating Leases
	Capital
	Leases			Payments		Receipts
2000	$	1,574		$	73,116	$	12,010
2001		444			60,635		8,902
2002		90			50,757		6,908
2003		—			42,496		4,957
2004		—			35,847		3,431
2005 and thereafter		—			71,113		5,379
Total future minimum lease payments		2,108		$	333,964	$	41,587
Amount representing interest		(129	)
Present value of future minimum lease payments	$	1,979

F-22

(14) Quarterly Results of Operations (Unaudited)

      The following is a summary of quarterly financial data for the 52 weeks ended January 29, 2000 and January 30, 1999. The fourth quarter of fiscal 1999 includes a $2.0 million pretax charge for the closing of 150 optical departments in Montgomery Ward stores. The third quarter of fiscal 1999 includes a $4.7 million pretax charge related to the severance of several senior managers. The fourth quarter of fiscal 1998 includes net pretax charges of $23.1 million related to restructuring and other unusual items, of which $5.2 million relates to inventory markdowns that are included in cost of sales. The third quarter of fiscal 1998 includes $6.0 million of income from cash received in a nontaxable settlement of claims against the former owner of Pearle.

Fiscal 1999

($in thousands, except per share amounts)

		1st		2nd		3rd			4th
		Quarter		Quarter		Quarter			Quarter
Net revenue		$	266,632	$	267,502	$	257,618		$	274,670
Gross margin			179,334		177,297		171,264			178,823
Net income (loss)			3,039		3,998		(2,806	)		(2,223	)
Earnings (loss) per common share:
	Basic		0.20		0.27		(0.19	)		(0.15	)
	Diluted		0.20		0.27		(0.19	)		(0.15	)

Fiscal 1998

($in thousands, except per share amounts)

		1st		2nd		3rd		4th
		Quarter		Quarter		Quarter		Quarter
Net revenue		$	271,828	$	267,611	$	256,654	$	272,089
Gross margin			181,539		178,479		171,744		172,330
Net income (loss)			6,112		9,800		9,062		(10,698	)
Earnings (loss) per common share:
	Basic		0.41		0.66		0.61		(0.72	)
	Diluted		0.40		0.64		0.60		(0.72	)

F-23

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON THE FINANCIAL STATEMENT SCHEDULES

To COLE NATIONAL CORPORATION:

      We have audited in accordance with auditing standards generally accepted in the United States the consolidated financial statements of Cole National Corporation and Subsidiaries included in this Form 10-K and have issued our report thereon dated March 23, 2000. Our audits were made for the purpose of forming an opinion on those statements taken as a whole. The financial statement schedules are the responsibility of the Company’s management and are presented for purposes of complying with the Securities and Exchange Commission’s rules and are not part of the consolidated financial statements. These schedules have been subjected to the auditing procedures applied in the audits of the consolidated financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the consolidated financial statements taken as a whole.

ARTHUR ANDERSEN LLP

Cleveland, Ohio,
March 23, 2000.

F-24

Schedule I

COLE NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Cole National Corporation
Condensed Balance Sheets
January 29, 2000 and January 30, 1999
(Dollars in millions)

		2000		1999
Assets:
Receivable from subsidiaries		$	63.7	$	68.8
Refundable income taxes			—		8.4
Investment in subsidiaries			51.9		48.4
Notes receivable and investment in Pearle Europe			15.4		14.7
Property and equipment, net			11.5		12.8
Other			17.2		7.9
	Total assets	$	159.7	$	161.0
Liabilities and Stockholders’ Equity:
Accounts payable and accrued expenses		$	2.5	$	3.2
Long-term debt			11.3		2.4
Other long term liabilities			—		10.0
Stockholders’ equity			145.9		145.4
	Total liabilities and stockholders’ equity	$	159.7	$	161.0

F-25

Schedule I
(continued)

Cole National Corporation
Condensed Statements of Operations and Cash Flows
52 Weeks Ended January 29, 2000, January 30, 1999 and January 31, 1998
(Dollars in millions)

			January 29,			January 30,			January 31,
			2000			1999			1998
Revenue:
	Services to affiliates		$	1.9		$	2.7		$	1.8
		Total revenue		1.9			2.7			1.8
Operating expenses				(6.7	)		(12.7	)		(1.8	)
Interest income				0.8			1.4			.3
Pre-tax income (loss)				(4.0	)		(8.6	)		.3
Income tax benefit (expense)				1.1			2.6			(.2	)
Income (loss) before equity in undistributed earnings (loss) of subsidiaries				(2.9	)		(6.0	)		.1
Equity in undistributed earnings (loss) of subsidiaries				4.9			20.3			(6.3	)
Net income (loss)				2.0			14.3			(6.2	)
Adjustments to reconcile net loss to cash provided (used) by operating activities				(3.5	)		(14.2	)		(18.8	)
		Net cash provided (used) by operating activities		(1.5	)		.1			(25.0	)
Financing activities:
	Repayment of long-term debt			(1.1	)		(.9	)		(1.0	)
	Proceeds from sale of common stock			—			—			115.9
	Common stock repurchased			(0.6	)		(5.5	)		(.6	)
	Repayment of stock option notes receivable			0.2			—			—
	Dividends paid			(0.2	)		—			—
	Proceeds from stock option exercises			0.2			2.0			2.9
		Net cash provided (used) by financing activities		(1.5	)		(4.4	)		117.2
Investing activities:
	Advances from (to) affiliates			5.1			21.2			(61.7	)
	Purchase of property and equipment			—			(9.7	)		—
	Acquisition of business			—			—			(27.8	)
	Investment in Pearle Europe			(2.1	)		(10.3	)		(2.8	)
	Repayment of notes receivable			—			3.1			.1
		Net cash provided (used) by investing activities		3.0			4.3			(92.2	)
Net change in cash				—			—			—
Cash, beginning of period				—			—			—
Cash, end of period			$	—		$	—		$	—

F-26

Schedule I
(continued)

Note to Condensed Financial Information of Registrant

      The accompanying financial information of Cole National Corporation is as of January 29, 2000 and January 30, 1999, and for the 52 weeks ended January 29, 2000, January 30, 1999 and January 31, 1998. Cole National Corporation is a holding company for its wholly-owned subsidiaries, including Cole National Group, Inc. and consisted of no other operations.

      This financial information should be read in connection with the Consolidated Financial Statements and notes thereto of Cole National Corporation and subsidiaries, contained on pages elsewhere in this Form 10-K.

F-27

Schedule II

Cole National Corporation and Subsidiaries
Valuation and Qualifying Accounts
52 Weeks Ended January 29, 2000, January 30, 1999 and January 31, 1998
(Dollars in millions)

			Additions
	Balance at		Charged to		Charged to						Balance at
	Beginning		Costs and		Other						End of
Description	of Period		Expenses		Accounts			Deductions			Period
January 29, 2000
Allowance for Doubtful Accounts	$	7.2	$	4.3	$	—		$	3.9	(A)	$	7.6
Franchise Repurchase Reserve		5.2		0.3		—			1.3	(A)		4.2
January 30, 1999
Allowance for Doubtful Accounts	$	7.1	$	0.9	$	—		$	0.8	(A)	$	7.2
Franchise Repurchase Reserve		6.7		—		—			1.5	(A)		5.2
Discontinued Operation Reserve		1.3		—		—			1.3	(B)		—
January 31, 1998
Allowance for Doubtful Accounts		6.6		1.1		1.8	(C)		2.4	(A)		7.1
Franchise Repurchase Reserve		5.5		0.6		1.5	(C)		0.9	(A)		6.7
Discontinued Operation Reserve		—		1.3		—			—			1.3

(A)	Receivable balances written off, net of recoveries.
(B)	Discontinued operation charges taken against the reserve.
(C)	Purchase price accounting reserves created as a result of the acquisition of AVC.

Reserve balances presented in the Notes to Consolidated Financial Statements are not represented in this schedule.

F-28

EXHIBIT INDEX

Exhibit
Number	Description
3.1(i)	Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 (i) of Cole National Corporation’s Annual Report on Form 10-K for the year ended February 3, 1996 (File No. 1-12814).
3.1(ii)	Certificate of Amendment of the Restated Certificate of Incorporation, incorporated by reference to Exhibit 3.1(ii) to Cole National Corporation’s Annual Report on Form 10-K for the period ended January 31, 1998 (File No. 1-12814).
3.2(ii)	Amended and Restated By-Laws of the Company, incorporated by reference to Exhibit 3.2(ii) of Cole National Corporation’s Annual Report on Form 10-K for the year ended February 3, 1996 (File No. 1-12814).
3.3	Certificate of Designations of Series A Junior Participating Preferred Stock, incorporated by reference to Exhibit 3.3 of Cole National Corporation’s Annual Report on Form 10-K for the year ended February 3, 1996 (File No. 1-12814).
4.1	Indenture dated November 15, 1996, by and among Cole National Group, Inc. and Norwest Bank Minnesota, National Association, as trustee, relating to the 9-7/8% Senior Subordinated Notes Due 2006 (the form of which Senior Subordinated Note is included in such Indenture), incorporated by reference to Exhibit 4.1 of Cole National Corporation’s Report on Form 8-K, filed with the Commission on December 2, 1996 (File No. 1-12814).
4.2	Indenture, dated August 22, 1997, between Cole National Group, Inc. and Norwest Bank Minnesota, National Association, as Trustee, relating to the 8-5/8% Senior Subordinated Notes Due 2007, incorporated by reference to Exhibit 4.4 of Cole National Group, Inc.’s Registration Statement on Form S-1 (Registration No. 333-34963).
4.3	Rights Agreement dated as of November 22, 1999 by and between Cole National Corporation and National City Bank, as Rights Agent.
4.4	Cole National Corporation by this filing agrees, upon request, to file with the Commission the instruments defining the rights of holders of long-term debt of Cole National Corporation and its subsidiaries where the total amount of securities authorized thereunder does not exceed 10% of the total assets of Cole National Corporation and its subsidiaries on a consolidated basis.
10.1*	Employment Agreement entered into as of December 17, 1998 by and among Cole National Corporation, Cole National Group, Inc., Cole Vision Corporation, Pearle, Inc., Things Remembered, Inc. and Jeffrey A. Cole, incorporated by reference to Exhibit 10.1 to Cole National Corporation’s Annual Report on Form 10-K for the year ended January 30, 1999 (File No. 1-12814).
10.2*	Agreement dated March 27, 1993 between Cole National Corporation and Joseph Gaglioti regarding termination of employment, incorporated by reference to Exhibit 10.8 to CNG’s Registration Statement on Form S-1 (Registration No. 33-66342).
10.3*	1992 Management Stock Option Plan, including forms of Nonqualified Stock Option Agreement (Time Vesting) and Nonqualified Stock Option Agreement (Performance Option), as amended, and forms of promissory notes and pledge agreements, incorporated by reference to Exhibit 10.11 to Cole National Group, Inc.’s Registration Statement on Form S-1 (Registration No. 33-66342).

X-1

Exhibit
Number	Description
10.4*	Cole National Corporation 1993 Management Stock Option Plan, including forms of Nonqualified Stock Option Agreement (1993 Time Vesting) and form of secured promissory notes and stock pledge agreement, incorporated by reference to Exhibit 10.29 to Cole National Group, Inc.’s Registration Statement on Form S-1 (Registration No. 33-66342).
10.5*	Form of Option Agreement for Directors of the Company, incorporated by reference to Exhibit 10.41 to Cole National Corporation ‘s Registration Statement on Form S-1 (Registration No. 33-74228).
10.6*	Amended and Restated Nonqualified Stock Option Plan for Non-employee Directors, incorporated by reference to Exhibit A to Cole National Corporation’s Proxy Statement for the 1997 Annual Meeting (File No. 1-12814).
10.7*	Form of Nonqualified Stock Option Agreement for Non-employee Directors, incorporated by reference to Exhibit 10.9 of Cole National Corporation’s Annual Report on Form 10-K for the year ended February 3, 1996 (File No. 1-12814).
10.8*	Cole National Corporation 1996 Management Stock Option Plan, including forms of Nonqualified Stock Option Agreement (1996 Time Vesting), incorporated by reference to Exhibit 10.10 of Cole National Corporation’s Annual Report on Form 10-K for the year ended February 3, 1996 (File No. 1-12814).
10.9*	Management Incentive Bonus Program, incorporated by reference to Exhibit 10.11 to Cole National Corporation’s Annual Report on Form 10-K for the period ended January 31, 1998 (File No. 1-12814).
10.10*	Form of Nonqualified Stock Option Agreement (1997 Time Vesting), incorporated by reference to Exhibit 10.12 to Cole National Corporation’s Annual Report on Form 10-K for the period ended January 31, 1998 (File No. 1-12814).
10.11*	Executive Life Insurance Plan of Cole National Corporation, incorporated by reference to Exhibit 10.12 to Cole National Group, Inc.’s Registration Statement on Form S-1 (Registration No. 33-66342).
10.12*	Medical Expense Reimbursement Plan of Cole National Corporation effective as of February 1, 1992, incorporated by reference to Exhibit 10.13 to Cole National Group, Inc.’s Registration Statement on Form S-1 (Registration No. 33-66342).
10.13	Agreement for the Allocation of Federal Income Tax Liability and Benefits among Members of the Parent Group dated August 23, 1985, as amended, incorporated by reference to Exhibit 10.26 to Cole National Group, Inc.’s Registration Statement on Form S-1 (Registration No. 33-66342).
10.14	Assignment and Assumption Agreement dated as of September 30, 1993 between the Company and Cole National Group, incorporated by reference to Exhibit 10.24 of Cole National Corporation’s Annual Report on Form 10-K for the year ended February 3, 1996 (File No. 1-12814).
10.15	Lease Agreement (Knoxville) dated as of November 28, 1979 by and between Tommy Hensley, as agent for the real property of Mrs. Don Siegel and Cole Vision Corporation, as amended and supplemented, incorporated by reference to Exhibit 10.15 to Cole National Group, Inc.’s Registration Statement on Form S-1 (Registration No. 33-66342).

X-2

Exhibit
Number	Description
10.16	Lease Agreement (Memphis) dated as of October 2, 1991 by and between Shelby Distribution Park and Cole Vision Corporation, incorporated by reference to Exhibit 10.16 to Cole National Group, Inc.’s Registration Statement on Form S-1 (Registration No. 33-66342).
10.17	Lease Agreement (Richmond) dated as of April 23, 1982 by and between Daniel, Daniel & Daniel and Cole Vision Corporation, as amended and supplemented, incorporated by reference to Exhibit 10.17 to Cole National Group, Inc.’s Registration Statement on Form S-1 (Registration No. 33-66342).
10.18	Lease for Multi-Tenancy Space (Salt Lake) dated as of October 30, 1981 by and between East Centennial Joint Venture and Cole Vision Corporation, as amended and supplemented, incorporated by reference to Exhibit 10.18 to Cole National Group, Inc.’s Registration Statement on Form S-1 (Registration No. 33-66342).
10.19	Lease Agreement (Knoxville) dated as of April 11, 1995 by and between Richard T. Fox and Cole Vision Corporation, incorporated by reference to Exhibit 10.29 of Cole National Corporation’s Annual Report on Form 10-K for the year ended February 3, 1996 (File No. 1-12814).
10.20	Form of Lease Agreement Finite 19518 dated as of December 29, 1988 between Sears, Roebuck and Co. and Cole Vision Corporation, incorporated by reference to Exhibit 10.23 to Cole National Group, Inc.’s Registration Statement on Form S-1 (Registration No. 33-66342).
10.21	Form of License Agreement (Optical), incorporated by reference to Exhibit 10.24 to Cole National Group, Inc.’s Registration Statement on Form S-1 (Registration No. 33-66342).
10.22	Form of License/Lease Agreement (Optical), incorporated by reference to Exhibit 10.25 to Cole National Group, Inc.’s Registration Statement on Form S-1 (Registration No. 33-66342).
10.23	Form of Indemnification Agreement for Directors of Cole National Corporation, incorporated by reference to Exhibit 10.19 to Cole National Group, Inc.’s Registration Statement on Form S-1 (Registration No. 33-66342).
10.24	Form of Indemnification Agreement for Officers of Cole National Corporation, incorporated by reference to Exhibit 10.20 to Cole National Group, Inc.’s Registration Statement on Form S-1 (Registration No. 33-66342).
10.25*	Supplemental Retirement Benefit Plan of Cole National Corporation, incorporated by reference to Exhibit 10.38 to Cole National Corporation’s Registration Statement on Form S-1 (Registration No. 33-74228).
10.26*	Supplemental Pension Plan of Cole National Corporation, incorporated by reference to Exhibit 10.48 to Cole National Corporation ‘s Registration Statement on Form S-1 (Registration No. 33-74228).
10.27	Warrant Agreement dated as of September 25, 1990 between Cole National Corporation and the purchasers named therein, incorporated by reference to Exhibit 10.36 to Cole National Corporation ‘s Registration Statement on Form S-1 (Registration No. 33-74228).

X-3

EXHIBIT INDEX

Exhibit
Number	Description
10.28	Lease agreement (Salt Lake) dated as of November 1, 1996 by and between Gibbons Realty Company and Cole Vision Corporation, incorporated by reference to Exhibit 10.01 of Cole National Corporations Quarterly Report on Form 10-Q for the period ended November 2, 1996 (File No. 1-12814).
10.29	Credit Agreement, dated as of November 15, 1996, among Cole Vision Corporation, Things Remembered, Inc., Cole Gift Centers, Inc., Pearle, Inc. and Pearle Service Corporation and Canadian Imperial Bank of Commerce, incorporated by reference to Exhibit 99.1 of Cole National Corporation’s Report on Form 8-K, filed with the Commission on December 2, 1996 (File No. 1-12814).
10.30	First Amendment to the Credit Agreement, dated as of January 13, 1997, among Cole Vision Corporation, Things Remembered, Inc., Cole Gift Centers, Inc., Pearle, Inc., and Pearle Service Corporation and Canadian Imperial Bank of Commerce, incorporated by reference to Exhibit 10.33 of Cole National Group, Inc.’s Registration Statement on Form S-1 (Registration No. 333-34963).
10.31	Second Amendment to Credit Agreement, dated as of August 8, 1997, among Cole Vision Corporation, Things Remembered, Inc., Cole Gift Centers, Inc., Pearle, Inc. and Pearle Service Corporation and Canadian Imperial Bank of Commerce, incorporated by reference to Exhibit 10.34 of the Cole National Group, Inc.’s Registration Statement on Form S-1 (Registration No. 333-34963).
10.32	Cole National Group, Inc. Guarantee and Cash Collateral Agreement, dated as of November 15, 1996, by Cole National Group and Cole National Corporation, incorporated by reference to Exhibit 99.3 of Cole National Corporation’s Report on Form 8-K, filed with the Commission on December 2, 1996 (File No. 1-12814).
10.33	Guarantee and Collateral Agreement dated as of November 15, 1996, by Cole Vision Corporation, Things Remembered, Inc., Cole Gift Centers, Inc., Pearle, Inc. and Pearle Service Corporation and Canadian Imperial Bank of Commerce, Incorporated by reference to Exhibit 99.4 of Cole National Corporation’s Report on Form 8-K, filed with the Commission on December 2, 1996 (File No. 1-12814).
10.34*	Form of Cole National Corporation 401(k) Savings Plan, incorporated by reference to Exhibit 4.1 of Cole National Corporation’s Registration Statement on Form S-8, filed with the Commission on November 20, 1997 (Registration No. 333-40609).
10.35*	Agreement, dated August 4, 1997, between the Company and Leslie D. Dunn regarding termination of employment, incorporated by reference to Exhibit 10.37 of Cole National Group, Inc.’s Registration Statement on Form S-1 (Registration No. 333-34963).
10.36*	Form of Cole National Corporation Non Qualified Stock Option Agreement (Non employee Directors), incorporated by reference to Exhibit 10.5 of Cole National Corporation’s Quarterly Report on Form 10-Q for the period ended August 2, 1997 (File No. 1-12814).
10.37*	Form of Cole National Corporation Non Employee Director Equity and Deferred Compensation Plan, incorporated by reference to Exhibit B to Cole National Corporation’s definitive Proxy Statement dated May 6, 1997 (File No. 1-12814).

X-4

EXHIBIT INDEX

Exhibit
Number	Description
10.38*	Form of Cole National Corporation Non Employee Director Equity and Deferred Compensation Plan Participation Agreement Plan Year 1997, incorporated by reference to Exhibit 10.7 of Cole National Corporation’s Quarterly Report on Form 10-Q for the period ended August 2, 1997 (File No. 1-12814).
10.39*	Form of Cole National Corporation’s Amended 1998 Equity and Performance Incentive Plan, incorporated by reference to Annex B to Cole National Corporation’s definitive Proxy Statement dated May 1, 1998 (File No. 1-12814).
10.40	Third Amendment to the Credit Agreement, dated as of May 15, 1998, among Cole Vision Corporation and Canadian Imperial Bank of Commerce, incorporated by reference to Exhibit 10.1 of Cole National Corporation’s Quarterly Report on Form 10-Q for the period ended May 2, 1998 (File No. 1-12814).
10.41	Fourth Amendment to the Credit Agreement, dated as of March 5, 1999, among Cole Vision Corporation, Things Remembered, Inc. and Pearle, Inc., and Canadian Imperial Bank of Commerce, incorporated by reference to Exhibit 10.45 of Cole National Corporation’s Annual Report on Form 10-K for the period ended January 30, 1999 (File No. 1-12814).
10.42*	Nonqualified Stock Option Agreement between Cole National Corporation and Jeffrey A. Cole dated as of December 17, 1998, incorporated by reference to Exhibit 10.46 of Cole National Corporation’s Annual Report on Form 10-K for the period ended January 30, 1999 (File No. 1-12814).
10.43*	Form of Nonqualified Stock Option Agreement for Executive Officers under the Cole National Corporation 1998 Equity Performance and Incentive Plan, incorporated by reference to Exhibit 10.48 of Cole National Corporation’s Annual Report on Form 10-K for the period ended January 30, 1999 (File No. 1-12814).
10.44*	Restricted Stock Agreement between Cole National Corporation and Jeffrey A. Cole dated as of December 17, 1998, incorporated by reference to Exhibit 10.49 of Cole National Corporation’s Annual Report on Form 10-K for the period ended January 30, 1999 (File No. 1-12814).
10.45*	Cole National Group, Inc. 1999 Supplemental Retirement Benefit Plan dated as of December 17, 1998, incorporated by reference to Exhibit 10.51 of Cole National Corporation’s Annual Report on Form 10-K for the period ended January 30, 1999 (File No. 1-12814).
10.46*	Instrument Designating Participants of the Cole National Group, Inc. 1999 Supplemental Retirement Benefit Plan dated December 17, 1998, incorporated by reference to Exhibit 10.52 of Cole National Corporation’s Annual Report on Form 10-K for the period ended January 30, 1999 (File No. 1-12814).
10.47*	Cole National Group, Inc. Deferred Compensation Plan effective as of February 1, 1999, incorporated by reference to Exhibit 10.53 of Cole National Corporation’s Annual Report on Form 10-K for the period ended January 30, 1999 (File No. 1-12814).
10.48*	Amendment No. 1, dated as of December 17, 1998, to the Cole National Group, Inc. Supplemental Pension Plan, incorporated by reference to Exhibit 10.54 of Cole National Corporation’s Annual Report on Form 10-K for the period ended January 30, 1999 (File No. 1-12814).

X-5

EXHIBIT INDEX

Exhibit
Number	Description
10.49	Fifth Amendment to the Credit Agreement, dated as of August 20, 1999, among Cole Vision Corporation, Things Remembered, Inc. and Pearle, Inc., and Canadian Imperial Bank of Commerce, incorporated by reference to Exhibit 10.1 of Cole National Corporation’s Quarterly Report on Form 10-Q for the period ended July 31, 1999 (File No. 1-12814).
10.50	Sixth Amendment and Waiver to the Credit Agreement, dated as of March 7, 2000, among Cole Vision Corporation, Things Remembered, Inc. and Pearle, Inc., and Canadian Imperial Bank of Commerce.
10.51	Cole National Corporation Guarantee, in favor of Canadian Imperial Bank of Commerce, dated as of March 7, 2000, among Cole Vision Corporation, Things Remembered, Inc. and Pearle, Inc.
10.52*	Employment Agreement entered into as of January 18, 2000 by and among Cole National Corporation and Larry Pollock.
10.53*	Restricted Stock Agreement between Cole National Corporation and Larry Pollock dated as of January 18, 2000.
10.54*	Nonqualified Stock Option Agreement #1 between Cole National Corporation and Larry Pollock dated as of January 18, 2000.
10.55*	Nonqualified Stock Option Agreement #2 between Cole National Corporation and Larry Pollock dated as of January 18, 2000.
10.56	Standstill Agreement, dated as of November 22, 1999, by and between Cole National Corporation and HAL International N.V.
10.57*	Agreement dated December 22, 1999 between Cole National Corporation and William P. Lahiff, Jr., regarding termination of employment.
10.58*	Letter agreement dated as of December 22, 1999 between Cole National Corporation and William P. Lahiff, Jr.
10.59*	Letter Agreement dated October 14, 1999 between Cole National Corporation and Wayne L. Mosley regarding termination of employment.
10.60*	Letter agreement dated March 23, 2000 between Cole National Corporation and Thomas T.S. Kaung.
10.61*	Agreement dated March 23, 2000 between Cole National Corporation and Thomas T.S. Kaung regarding termination of employment.
10.62*	Nonqualified Stock Option Agreement (Grant #1) between Cole National Corporation and Thomas T.S. Kaung dated as of March 23, 2000.
10.63*	Nonqualified Stock Option Agreement (Grant #2) between Cole National Corporation and Thomas T.S. Kaung dated as of March 23, 2000.
10.64*	Form of Cole National Corporation’s 1999 Employee Stock Purchase Plan, incorporated by reference to Annex A of Cole National Corporation’s definitive Proxy Statement dated May 3, 1999 (File No. 1-12814).

X-6

EXHIBIT INDEX

Exhibit
Number	Description
10.65*	Form of Cole National Corporation’s 1999 Broad-Based Employee Stock Option Plan, incorporated by reference to Exhibit 4.6 of Cole National Corporation’s Registration Statement on Form S-8 (Registration No. 333-822714).
10.66*	Instrument Designating Participant of the Cole National Group, Inc. 1999 Supplemental Retirement Benefit Plan dated January 1, 2000.
10.67*	Addendum to Employment Agreement dated June 4, 1999 among Jeffrey A. Cole, Cole National Corporation and certain of its subsidiaries.
10.68*	Split-Dollar Agreement dated as of June 4, 1999 between Cole National Corporation and Jo Merrill, as Trustee of the Jeffrey A. Cole Insurance Trust.
10.69	Seventh Amendment to the Credit Agreement, dated as of April 21, 2000, among Cole Vision Corporation, Things Remembered, Inc. and Pearle, Inc., and Canadian Imperial Bank of Commerce.
21	Subsidiaries of Cole National Corporation.
24	Power(s) of Attorney.
27	Financial Data Schedule.

* Reflects management contract or other compensatory arrangement required to be filed as an exhibit pursuant to Item 14(c) of this Form 10-K.

X-7 EX-4.3 2 EXHIBITI 4.3 1 Exhibit 4.3 ================================================================================ RIGHTS AGREEMENT Dated as of November 22, 1999 By and Between Cole National Corporation and National City Bank, as Rights Agent ================================================================================ 2 TABLE OF CONTENTS ----------------- Page ---- 1. Certain Definitions ............................................1 2. Appointment of Rights Agent ....................................6 3. Issue of Right Certificates ....................................6 4. Form of Right Certificates .....................................8 5. Countersignature and Registration ..............................9 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates ..................................................10 7. Exercise of Rights; Purchase Price; Expiration Date of Rights ........................................................10 8. Cancellation and Destruction of Right Certificates ............12 9. Company Covenants Concerning Securities and Rights ............12 10. Record Date ...................................................15 11. Adjustment of Purchase Price, Number and Kind of Securities or Number of Rights ...........................................15 12. Certificate of Adjusted Purchase Price or Number of Securities ....................................................26 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power .................................................27 14. Fractional Rights and Fractional Securities ...................30 15. Rights of Action ..............................................32 16. Agreement of Rights Holders ...................................32 17. Right Certificate Holder Not Deemed a Stockholder .............33 18. Concerning the Rights Agent ...................................34 19. Merger or Consolidation or Change of Name of Rights Agent .....34 (i) 3 Page ---- 20. Duties of Rights Agent ........................................35 21. Change of Rights Agent ........................................37 22. Issuance of New Right Certificates ............................38 23. Redemption ....................................................39 24. Exchange ......................................................40 25. Notice of Certain Events ......................................41 26. Notices .......................................................42 27. Supplements and Amendments ....................................43 28. Successors; Certain Covenants .................................44 29. Benefits of This Agreement ....................................44 30. Governing Law .................................................44 31. Severability ..................................................44 32. Descriptive Headings, Etc .....................................45 33. Determinations and Actions by the Board .......................45 34. Counterparts ..................................................45 Exhibit A .............................................................A-1 Exhibit B .............................................................B-1 Exhibit C .............................................................C-1 (ii) 4 RIGHTS AGREEMENT This RIGHTS AGREEMENT, dated as of November 22, 1999 (this "Agreement"), is made and entered into by and between Cole National Corporation, a Delaware corporation (the "Company"), and National City Bank, a national banking association (the "Rights Agent"). RECITALS WHEREAS, on November 18, 1999, the Board of the Company authorized and declared a dividend distribution of one right (a "Right") for each share of Common Stock, par value $.001 per share, of the Company (a "Common Share") outstanding as of the Close of Business (as hereinafter defined) on December 6, 1999 (the "Record Date"), each Right initially representing the right to purchase one one-hundredth of a Preferred Share (as hereinafter defined), on the terms and subject to the conditions herein set forth, and further authorized and directed the issuance of one Right (subject to adjustment as provided herein) with respect to each Common Share issued or delivered by the Company (whether originally issued or delivered from the Company's treasury) after the Record Date but prior to the earlier of the Distribution Date (as hereinafter defined) and the Expiration Date (as hereinafter defined) or as provided in Section 22. Notwithstanding anything to the contrary in this Agreement, this Agreement will not be effective until the effectiveness of the redemption of the rights issued pursuant to that certain Rights Agreement, dated as of August 22, 1995, as amended, by and between the Company and National City Bank. NOW, THEREFORE, in consideration of the mutual agreements herein set forth, the parties hereto hereby agree as follows: 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the following terms have the meanings indicated: (a) "ACQUIRING PERSON" means any Person (other than the Company, any Related Person or HAL (for so long as HAL is in compliance with the terms of the Standstill Agreement, dated as of November 22, 1999, as it may be amended from time to time, by and between the Company and HAL, and only unless and until HAL shall have become the Beneficial Owner of a percentage of Common Shares then outstanding that equals or exceeds the HAL Percentage, at which time HAL shall be an Acquiring Person)) who or which, together with all Affiliates and Associates of such Person, is the Beneficial Owner of 15% or more of the then- outstanding Common Shares; PROVIDED, HOWEVER, that a Person will 5 not be deemed to have become an Acquiring Person solely as a result of a reduction in the number of Common Shares outstanding unless and until such time as (i) such Person or any Affiliate or Associate of such Person thereafter becomes the Beneficial Owner of additional Common Shares representing 1% or more of the then-outstanding Common Shares, other than as a result of a stock dividend, stock split or similar transaction effected by the Company in which all holders of Common Shares are treated equally, or (ii) any other Person who is the Beneficial Owner of Common Shares representing 1% or more of the then-outstanding Common Shares thereafter becomes an Affiliate or Associate of such Person. Notwithstanding the foregoing, if the Board of Directors of the Company determines in good faith that a Person who would otherwise be an "Acquiring Person" as defined pursuant to the foregoing provisions of this paragraph (a), has become such inadvertently, and such Person divests as promptly as practicable a sufficient number of Common Shares so that such Person would no longer be an "Acquiring Person" as defined pursuant to the foregoing provisions of this paragraph (a), then such Person shall not be deemed to be an "Acquiring Person" for any purposes of this Agreement. (b) "AFFILIATE" and "ASSOCIATE" will have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in effect on the date of this Agreement, PROVIDED HOWEVER, that a Person will not be deemed to be the Affiliate or Associate of another Person solely because either or both Persons are or were Directors of the Company. (c) A Person will be deemed the "BENEFICIAL OWNER" of and to "BENEFICIALLY OWN," any securities: (i) the beneficial ownership of which such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing), or upon the exercise of conversion rights, exchange rights, warrants, options or other rights (in each case, other than upon exercise or exchange of the Rights); PROVIDED, HOWEVER, that a Person will not be deemed the Beneficial Owner of, or to Beneficially Own, securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange; or 2 6 (ii) which such Person or any of such Person's Affiliates or Associates, directly or indirectly, has or shares the right to vote or dispose of, including pursuant to any agreement, arrangement or understanding (whether or not in writing); or (iii) of which any other Person is the Beneficial Owner, if such Person or any of such Person's Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing) with such other Person (or any of such other Person's Affiliates or Associates) with respect to acquiring, holding, voting or disposing of any securities of the Company; PROVIDED, HOWEVER, that a Person will not be deemed the Beneficial Owner of, or to Beneficially Own, any security (A) if such Person has the right to vote such security pursuant to an agreement, arrangement or understanding (whether or not in writing) which (1) arises solely from a revocable proxy given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act and (2) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report), or (B) if such beneficial ownership arises solely as a result of such Person's status as a "clearing agency," as defined in Section 3(a)(23) of the Exchange Act; PROVIDED FURTHER, HOWEVER, that nothing in this paragraph (c) will cause a Person engaged in business as an underwriter of securities to be the Beneficial Owner of, or to Beneficially Own, any securities acquired through such Person's participation in good faith in an underwriting syndicate until the expiration of 40 calendar days after the date of such acquisition, or such later date as the Directors of the Company may determine in any specific case. (d) "BUSINESS DAY" means any day other than a Saturday, Sunday or a day on which banking institutions in the State of Ohio (or such other state in which the principal office of the Rights Agent is located) are authorized or obligated by law or executive order to close. (e) "CLOSE OF BUSINESS" on any given date means 5:00 P.M., Eastern time, on such date; PROVIDED, HOWEVER, that if such date is not a Business Day it means 5:00 P.M., Eastern time, on the next succeeding Business Day. (f) "COMMON SHARES" when used with reference to the Company means the shares of Common Stock, par value $.001 per share, of the Company; PROVIDED, HOWEVER, that, if the Company is the 3 7 continuing or surviving corporation in a transaction described in Section 13(a) (ii), "Common Shares" when used with reference to the Company means shares of the capital stock or units of the equity interests with the greatest aggregate voting power of the Company. "Common Shares" when used with reference to any corporation or other legal entity other than the Company, including an Issuer, means shares of the capital stock or units of the equity interests with the greatest aggregate voting power of such corporation or other legal entity. (g) "COMPANY" means Cole National Corporation, a Delaware corporation. (h) "DISTRIBUTION DATE" means the earlier of: (i) the Close of Business on the tenth calendar day following the Share Acquisition Date, or (ii) the Close of Business on the tenth Business Day (or, unless the Distribution Date shall have previously occurred, such later date as may be specified by the Board of Directors of the Company) after the commencement of a tender or exchange offer by any Person (other than the Company or any Related Person), if upon the consummation thereof such Person would be the Beneficial Owner of 15% or more of the then-outstanding Common Shares. (i) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. (j) "EXPIRATION DATE" means the earliest of (i) the Close of Business on the Final Expiration Date, (ii) the time at which the Rights are redeemed as provided in Section 23, and (iii) the time at which all exercisable Rights are exchanged as provided in Section 24. (k) "FINAL EXPIRATION DATE" means the tenth anniversary of the Record Date. (l) "FLIP-IN EVENT" means any event described in clauses (A), (B) or (C) of Section 11(a)(ii). (m) "FLIP-OVER EVENT" means any event described in clauses (i), (ii) or (iii) of Section 13(a). (n) "HAL" shall mean HAL Holding N.V. and its Affiliates and Associates. (o) "HAL PERCENTAGE" shall mean 25%. However, if on June 30, 2001, HAL is not the Beneficial Owner (as defined in the Standstill Agreement) of 20% or more of the Total Voting Power (as defined in the Standstill Agreement) outstanding at the close 4 8 of business on June 30, 2001, then the HAL Percentage shall be reduced to the greater of the Total Voting Power Beneficially Owned (each as defined in the Standstill Agreement) by HAL on June 30, 2001 or 15%. (p) "ISSUER" has the meaning set forth in Section 13(b). (q) "NASDAQ" means The NASDAQ Stock Market. (r) "PERSON" means any individual, firm, corporation or other legal entity, and includes any successor (by merger or otherwise) of such entity. (s) "PREFERRED SHARES" means shares of Series A Junior Participating Preferred Stock, without par value, of the Company having the rights and preferences set forth in the form of Certificate of Designation of Series A Junior Participating Preferred Stock attached as EXHIBIT A. (t) "PURCHASE PRICE" means initially $40.00 per one one-hundredth of a Preferred Share, subject to adjustment from time to time as provided in this Agreement. (u) "RECORD DATE" has the meaning set forth in the Recitals to this Agreement. (v) "REDEMPTION PRICE" means $.01 per Right, subject to adjustment by resolution of the Board of Directors of the Company to reflect any stock split, stock dividend or similar transaction occurring after the Record Date. (w) "RELATED PERSON" means (i) any Subsidiary of the Company or (ii) any employee benefit or stock ownership plan of the Company or of any Subsidiary of the Company or any entity holding Common Shares for or pursuant to the terms of any such plan. (x) "RIGHT" has the meaning set forth in the Recitals to this Agreement. (y) "RIGHT CERTIFICATES" means certificates evidencing the Rights, in substantially the form attached as EXHIBIT B. (z) "RIGHTS AGENT" means National City Bank, unless and until a successor Rights Agent has become such pursuant to the terms of this Agreement, and thereafter, "Rights Agent" means such successor Rights Agent. 5 9 (aa) "SECURITIES ACT" means the Securities Act of 1933, as amended. (bb) "SHARE ACQUISITION DATE" means the first date of public announcement by the Company (by press release, filing made with the Securities and Exchange Commission or otherwise) that an Person has become such. (cc) "SUBSIDIARY" when used with reference to any Person means any corporation or other legal entity of which a majority of the voting power of the voting equity securities or equity interests is owned, directly or indirectly, by such Person; PROVIDED, HOWEVER, that for purposes of Section 13(b), "Subsidiary" when used with reference to any Person means any corporation or other legal entity of which at least 20% of the voting power of the voting equity securities or equity interests is owned, directly or indirectly, by such Person. (dd) "TRADING DAY" means any day on which the principal national securities exchange on which the Common Shares are listed or admitted to trading is open for the transaction of business or, if the Common Shares are not listed or admitted to trading on any national securities exchange, a Business Day. (ee) "TRIGGERING EVENT" means any Flip-in Event or Flip-over Event. 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the Rights Agent to act as agent for the Company and the holders of the Rights (who, in accordance with Section 3, will also be, prior to the Distribution Date, the holders of the Common Shares) in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment and hereby certifies that it complies with the requirements of the New York Stock Exchange governing transfer agents and registrars. The Company may from time to time act as Co-Rights Agent or appoint such Co-Rights Agents as it may deem necessary or desirable. Any actions which may be taken by the Rights Agent pursuant to the terms of this Agreement may be taken by any such Co-Rights Agent. To the extent that any Co-Rights Agent takes any action pursuant to this Agreement, such Co-Rights Agent will be entitled to all of the rights and protections of, and subject to all of the applicable duties and obligations imposed upon, the Rights Agent pursuant to the terms of this Agreement. 3. ISSUE OF RIGHT CERTIFICATES. (a) Until the Distribution Date, (i) the Rights will be evidenced by the certificates representing Common Shares registered in the names of the record holders thereof (which certificates representing 6 10 Common Shares will also be deemed to be Right Certificates), (ii) the Rights will be transferable only in connection with the transfer of the underlying Common Shares, and (iii) the surrender for transfer of any certificates evidencing Common Shares in respect of which Rights have been issued will also constitute the transfer of the Rights associated with the Common Shares evidenced by such certificates. (b) Rights will be issued by the Company in respect of all Common Shares (other than Common Shares issued upon the exercise or exchange of any Right) issued or delivered by the Company (whether originally issued or delivered from the Company's treasury) after the Record Date but prior to the earlier of the Distribution Date and the Expiration Date. Certificates evidencing such Common Shares will have stamped on, impressed on, printed on, written on, or otherwise affixed to them the following legend or such similar legend as the Company may deem appropriate and as is not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange or transaction reporting system on which the Common Shares may from time to time be listed or quoted, or to conform to usage: This Certificate also evidences and entitles the holder hereof to certain Rights as set forth in a Rights Agreement between Cole National Corporation and National City Bank, dated as of November 22, 1999, as the same may be amended from time to time (the "Rights Agreement"), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of Cole National Corporation. The Rights are not exercisable prior to the occurrence of certain events specified in the Rights Agreement. Under certain circumstances, as set forth in the Rights Agreement, such Rights may be redeemed, may be exchanged, may expire, may be amended, or may be evidenced by separate certificates and no longer be evidenced by this Certificate. Cole National Corporation will mail to the holder of this Certificate a copy of the Rights Agreement, as in effect on the date of mailing, without charge promptly after receipt of a written request therefor. Under certain circumstances as set forth in the Rights Agreement, Rights that are or were beneficially owned by an Acquiring Person or any Affiliate or Associate of an Acquiring Person (as such terms are defined in the Rights Agreement) may become null and void. 7 11 (c) Any Right Certificate issued pursuant to this Section 3 that represents Rights beneficially owned by an Acquiring Person or any Associate or Affiliate thereof and any Right Certificate issued at any time upon the transfer of any Rights to an Acquiring Person or any Associate or Affiliate thereof or to any nominee of such Acquiring Person, Associate or Affiliate and any Right Certificate issued pursuant to Section 6 or 11 hereof upon transfer, exchange, replacement or adjustment of any other Right Certificate referred to in this sentence, shall be subject to and contain the following legend or such similar legend as the Company may deem appropriate and as is not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed, or to conform to usage: The Rights represented by this Right Certificate are or were beneficially owned by a Person who was an Acquiring Person or an Affiliate or an Associate of an Acquiring Person (as such terms are defined in the Rights Agreement). This Right Certificate and the Rights represented hereby may become null and void in the circumstances specified in Section 11(a)(ii) or Section 13 of the Rights Agreement. (d) As promptly as practicable after the Distribution Date, the Company will prepare and execute, the Rights Agent will countersign and the Company will send or cause to be sent (and the Rights Agent will, if requested, send), by first class, insured, postage prepaid mail, to each record holder of Common Shares as of the Close of Business on the Distribution Date, at the address of such holder shown on the records of the Company, a Right Certificate evidencing one Right for each Common Share so held, subject to adjustment as provided herein. As of and after the Distribution Date, the Rights will be evidenced solely by such Right Certificates. (e) In the event that the Company purchases or otherwise acquires any Common Shares after the Record Date but prior to the Distribution Date, any Rights associated with such Common Shares will be deemed canceled and retired so that the Company will not be entitled to exercise any Rights associated with the Common Shares so purchased or acquired. 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the form of election to purchase and the form of assignment to be printed on the reverse thereof) will be substantially in the form attached as EXHIBIT B with such changes and marks of identification or designation, and such legends, summaries or 8 12 endorsements printed thereon, as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange or transaction reporting system on which the Rights may from time to time be listed or quoted, or to conform to usage. Subject to the provisions of Section 22, the Right Certificates, whenever issued, on their face will entitle the holders thereof to purchase such number of one one-hundredths of a Preferred Share as are set forth therein at the Purchase Price set forth therein, but the Purchase Price, the number and kind of securities issuable upon exercise of each Right and the number of Rights outstanding will be subject to adjustment as provided herein. 5. COUNTERSIGNATURE AND REGISTRATION. (a) The Right Certificates will be executed on behalf of the Company by its Chairman of the Board, its President or any Vice President, either manually or by facsimile signature, and will have affixed thereto the Company's seal or a facsimile thereof which will be attested by the Secretary or an Assistant Secretary of the Company, either manually or by facsimile signature. The Right Certificates will be manually countersigned by the Rights Agent and will not be valid for any purpose unless so countersigned. In case any officer of the Company who signed any of the Right Certificates ceases to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Right Certificates, nevertheless, may be countersigned by the Rights Agent, and issued and delivered by the Company with the same force and effect as though the person who signed such Right Certificates had not ceased to be such officer of the Company; and any Right Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Right Certificate, is a proper officer of the Company to sign such Right Certificate, although at the date of the execution of this Rights Agreement any such person was not such officer. (b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at the principal office of the Rights Agent designated for such purpose and at such other offices as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange or any transaction reporting system on which the Rights may from time to time be listed or quoted, books for registration and transfer of the Right Certificates issued hereunder. Such books will show the names and addresses of the respective holders of the Right Certificates, the number of Rights evidenced on its face by each 9 13 of the Right Certificates and the date of each of the Right Certificates. 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. (a) Subject to the provisions of Sections 7(d) and if, at any time after the Close of Business on the Distribution Date and prior to the Expiration Date, any Right Certificate or Right Certificates representing exercisable Rights may be transferred, split up, combined or exchanged for another Right Certificate or Right Certificates, entitling the registered holder to purchase a like number of one one-hundredths of a Preferred Share (or other securities, as the case may be) as the Right Certificate or Right Certificates surrendered then entitled such holder (or former holder in the case of a transfer) to purchase. Any registered holder desiring to transfer, split up, combine or exchange any such Right Certificate or Rights Certificates must make such request in a writing delivered to the Rights Agent and must surrender the Right Certificate or Right Certificates to be transferred, split up, combined or exchanged at the principal office of the Rights Agent designated for such purpose. Thereupon or as promptly as practicable thereafter, subject to the provisions of Sections 7(d) and 14, the Company will prepare, execute and deliver to the Rights Agent, and the Rights Agent will countersign and deliver, a Right Certificate or Right Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Right Certificates. (b) Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Right Certificate and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and, if requested by the Company, reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Right Certificate if mutilated, the Company will prepare, execute and deliver a new Right Certificate of like tenor to the Rights Agent and the Rights Agent will countersign and deliver such new Right Certificate to the registered holder in lieu of the Right Certificate so lost, stolen, destroyed or mutilated. 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS. (a) The registered holder of any Right Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein) in whole or in part at any time after the 10 14 Distribution Date and prior to the Expiration Date, upon surrender of the Right Certificate, with the form of election to purchase on the reverse side thereof duly executed, to the Rights Agent at the office or offices of the Rights Agent designated for such purpose, together with payment in cash, in lawful money of the United States of America by certified check or bank draft payable to the order of the Company, equal to the sum of (i) the exercise price for the total number of securities as to which such surrendered Rights are exercised and (ii) an amount equal to any applicable transfer tax required to be paid by the holder of such Right Certificate in accordance with the provisions of Section 9(d). (b) Upon receipt of a Right Certificate representing exercisable Rights with the form of election to purchase duly executed, accompanied by payment as described above, the Rights Agent will promptly (i) requisition from any transfer agent of the Preferred Shares (or make available, if the Rights Agent is the transfer agent) certificates representing the number of one one-hundredths of a Preferred Share to be purchased (and the Company hereby irrevocably authorizes and directs its transfer agent to comply with all such requests), or, if the Company elects to deposit Preferred Shares issuable upon exercise of the Rights hereunder with a depositary agent, requisition from the depositary agent depositary receipts representing such number of one one-hundredths of a Preferred Share as are to be purchased (and the Company hereby irrevocably authorizes and directs such depositary agent to comply with all such requests), (ii) after receipt of such certificates (or depositary receipts, as the case may be), cause the same to be delivered to or upon the order of the registered holder of such Right Certificate, registered in such name or names as may be designated by such holder, (iii) when appropriate, requisition from the Company or any transfer agent therefor (or make available, if the Rights Agent is the transfer agent) certificates representing the number of equivalent common shares to be issued in lieu of the issuance of Common Shares in accordance with the provisions of Section 11(a)(iii), (iv) when appropriate, after receipt of such certificates, cause the same to be delivered to or upon the order of the registered holder of such Right Certificate, registered in such name or names as may be designated by such holder, (v) when appropriate, requisition from the Company the amount of cash to be paid in lieu of the issuance of fractional shares in accordance with the provisions of Section 14 or in lieu of the issuance of Common Shares in accordance with the provisions of Section 11(a)(iii), (vi) when appropriate, after receipt, deliver such cash to or upon the order of the registered holder of such Right Certificate, and (vii) when appropriate, deliver any due bill or other instrument provided to the Rights Agent by the 11 15 Company for delivery to the registered holder of such Right Certificate as provided by Section 11(1). (c) In case the registered holder of any Right Certificate exercises less than all the Rights evidenced thereby, the Company will prepare, execute and deliver a new Right Certificate evidencing Rights equivalent to the Rights remaining unexercised and the Rights Agent will countersign and deliver such new Right Certificate to the registered holder of such Right Certificate or to his duly authorized assigns, subject to the provisions of Section 14. (d) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company will be obligated to undertake any action with respect to any purported transfer, split up, combination or exchange of any Right Certificate pursuant to Section 6 or exercise of a Right Certificate as set forth in this Section 7 unless the registered holder of such Right Certificate has (i) completed and signed the certificate following the form of assignment or the form of election to purchase, as applicable, set forth on the reverse side of the Right Certificate surrendered for such transfer, split up, combination, exchange or exercise and (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company may reasonably request. 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All Right Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange will, if surrendered to the Company or to any of its stock transfer agents, be delivered to the Rights Agent for cancellation or in canceled form, or, if surrendered to the Rights Agent, will be canceled by it, and no Right Certificates will be issued in lieu thereof except as expressly permitted by the provisions of this Agreement. The Company will deliver to the Rights Agent for cancellation and retirement, and the Rights Agent will so cancel and retire, any other Right Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent will deliver all canceled Right Certificates to the Company, or will, at the written request of the Company, destroy such canceled Right Certificates, and in such case will deliver a certificate of destruction thereof to the Company. 9. COMPANY COVENANTS CONCERNING SECURITIES AND RIGHTS. The Company covenants and agrees that: (a) It will cause to be reserved and kept available out of its authorized and unissued Preferred Shares or any 12 16 Preferred Shares held in its treasury, a number of Preferred Shares that will be sufficient to permit the exercise in full of all outstanding Rights in accordance with Section 7. (b) So long as the Preferred Shares (and, following the occurrence of a Triggering Event, Common Shares and/or other securities) issuable upon the exercise of the Rights may be listed on a national securities exchange, or quoted on Nasdaq, it will endeavor to cause, from and after such time as the Rights become exercisable, all securities reserved for issuance upon the exercise of Rights to be listed on such exchange, or quoted on Nasdaq, upon official notice of issuance upon such exercise. (c) It will take all such action as may be necessary to ensure that all Preferred Shares (and, following the occurrence of a Triggering Event, Common Shares and/or other securities) delivered upon exercise of Rights, at the time of delivery of the certificates for such securities, will be (subject to payment of the Purchase Price) duly authorized, validly issued, fully paid and nonassessable securities. (d) It will pay when due and payable any and all federal and state transfer taxes and charges that may be payable in respect of the issuance or delivery of the Right Certificates and of any certificates representing securities issued upon the exercise of Rights; PROVIDED, HOWEVER, that the Company will not be required to pay any transfer tax or charge which may be payable in respect of any transfer or delivery of Right Certificates to a person other than, or the issuance or delivery of certificates or depositary receipts representing securities issued upon the exercise of Rights in a name other than that of, the registered holder of the Right Certificate evidencing Rights surrendered for exercise, or to issue or deliver any certificates or depositary receipts representing securities issued upon the exercise of any Rights until any such tax or charge has been paid (any such tax or charge being payable by the holder of such Right Certificate at the time of surrender) or until it has been established to the Company's reasonable satisfaction that no such tax is due. (e) It will use its best efforts (i) to file on an appropriate form, as soon as practicable following the later of the Share Acquisition Date and the Distribution Date, a registration statement under the Securities Act with respect to the securities issuable upon exercise of the Rights, (ii) to cause such registration statement to become effective as soon as practicable after such filing, and (iii) to cause 13 17 such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Securities Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for such securities and (B) the Expiration Date. The Company will also take such action as may be appropriate under, or to ensure compliance with, the securities or "blue sky" laws of the various states in connection with the exercisability of the Rights. The Company may temporarily suspend, for a period of time after the date set forth in clause (i) of the first sentence of this Section 9(e), the exercisability of the Rights in order to prepare and file such registration statement and to permit it to become effective. Upon any such suspension, the Company will issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect. In addition, if the Company determines that a registration statement should be filed under the Securities Act or any state securities laws following the Distribution Date, the Company may temporarily suspend the exercisability of the Rights in each relevant jurisdiction until such time as a registration statement has been declared effective and, upon any such suspension, the Company will issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect. Notwithstanding anything in this Agreement to the contrary, the Rights will not be exercisable in any jurisdiction if the requisite registration or qualification in such jurisdiction has not been effected or the exercise of the Rights is not permitted under applicable law. (f) Notwithstanding anything in this Agreement to the contrary, after the later of the Share Acquisition Date and the Distribution Date it will not take (or permit any Subsidiary to take) any action if at the time such action taken it is reasonably foreseeable that such action will eliminate or otherwise diminish the benefits intended to be afforded by the Rights. (g) In the event that the Company is obligated to issue other securities of the Company and/or pay cash pursuant to Section 11, 13, 14 or 24 it will make all arrangements necessary so that such other securities and/or cash are available for distribution by the Rights Agent, if and when appropriate. 14 18 10. RECORD DATE. Each Person in whose name any certificate representing Preferred Shares (or Common Shares and/or other securities, as the case may be) is issued upon the exercise of Rights will for all purposes be deemed to have become the holder of record of the Preferred Shares (or Common Shares and/or other securities, as the case may be) represented thereby on, and such certificate will be dated, the date upon which the Right Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price (and all applicable transfer taxes) was made; PROVIDED, HOWEVER, that if the date of such surrender and payment is a date upon which the transfer books of the Company for the Preferred Shares (or Common Shares and/or other securities, as the case may be) are closed, such Person will be deemed to have become the record holder of such securities on, and such certificate will be dated, the next succeeding Business Day on which the transfer books of the Company for the Preferred Shares (or Common Shares and/or other securities, as the case may be) are open. Prior to the exercise of the Rights evidenced thereby, the holder of a Right Certificate will not be entitled to any rights of a holder of any security for which the Rights are or may become exercisable, including, without limitation, the right to vote, to receive dividends or other distributions, or to exercise any preemptive rights, and will not be entitled to receive any notice of any proceedings of the Company, except as provided herein. 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SECURITIES OR NUMBER OF RIGHTS. The Purchase Price, the number and kind of securities issuable upon exercise of each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11. (a) (i) In the event that the Company at any time after the Record Date (A) declares a dividend on the Preferred Shares payable in Preferred Shares, (B) subdivides the outstanding Preferred Shares, (C) combines the outstanding Preferred Shares into a smaller number of Preferred Shares, or (D) issues any shares of its capital stock in a reclassification of the Preferred Shares (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this Section 11(a), the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification and/or the number and/or kind of shares of capital stock issuable on such date upon exercise of a Right, will be proportionately adjusted so that the holder of any Right exercised after such time is entitled to receive upon payment of the 15 19 Purchase Price then in effect the aggregate number and kind of shares of capital stock which, if such Right had been exercised immediately prior to such date and at a time when the transfer books of the Company for the Preferred Shares were open, the holder of such Right would have owned upon such exercise (and, in the case of a reclassification, would have retained after giving effect to such reclassification) and would have been entitled to receive by virtue of such dividend, subdivision, combination or reclassification; PROVIDED, HOWEVER, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock issuable upon exercise of one Right. If an event occurs which would require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii) or Section 13, the adjustment provided for in this Section 11(a)(i) will be in addition to, and will be made prior to, any adjustment required pursuant to Section 11(a)(ii) or Section 13. (ii) Subject to the provisions of Section 24, if: (A) any Person becomes an Acquiring Person; or (B) any Acquiring Person or any Affiliate or Associate of any Acquiring Person, directly or indirectly, (1) merges into the Company or otherwise combines with the Company and the Company is the continuing or surviving corporation of such merger or combination (other than in a transaction subject to Section 13), (2) merges or otherwise combines with any Subsidiary of the Company, (3) in one or more transactions (otherwise than in connection with the exercise, exchange or conversion of securities exercisable or exchangeable for or convertible into shares of any class of capital stock of the Company or any of its Subsidiaries) transfers cash, securities or any other property to the Company or any of its Subsidiaries in exchange (in whole or in part) for shares of any class of capital stock of the Company or any of its Subsidiaries or for securities exercisable or exchangeable for or convertible into shares of any class of capital stock of the Company or any of its Subsidiaries, or otherwise obtains from the Company or any of its Subsidiaries, with or without consideration, any additional shares of any class of capital stock of the Company or any of its Subsidiaries or securities exercisable or exchangeable for or convertible into shares of any class of capital stock of the Company or any of its Subsidiaries (otherwise than as part of a pro rata distribution to all holders of shares of any class of capital stock of the Company, or any of its Subsidiaries), (4) sells, purchases, 16 20 leases, exchanges, mortgages, pledges, transfers or otherwise disposes (in one or more transactions) to, from, with or of, as the case may be, the Company or any of its Subsidiaries (otherwise than in a transaction subject to Section 13), any property, including securities, on terms and conditions less favorable to the Company than the Company would be able to obtain in an arm's-length transaction with an unaffiliated third party, (5) receives any compensation from the Company or any of its Subsidiaries other than compensation as a director or a regular full-time employee, in either case at rates consistent with the Company's (or its Subsidiaries') past practices, or (6) receives the benefit, directly or indirectly (except proportionately as a stockholder), of any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantage provided by the Company or any of its Subsidiaries; or (C) during such time as there is an Acquiring Person, there is any reclassification of securities of the Company (including any reverse stock split), or any recapitalization of the Company, or any merger or consolidation of the Company with any of its Subsidiaries, or any other transaction or series of transactions involving the Company or any of its Subsidiaries (whether or not with or into or otherwise involving an Acquiring Person), other than a transaction subject to Section 13, which has the effect, directly or indirectly, of increasing by more than 1% the proportionate share of the outstanding shares of any class of equity securities of the Company or any of its Subsidiaries, or of securities exercisable or exchangeable for or convertible into equity securities of the Company or any of its Subsidiaries, of which an Acquiring Person, or any Affiliate or Associate of any Acquiring Person, is the Beneficial Owner; then, and in each such case, from and after the latest of the Distribution Date, the Share Acquisition Date and the date of the occurrence of such Flip-in Event, proper provision will be made so that each holder of a Right, except as provided below, will thereafter have the right to receive, upon exercise thereof in accordance with the terms of this Agreement at an exercise price per Right equal to the product of the then-current Purchase Price multiplied by the number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to the date of the occurrence of such Flip-in Event (or, if any other Flip-in Event shall have previously occurred, the product of the then-current Purchase Price multiplied by the number of 17 21 one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to the date of the first occurrence of a Flip-in Event), in lieu of Preferred Shares, such number of Common Shares as equals the result obtained by (x) multiplying the then-current Purchase Price by the number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to the date of the occurrence of such Flip-in Event (or, if any other Flip-in Event shall have previously occurred, multiplying the then-current Purchase Price by the number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to the date of the first occurrence of a Flip-in Event), and dividing that product by (y) 50% of the current per share market price of the Common Shares (determined pursuant to Section 11(d)) on the date of the occurrence of such Flip-in Event. Notwithstanding anything in this Agreement to the contrary, from and after the first occurrence of a Flip-in Event, any Rights that are Beneficially Owned by (A) any Acquiring Person (or any Affiliate or Associate of any Acquiring Person), (B) a transferee of any Acquiring Person (or any such Affiliate or Associate) who becomes a transferee after the occurrence of a Flip-in Event, or (C) a transferee of any Acquiring Person (or any such Affiliate or Associate) who became a transferee prior to or concurrently with the occurrence of a Flip-in Event pursuant to either (1) a transfer from an Acquiring Person to holders of its equity securities or to any Person with whom it has any continuing agreement, arrangement or understanding regarding the transferred Rights or (2) a transfer which the Directors of the Company have determined is part of a plan, arrangement or understanding which has the purpose or effect of avoiding the provisions of this Section 11(a)(ii), and subsequent transferees of any of such Persons, will be void without any further action and any holder of such Rights will thereafter have no rights whatsoever with respect to such Rights under any provision of this Agreement. The Company will use all reasonable efforts to ensure that the provisions of this Section 11(a)(ii) are complied with, but will have no liability to any holder of Right Certificates or any other Person as a result of its failure to make any determinations with respect to an Acquiring Person or its Affiliates, Associates or transferees hereunder. Upon the occurrence of a Flip-in Event, no Right Certificate that represents Rights that are or have become void pursuant to the provisions of this Section 11(a)(ii) will thereafter be issued pursuant to Section 3 or Section 6, and any Right Certificate delivered to the Rights Agent that represents Rights that are or have become void pursuant to the provisions of this Section 18 22 11(a)(ii) will be canceled. Upon the occurrence of a Flip-over Event, any Rights that shall not have been previously exercised pursuant to this Section 11 (a)(ii) shall thereafter be exercisable only pursuant to Section 13 and not pursuant to this Section 11(a)(ii). (iii) Upon the occurrence of a Flip-in Event, if there are not sufficient Common Shares authorized but unissued or issued but not outstanding to permit the issuance of all the Common Shares issuable in accordance with Section 11(a)(ii) upon the exercise of a Right, the Board of Directors of the Company will use its best efforts promptly to authorize and, subject to the provisions of Section 9(e), make available for issuance additional Common Shares or other equity securities of the Company having equivalent voting rights and an equivalent value (as determined in good faith by the Board of Directors of the Company) to the Common Shares (for purposes of this Section 11(a)(iii), "equivalent common shares"). In the event that equivalent common shares are so authorized, upon the exercise of a Right in accordance with the provisions of Section 7, the registered holder will be entitled to receive (A) Common Shares, to the extent any are available, and (B) a number of equivalent common shares, which the Board of Directors of the Company has determined in good faith to have a value equivalent to the excess of (x) the aggregate current per share market value on the date of the occurrence of the most recent Flip-in Event of all the Common Shares issuable in accordance with Section 11(a)(ii) upon the exercise of a Right (the "Exercise Value") over (y) the aggregate current per share market value on the date of the occurrence of the most recent Flip-in Event of any Common Shares available for issuance upon the exercise of such Right; PROVIDED, HOWEVER, that if at any time after 90 calendar days after the latest of the Share Acquisition Date, the Distribution Date and the date of the occurrence of the most recent Flip-in Event, there are not sufficient Common Shares and/or equivalent common shares available for issuance upon the exercise of a Right, then the Company will be obligated to deliver, upon the surrender of such Right and without requiring payment of the Purchase Price, Common Shares (to the extent available), equivalent common shares (to the extent available) and then cash (to the extent permitted by applicable law and any agreements or instruments to which the Company is a party in effect immediately prior to the Share Acquisition Date), which securities and cash have an aggregate value equal to the excess of (1) the Exercise Value over (2) the product of the then-current Purchase Price multiplied by the number of one one-hundredths of a Preferred Share for which a Right 19 23 was exercisable immediately prior to the date of the occurrence of the most recent Flip-in Event (or, if any other Flip-in Event shall have previously occurred, the product of the then-current Purchase Price multiplied by the number of one one-hundredths of a Preferred Share for which a Right would have been exercisable immediately prior to the date of the occurrence of such Flip-in Event if no other Flip-in Event had previously occurred). To the extent that any legal or contractual restrictions prevent the Company from paying the full amount of cash payable in accordance with the foregoing sentence, the Company will pay to holders of the Rights as to which such payments are being made all amounts which are not then restricted on a pro rata basis and will continue to make payments on a pro rata basis as promptly as funds become available until the full amount due to each such Rights holder has been paid. (b) In the event that the Company fixes a record date for the issuance of rights, options or warrants to all holders of Preferred Shares entitling them (for a period expiring within 45 calendar days after such record date) to subscribe for or purchase Preferred Shares (or securities having equivalent rights, privileges and preferences as the Preferred Shares (for purposes of this Section 11(b), "equivalent preferred shares")) or securities convertible into Preferred Shares or equivalent preferred shares at a price per Preferred Share or equivalent preferred share (or having a conversion price per share, if a security convertible into Preferred Shares or equivalent preferred shares) less than the current per share market price of the Preferred Shares (determined pursuant to Section 11(d)) on such record date, the Purchase Price to be in effect after such record date will be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which is the number of Preferred Shares outstanding on such record date plus the number of Preferred Shares which the aggregate offering price of the total number of Preferred Shares and/or equivalent preferred shares so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such current per share market price and the denominator of which is the number of Preferred Shares outstanding on such record date plus the number of additional Preferred Shares and/or equivalent preferred shares to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible); PROVIDED, HOWEVER, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock issuable upon exercise of one Right. In case such subscription or ice may be paid in a consideration part or all of which is in a 20 24 form other than cash, the value of such consideration will be as determined in good faith by the Board of Directors of the Company, whose determination will be described in a statement filed with the Rights Agent. Preferred Shares owned by or held for the account of the Company will not be deemed outstanding for the purpose of any such computation. Such adjustment will be made successively whenever such a record date is fixed, and in the event that such rights, options or warrants are not so issued, the Purchase Price will be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed. (c) In the event that the Company fixes a record date for the making of a distribution to all holders of Preferred Shares (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation) of evidences of indebtedness, cash (other than a regular periodic cash dividend), assets, stock (other than a dividend payable in Preferred Shares) or subscription rights, options or warrants (excluding those referred to in Section 11 (b)), the Purchase Price to be in effect after such record date will be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which is the current per share market price of the Preferred Shares (as determined pursuant to Section 11(d)) on such record date or, if earlier, the date on which Preferred Shares begin to trade on an ex-dividend or when issued basis for such distribution, less the fair market value (as determined in good faith by the Board of Directors of the Company, whose determination will be described in a statement filed with the Rights Agent) of the portion of the evidences of indebtedness, cash, assets or stock so to be distributed or of such subscription rights, options or warrants applicable to one Preferred Share, and the denominator of which is such current per share market price of the Preferred Shares; PROVIDED, HOWEVER, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock issuable upon exercise of one Right. Such adjustments will be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Purchase Price will again be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed. (d) (i) For the purpose of any computation hereunder, the "current per share market price" of Common Shares on any date will be deemed to be the average of the daily closing prices per share of such Common Shares for the 30 consecutive Trading Days immediately prior to such date; 21 25 PROVIDED, HOWEVER, that in the event that the current per share market price of the Common Shares is determined during a period following the announcement by the issuer of such Common Shares of (A) a dividend or distribution on such Common Shares payable in such Common Shares or securities convertible into such Common Shares (other than the Rights) or (B) any subdivision, combination or reclassification of such Common Shares, and prior to the expiration of 30 Trading Days after the ex-dividend date for such dividend or distribution, or the record date for such subdivision, combination or reclassification, then, and in each such case, the current per share market price will be appropriately adjusted to take into account ex-dividend trading or to reflect the current per share market price per Common Share equivalent. The closing price for each day will be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Common Shares are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Common Shares are listed or admitted to trading or, if the Common Shares are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by Nasdaq or such other system then in use, or, if on any such date the Common Shares are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Shares selected by the Board of Directors of the Company. If the Common Shares are not publicly held or not so listed or traded, or are not the subject of available bid and asked quotes, "current per share market price" will mean the fair value per share as determined in good faith by the Board of Directors of the Company, whose determination will be described in a statement filed with the Rights Agent. (ii) For the purpose of any computation hereunder, the "current per share market price" of the Preferred Shares will be determined in the same manner as set forth above for Common Shares in Section 11(d)(i), other than the last sentence thereof. If the current per share market price of the Preferred Shares cannot be determined in the manner 22 26 provided above, the "current per share market price" of the Preferred Shares will be conclusively deemed to be an amount equal to the current per share market price of the Common Shares multiplied by one hundred (as such number may be appropriately adjusted to reflect events such as stock splits, stock dividends, recapitalizations or similar transactions relating to the Common Shares occurring after the date of this Agreement). If neither the Common Shares nor the Preferred Shares are publicly held or so listed or traded, or the subject of available bid and asked quotes, "current per share market price" of the Preferred Shares will mean the fair value per share as determined in good faith by the Board of Directors of the Company, whose determination will be described in a statement filed with the Rights Agent. For all purposes of this Agreement, the current per share market price of one one-hundredth of a preferred Share will be equal to the current per share market price of one Preferred Share divided by one hundred. (e) Except as set forth below, no adjustment in the Purchase Price will be required unless such adjustment would require an increase or decrease of at least 1% in such price; PROVIDED, HOWEVER, that any adjustments which by reason of this Section 11(e) are not required to be made will be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 will be made to the nearest cent or to the nearest one one-millionth of a Preferred Share or one ten-thousandth of a Common Share or other security, as the case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11 will be made no later than the earlier of (i) three years from the date of the transaction which requires such adjustment and (ii) the Expiration Date. (f) If as a result of an adjustment made pursuant to Section 11(a), the holder of any Right thereafter exercised becomes entitled to receive any securities of the Company other than Preferred Shares, thereafter the number and/or kind of such other securities so receivable upon exercise of any Right (and/or the Purchase Price in respect thereof) will be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Shares (and the Purchase Price in respect thereof) contained in this Section 11, and the provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares (and the Purchase Price in respect thereof) will apply on like terms to any such other securities (and the Purchase Price in respect thereof). 23 27 (g) All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder will evidence the right to purchase, at the adjusted Purchase Price, the number of one one-hundredths of a Preferred Share issuable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein. (h) Unless the Company has exercised its election as provided in Section 11(i), upon each adjustment of the Purchase Price pursuant to Section 11(b) or Section 11(c), each Right outstanding immediately prior to the making of such adjustment will thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of one one-hundredths of a Preferred Share (calculated to the nearest one one-millionth of a Preferred Share) obtained by (i) multiplying (x) the number of one one-hundredths of a Preferred Share issuable upon exercise of a Right immediately prior to such adjustment of the Purchase Price by (y) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price. (i) The Company may elect, on or after the date of any adjustment of the Purchase Price, to adjust the number of Rights in substitution for any adjustment in the number of one one-hundredths of a Preferred Share issuable upon the exercise of a Right. Each of the Rights outstanding after such adjustment of the number of Rights will be exercisable for the number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights will become that number of Rights (calculated to the nearest one ten-thousandth) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Company will make a public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. Such record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if the Right Certificates have been issued, will be at least 10 calendar days later than the date of the public announcement. If Right Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11(i), the Company will, as promptly as practicable, cause to be distributed to holders of record of Right Certificates on such record date Right Certificates evidencing, subject to the provisions of Section 14, the additional Rights to which such holders are entitled as a result of such adjustment, or, at the 24 28 option of the Company, will cause to be distributed to such holders of record in substitution and replacement for the Right Certificates held by such holders prior to the date of adjustment, and upon surrender thereof if required by the Company, new Right Certificates evidencing all the Rights to which such holders are entitled after such adjustment. Right Certificates so to be distributed will be issued, executed, and countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price) and will be registered in the names of the holders of record of Right Certificates on the record date specified in the public announcement. (j) Without respect to any adjustment or change in the Purchase Price and/or the number and/or kind of securities issuable upon the exercise of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Purchase Price and the number and kind of securities which were expressed in the initial Right Certificate issued hereunder. (k) Before taking any action that would cause an adjustment reducing the Purchase Price below one one-hundredth of the then par value, if any, of the Preferred Shares or below the then par value, if any, of any other securities of the Company issuable upon exercise of the Rights, the Company will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable Preferred Shares or such other securities, as the case may be, at such adjusted Purchase Price. (l) In any case in which this Section 11 otherwise requires that an adjustment in the Purchase Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event the issuance to the holder of any Right exercised after such record date the number of Preferred Shares or other securities of the Company, if any, issuable upon such exercise over and above the number of Preferred Shares or other securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; PROVIDED, HOWEVER, that the Company delivers to such holder a due bill or other appropriate instrument evidencing such holder's right to receive such additional Preferred Shares or other securities upon the occurrence of the event requiring such adjustment. (m) Notwithstanding anything in this Agreement to the contrary, the Company will be entitled to make such reductions in the Purchase Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that in its 25 29 good faith judgment the Board of Directors of the Company determines to be advisable in order that any (i) consolidation or subdivision of the Preferred Shares, (ii) issuance wholly for cash of Preferred Shares at less than the current per share market price therefor, (iii) issuance wholly for cash of Preferred Shares or securities which by their terms are convertible into or exchangeable for Preferred Shares, (iv) stock dividends, or (v) issuance of rights, options or warrants referred to in this Section 11, hereafter made by the Company to holders of its Preferred Shares is not taxable to such stockholders. (n) Notwithstanding anything in this Agreement to the contrary, in the event that the Company at any time after the Record Date prior to the Distribution Date (i) pays a dividend on the outstanding Common Shares payable in Common Shares, (ii) subdivides the outstanding Common Shares, (iii) combines the outstanding Common Shares into a smaller number of shares, or (iv) issues any shares of its capital stock in a reclassification of the outstanding Common Shares (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), the number of Rights associated with each Common Share then outstanding, or issued or delivered thereafter but prior to the Distribution Date, will be proportionately adjusted so that the number of Rights thereafter associated with each Common Share following any such event equals the result obtained by multiplying the number of Rights associated with each Common Share immediately prior to such event by a fraction the numerator of which is the total number of Common Shares outstanding immediately prior to the occurrence of the event and the denominator of which is the total number of Common Shares outstanding immediately following the occurrence of such event. The adjustments provided for in this Section 11(n) will be made successively whenever such a dividend is paid or such a subdivision, combination or reclassification is effected. 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SECURITIES. Whenever an adjustment is made as provided in Section 11 or Section 13, the Company will promptly (a) prepare a certificate setting forth such adjustment and a brief statement of the facts accounting for such adjustment, (b) file with the Rights Agent and with each transfer agent for the Preferred Shares and the Common Shares a copy of such certificate, and (c) if such adjustment is made after the Distribution Date, mail a brief summary of such adjustment to each holder of a Right Certificate in accordance with Section 26. 26 30 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER. (a) In the event that: (i) at any time after a Person has become an Acquiring Person, the Company consolidates with, or merges with or into, any other Person and the Company is not the continuing or surviving corporation of such consolidation or merger; or (ii) at any time after a Person has become an Acquiring Person, any Person consolidates with the Company, or merges wIth or into the Company, and the Company is the continuing or surviving corporation of such merger or consolidation and, in connection with such merger or consolidation, all or part of the Common Shares is changed into or exchanged for stock or other securities of any other Person or cash or any other property; or (iii) at any time after a Person has become an Acquiring Person, the Company, directly or indirectly, sells or otherwise transfers (or one or more of its Subsidiaries sells or otherwise transfers), in one or more transactions, assets or earning power (including without limitation securities creating any obligation on the part of the Company and/or any of its Subsidiaries) representing in the aggregate more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any Person or Persons other than the Company or one or more of its wholly owned Subsidiaries; then, and in each such case, proper provision will be made so that from and after the latest of the Share Acquisition Date, the Distribution Date and the date of the occurrence of such Flip-over Event (A) each holder of a Right thereafter has the right to receive, upon the exercise thereof in accordance with the terms of this Agreement at an exercise price per Right equal to the product of the then-current Purchase Price multiplied by the number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to the Share Acquisition Date, such number of duly authorized, validly issued, fully paid, nonassessable and freely tradeable Common Shares of the Issuer, free and clear of any liens, encumbrances and other adverse claims and not subject to any rights of call or first refusal, as equals the result obtained by (x) multiplying the then-current Purchase Price by the number of one one-hundredths of a Preferred Share for which a Right is exercisable immediately prior to the Share Acquisition Date and dividing that product by (y) 50% of the current per share market price of the Common Shares of the Issuer (determined pursuant to Section 11(d)), on the date of the occurrence of such Flip-over Event; (B) the Issuer will 27 31 thereafter be liable for, and will assume, by virtue of the occurrence of such Flip-over Event, all the obligations and duties of the Company pursuant to this Agreement; (C) the term "Company" will thereafter be deemed to refer to the Issuer; and (D) the Issuer will take such steps (including without limitation the reservation of a sufficient number of its Common Shares to permit the exercise of all outstanding Rights) in connection with such consummation as may be necessary to assure that the provisions hereof are thereafter applicable, as nearly as reasonably may be possible, in relation to its Common Shares thereafter deliverable upon the exercise of the Rights. (b) For purposes of this Section 13, "Issuer" means (i) in the case of any Flip-over Event described in Sections 13(a)(i) or (ii) above, the Person that is the continuing, surviving, resulting or acquiring Person (including the Company as the continuing or surviving corporation of a transaction described in Section 13(a)(ii) above), and (ii) in the case of any Flip-over Event described in Section 13(a)(iii) above, the Person that is the party receiving the greatest portion of the assets or earning power (including without limitation securities creating any obligation on the part of the Company and/or any of its Subsidiaries) transferred pursuant to such transaction or transactions; PROVIDED, HOWEVER, that, in any such case, (A) if (1) no class of equity security of such Person is, at the time of such merger, consolidation or transaction and has been continuously over the preceding 12-month period, registered pursuant to Section 12 of the Exchange Act, and (2) such Person is a Subsidiary, directly or indirectly, of another Person, a class of equity security of which is and has been so registered, the term "Issuer" means such other Person; and (B) in case such Person is a Subsidiary, directly or indirectly, of more than one Person, a class of equity security of two or more of which are and have been so registered, the term "Issuer" means whichever of such Persons is the issuer of the equity security having the greatest aggregate market value. Notwithstanding the foregoing, if the Issuer in any of the Flip-over Events listed above is not a corporation or other legal entity having outstanding equity securities, then, and in each such case, (x) if the Issuer is directly or indirectly wholly owned by a corporation or other legal entity having outstanding equity securities, then all references to Common Shares of the Issuer will be deemed to be references to the Common Shares of the corporation or other legal entity having outstanding equity securities which ultimately controls the Issuer, and (y) if there is no such corporation or other legal entity having outstanding equity securities, (I) proper provision will be made so that the Issuer creates or otherwise makes available for purposes of the exercise of the Rights in accordance with the terms of this Agreement, a kind or 28 32 kinds of security or securities having a fair market value at least equal to the economic value of the Common Shares which each holder of a Right would have been entitled to receive if the issuer had been a corporation or other legal entity having outstanding equity securities; and (II) all other provisions of this Agreement will apply to the issuer of such securities as if such securities were Common Shares. (c) The Company will not consummate any Flip-over Event if, (i) at the time of or immediately after such Flip-over Event, there are or would be any rights, warrants, instruments or securities outstanding or any agreements or arrangements in effect which would eliminate or substantially diminish the benefits intended to be afforded by the Rights, (ii) prior to, simultaneously with or immediately after such Flip-over Event, the stockholders of the Person who constitutes, or would constitute, the Issuer for purposes of Section 13(a) shall have received a distribution of Rights previously owned by such Person or any of its Affiliates or Associates, or (iii) the form or nature of the organization of the Issuer would preclude or limit the exercisability of the Rights. In addition, the Company will not consummate any Flip-over Event unless the Issuer has a sufficient number of authorized Common Shares (or other securities as contemplated in Section 13(b) above) which have not been issued or reserved for issuance to permit the exercise in full of the Rights in accordance with this Section 13 and unless prior to such consummation the Company and the Issuer have executed and delivered to the Rights Agent a supplemental agreement providing for the terms set forth in subsections (a) and (b) of this Section 13 and further providing that as promptly as practicable after the consummation of any Flip-over Event, the Issuer will: (A) prepare and file a registration statement under the Securities Act with respect to the Rights and the securities issuable upon exercise of the Rights on an appropriate form, and use its best efforts to cause such registration statement to (1) become effective as soon as practicable after such filing and (2) remain effective (with a prospectus at all times meeting the requirements of the Securities Act) until the Expiration Date; (B) take all such action as may be appropriate under, or to ensure compliance with, the securities or "blue sky" laws of the various states in connection with the exercisability of the Rights; and (C) deliver to holders of the Rights historical financial statements for the Issuer and each of its 29 33 Affiliates which comply in all respects with the requirements for registration on Form 10 under the Exchange Act. (d) The provisions of this Section 13 will similarly apply to successive mergers or consolidations or sales or other transfers. In the event that a Flip-over Event occurs at any time after the occurrence of a Flip-in Event, except for Rights that have become void pursuant to Section 11(a)(ii), Rights that shall not have been previously exercised will cease to be exercisable in the manner provided in Section 11(a)(ii) and will thereafter be exercisable in the manner provided in Section 13(a). 14. FRACTIONAL RIGHTS AND FRACTIONAL SECURITIES. (a) The Company will not be required to issue fractions of Rights or to distribute Right Certificates which evidence fractional Rights. In lieu of such fractional Rights, the Company will pay as promptly as practicable to the registered holders of the Right Certificates with regard to which such fractional Rights otherwise would be issuable, an amount in cash equal to the same fraction of the current market value of one Right. For the purposes of this Section 14(a), the current market value of one Right is the closing price of the Rights for the Trading Day immediately prior to the date on which such fractional Rights otherwise would have been issuable. The closing price for any day is the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Rights are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Rights are listed or admitted to trading or, if the Rights are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by Nasdaq or such other system then in use, or if on any such date the Rights are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights selected by the Board of Directors of the Company. If the Rights are not publicly held or are not so listed or traded, or are not the subject of available bid and asked quotes, the current market value of one Right will mean the fair value thereof as determined in good faith by the Board of 30 34 Directors of the Company, whose determination will be described in a statement filed with the Rights Agent. (b) The Company will not be required to issue fractions of Preferred Shares (other than fractions which are integral multiples of one one-hundredth of a Preferred Share) upon exercise of the Rights or to distribute certificates which evidence fractional Preferred Shares (other than fractions which are integral multiples of one one-hundredth of a Preferred Share). Fractions of Preferred Shares in integral multiples of one one-hundredth of a Preferred Share may, at the election of the Company, be evidenced by depositary receipts pursuant to an appropriate agreement between the Company and a depositary selected by it, provided that such agreement provides that the holders of such depositary receipts have all the rights, privileges and preferences to which they are entitled as beneficial owners of the Preferred Shares represented by such depositary receipts. In lieu of fractional Preferred Shares that are not integral multiples of one one-hundredth of a Preferred Share, the Company may pay to any Person to whom or which such fractional Preferred Shares would otherwise be issuable an amount in cash equal to the same fraction of the current market value of one Preferred Share. For purposes of this Section 14(b), the current market value of one Preferred Share is the closing price of the Preferred Shares (as determined in the same manner as set forth for Common Shares in the second sentence of Section 11(d)(i)) for the Trading Day immediately prior to the date of such exercise; PROVIDED, HOWEVER, that if the closing price of the Preferred Shares cannot be so determined, the closing price of the Preferred Shares for such Trading Day will be conclusively deemed to be an amount equal to the closing price of the Common Shares (determined pursuant to the second sentence of Section 11(d)(i)) for such Trading Day multiplied by one hundred (as such number may be appropriately adjusted to reflect events such as stock splits, stock dividends, recapitalizations or similar transactions relating to the Common Shares occurring after the date of this Agreement); PROVIDED FURTHER, HOWEVER, that if neither the Common Shares nor the Preferred Shares are publicly held or listed or admitted to trading on any national securities exchange, or the subject of available bid and asked quotes, the current market value of one Preferred Share will mean the fair value thereof as determined in good faith by the Board of Directors of the Company, whose determination will be described in a statement filed with the Rights Agent. (c) Following the occurrence of a Triggering Event, the Company will not be required to issue fractions of Common Shares or other securities issuable upon exercise or exchange of the Rights or to distribute certificates which evidence any such 31 35 fractional securities. In lieu of issuing any such fractional securities, the Company may pay to any Person to whom or which such fractional securities would otherwise be issuable an amount in cash equal to the same fraction of the current market value of one such security. For purposes of this Section 14(c), the current market value of one Common Share or other security issuable upon the exercise or exchange of Rights is the closing price thereof (as determined in the same manner as set forth for Common Shares in the second sentence of Section 11(d)(i)) for the Trading Day immediately prior to the date of such exercise or exchange; PROVIDED, HOWEVER, that if neither the Common Shares nor any such other securities are publicly held or listed or admitted to trading on any national securities exchange, or the subject of available bid and asked quotes, the current market value of one Common Share or such other security will mean the fair value thereof as determined in good faith by the Board of Directors of the Company, whose determination will mean the fair value thereof as will be described in a statement filed with the Rights Agent. 15. RIGHTS OF ACTION. All rights of action in respect of this Agreement, excepting the rights of action given to the Rights Agent under Section 18, are vested in the respective registered holders of the Right Certificates (and, prior to the Distribution Date, the registered holders of the Common Shares); and any registered holder of any Right Certificate (or, prior to the Distribution Date, of the Common Shares), without the consent of the Rights Agent or of the holder of any other Right Certificate (or, prior to the Distribution Date, of the holder of any Common Shares), may in his own behalf and for his own benefit enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his right to exercise the Rights evidenced by such Right Certificate in the manner provided in such Right Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and will be entitled to specific performance of the obligations under this Agreement, and injunctive relief against actual or threatened violations of the obligations of any Person subject to this Agreement. 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by accepting the same consents and agrees with the Company and the Rights Agent and with every other holder of a Right that: 32 36 (a) Prior to the Distribution Date, the Rights are transferable only in connection with the transfer of the Common Shares; (b) After the Distribution Date, the Right Certificates are transferable only on the registry books of the Rights Agent if surrendered at the principal office of the Rights Agent designated for such purpose, duly endorsed or accompanied by a proper instrument of transfer; (c) The Company and the Rights Agent may deem and treat the person in whose name the Right Certificate (or, prior to the Distribution Date, the associated Common Share certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Right Certificate or the associated Common Share certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent will be affected by any notice to the contrary; (d) Such holder expressly waives any right to receive any fractional Rights and any fractional securities upon exercise or exchange of a Right, except as otherwise provided in Section 14. (e) Notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights Agent will have any liability to any holder of a Right or other Person as a result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation; PROVIDED, HOWEVER, that the Company will use its best efforts to have any such order, decree or ruling lifted or otherwise overturned as soon as possible. 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No holder, as such, of any Right Certificate will be entitled to vote, receive dividends, or be deemed for any purpose the holder of Preferred Shares or any other securities of the Company which may at any time be issuable upon the exercise of the Rights represented thereby, nor will anything contained herein or in any Right Certificate be construed to confer upon the holder of any Right Certificate, as such, any of the rights of a stockholder of 33 37 the Company or any right to vote for the election of Directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 25), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Right Certificate shall have been exercised in accordance with the provisions of this Agreement or exchanged pursuant to the provisions of Section 24. 18. CONCERNING THE RIGHTS AGENT. (a) The Company will pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company will also indemnify the Rights Agent for, and hold it harmless against, any loss, liability, suit, action, proceeding or expense, incurred without negligence, bad faith, or willful misconduct on the part of the Rights Agent, for anything done or omitted to be done by the Rights Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending against any claim of liability arising therefrom, directly or indirectly. (b) The Rights Agent will be protected and will incur no liability for or in respect of any action taken, suffered, or omitted by it in connection with its administration of this Agreement in reliance upon any Right Certificate or certificate evidencing Preferred Shares or Common Shares or other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement or other paper or document believed by it to be genuine and to be signed, executed, and, where necessary, verified or acknowledged, by the proper Person or Persons. 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT. (a) Any corporation into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent is a party, or any corporation succeeding to the corporate trust business of the Rights Agent or any successor Rights Agent, will be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such corporation would be eligible for appointment as a successor Rights Agent under the provisions of Section 21. If at the time 34 38 such successor Rights Agent succeeds to the agency created by this Agreement any of the Right Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Right Certificates so countersigned; and if at that time any of the Right Certificates shall not have been countersigned, any successor Rights Agent may countersign such Right Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Right Certificates will have the full force provided in the Right Certificates and in this Agreement. (b) If at any time the name of the Rights Agent changes and at such time any of the Right Certificates have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Right Certificates so countersigned; and if at that time any of the Right Certificates have not been countersigned, the Rights Agent may countersign such Right Certificates either in its prior name or in its changed name; and in all such cases such Right Certificates will have the full force provided in the Right Certificates and in this Agreement. 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company and the holders of Right Certificates, by their acceptance thereof, will be bound: (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the Company), and the opinion of such counsel will be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion. (b) Whenever in the performance of its duties under this Agreement the Rights Agent deems it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by any one of the Chairman of the Board, the President, any Vice President, the Secretary or the Treasurer of the Company and delivered to the Rights Agent, and such certificate will be full authorization to the Rights Agent for any action taken or suffered in good faith 35 39 by it under the provisions of this Agreement in reliance upon such certificate. (c) The Rights Agent will be liable hereunder only for its own gross negligence, bad faith or willful misconduct. (d) The Rights Agent will not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Right Certificates (except its countersignature thereof) or be required to verify the same, but all such statements and recitals are and will be deemed to have been made by the Company only. (e) The Rights Agent will not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution and delivery hereof by the Rights Agent) or in respect of the validity or execution of any Right Certificate (except its countersignature thereof); nor will it be responsible for any breach by the Company of any covenant contained in this Agreement or in any Right Certificate; nor will it be responsible for any adjustment required under the provisions of Sections 11 or 13 (including any adjustment which results in Rights becoming void) or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Right Certificates after actual notice of any such adjustment); nor will it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of stock or other securities to be issued pursuant to this Agreement or any Right Certificate or as to whether any shares of stock or other securities will, when issued, be duly authorized, validly issued, fully paid and nonassessable. (f) The Company will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement. (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any one of the Chairman of the Board, the President, any Vice President, the Secretary or the Treasurer of the Company, and to apply to such officers 36 40 for advice or instructions in connection with its duties, and it will not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer. (h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein will preclude the Rights Agent from acting in any other capacity for the Company or for any other Person. (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent will not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct, provided reasonable care was exercised in the selection and continued employment thereof. The Rights Agent will not be under any duty or responsibility to ensure compliance with any applicable federal or state securities laws in connection with the issuance, transfer or exchange of Right Certificates. (j) If, with respect to any Right Certificate surrendered to the Rights Agent for exercise, transfer, split up, combination or exchange, either (i) the certificate attached to the form of assignment or form of election to purchase, as the case may be, has either not been completed or indicates an affirmative response to clause l or 2 thereof, or (ii) any other actual or suspected irregularity exists, the Rights Agent will not take any further action with respect to such requested exercise, transfer, split up, combination or exchange without first consulting with the Company, and will thereafter take further action with respect thereto only in accordance with the Company's written instructions. 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon 30 calendar days' notice in writing mailed to the Company and to each transfer agent of the Preferred Shares or the Common Shares by registered or certified mail, and to the holders of the Right Certificates by first class 37 41 mail. The Company may remove the Rights Agent or any successor Rights Agent upon 30 calendar days' notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Preferred Shares and the Common Shares by registered or certified mail, and to the holders of the Right Certificates by first class mail. If the Rights Agent resigns or is removed or otherwise becomes incapable of acting, the Company will appoint a successor to the Rights Agent. If the Company fails to make such appointment within a period of 30 calendar days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Right Certificate (who will, with such notice, submit his Right Certificate for inspection by the Company), then the registered holder of any Right Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, will be a corporation or other legal entity organized and doing business under the laws of the United States or of the State of New York (or of any other state of the United States so long as such corporation is authorized to do business as a banking institution in the State of New York), in good standing, having a principal office in the State of New York, which is authorized under such laws to exercise corporate trust or stock transfer powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least $50 million. After appointment, the successor Rights Agent will be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent will deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment, the Company will file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Preferred Shares or the Common Shares, and mail a notice thereof in writing to the registered holders of the Right Certificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, will not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right Certificates evidencing Rights in such form as may be approved by 38 42 its Board of Directors to reflect any adjustment or change in the Purchase Price per share and the number or kind of securities issuable upon exercise of the Rights made in accordance with the provisions of this Agreement. In addition, in connection with the issuance or sale by the Company of Common Shares following the Distribution Date and prior to the Expiration Date, the Company (a) will, with respect to Common Shares so issued or sold pursuant to the exercise, exchange or conversion of securities (other than Rights) issued prior to the Distribution Date which are exercisable or exchangeable for, or convertible into Common Shares, and (b) may, in any other case, if deemed necessary, appropriate or desirable by the Board of Directors of the Company, issue Right Certificates representing an equivalent number of Rights as would have been issued in respect of such Common Shares if they had been issued or sold prior to the Distribution Date, as appropriately adjusted as provided herein as if they had been so issued or sold; PROVIDED, HOWEVER, that (i) no such Right Certificate will be issued if, and to the extent that, in its good faith judgment the Board of Directors of the Company determines that the issuance of such Right Certificate could have a material adverse tax consequence to the Company or to the Person to whom or which such Right Certificate otherwise would be issued and (ii) no such Right Certificate will be issued if, and to the extent that, appropriate adjustment otherwise has been made in lieu of the issuance thereof. 23. REDEMPTION. (a) Prior to the Expiration Date, the Board of Directors of the Company may, at its option, redeem all but not less than all of the then-outstanding Rights at the Redemption Price at any time prior to the Close of Business on the later of (i) the Distribution Date and (ii) Share Acquisition Date. Any such redemption will be effective immediately upon the action of the Board of Directors of the Company ordering the same, unless such action of the Board of Directors of the Company expressly provides that such redemption will be effective at a subsequent time or upon the occurrence or nonoccurrence of one or more specified events (in which case such redemption will be effective in accordance with the provisions of such action of the Board of Directors of the Company). (b) Immediately upon the effectiveness of the redemption of the Rights as provided in Section 23(a), and without any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights will be to receive the Redemption Price, without interest thereon. Promptly after the effectiveness of the redemption of the Rights as provided in Section 23(a), the Company will publicly announce such redemption and, within 10 calendar days thereafter, will give notice of such redemption to the holders of 39 43 the then-outstanding Rights by mailing such notice to all such holders at their last addresses as they appear upon the registry books of the Company; PROVIDED, HOWEVER, that the failure to give, or any defect in, any such notice will not affect the validity of the redemption of the Rights. Any notice that is mailed in the manner herein provided will be deemed given, whether or not the holder receives the notice. The notice of redemption mailed to the holders of Rights will state the method by which the payment of the Redemption Price will be made. The Company may, at its option, pay the Redemption Price in cash, Common Shares (based upon the current per share market price of the Common Shares (determined pursuant to Section 11(d)) at the time of redemption), or any other form of consideration deemed appropriate by the Board of Directors of the Company (based upon the fair market value of such other consideration, determined by the Board of Directors of the Company in good faith) or any combination thereof. The Company may, at its option, combine the payment of the Redemption Price with any other payment being made concurrently to holders of Common Shares and, to the extent that any such other payment is discretionary, may reduce the amount thereof on account of the concurrent payment of the Redemption Price. If legal or contractual restrictions prevent the Company from paying the Redemption Price (in the form of consideration deemed appropriate by the Board of Directors) at the time of redemption, the Company will pay the Redemption Price, without interest, promptly after such time as the Company ceases to be so prevented from paying the Redemption Price. 24. EXCHANGE. (a) The Board of Directors of the Company may, at its option, at any time after the later of the Share Acquisition Date and the Distribution Date, exchange all or part of the then-outstanding and exercisable Rights (which will not include Rights that have become void pursuant to the provisions of Section 11(a)(ii)) for Common Shares at an exchange ratio of one Common Share per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the Record Date (such exchange ratio being hereinafter referred to as the "Exchange Ratio"). Any such exchange will be effective immediately upon the action of the Board of Directors of the Company ordering the same, unless such action of the Board of Directors of the Company expressly provides that such exchange will be effective at a subsequent time or upon the occurrence or nonoccurrence of one or more specified events (in which case such exchange will be effective in accordance with the provisions of such action of the Board of Directors of the Company). Notwithstanding the foregoing, the Board of Directors of the Company will not be empowered to effect such exchange at any time after any Person (other than the Company or any Related Person), who or which, together with all Affiliates and Associates of such 40 44 Person, becomes the Beneficial Owner of 50% or more of the then-outstanding Common Shares. (b) Immediately upon the effectiveness of the exchange of any Rights as provided in Section 24(a), and without any further action and without any notice, the right to exercise such Rights will terminate and the only right with respect to such Rights thereafter of the holder of such Rights will be to receive that number of Common Shares equal to the number of such Rights held by such holder multiplied by the Exchange Ratio. Promptly after the effectiveness of the exchange of any Rights as provided in Section 24(a), the Company will publicly announce such exchange and, within 10 calendar days thereafter, will give notice of such exchange to all of the holders of such Rights at their last addresses as they appear upon the registry books of the Rights Agent; PROVIDED, HOWEVER, that the failure to give, or any defect in, such notice will not affect the validity of such exchange. Any notice that is mailed in the manner herein provided will be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the exchange of the Common Shares for Rights will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange will be effected pro rata based on the number of Rights (other than Rights which have become void pursuant to the provisions of Section 11(a)(ii)) held by each holder of Rights. (c) In any exchange pursuant to this Section 24, the Company, at its option, may substitute for any Common Share exchangeable for a Right (i) equivalent common shares (as such term is used in Section 11(a)(iii)), (ii) cash, (iii) debt securities of the Company, (iv) other assets, or (v) any combination of the foregoing, in any event having an aggregate value, as determined in good faith by the Board of Directors of the Company (whose determination will be described in a statement filed with the Rights Agent), equal to the current market value of one Common Share (determined pursuant to Section 11(d)) on the Trading Day immediately preceding the date of the effectiveness of the exchange pursuant to this Section 24. 25. NOTICE OF CERTAIN EVENTS. (a) If, after the Distribution Date, the Company proposes (i) to pay any dividend payable in stock of any class to the holders of Preferred Shares or to make any other distribution to the holders of Preferred Shares (other than a regular periodic cash dividend), (ii) to offer to the holders of Preferred Shares rights, options or warrants to subscribe for or to purchase any additional Preferred Shares or shares of stock of any class or any other securities, rights or options, (iii) to effect any reclassification of its 41 45 Preferred Shares (other than a reclassification involving only the subdivision of outstanding Preferred Shares), (iv) to effect any consolidation or merger into or with, or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one or more transactions, of assets or earning power (including, without limitation, securities creating any obligation on the part of the Company and/or any of its Subsidiaries) representing more than 50% of the assets and earning power of the Company and its Subsidiaries, taken as a whole, to any other Person or Persons other than the Company or one or more of its wholly owned Subsidiaries, (v) to effect the liquidation, dissolution or winding up of the Company, or (vi) to declare or pay any dividend on the Common Shares payable in Common Shares or to effect a subdivision, combination or reclassification of the Common Shares then, in each such case, the Company will give to each holder of a Right Certificate, to the extent feasible and in accordance with Section 26, a notice of such proposed action, which specifies the record date for the purposes of such stock dividend, distribution or offering of rights, options or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up is to take place and the date of participation therein by the holders of the Common Shares and/or Preferred Shares, if any such date is to be fixed, and such notice will be so given, in the case of any action covered by clause (i) or (ii) above, at least 10 calendar days prior to the record date for determining holders of the Preferred Shares for purposes of such action, and, in the case of any such other action, at least 10 calendar days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the Common Shares and/or Preferred Shares, whichever is the earlier. (b) In case any Triggering Event occurs, then, in any such case, the Company will as soon as practicable thereafter give to the Rights Agent and each holder of a Right Certificate, in accordance with Section 26, a notice of the occurrence of such event, which specifies the event and the consequences of the event to holders of Rights. 26. NOTICES. (a) Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Right Certificate to or on the Company will be sufficiently given or made if sent by first class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows: 42 46 Cole National Corporation 5915 Landerbrook Drive Cleveland, Ohio 44124 Attention: General Counsel (b) Subject to the provisions of Section 21 hereof, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Right Certificate to or on the Rights Agent will be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows: National City Bank 1900 East Ninth Street Cleveland, Ohio 44114 Attention: Corporate Trust Administration (c) Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Right Certificate (or, if prior the Distribution Date, to the holder of any certificate evidencing Common Shares) will be sufficiently given or made if sent by first class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company. 27. SUPPLEMENTS AND AMENDMENTS. Prior to the time at which the Rights cease to be redeemable pursuant to Section 23, and subject to the last sentence of this Section 27, the Company may in its sole and absolute discretion, and the Rights Agent will if the Company so directs, supplement or amend any provision of this Agreement in any respect without the approval of any holders of Rights or Common Shares. From and after the time at which the Rights cease to be redeemable pursuant to Section 23, and subject to the last sentence of this Section 27, the Company may, and the Rights Agent will if the Company so directs, supplement or amend this Agreement without the approval of any holders of Rights or Common Shares in order (i) to cure any ambiguity, (ii) to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, (iii) to shorten or lengthen any time period hereunder, or (iv) to supplement or amend the provisions hereunder in any manner which the Company may deem desirable; provided that no such supplement or amendment shall adversely affect the interests of the holders of Rights as such (other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person), and no such supplement or amendment shall cause the Rights again to become redeemable or cause this Agreement again to become supplementable or amendable otherwise than in accordance with the provisions of this sentence. Without limiting the generality or effect of the 43 47 foregoing, this Agreement may be supplemented or amended to provide for such voting powers for the Rights and such procedures for the exercise thereof, if any, as the Board of Directors of the Company may determine to be appropriate. Upon the delivery of a certificate from an officer of the Company which states that the proposed supplement or amendment is in compliance with the terms of this Section 27, the Rights Agent will execute such supplement or amendment; PROVIDED, HOWEVER, that the failure or refusal of the Rights Agent to execute such supplement or amendment will not affect the validity of any supplement or amendment adopted by the Board of Directors of the Company, any of which will be effective in accordance with the terms thereof. Notwithstanding anything in this Agreement to the contrary, no supplement or amendment may be made which decreases the stated Redemption Price to an amount less than $.01 per Right. 28. SUCCESSORS; CERTAIN COVENANTS. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent will be binding on and inure to the benefit of their respective successors and assigns hereunder. 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement will be construed to give to any Person other than the Company, the Rights Agent, and the registered holders of the Right Certificates (and, prior to the Distribution Date, the Common Shares) any legal or equitable right, remedy or claim under this Agreement. This Agreement will be for the sole and exclusive benefit of the Company, the Rights Agent, and the registered holders of the Right Certificates (or prior to the Distribution Date, the Common Shares). 30. GOVERNING LAW. This Agreement, each Right and each Right Certificate issued hereunder will be deemed to be a contract made under the internal substantive laws of the State of Delaware and for all purposes will be governed by and construed in accordance with the internal substantive laws of such State applicable to contracts to be made and performed entirely within such State. 31. SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement will remain in full force and effect and will in no way be affected, impaired or invalidated; PROVIDED, HOWEVER, that nothing contained in this Section 31 will affect the ability of the Company under the provisions of Section 27 to supplement or amend this Agreement to replace such invalid void or unenforceable term, provision, covenant or 44 48 restriction with a legal, valid and enforceable term, provision, covenant or restriction. 32. DESCRIPTIVE HEADINGS, ETC. Descriptive headings of the several Sections of this Agreement are inserted for convenience only and will not control or affect the meaning or construction of any of the provisions hereof. Unless otherwise expressly provided, references herein to Articles, Sections and Exhibits are to Articles, Sections and Exhibits of or to this Agreement. 33. DETERMINATIONS AND ACTIONS BY THE BOARD. For all purposes of this Agreement, any calculation of the number of Common Shares outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding Common Shares of which any Person is the Beneficial Owner, will be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The Board of Directors of the Company will have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board of Directors of the Company or to the Company, or as may be necessary or advisable in the administration of this Agreement, including without limitation the right and power to (i) interpret the provisions of this Agreement and (ii) make all determinations deemed necessary or advisable for the administration of this Agreement (including any determination as to whether particular Rights shall have become void). All such actions, calculations, interpretations and determinations (including, for purposes of clause (y) below, any omission with respect to any of the foregoing) which are done or made by the Board of Directors of the Company in good faith will (x) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights and all other parties and (y) not subject the Board of Directors of the Company to any liability to any Person, including without limitation the Rights Agent and the holders of the Rights. 34. COUNTERPARTS. This Agreement may be executed in any number of counterparts and each of such counterparts will for all purposes be deemed to be an original, and all such counterparts will together constitute but one and the same instrument. 45 49 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. COLE NATIONAL CORPORATION By: /s/ Joseph Gaglioti ---------------------------------- Name: Joseph Gaglioti Title: Vice President & Treasurer NATIONAL CITY BANK By: /s/ David B. Davis ---------------------------------- Name: DAVID B. DAVIS Title: Vice President 50 EXHIBIT A --------- FORM OF CERTIFICATE OF DESIGNATION OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK OF COLE NATIONAL CORPORATION Cole National Corporation, a corporation organized and existing under the General Corporation Law of the State of Delaware (hereinafter called the "Corporation"), hereby certifies that the following resolution was adopted by the Board of Directors of the Corporation as required by Section 151 of the General Corporation Law, effective as of ______________, 1999: RESOLVED, that pursuant to the authority vested in the Board of Directors of the Corporation by the Certificate of Incorporation of the Corporation and pursuant to the provisions of Section 151 of the General Corporation Law of the State of Delaware, the Board of Directors hereby amends and restates the terms of the Series A Junior Participating Preferred Stock, without par value, as follows: Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be designated as "Series A Junior Participating Preferred Stock" (the "Series A Preferred Stock") and the number of shares constituting the Series A Preferred Stock shall be 400,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; PROVIDED, that no decrease shall reduce the number of shares of Series A Preferred Stock to a number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series A Preferred Stock. Section 2. DIVIDENDS AND DISTRIBUTIONS. (a) Subject to the rights of the holders of any shares of any series of Preferred Stock (or any similar stock) ranking prior and superior to the Series A Preferred Stock with respect to dividends, the holders of shares of Series A Preferred Stock, in preference to the holders of Common Stock, par value $.001 per share (the "Common Stock"), of the Corporation, and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September and December in each year (each such date being referred to herein as a "Quarterly Dividend 51 Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (i) $1.00 or (ii) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock. In the event the Corporation shall at any time (A) declare or pay any dividend on the outstanding shares of Common Stock payable in shares of Common Stock or (B) effect a subdivision, combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of dividends in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then, in each such case, the amount to which holders of shares of Series A Preferred Stock would otherwise be entitled immediately prior to much event under clause (ii) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (b) The Corporation shall declare a dividend or distribution on the Series A Preferred Stock as provided in paragraph (a) of this Section 2 immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); PROVIDED that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series A Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. (c) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless (i) the date of issue of such shares is prior to the record data for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of the first issuance of a share of Series A A-2 52 Preferred Stock, or (ii) the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 calendar days prior to the date fixed for the payment thereof. Section 3. VOTING RIGHTS. The holders of shares of Series A Preferred Stock shall have the following voting rights: (a) Subject to the provision for adjustment hereinafter set forth, each share of Series A Preferred Stock shall entitle the holder thereof to 100 votes an all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time (i) declare or pay any dividend on the outstanding shares of Common Stock payable in shares of Common Stock or (ii) effect a subdivision, combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of dividends in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then, in each such case, the number of votes per share to which holders of shares of Series A Preferred Stock would otherwise be entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and this denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (b) Except as otherwise provided herein, in any other Certificate of Designations creating a series of Preferred Stock or any similar stock, or by law, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation. A-3 53 (c) Except as set forth herein, or as otherwise provided by law, holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. 4. CERTAIN RESTRICTIONS. (a) Whenever quarterly dividends or other dividends or distributions payable on the Series A Preferred stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Corporation shall not: (i) declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock; (ii) declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except dividends paid ratably on the Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred stock; or (iv) redeem or purchase or otherwise acquire for consideration any shares of Series A Preferred stock, or any shares of stock ranking an a parity with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, A-4 54 after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. (b) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (a) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. Section 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Certificate of Incorporation, or in any other Certificate of Designations creating a series of Preferred Stock or any similar stock or as otherwise required by law. Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made (a) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received $100 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment; PROVIDED, HOWEVER, that the holders of shares of Series A Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of shares of Common Stock, or (b) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation shall at any time (i) declare or pay any dividend on the outstanding shares of Common Stock payable in shares of Common Stock or (ii) effect a subdivision, combination or consolidation of the shares of Common A-5 55 Stock (by reclassification or otherwise than by payment of dividends in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then, in each such case, the aggregate amount to which each holder of shares of Series A Preferred Stock would otherwise be entitled immediately prior to such event under the proviso in clause (a) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then, in each such case, each share of Series A Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time (a) declare or pay any dividend on the outstanding shares of Common Stock payable in shares of Common Stock or (b) effect a subdivision, combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of dividends in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then, in each such case, the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 8. REDEMPTION. The shares of Series A Preferred Stock shall not be redeemable. Section 9. RANK. The Series A Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets, junior to all series of any other class of the Corporation's Preferred Stock. Section 10. AMENDMENT. The Certificate of Incorporation of the Corporation shall not be amended in any manner which would materially alter or change the powers, A-6 56 preferences or special rights of the Series A Preferred Stock so an to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series A Preferred Stock, voting together as a single series. IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf of the Corporation by its Chairman and attested to by its Secretary this _____ day of ____________, 1999. COLE NATIONAL CORPORATION By: --------------------------------- ATTEST: - -------------------------- Leslie D. Dunn, Secretary A-7 57 EXHIBIT B --------- FORM OF RIGHT CERTIFICATE Certificate No. R- Rights ------------ NOT EXERCISABLE AFTER DECEMBER 6, 2009 (SUBJECT TO POSSIBLE EXTENSION AT THE OPTION OF THE COMPANY) OR EARLIER IF REDEEMED, EXCHANGED OR AMENDED. THE RIGHTS ARE SUBJECT TO REDEMPTION, EXCHANGE AND AMENDMENT AT THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SPECIFIED IN THE RIGHTS AGREEMENT, RIGHTS THAT ARE OR WERE BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR A TRANSFEREE THEREOF MAY BECOME NULL AND VOID. Right Certificate COLE NATIONAL CORPORATION This certifies that ______________ ___, or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions, and conditions of the Rights Agreement, dated as of November 22, 1999 (the "Rights Agreement"), between Cole National Corporation, a Delaware corporation (the "Company"), and National City Bank (the "Rights Agent"), to purchase from the Company at any time after the Distribution Date (as such term is defined in the Rights Agreement) and prior to 5:00 P.M. (Eastern time) on the Expiration Date (as such term is defined in the Rights Agreement) at the principal office or offices of the Rights Agent designated for such purpose, one one-hundredth of a fully paid nonassessable share of Series A Junior Participating Preferred Stock, without par value (the "Preferred Shares"), of the Company, at a purchase price of $40.00 per one one-hundredth of a Preferred Share (the "Purchase Price"), upon presentation and surrender of this Right Certificate with the Form of Election to Purchase and related Certificate duly executed. If this Right Certificate is exercised in part, the holder will be entitled to receive upon surrender hereof another Right Certificate or Right Certificates for the number of whole Rights not exercised. The number of Rights evidenced by this Right Certificate (and the 58 number of one one-hundredths of a Preferred Share which may be purchased upon exercise thereof) set forth above, and the Purchase Price set forth above, are the number and Purchase Price as of the date of the Rights Agreement, based on the Preferred Shares as constituted at such date. As provided in the Rights Agreement, the Purchase Price and/or the number and/or kind of securities issuable upon the exercise of the Rights evidenced by this Right Certificate are subject to adjustment upon the occurrence of certain events. This Right Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities of the Rights Agent, the Company and the holders of the Right Certificates, which limitations of rights include the temporary suspension of the exercisability of the Rights under the circumstances specified in the Rights Agreement. Copies of the Rights Agreement are on file at the above-mentioned office of the Rights Agent and can be obtained from the Company without charge upon written request therefor. Terms used herein with initial capital letters and hot defined herein are used herein with the meanings ascribed thereto in the Rights Agreement. Pursuant to the Rights Agreement, from and after the occurrence of a Flip-in Event, any Rights that are Beneficially Owned by (i) any Acquiring Person (or any Affiliate or Associate of any Acquiring Person), (ii) a transferee of any Acquiring Person (or any such Affiliate or Associate) who becomes a transferee after the occurrence of a Flip-in Event, or (iii) a transferee of any Acquiring Person (or any such Affiliate or Associate) who became a transferee prior to or concurrently with the Flip-in Event pursuant to either (a) a transfer from an Acquiring Person to holders of its equity securities or to any Person with whom it has any continuing agreement, arrangement or understanding regarding the transferred Rights or (b) a transfer which the Board of Directors of the Company has determined is part of a plan, arrangement or understanding which has the purpose or effect of avoiding certain provisions of the Rights Agreement, and subsequent transferees of any of such Persons, will be void without any further action and any holder of such Rights will thereafter have no rights whatsoever with respect to such Rights under any provision of the Rights Agreement. From and after the occurrence of a Flip-in Event, no Right Certificate will be issued that represents Rights that are or have become void pursuant to the provisions of the Rights Agreement, and any B-2 59 Right Certificate delivered to the Rights Agent that represents Rights that are or have become void pursuant to the provisions of the Rights Agreement will be canceled. This Right Certificate, with or without other Right Certificates, may be transferred, split up, combined or exchanged for another Right Certificate or Right Certificates entitling the holder to purchase a like number of one one-hundredths of a Preferred Share (or other securities, as the case may be) as the Right Certificate or Right Certificates surrendered entitled such holder (or former holder in the case of a transfer) to purchase, upon presentation and surrender hereof at the principal office of the Rights Agent designated for such purpose, with the Form of Assignment (if appropriate) and the related Certificate duly executed. Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate may be redeemed by the Company at its option at a redemption price of $.01 per Right or may be exchanged in whole or in part. The Rights Agreement may be supplemented and amended by the Company, as provided therein. The Company is not required to issue fractions of Preferred Shares (other than fractions which are integral multiples of one one-hundredth of a Preferred Share, which may, at the option of the Company, be evidenced by depositary receipts) or other securities issuable upon the exercise of any Right or Rights evidenced hereby. In lieu of issuing such fractional Preferred Shares or other securities, the Company may make a cash payment, as provided in the Rights Agreement. No holder of this Right Certificate, as such, will be entitled to vote or receive dividends or be deemed for any purpose the holder of the Preferred Shares or of any other securities of the Company which may at any time be issuable upon the exercise of the Right or Rights represented hereby, nor will anything contained herein or in the Rights Agreement be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Right Certificate have been exercised in accordance with the provisions of the Rights Agreement. B-3 60 This Right Certificate will not be valid or obligatory for any purpose until it has been countersigned by the Rights Agent. WITNESS the facsimile signature of the proper officers of the Company and its corporate seal. Dated as of ___________, ____. [SEAL] ATTEST: COLE NATIONAL CORPORATION - ----------------------------- By: --------------------------------- Name: Title: Countersigned: NATIONAL CITY BANK By: -------------------------- Authorized Signature B-4 61 Form of Reverse Side of Right Certificate FORM OF ASSIGNMENT ------------------ (To be executed by the registered holder if such holder desires to transfer the Right Certificate) FOR VALUE RECEIVED, ___________________________ hereby sells, assigns and transfers unto _______________________________________________________________ ______________________________________________________________________________ (Please print name and address of transferee) ______________________________________________________________________________ this Right Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint _______________ Attorney, to transfer the within Right Certificate on the books of the within-named Company, with full power of substitution. Dated: --------------, --- ----------------------------------- Signature Signature Guaranteed: B-5 62 CERTIFICATE ----------- The undersigned hereby certifies by checking the appropriate boxes that: (1) the Rights evidenced by this Right Certificate [ ] are [ ] are not being sold, assigned, transferred, split up, combined or exchanged by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Person (as such terms are defined in the Rights Agreement); (2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate from any Person who is, was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person. Dated: --------------, --- ----------------------------------- Signature B-6 63 FORM OF ELECTION TO PURCHASE ---------------------------- (To be executed if holder desires to exercise the Right Certificate) TO COLE NATIONAL CORPORATION: The undersigned hereby irrevocably elects to exercise __________ Rights represented by this Right Certificate to purchase the one one-hundredths of a Preferred Share or other securities issuable upon the exercise of such Rights and requests that certificates for such securities be issued in the name of and delivered to: Please insert social security or other identifying number: ------------------------------------------------ - ---------------------------------------------------------------------------- (Please print name and address) - ---------------------------------------------------------------------------- If such number of Rights is not all the Rights evidenced by this Right Certificate, a new Right Certificate for the balance remaining of such Rights will be registered in the name of and delivered to: Please insert social security or other identifying number: ------------------------------------------------ - ---------------------------------------------------------------------------- (Please print name and address) - ---------------------------------------------------------------------------- Dated: --------------, --- ----------------------------------- Signature Signature Guaranteed: B-7 64 CERTIFICATE ----------- The undersigned hereby certifies by checking the appropriate boxes that: (1) the Rights evidenced by this Right Certificate [ ] are [ ] are not being exercised by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Person (as such terms are defined pursuant to the Rights Agreement); (2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate from any Person who is, was, or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person. Dated: --------------, --- ----------------------------------- Signature NOTICE Signatures on the foregoing Form of Assignment and Form of Election to Purchase and in the related Certificates must correspond to the name as written upon the face of this Right Certificate in every particular, without alteration or enlargement or any change whatsoever. Signatures must be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved medallion signature program) pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended. B-8 65 EXHIBIT C --------- SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK The Board of Directors (the "Board") of Cole National Corporation (the "Company") has declared a dividend distribution of one right (a "Right") for each outstanding share of Common Stock, par value $.001 per share (the "Common Shares"), of the Company. The distribution is payable on December 6, 1999 (the "Record Date") to the stockholders of record as of the close of business on the Record Date. Each Right entitles the registered holder thereof to purchase from the Company one one-hundredth of a share of Series A Junior Participating Preferred Stock, without par value (the "Preferred Shares"), of the Company at a price (the "Purchase Price") of $40.00 per one one-hundredth of a Preferred Share, subject to adjustment. The description and terms of the Rights are set forth in a Rights Agreement, dated as of November 22, 1999 (the "Rights Agreement"), between the Company and National City Bank, as Rights Agent (the "Rights Agent"). Under the Rights Agreement, the Rights will be evidenced by the certificates evidencing Common Shares until the earlier (the "Distribution Date") of: (i) the close of business on the tenth calendar day following the first date (the "Share Acquisition Date") of public announcement (A) that a person or group (other than (1) HAL Holding N.V. and its Affiliates and Associates (each as defined in the Rights Agreement) ("HAL"), for so long as HAL is in compliance with the terms of the Standstill Agreement, dated as of November 22, 1999, between the Company and HAL or (2) the Company, a subsidiary or employee benefit or stock ownership plan of the Company or any of its affiliates or associates), together with its affiliates and associates, has acquired beneficial ownership of 15% or more of the outstanding Common Shares or (B) that HAL has acquired beneficial ownership of a number of Common Shares in excess of the HAL Percentage (as defined below) (any such person or group being hereinafter called an "Acquiring Person") or (ii) the close of business on the tenth business day (or such later date as may be specified by the Board) following the commencement of a tender offer or exchange offer by a person (other than the Company, a subsidiary or employee benefit or stock ownership plan of the Company or any of its affiliates or associates), the consummation of which would result in beneficial ownership by such person of 15% or more of the outstanding Common Shares. "HAL Percentage" means 25% to and including November ___, 2000, at which time the HAL Percentage snall be reduced to (i) 15%, if HAL is not the beneficial owner of 15% or more of the Common Shares of the Company outstanding at 66 the close of business on November __, 2000 or (ii) if HAL is the beneficial owner of 15% or more of the Common Shares of the Company outstanding at the close of business on November ___, 2000, the percentage so beneficially owned by HAL (rounded to the nearest percent), which shall not exceed 25%. The Rights Agreement provides that, until the Distribution Date, the Rights may be transferred with and only with the Common Shares. Until the Distribution Date (or earlier redemption, exchange or expiration of the Rights), any certificate evidencing Common Shares of the Company issued upon transfer or new issuance of the Common Shares will contain a notation incorporating the Rights Agreement by reference. Until the Distribution Date (or earlier redemption, exchange or expiration of the Rights), the surrender for transfer of any certificates evidencing Common Shares will also constitute the transfer of the Rights associated with such certificates. As soon as practicable following the Distribution Date, separate certificates evidencing the Rights ("Right Certificates") will be mailed to holders of record of Common Shares as of the close of business on the Distribution Date and such separate Right Certificates alone will evidence the Rights. No Right is exercisable at any time prior to the Distribution Date. The Rights will expire on the tenth anniversary of the Record Date (the "Final Expiration Date") unless earlier redeemed, exchanged or amended by the Company as described below. Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including the right to vote or to receive dividends. The Purchase Price payable, and the number of the Preferred Shares or other securities issuable, upon exercise of the Rights will be subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Preferred Shares, (ii) upon the grant to holders of Preferred Shares of certain rights or warrants to subscribe for or purchase the Preferred Shares at a price, or securities convertible into the Preferred Shares with a conversion price, less than the then-current market price of the Preferred Shares, or (iii) upon the distribution to holders of the Preferred Shares of evidences of indebtedness, cash (excluding regular periodic cash dividends), assets, stock (excluding dividends payable in the Preferred Shares) or subscription rights or warrants (other than those referred to above). The number of outstanding Rights and the number of one one-hundredths of the Preferred Shares issuable upon exercise of each Right will be subject to adjustment in the event of a stock dividend on the Common Shares payable in Common Shares or a subdivision, combination or reclassification of C-2 67 Common Shares occurring, in any such case, prior to the Distribution Date. The Preferred Shares issuable upon exercise of the Rights will not be redeemable. Each Preferred Share will be entitled, in connection with the declaration of a dividend on the Common Shares, to a preferential dividend payment equal to the greater of (i) $1.00 per share and (ii) an amount equal to 100 times the related dividend declared per Common Share. Subject to customary anti-dilution provisions, in the event of liquidation, the holders of Preferred Shares will be entitled to a preferential liquidation payment equal to the greater of (a) $100 per share and (b) an amount equal to 100 times the liquidation payment made per Common Share. Because of the nature of the Preferred Shares' dividend, voting and liquidation rights, the value of the one one-hundredth interest in a Preferred Share purchasable upon exercise of a Right should approximate the value of one Common Share. Rights will be exercisable to purchase Preferred Shares only after the Distribution Date occurs and prior to the occurrence of a Flip-in Event as described below. A Distribution Date resulting from the commencement of a tender offer or exchange offer described in clause (ii) of the second paragraph of this summary could precede the occurrence of a Flip-in Event and thus result in the Rights being exercisable to purchase Preferred Shares. A Distribution Date resulting from any occurrence described in clause (i) of the second paragraph of this summary would necessarily follow the occurrence of a Flip-in Event and thus result in the Rights being exercisable to purchase Common Shares or other securities as described below. Under the Rights Agreement, in the event (a "Flip-in Event") that (i) any person or group, together with its affiliates and associates, becomes an Acquiring Person, (ii) any Acquiring Person or any affiliate or associate thereof merges into or combines with the Company and the Company is the surviving corporation, (iii) any Acquiring Person or any affiliate or associate thereof effects certain other transactions with the Company, or (iv) during such time as there is an Acquiring Person the Company effects certain transactions, in each case as described in the Rights Agreement, then, in each such case, proper provision will be made so that from and after the latest of the Share Acquisition Date, the Distribution Date and the date of the occurrence of such Flip-in Event each holder of a Right, other than Rights that are or were owned beneficially by an Acquiring Person (which, from and after the date of a Flip-in Event, will be void), will have the right to receive, upon exercise thereof at the then-current exercise price of the Right, C-3 68 that number of Common Shares (or, under certain circumstances, an economically equivalent security or securities of the Company) that at the time of such Flip-in Event have a market value of two times the exercise price of the Right. In the event (a "Flip-over Event") that, at any time after a person has become an Acquiring Person, (i) the Company merges with or into any person and the Company is not the surviving corporation, (ii) any person merges with or into the Company and the Company is the surviving corporation, but all or part of the Common Shares are changed or exchanged for stock or other securities of any other person or cash or any other property, or (iii) 50% or more of the Company's assets or earning power, including securities creating obligations of the Company, are sold, in each case as described in the Rights Agreement, then, and in each such case, proper provision will be made so that from and after the latest of the Share Acquisition Date, the Distribution Date and the date of the occurrence of such Flip-over Event, each holder of a Right, other than Rights which have beoome void, will thereafter have the right to receive, upon the exercise thereof at the then-current exercise price of the Right, that number of shares of common stock (or, under certain circumstances, an economically equivalent security or securities) of such other person that at the time of such Flip-over Event nave a market value of two times the exercise price of the Right. From and after the later of the Share Acquisition Date and the Distribution Date, Rights (other than any Rights that have become void) will be exercisable as described above, upon payment of the aggregate exercise price in cash. In addition, at any time after the later of the Share Acquisition Date and the Distribution Date and prior to the acquisition by any person or group of affiliated or associated persons of 50% or more of the outstanding Common Shares, the Company may exchange the Rights (other than any rights that have become void), in whole or in part, at an exchange ratio of one Common Share per Right (subject to adjustment). With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments require an adjustment in the Purchase Price of at least 1%. The Company will not be required to issue fractional Preferred Shares (other than fractions that are integral multiples of one one-hundredth of a Preferred Share, which may, at the option of the Company, be evidenced by depositary receipts) or fractional Common Shares or other securities issuable upon the exercise of Rights. In lieu of issuing such securities, the Company may make a cash payment, as provided in the Rights Agreement. C-4 69 The Company may, at its option, redeem the Rights in whole, but not in part, at a price of $.01 per Right, subject to adjustment (the "Redemption Price"), at any time prior to the close of business on the later of the Distribution Date and the Share Accuisition Date. Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price. The Rights Agreement may be amended by the Company without the approval of any holders of Rights Certificates, including amendments that increase or decrease the Purchase Price, that add other events requiring adjustment to the Purchase Price payable and the number of the Preferred Shares or other securities issuable upon the exercise of the Rights or that modify procedures relating to the redemption of the Rights, except that no amendment may be made that decreases the stated Redemption Price to an amount less than $.01 per Right. The Board will have the exclusive power and authority to administer the Rights Agreement and to exercise all rights and powers specifically granted to the Board or to the Company therein, or as may be necessary or advisable in the administration of the Rights Agreement, including without limitation the right and power to interpret the provisions of the Rights Agreement and to make all determinations deemed necessary or advisable for the administration of the Rights Agreement (including any determination to redeem or not redeem the Rights or to amend or not amend the Rights Agreement). All such actions, calculations, interpretations and determinations (including any omission with respect to any of the foregoing) which are done or made by the Board in good faith will be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights and all other parties and will not subject the Board to any liability to any person, including without limitation the Rights Agent and the holders of the Rights. A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as an exhibit to a Registration Statement on Form 8-A. A copy of the Rights Agreement is available free of charge from the Company. This summary description of the Rights is as of the Record Date, does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement, which is incorporated herein by this reference. C-5 EX-10.50 3 EXHIBIT 10.50 1 Exhibit 10.50 SIXTH AMENDMENT AND WAIVER SIXTH AMENDMENT AND WAIVER, dated as of March 7, 2000 (this "AMENDMENT AND WAIVER"), to the Credit Agreement, dated as of November 15, 1996 (as amended, supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"), among COLE VISION CORPORATION, a Delaware corporation ("COLE VISION"), THINGS REMEMBERED, INC., a Delaware corporation ("THINGS REMEMBERED") and PEARLE, INC., a Delaware corporation ("PEARLE"; Cole Vision, Things Remembered and Pearle each being referred to as a "BORROWER" and collectively as the "BORROWERS"), the several banks and other financial institutions from time to time parties thereto (collectively, the "LENDERS") and CANADIAN IMPERIAL BANK OF COMMERCE, a Canadian-chartered bank acting through its New York Agency, as administrative agent for the Lenders thereunder (in such capacity, the "ADMINISTRATIVE AGENT"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Borrowers, the Lenders and the Administrative Agent are parties to the Credit Agreement; WHEREAS, the Borrowers have requested that the Administrative Agent and the Lenders amend and waive certain provisions of the Credit Agreement as set forth herein; and WHEREAS, the Administrative Agent and the Lenders are willing to effect such amendment and waiver, but only upon the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Borrowers, the Lenders and the Administrative Agent hereby agree as follows: 1. DEFINED TERMS. Unless otherwise defined herein, terms defined in the Credit Agreement shall have such meanings when used herein. 2. AMENDMENT TO SUBSECTION 1.1. Subsection 1.1 of the Credit Agreement is hereby amended by: (a) inserting the following new definitions in their proper alphabetical order: "COVENANT MODIFICATION PERIOD": the period from and including January 30, 2000 to and including April 29, 2000. "SIXTH AMENDMENT EFFECTIVE DATE": March 7, 2000. 2 2 (b) changing the definition of "Available Revolving Credit Commitment" to read in its entirety as follows: "AVAILABLE REVOLVING CREDIT COMMITMENT": as to any Lender at any time, an amount equal to the excess, if any, of (a) the amount of such Lender's Revolving Credit Commitment at such time OVER (b) the sum of (i) the aggregate unpaid principal amount at such time of all Revolving Credit Loans made by such Lender and (ii) an amount equal to such Lender's Revolving Credit Commitment Percentage of the outstanding L/C Obligations at such time; collectively, as to all the Lenders, the "AVAILABLE REVOLVING CREDIT COMMITMENTS", PROVIDED that, for purposes of subsection 2.1, "Available Revolving Credit Commitments" shall be reduced during the Covenant Modification Period by an amount equal to $25,000,000 in the event that the Leverage Ratio as of the end of the fiscal quarter of CNG ending on January 29, 2000 is greater than 3.50 to 1.00. 3. AMENDMENT TO SUBSECTION 2.4. Subsection 2.4 of the Credit Agreement is hereby amended by changing such subsection to read in its entirety as follows: "2.4 COMMITMENT FEES: OTHER FEES. (a) The Borrowers agree, jointly and severally, to pay to the Administrative Agent for the account of each Lender, a commitment fee for the period from and including the first day of the Revolving Credit Commitment Period to the Revolving Credit Commitment Termination Date, computed at the rate per annum set forth under the heading "Commitment Fees" on Schedule II opposite the percentage which is the average daily amount of the Aggregate Outstanding Revolving Credit of all Lenders during the period for which payment is made constitutes of the average daily amount of the Available Revolving Credit Commitment of such Lender during such payment period, payable quarterly in arrears on the last day of each fiscal quarter of CNG and on the Revolving Credit Commitment Termination Date, commencing on the first of such days to occur after the Closing Date. Notwithstanding the foregoing, the commitment fee for the period from and including the first day of the Sixth Amendment Effective Date to June 30, 2000 shall be 0.75% per annum of the average daily amount of the Revolving Credit Commitment of such Lender during such period, payable as set forth above. (b) The Borrowers agree, jointly and severally, to pay to the Administrative Agent for the account of each Lender, a utilization fee for the period from and including the Sixth Amendment Effective Date to June 30, 2000, (i) if the average daily amount of the aggregate principal amount of all Revolving Credit Loans outstanding during such period is greater than 66-2/3% of the average aggregate Revolving Credit Commitments during such period, computed at 0.50% per annum on the average daily principal amount of such Lender's outstanding Revolving Credit Loans during such period and (ii) if the average daily amount of the aggregate principal amount of all Revolving Credit Loans outstanding during such period is less than or equal to 66-2/3% but greater than 33-1/3% of the average aggregate Revolving Credit Commitments during such period, computed at 3 3 0.25% per annum on the average daily principal amount of such Lender's outstanding Revolving Credit Loans." 4. AMENDMENT TO SUBSECTION 7.2(c). Subsection 7.2(c) of the Credit Agreement is hereby amended by inserting "(90 days in the case of the fiscal year ending January 29, 2000)" after the word "Borrowers" therein. 5. AMENDMENT TO SUBSECTIONS 8.1(a) AND 8.1(b). Subsections 8.1(a) and 8.1(b) of the Credit Agreement are hereby amended by deleting such subsections in their entireties and substituting in lieu thereof the following: "(a) LEVERAGE RATIO. Permit the Leverage Ratio at any time during any of the test periods set forth below to be greater than the ratio set forth opposite such test period set forth below: TEST PERIOD LEVERAGE RATIO ----------- -------------- June 30, 2000 - July 29, 2000 3.75 to 1.00 June 30, 2000 - August 4, 2001 3.50 to 1.00 August 5, 2001 - February 2, 2002 3.25 to 1.00 February 3, 2002 - Revolving Credit Termination Date 3.00 to 1.00 (b) ADJUSTED INTEREST COVERAGE RATIO. Permit the Adjusted Interest Coverage Ratio as of the end of each fiscal quarter of CNG ending on or about any of the dates set forth below to be less than the ratio set forth opposite such date below: ADJUSTED FISCAL QUARTER ENDING INTEREST COVERAGE RATIO --------------------- ----------------------- July 29, 2000 1.50 to 1.00 October 31, 2000 1.50 to 1.00 February 3, 2001 1.50 to 1.00 April 29, 2001 1.50 to 1.00 August 4, 2001 1.50 to 1.00 October 31, 2001 1.50 to 1.00 February 2, 2002 1.50 to 1.00 Thereafter 1.60 to 1.00" 4 4 6. ADDITIONAL AMENDMENT TO SUBSECTION 8.1. Subsection 8.1 of the Credit Agreement is hereby amended by inserting the following new paragraph (d) at the end thereof: "(d) EBITDA. Permit EBITDA for any period of four consecutive fiscal quarters of CNG ending with any fiscal quarter set forth below to be less than the amount set forth below opposite such fiscal quarter: FISCAL QUARTER ENDING EBITDA --------------------- ------ April 29, 2000 $55,000,000 PROVIDED that, for the purposes of this subsection 8.1(d), restructuring charges incurred in such period in connection with the optical business of the Borrowers, deducted in calculating Net Income for such period, shall be included in the determination of EBITDA, PROVIDED FURTHER that the amount of such restructuring charges that may be so included in the determination of EBITDA shall not exceed $2,000,000.". 7. AMENDMENT TO SUBSECTION 8.2(i). Subsection 8.2(i) of the Credit Agreement is hereby amended by deleting such subsection in its entirety and substituting in lieu thereof the following: "(i) Indebtedness of the Borrowers and their Subsidiaries in an aggregate principal amount not exceeding as to the Borrowers and their Subsidiaries $10,000,000 at any time outstanding; PROVIDED that no Indebtedness shall be created, incurred or assumed pursuant to this subsection 8.2(i) during the Covenant Modification Period". 8. AMENDMENT TO SUBSECTION 8.7(c). Subsection 8.7(c) of the Credit Agreement is hereby amended by deleting such subsection in its entirety and substituting in lieu thereof the following: "(c) so long as no Default or Event of Default shall have occurred and be continuing or would occur after giving effect to such dividend, dividends to CNG in an aggregate amount not to exceed $30,000,000 solely to allow CNG to repurchase CNG Notes and/or Senior Subordinated Notes without violating Section 9(m); PROVIDED that no dividends shall be declared or paid pursuant to this subsection 8.7(c) during the Covenant Modification Period;". 9. AMENDMENT TO SUBSECTION 8.7(d). Subsection 8.7(d) of the Credit Agreement is hereby amended by deleting such subsection in its entirety and substituting in lieu thereof the following: "(d) so long as no Default or Event of Default shall have occurred and be continuing or would occur after giving effect to such dividend, dividends to CNG in an aggregate amount not to exceed $4,000,000 solely to allow CNG or CNC to repurchase, redeem, or otherwise acquire or retire for value, any Capital Stock of CNG or CNC or 5 5 any current or former Subsidiary of CNG held by any of CNG's (or any of its Subsidiaries') current or former employees; PROVIDED that no dividends shall be declared or paid pursuant to this subsection 8.7(d) during the Covenant Modification Period;". 10. AMENDMENT TO SUBSECTION 8.8 Subsection 8.8 of the Credit Agreement is hereby amended by deleting such subsection in its entirety and substituting in lieu thereof the following: "8.8 LIMITATION ON CAPITAL AND OTHER EXPENDITURES. (a) Make any expenditure in respect of the purchase or other acquisition of fixed or capital assets (a "CAPITAL EXPENDITURE") except for expenditures in the ordinary course of business not exceeding, in the aggregate for the Borrowers and their Subsidiaries during any of the test periods set forth below, the amount set forth opposite such test period set forth below: TEST PERIOD AMOUNT ----------- ------ January 30, 2000 - February 3, 2001 $45,000,000 February 4, 2001 - February 2, 2002 $50,000,000 February 3, 2002 - Revolving Credit Termination Date $55,000,000 PROVIDED that the aggregate amount of expenditures made pursuant to this subsection 8.8 for the period of four consecutive fiscal quarters of the Borrowers and their Subsidiaries ending April 29, 2000, shall not exceed $40,000,000; or (b) Make, during the fiscal quarter of the Borrowers ending April 29, 2000, any expenditure in respect of the development of computer systems owned or operated by the Borrowers and their Subsidiaries except for expenditures in the ordinary course of business not exceeding $6,000,000 in the aggregate for the Borrowers and their Subsidiaries.". 11. AMENDMENT TO SUBSECTION 8.9(e). Subsection 8.9(e) of the Credit Agreement is hereby amended by deleting such subsection in its entirety and substituting in lieu thereof the following: "(e) so long as no Default or Event of Default has occurred and is continuing or would occur after giving effect to such Investment, Investments in franchises in a business related to the optical business of Pearle and Cole Vision as conducted on the Closing Date in an aggregate amount not to exceed $15,000,000 during any fiscal year; PROVIDED that the aggregate amount of Investments made pursuant to this subsection 8.9(e) during the fiscal quarter of CNG ending April 29, 2000 shall not exceed $5,000,000; and". 6 6 12. AMENDMENT TO SUBSECTION 8.9(f). Subsection 8.9(f) of the Credit Agreement is hereby amended by deleting such subsection in its entirety and substituting in lieu thereof the following: "(f) Investments, other than the purchase of CNG Notes or the Senior Subordinated Notes, in an aggregate amount not to exceed $10,000,000; PROVIDED that the aggregate amount of Investments made pursuant to this subsection 8.9(f) during the Covenant Modification Period shall not exceed $1,000,000.". 13. AMENDMENT TO SUBSECTION 9(m). Subsection 9(m)(i)(x) of the Credit Agreement is hereby amended by deleting such subsection in its entirety and substituting in lieu thereof the following: "(x)(so long as no Default or Event of Default has occurred and is continuing or would occur as a result of such repurchase and so long as no such repurchase occurs during the Covenant Modification Period), repurchases by CNG of such of the CNG notes and/or Senior Subordinated Notes that it is able to repurchase for an aggregate purchase price (including fees and expenses incurred in connection with such repurchase) not to exceed $30,000,000 and". 14. ADDITIONAL AMENDMENT TO SECTION 9. Section 9 is hereby amended by inserting the following new paragraph (o) after paragraph (n) thereof: "(o) CNC shall (i) create, incur, assume or suffer to exist any Indebtedness, except Indebtedness outstanding on the Sixth Amendment Effective Date; (ii) make any Investments, except Investments in Pearle Europe B.V. in an aggregate amount not to exceed $10,000,000; or (iii) create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired.". 15. AMENDMENT TO SCHEDULE II TO CREDIT AGREEMENT. Schedule II to the Credit Agreement is hereby amended by deleting such Schedule in its entirety and inserting in lieu thereof the revised Schedule II attached hereto as Exhibit A. 16. WAIVER. The Lenders hereby waive any Default or Event of Default arising from violation of subsection 8.1(b) of the Credit Agreement for the period ended January 29, 2000. 17. AMENDMENT FEE. In consideration of the agreement of the Lenders to consent to the amendments and waiver contained herein, the Borrowers agree to pay to each Lender which so consents on or prior to March 7, 2000 (by executing and delivering to the Administrative Agent or its counsel this Amendment and Waiver on or prior to such date), an amendment fee in an amount equal to .25% of the amount of such Lender's Commitment, payable on the effective date of this Amendment and Waiver in immediately available funds to the Administrative Agent on behalf of such Lender. 7 7 18. REPRESENTATIONS AND WARRANTIES. Each Borrower hereby confirms, reaffirms and restates the representations and warranties made by it in Section 5 of the Credit Agreement, PROVIDED that each reference to the Credit Agreement therein shall be deemed to be a reference to the Credit Agreement after giving effect to this Amendment and Waiver. Each Borrower represents and warrants that, after giving effect to this Amendment and Waiver, no Default or Event of Default has occurred and is continuing. 19. CONDITIONS TO EFFECTIVENESS. This amendment and Waiver shall become effective on the date (the "AMENDMENT EFFECTIVE DATE") on which all of the following conditions precedent have been satisfied or waived: (a) the Borrowers, the Lenders, and the Administrative Agent shall have executed and delivered to the Administrative Agent this Amendment and Waiver, and the Guarantors shall have executed and delivered to the Administrative Agent the Acknowledgment and Consent attached hereto; (b) Cole National Corporation shall have executed and delivered to the Administrative Agent a Guarantee with terms and conditions satisfactory to the Administrative Agent; and (c) the Borrowers shall have paid the fees referred to in Section 17 above. 20. CONTINUING EFFECT OF CREDIT AGREEMENT. This amendment and Waiver shall not constitute a waiver, amendment or modification of any other provision of the Credit Agreement not expressly referred to herein and shall not be construed as a waiver or consent to any further or future action on the part of the Borrowers that would require a waiver or consent of the Lenders or the Administrative Agent. Except as expressly amended or modified herein, the provisions of the Credit Agreement are and shall remain in full force and effect. 21. COUNTERPARTS. This amendment and Waiver may be executed by one or more of the parties to this Amendment and Waiver on any number of separate counterparts (including by facsimile transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Amendment and Waiver signed by all the parties shall be lodged with the Borrowers and the Administrative Agent. 22. PAYMENT OF EXPENSES. The borrowers agree, jointly and severally, to pay or reimburse the Administrative Agent for all of its out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of this Amendment and Waiver and any other documents prepared in connection herewith, and the consummation and administration of the transactions contemplated hereby, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent. 8 8 23. GOVERNING LAW. THIS AMENDMENT AND WAIVER AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 9 IN WITNESS WHEREOF, the parties hereto have caused this Amendment and Waiver to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. COLE VISION CORPORATION By: /s/ Joseph Gaglioti --------------------------------------------- Name: Joseph Gaglioti Title: Treasurer and Assistant Secretary THINGS REMEMBERED, INC. By: /s/ Joseph Gaglioti --------------------------------------------- Name: Joseph Gaglioti Title: Treasurer and Assistant Secretary PEARLE, INC. By: /s/ Joseph Gaglioti --------------------------------------------- Name: Joseph Gaglioti Title: Vice President, Treasurer and Assistant Secretary 10 CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY, as Administrative Agent By: /s/ Katherine Bass --------------------------------------------- Name: Katherine Bass Title: Executive Director CIBC World Markets Corp. as Agent CIBC INC. By: /s/ Katherine Bass --------------------------------------------- Name: Katherine Bass Title: Executive Director CIBC World Markets Corp. as Agent CREDIT SUISSE FIRST BOSTON By: --------------------------------------------- Name: Title: By: --------------------------------------------- Name: Title: 11 CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY, as Administrative Agent By: --------------------------------------------- Name: Title: CIBC INC. By: --------------------------------------------- Name: Title: CREDIT SUISSE FIRST BOSTON By: /s/ Robert Hetu --------------------------------------------- Name: Robert Hetu Title: Vice President By: /s/ Chris T. Horgan --------------------------------------------- Name: Chris T. Horgan Title: Vice President 12 FIRST UNION NATIONAL BANK By: /s/ Thomas M. Harder --------------------------------------------- Name: Thomas M. Harder Title: Vice President NATIONAL CITY BANK By: --------------------------------------------- Name: Title: KEYBANK NATIONAL ASSOCIATION By: --------------------------------------------- Name: Title: FIFTH THIRD BANK, NORTHEASTERN OHIO By: --------------------------------------------- Name: Title: 13 FIRST UNION NATIONAL BANK By: --------------------------------------------- Name: Title: NATIONAL CITY BANK By: /s/ Chris D. Thornton --------------------------------------------- Name: Chris D. Thornton Title: Vice President KEYBANK NATIONAL ASSOCIATION By: --------------------------------------------- Name: Title: FIFTH THIRD BANK, NORTHEASTERN OHIO By: --------------------------------------------- Name: Title: 14 FIRST UNION NATIONAL BANK By: --------------------------------------------- Name: Title: NATIONAL CITY BANK By: --------------------------------------------- Name: Title: KEYBANK NATIONAL ASSOCIATION By: /s/ Mark A. LoSchiavo --------------------------------------------- Name: Mark A. LoSchiavo Title: Assistant Vice President FIFTH THIRD BANK, NORTHEASTERN OHIO By: --------------------------------------------- Name: Title: 15 FIRST UNION NATIONAL BANK By: --------------------------------------------- Name: Title: NATIONAL CITY BANK By: --------------------------------------------- Name: Title: KEYBANK NATIONAL ASSOCIATION By: --------------------------------------------- Name: Title: FIFTH THIRD BANK, NORTHEASTERN OHIO By: /s/ James P. Byrnes --------------------------------------------- Name: James P. Byrnes Title: Vice President 16 12 EXHIBIT A TO SIXTH AMENDMENT AND WAIVER Schedule II ----------- to Credit Agreement ------------------- Applicable Margin Calculation for Revolving Credit Loans -------------------------------------------------------- ABR Loans Eurodollar Loans Leverage Ratio Applicable Margin Applicable Margin - -------------- ----------------- ----------------- Greater than 3.25 to 1.00 1.25% 2.25% Greater than 3.00 to 1.00, but less than or equal to 3.25 to 1.00 1.00% 2.00% Greater than 2.50 to 1.00, but less than or equal to 3.00 to 1.00 .75% 1.75% Less than or equal to 2.50 to 1.00 .50% 1.50% Notwithstanding the foregoing table, (a) during the period from and including the Sixth Amendment Effective Date until June 30, 2000, the Applicable Margin in respect of Revolving Credit Loans shall equal (i) with respect to ABR Loans, 1.5% per annum and (ii) with respect to Eurodollar Loans, 2.5% per annum, and (b) the Applicable Margin will be adjusted on each Adjustment Date after the Covenant Modification Period to the applicable rate per annum set forth above under the heading "ABR Loans Applicable Margin" or "Eurodollar Loans Applicable Margin" MINUS .25% per annum in the event that, immediately preceding such Adjustment Date, (i) the senior unsecured long-term debt of CNG shall be rated at least "BBB-" by Standard & Poor's, a division of McGraw-Hill, Inc., and (ii) the Administrative Agent shall have received written notice of such rating from a Borrower. 17 13 Commitment Fees --------------- Percentage of Revolving Credit Commitments Used Commitment Fees - ---------------- --------------- Greater than 66.6% 0.375% Greater than 33.3%, but less than or equal to 66.6% 0.50% Less than or equal to 33.3% 0.75% 18 CNC GUARANTEE GUARANTEE, dated as of March 7, 2000, made COLE NATIONAL CORPORATION, a Delaware corporation (the "GUARANTOR"), in favor of Canadian Imperial Bank of Commerce, as administrative agent (in such capacity, the "ADMINISTRATIVE AGENT") for (i) the banks and other financial institutions (the "Lenders") from time to time parties to the Credit Agreement, dated as of November 15, 1996 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among Cole Vision Corporation, Things Remembered, Inc. and Pearle, Inc. (collectively, the "Borrowers"), the Lenders and the Administrative Agent and (ii) the other Guaranteed Parties (as defined below). WITNESSETH: WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make, and have made, extensions to the Borrowers upon the terms and subject to the conditions set forth therein; WHEREAS, the Borrowers are members of an affiliated group of companies that includes the Guarantor; WHEREAS, the proceeds of the extensions of credit have been and will be used in part to enable the Borrowers to make valuable transfers to the Guarantor in connection with the operations of their respective business; WHEREAS, the Guarantor will derive substantial direct and indirect benefit from the continued making of the extension of credit under the Credit Agreement; and WHEREAS, it is a condition precedent to the effectiveness of the Sixth Amendment and Waiver, dated as of March 7, 2000 (the "SIX AMENDMENT"), of the Credit Agreement that the Guarantor shall have executed and delivered this Guarantee to the Administrative Agent for the ratable benefit of the Guaranteed Parties; NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent and the Lenders to enter into the Sixth Amendment and to induce the Lenders to continue to make their respective extensions of credit to the Borrowers thereunder, the Guarantor hereby agrees with the Administrative Agent, for the ratable benefit of the Guaranteed Parties, as follows: SECTION 1. DEFINED TERMS 1.1 DEFINITIONS. (a) Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement. 19 (b) The following terms shall have the following meanings: "GUARANTEE": this CNC Guarantee, as the same may be amended, supplemented or otherwise modified from time to time. "GUARANTEED OBLIGATIONS": the collective reference to the Obligations and all obligations and liabilities of the Guarantor which may arise under or in connection with this Guarantee, whether on account of reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Administrative Agent or to the Lenders that are required to be paid by the Guarantor pursuant to the terms of this Guarantee). "GUARANTEED PARITIES": the collective reference to the Administrative Agent, the Lenders (including, without limitation, the Issuing Lender) and any Affiliate of any Lender which has entered into a Hedge Agreement with any Borrower or any Subsidiary. "GUARANTOR": as defined in the preamble hereto. "HEDGE AGREEMENTS": as to any Person, all interest rate swaps, caps or collar agreements or similar arrangements entered into by such Person providing for protection against fluctuations in interest rates or currency exchange rates of the exchange of nominal interest obligations, either generally or under specific contingencies, including, without limitations, all Interest Rate Protection Agreements and Permitted Hedging Arrangements with respect to currency exchange rates. "OBLIGATIONS": the collective reference to the unpaid principal of and interest on the Revolving Credit Loans and Reimbursement Obligations and all other obligations and liabilities of the Borrowers (including, without limitations, interest accruing at the then applicable rate provided in the Credit Agreement after the maturity of the Revolving Credit Loans and Reimbursement Obligations and interest accruing at the then applicable rate provided in the Credit Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrowers, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) to the Administrative Agent or any Lender (or, in the case of any Hedge Agreement referred to below, any Affiliate of any Lender), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Credit Agreement, this Guarantee, the other Loan Documents, any Letter of Credit or any Hedge Agreement entered into by any Borrower with any Lender (or, in the case of any Hedge Agreement, any Affiliate of any Lender) or any other document made, delivered or given in connection therewith, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Administrative Agent or to the Lenders that are required to be paid by any Borrower pursuant to the terms of any of the foregoing agreements). 20 1.2 OTHER DEFINITIONAL PROVISIONS. (a) The words "hereof", "herein", "hereto" and "hereunder" and words of similar import when used in this Guarantee shall refer to this Guarantee as a whole and not to any particular provision of this Guarantee, and Section and Schedule references are to this Guarantee unless otherwise specified. (b) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. SECTION 2. GUARANTEE 2.1 GUARANTEE. (a) The Guarantor hereby unconditionally and irrevocable guarantees to the Administrative Agent, for the ratable benefits of the Guaranteed Parties and their respective successors, indorsees, transferees and assigns, the prompt and complete payment and performance by the Borrowers when due (whether at the stated maturity, by acceleration or otherwise) of the Guaranteed Obligations. (b) Anything herein or in any other Loan Document to the contrary notwithstanding, the maximum liability of the Guarantor hereunder shall in no event exceed the amount which can be guaranteed by the Guarantor under applicable federal and state laws relating to the insolvency of debtors. (c) The Guarantor agrees that the Obligations may at any time and from time to time exceed the amount of the liability of the Guarantor hereunder without impairing the guarantee contained in this Section 2 or affecting the rights and remedies of the Administrative Agent or any other Guaranteed Party hereunder. (d) The guarantee contained in this Section 2 shall remain in full force and effect until the first date on which all the Obligations and the obligations of the Guarantor under the guarantee contained in this Section 2 shall have been satisfied by payment in full, no Letter of Credit shall be outstanding and the Commitments shall be terminated, notwithstanding that from time to time during the term of the Credit Agreement the Borrowers may be free from any Obligations. (e) No payment made by any Borrower, the Guarantor, any other guarantor or any other Person or received or collected by the Administrative Agent or any other Guaranteed Party from any Borrower, the Guarantor, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of the Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by the Guarantor in respect of the Obligations or any payment received or collected from the Guarantor in respect of the Obligations), remain liable for the Obligations up to the maximum liability of the Guarantor hereunder until the first date on which the Obligations are paid in full, no Letter of Credit shall be outstanding and the Commitments are terminated. 21 4 2.2 NO SUBROGATION. Notwithstanding any payment made by the Guarantor hereunder or any set-off or application of funds of the Guarantor by the Administrative Agent or any other Guaranteed Party, the Guarantor shall not be entitled to be subrogated to any of the rights of the Administrative Agent or any other Guaranteed Party against any Borrower or any collateral security or guarantee or right of offset held by the Administrative Agent or any other Guaranteed Party for the payment of the Obligations, nor shall the Guarantor seek or be entitled to seek any contribution or reimbursement from any Borrower in respect of payments made by the Guarantor hereunder, until all amounts owing to the Administrative Agent and the other Guaranteed Parties by the Borrowers on account of the Obligations are paid in full, no Letter of Credit shall be outstanding and the Commitments are terminated. If any amount shall be paid to the Guarantor on account of such subrogation rights at any time when all of the Obligations shall not have been paid in full, such amount shall be held by the Guarantor in trust for the Administrative Agent and the other Guaranteed Parties, segregated from other funds of the Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned over to the Administrative Agent in the exact form received by the Guarantor (duly indorsed by the Guarantor to the Administrative Agent, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Administrative Agent may determine. 2.3 AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS. The Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against the Guarantor and without notice to or further assent by the Guarantor, any demand for payment of any of the Obligations made by the Administrative Agent or any other Guaranteed Party may be rescinded by the Administrative Agent or such other Guaranteed Party and any of the Obligations continued, and the Obligations, or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Administrative Agent or any other Guaranteed Party, and the Credit Agreement and the other Loan Documents and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Administrative Agent (or the Majority Lenders, as the case may be) may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Administrative Agent or any other Guaranteed Party for the payment of the Obligations may be sold, exchanged, waived, surrendered or released. Neither the Administrative Agent nor any other Guaranteed Party shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Obligations or for the guarantee contained in this Section 2 or any property subject thereto. 2.4 GUARANTEE ABSOLUTE AND UNCONDITIONAL. The Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by the Administrative Agent or any other Guaranteed Party upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in this Section 2; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between any Borrower and the Guarantor, on the one hand, and the Administrative Agent and the other Guaranteed Parties, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee 22 5 contained in this Section 2. The Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Borrowers or the Guarantor with respect to the Obligations. The Guarantor understands and agrees that the guarantee contained in this Section 2 shall be construed as a continuing, absolute and unconditional guarantee of payment. The Guarantor hereby waives, to the extent it may legally do so, any and all defenses that it may have arising out of or in connection with any and all of the following: (a) the validity or enforceability of the Credit Agreement or any other Loan Document, any of the Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Administrative Agent or any other Guaranteed Party, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by any Borrower against the Administrative Agent or any other Guaranteed Party, (c) any change in the time, place, manner or place of payment, amendment, or waiver or increase in the Obligations, (d) any change in the corporate structure or existence of any Borrower or (e) any other circumstance whatsoever (with or without notice to or knowledge of such Borrower or the Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of any Borrower for the Obligations, or of the Guarantor under the guarantee contained in this Section 2, in bankruptcy or in any other instance. When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against the Guarantor, the Administrative Agent or any other Guaranteed Party may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as it may have against any Borrower or any other Person or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by the Administrative Agent or any other Guaranteed Party to make any such demand, to pursue such other rights or remedies or to collect any payments from any Borrower or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of any Borrower or any other Person or any such collateral security, guarantee or right of offset, shall not relieve the Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Administrative Agent or any other Guaranteed Party against the Guarantor. For the purposes hereof "demand" shall include the commencement and continuance of any legal proceedings. 2.5 REINSTATEMENT. The guarantee contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any other Guaranteed Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any Borrower or the Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, any Borrower or the Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. 2.6 PAYMENTS. The Guarantor hereby guarantees that payments hereunder will be paid to the Administrative Agent without set-off or counterclaim in Dollars at the office of the Administrative Agent located at 425 Lexington Avenue, New York, New York 10017. 23 6 SECTION 3. REPRESENTATIONS AND WARRANTIES To induce the Administrative Agent and the Lenders to enter into the Sixth Amendment and to induce the Lenders to continue to make their respective extensions of credit to the Borrowers under the Credit Agreement, the Guarantor hereby represents and warrants to the Administrative Agent and each other Guaranteed Party that: (a) The Guarantor (i) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (ii) has the corporate or other organizational power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, (iii) is duly qualified as a foreign corporation or other entity 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 and (iv) is in compliance with all Requirements of Law except to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. (b) The Guarantor has the corporate or other organizational power and authority, and the legal right, to make, deliver and perform this Guarantee and has taken all necessary corporate or other organizational action to authorize the execution, delivery and performance of this Guarantee. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the execution, delivery, performance, validity or enforceability of this Guarantee. This Guarantee has been duly executed and delivered on behalf of the Guarantee. This Guarantee constitutes a legal, valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (c) The execution, delivery and performance of this Guarantee will not violate any Requirement of Law or Contractual Obligation of the Guarantor or of any of its Subsidiaries and will not result in, or require, the creation or imposition of any Lien on any of its or their respective properties or revenues pursuant to any such Requirements of Law or Contractual Obligation (other than pursuant to this Guarantee). (d) No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Guarantor, threatened by or against the Guarantor or any of its Subsidiaries or against any of its or their respective properties or revenues (x) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby, or (y) which could reasonably be expected to have a Material Adverse Effect. 24 7 SECTION 4. COVENANTS The Guarantor covenants and agrees with the Administrative Agent and the other Guaranteed Parties that, from and after the date of this Guarantee until the Guaranteed Obligations shall have been paid in full, no Letter of Credit shall be outstanding and the Commitments shall have terminated: 4.1 COVENANTS IN CREDIT AGREEMENT. The Guarantor shall take, or shall refrain from taking, as the case may be, each action that is necessary to be taken or not taken, as the case may be, so that no Default or Event of Default is caused by the failure to take such action or to refrain from taking such action by the Guarantor or any of its Subsidiaries. SECTION 5. THE ADMINISTRATIVE AGENT 5.1 AUTHORITY OF ADMINISTRATIVE AGENT. The Guarantor acknowledges that the rights and responsibilities of the Administrative Agent under this Guarantee with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Guarantee or any amendment, supplement or other modification of this Guarantee shall, as between the Administrative Agent and the Guaranteed Parties, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Administrative Agent and the Guarantor, the Administrative Agent shall be conclusively presumed to be acting as agent for the Guaranteed Parties with full and valid authority so to act or refrain from acting, and the Guarantor shall be under any obligation, or entitlement, to make any inquiry respecting such authority. SECTION 6. MISCELLANEOUS 6.1 AMENDMENTS IN WRITING. None of the terms or provisions of this Guarantee may be waived, amended, supplemented or otherwise modified except by a written instrument executed by the Guarantor and the Administrative Agent, PROVIDED that any provision of this Guarantee imposing obligations on the Guarantor may be waived by the Administrative Agent in a written instrument executed by the Administrative Agent. 6.2 NOTICES. All notices, requests and demands to or upon the Administrative Agent or the Guarantor hereunder shall be effected in the manner provided for in subsection 11.2 of the Credit Agreement; PROVIDED that any such notice, request or demand to or upon the Guarantor shall be addressed to the Guarantor at: 5915 Landerbrook Drive Mayfield Heights, Ohio 44124 Attention: Joseph Gaglioti Fax: (216) 461-3489 25 8 with a copy to: Jones, Day, Reavis & Pogue North Point 901 Lakeside Avenue Cleveland, Ohio 44114 Attention: David P. Porter, Esq. Fax: (216) 579-0212 6.3 NO WAIVER BY COURSE OF CONDUCT: CUMULATIVE REMEDIES. Neither the Administrative Agent nor any other Guaranteed Party shall by any act (except by a written instrument pursuant to Section 6.1), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. No failure to exercise, nor any delay in exercising, on the part of the Administrative Agent or any other Guaranteed Party, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Administrative Agent or any other Guaranteed Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Administrative Agent or such other Guaranteed Party would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law. 6.4 ENFORCEMENT EXPENSES: INDEMNIFICATION. (a) The Guarantor agrees to pay or reimburse each Guaranteed Party and the Administrative Agent for all their respective costs and expenses incurred in collecting against the Guarantor under the guarantee contained in Section 2 or otherwise enforcing any rights under this Guarantee, including, without limitation, the fees and disbursements of counsel (including the allocated fees and expenses of in-house counsel) to each Guaranteed Party and of counsel to the Administrative Agent. (b) The Guarantor agrees to pay, and to save the Administrative Agent and the Guaranteed Parties harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable in connection with any of the transactions contemplated by this Guarantee. (c) The Guarantor agrees to pay, and to save the Administrative Agent and the Guaranteed Parties harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Guarantee (collectively, the "INDEMNIFIED LIABILITIES") to the extent the Borrowers would be required to do so pursuant to Section 11.5 of the Credit Agreement. (d) The agreements in this Section 6.4 shall survive repayment of the Guaranteed Obligations and all other amounts payable under the Credit Agreement and the other Loan Documents. 26 9 6.5 SUCCESSORS AND ASSIGNS. This Guarantee shall be binding upon the successors and assigns of the Guarantor and shall inure to the benefit of the Administrative Agent and the Guaranteed Parties and their successors and assigns; PROVIDED that the Guarantor may assign, transfer or delegate any of its rights or obligations under this Guarantee without the prior written consent of the Administrative Agent. 6.6 SET-OFF. The Guarantor hereby irrevocably authorizes the Administrative Agent and each other Guaranteed Party at any time and from time to time without notice to the Guarantor or any Borrower, any such notice being expressly waived by the Guarantor and by the Borrowers, upon any amount remaining unpaid after it becomes due and payable by the Guarantor hereunder to set-off and appropriate and apply against any such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Administrative Agent or such other Guaranteed Party to or for the credit or the account of the Guarantor, or any part thereof in such amounts as the Administrative Agent or such other Guaranteed Party may elect. The Administrative Agent and each other Guaranteed Party shall notify the Guarantor promptly of any such set-off and the application made by the Administrative Agent or such other Guaranteed Party of the proceeds thereof; PROVIDED that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Administrative Agent and each other Guaranteed Party under this Section 6.6 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Administrative Agent or such other Guaranteed Party may have. 6.7 SEVERABILITY. Any provision of this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 6.8 SECTION HEADINGS. The Section headings used in this Guarantee are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 6.9 INTEGRATION. This Guarantee and the other Loan Documents represent the agreement of the Guarantor, the Administrative Agent and the other Guaranteed Parties with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any other Guaranteed Party relative to subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents. 6.10 GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 27 10 6.11 SUBMISSION TO JURISDICTION; WAIVERS. The Guarantor hereby irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Guarantee, or for recognition and enforcement of any judgement in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Guarantor at its address referred to in Section 6.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any exemplary, punitive or consequential damages. 6.12 ACKNOWLEDGEMENTS. The Guarantor hereby acknowledges that: (a) it has been advised by counsel in the negotiation, execution and delivery of this Guarantee; (b) neither the Administrative Agent nor any other Guaranteed Party has any fiduciary relationship with or duty to the Guarantor arising out of or in connection with this Guarantee or any of the other Loan Documents, and the relationship between the Guarantor, on the one hand, and the Administrative Agent and the Guaranteed Parties, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and (c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Guaranteed Parties or among the Guarantor and the Guaranteed Parties. 28 11 6.13 WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 6.14 RELEASES. At such time as the Revolving Credit Loans, the Reimbursement Obligations and the other Guaranteed Obligations shall have been paid in full, the Commitments have been terminated and no Letters of Credit shall be outstanding, this Guarantee and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent and the Guarantor hereunder shall terminate, all without delivery of any instrument or performance of any act by any party. At the request and sole expense of the Guarantor following any such termination, the Administrative Agent shall execute and deliver to the Guarantor such documents as the Guarantor shall reasonably request to evidence such termination. 29 12 IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly executed and delivered as of the date first above written. COLE NATIONAL CORPORATION By: /s/ J. Gaglioti --------------------------------- Title: Vice President & Treasurer 30 ACKNOWLEDGMENT AND CONSENT Each of the undersigned corporations as Guarantors under the Guarantee and Collateral Agreement, dated as of November 15, 1996 (as amended, supplemented or otherwise modified from time to time, the "GUARANTEE AND COLLATERAL AGREEMENT"), made by the undersigned corporations in favor of the Administrative Agent, for the benefit of the Lenders, hereby (a) consents to the transactions contemplated by this Amendment and Waiver, and (b) acknowledges and agrees that the guarantees (and grants of collateral security therefor) contained in such Guarantee and Collateral Agreement are, and shall remain, in full force and effect after giving effect to this Amendment and Waiver, and all prior modifications to the Credit Agreement. BAY CITIES OPTICAL COMPANY By: /s/ J. Gaglioti ---------------------------------------- Name: Joseph Gaglioti Title: Treasurer and Assistant Secretary WESTERN STATES OPTICAL, INC. By: /s/ J. Gaglioti ---------------------------------------- Name: Joseph Gaglioti Title: Treasurer and Assistant Secretary COLE VISION SERVICES, INC. By: /s/ J. Gaglioti ---------------------------------------- Name: Joseph Gaglioti Title: Treasurer and Assistant Secretary COLE MANAGEMENT SERVICES, INC. By: /s/ J. Gaglioti ---------------------------------------- Name: Joseph Gaglioti Title: Treasurer 31 PEARLE VISIONCARE, INC. By: /s/ J. Gaglioti ---------------------------------------- Name: Joseph Gaglioti Title: Vice President & Treasurer PEARLE VISION MANAGED CARE - HMO OF TEXAS, INC. By: /s/ J. Gaglioti ---------------------------------------- Name: Joseph Gaglioti Title: Vice President, Treasurer & C.F.O. EX-10.51 4 EXHIBIT 10.51 1 Exhibit 10.51 CNC GUARANTEE GUARANTEE, dated as of March 7, 2000, made by COLE NATIONAL CORPORATION, a Delaware Corporation (the "GUARANTOR"), in favor of Canadian Imperial Bank of Commerce, as administrative agent (in such capacity, the "ADMINISTRATIVE AGENT" for (i) the banks and other financial institutions (the "LENDERS") from time to time parties to the Credit Agreement, dated as of November 15, 1996 (as amended, supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"), among Cole Vision Corporation, Things Remembered, Inc. and Pearle, Inc. (collectively, the "BORROWERS"), the Lenders and the Administrative Agent and (ii) the other Guaranteed parties (as defined below). W I T N E S S E T H: - - - - - - - - - - WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make, and have made, extensions of the credit to the Borrowers upon the terms and subject to the conditions set forth therein; WHEREAS, the Borrowers are members of an affiliated group of companies that includes the Guarantor; WHEREAS, the proceeds of the extensions of credit have been and will be used in part to enable the Borrowers to make valuable transfers to the Guarantor in connection with the operation of their respective businesses; WHEREAS, the Guarantor will derive substantial direct and indirect benefit from the continued making of the extensions of credit under the Credit Agreement; and WHEREAS, it is a condition precedent to the effectiveness of the Sixth Amendment and Waiver, dated as of March 7, 2000 (the "SIXTH AMENDMENT"), of the Credit Agreement that the Guarantor shall have executed and delivered this Guarantee to the Administrative Agent for the ratable benefit of the Guaranteed Parties; NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent and the Lenders to enter into the Sixth Amendment and to induce the Lenders to continue to make their respective extensions of credit to the Borrowers thereunder, the Guarantor hereby agrees with the Administrative Agent, for the ratable benefit of the Guaranteed Parties, as follows: SECTION 1. DEFINED TERMS 1.1 DEFINITIONS. (a) Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement. 2 2 (b) The following terms shall have the following meanings: "GUARANTEE": this CNC Guarantee, as the same may be amended, supplemented or otherwise modified from time to time. "GUARANTEED OBLIGATIONS": the collective reference to the Obligations and all obligations and liabilities of the Guarantor which may arise under or in connection with this Guarantee, whether on account of reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Administrative Agent or to the Lenders that are required to be paid by the Guarantor pursuant to the terms of this Guarantee). "GUARANTEED PARTIES": the collective reference to the Administrative Agent, the Lenders (including, without limitation, the Issuing Lender) and any Affiliate of any Lender which has entered into a Hedge Agreement with any Borrower or any Subsidiary. "GUARANTOR": as defined in the preamble hereto. "HEDGE AGREEMENTS": as to any Person, all interest rate swaps, caps or collar agreements or similar arrangements entered into by such Person providing for protection against fluctuations in interest rates or currency exchange rates or the exchange of nominal interest obligations, either generally or under specific contingencies, including, without limitation, all Interest Rate Protection Agreements and Permitted Hedging Arrangements with respect to currency exchange rates. "OBLIGATIONS": the collective reference to the unpaid principal of and interest on the Revolving Credit Loans and Reimbursement Obligations and all other obligations and liabilities of the Borrowers (including, without limitation, interest accruing at the then applicable rate provided in the Credit Agreement after the maturity of the Revolving Credit Loans and Reimbursement Obligations and interest accruing at the then applicable rate provided in the Credit Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrowers, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) to the Administrative Agent or any Lender (or, in the case of any Hedge Agreement referred to below, any Affiliate of any Lender), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Credit Agreement, this Guarantee, the other Loan Documents, any Letter of Credit or any Hedge Agreement entered into by any Borrower with any Lender (or, in the case of any Hedge Agreement, any Affiliate of any Lender) or any other document made, delivered or given in connection therewith, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Administrative Agent or to the Lenders that are required to be paid by any Borrower pursuant to the terms of any of the foregoing agreements). 3 3 1.2 OTHER DEFINITIONAL PROVISIONS. (a) The words "hereof," "herein", "hereto" and "hereunder" and words of similar import when used in this Guarantee shall refer to this Guarantee as a whole and not to any particular provision of this Guarantee, and Section and Schedule references are to this Guarantee unless otherwise specified. (b) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. SECTION 2. GUARANTEE 2.1 GUARANTEE. (a) The Guarantor hereby unconditionally and irrevocably guarantees to the Administrative Agent, for the ratable benefit of the Guaranteed Parties and their respective successors, indorsees, transferees and assigns, the prompt and complete payment and performance by the Borrowers when due (whether at the stated maturity, by acceleration or otherwise) of the Guaranteed Obligations. (b) Anything herein or in any other Loan Document to the contrary notwithstanding, the maximum liability of the Guarantor hereunder shall in no event exceed the amount which can be guaranteed by the Guarantor under applicable federal and state laws relating to the insolvency of debtors. (c) The Guarantor agrees that the Obligations may at any time and from time to time exceed the amount of the liability of the Guarantor hereunder without impairing the guarantee contained in the Section 2 or affecting the right and remedies of the Administrative Agent or any other Guaranteed party hereunder. (d) The guarantee contained in this Section 2 shall remain in full force and effect until the first date on which all the Obligations and the obligations of the Guarantor under the guarantee contained in this Section 2 shall have been satisfied by payment in full, no Letter of Credit shall be outstanding and the Commitments shall be terminated, notwithstanding that from time to time during the term of the Credit Agreement the Borrowers may be free from any Obligations. (e) No payment made by any Borrower, the Guarantor, any other guarantor or any other Person or received or collected by the Administrative Agent or any other Guaranteed Party from any Borrower, the Guarantor, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of the Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by the Guarantor in respect of the Obligations or any payment received or collected from the Guarantor in respect of the Obligations), remain liable for the Obligations up to the maximum liability of the Guarantor hereunder until the first date on which the Obligations are paid in full, no Letter of Credit shall be outstanding and the Commitments are terminated. 4 4 2.2 NO SUBROGATION. Notwithstanding any payment made by the Guarantor hereunder or any set-off or application of funds of the Guarantor by the Administrative Agent or any other Guaranteed Party, the Guarantor shall not be entitled to be subrogated to any of the rights of the Administrative Agent or any other Guaranteed Party against any Borrower or any collateral security or guarantee or right of offset held by the Administrative Agent or any other Guaranteed Party for the payment of the Obligations, nor shall the Guarantor seek or be entitled to seek any contribution or reimbursement from any Borrower in respect of payments made by the Guarantor hereunder, until all amounts owing to the Administrative Agent and the other Guaranteed Parties by the Borrowers on account of the Obligations are paid in full, no Letter of Credit shall be outstanding and the Commitments are terminated. If any amount shall be paid to the Guarantor on account of such subrogation rights at any time when all of the Obligations shall not have been paid in full, such amount shall be held by the Guarantor in trust for the Administrative Agent and the other Guaranteed Parties, segregated from other funds of the Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned over to the Administrative Agent in the exact form received by the Guarantor (duly indorsed by the Guarantor to the Administrative Agent, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Administrative Agent may determine. 2.3 AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS. The Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against the Guarantor and without notice to or further assent by the Guarantor, any demand for payment of any of the Obligations made by the Administrative Agent or any other Guaranteed Party may be rescinded by the Administrative Agent or such other Guaranteed Party and any of the Obligations continued, and the Obligations, or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Administrative Agent or any other Guaranteed Party, and the Credit Agreement and the other Loan Documents and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Administrative Agent (or the Majority Lenders, as the case may be) may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Administrative Agent or any other Guaranteed Party for the payment of the Obligations may be sold, exchanged, waived, surrendered or released. Neither the Administrative Agent nor any other Guaranteed Party shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Obligations or for the guarantee contained in this Section 2 or any property subject thereto. 2.4 GUARANTEE ABSOLUTE AND UNCONDITIONAL. The Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by the Administrative Agent or any other Guaranteed Party upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in this Section 2; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between any Borrower and the Guarantor, on the one hand, and the Administrative Agent and the other Guaranteed Parties, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee 5 5 contained in this Section 2. The Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Borrowers or the Guarantor with respect to the Obligations. The Guarantor understands and agrees that the guarantee contained in this Section 2 shall be construed as a continuing, absolute and unconditional guarantee of payment. The Guarantor hereby waives, to the extent it may legally do so, any and all defenses that it may have arising out of or in connection with any and all of the following: (a) the validity or enforceability of the Credit Agreement or any other Loan Document, any of the Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Administrative Agent or any other Guaranteed Party, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by any Borrower against the Administrative Agent or any other Guaranteed Party, (c) any change in the time, place, manner or place of payment, amendment, or waiver or increase in the Obligations, (d) any change in the corporate structure or existence of any Borrower or (e) any other circumstance whatsoever (with or without notice to or knowledge of such Borrower or the Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of any Borrower for the Obligations, or of the Guarantor under the guarantee contained in this Section 2, in bankruptcy or in any other instance. When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against the Guarantor, the Administrative Agent or any other Guaranteed Party may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as it may have against any Borrower or any other Person or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by the Administrative Agent or any other Guaranteed Party to make any such demand, to pursue such other rights or remedies or to collect any payments from any Borrower or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of any Borrower or any other Person or any such collateral security, guarantee or right of offset, shall not relieve the Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Administrative Agent or any other Guaranteed Party against the Guarantor. For the purposes hereof "demand" shall include the commencement and continuance of any legal proceedings. 2.5 REINSTATEMENT. The guarantee contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any other Guaranteed Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any Borrower or the Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, any Borrower or the Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. 2.6 PAYMENTS. The Guarantor hereby guarantees that payments hereunder will be paid to the Administrative Agent without set-off or counterclaim in Dollars at the office of the Administrative Agent located at 425 Lexington Avenue, New York, New York 10017. 6 6 SECTION 3. REPRESENTATIONS AND WARRANTIES To induce the Administrative Agent and the Lenders to enter into the Sixth Amendment and to induce the Lenders to continue to make their respective extensions of credit to the Borrowers under the Credit Agreement, the Guarantor hereby represents and warrants to the Administrative Agent and each other Guaranteed Party that: (a) The Guarantor (i) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (ii) has the corporate or other organizational power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, (iii) is duly qualified as a foreign corporation or other entity 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 and (iv) is in compliance with all Requirements of Law except to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. (b) The Guarantor has the corporate or other organizational power and authority, and the legal right, to make, deliver and perform this Guarantee and has taken all necessary corporate or other organizational action to authorize the execution, delivery and performance of this Guarantee. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the execution, delivery, performance, validity or enforceability of this Guarantee. This Guarantee has been duly executed and delivered on behalf of the Guarantee. This Guarantee constitutes a legal, valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (c) The execution, delivery and performance of this Guarantee will not violate any Requirement of Law or Contractual Obligation of the Guarantor or of any of its Subsidiaries and will not result in, or require, the creation or imposition of any Lien on any of its or their respective properties or revenues pursuant to any such Requirement of Law or Contractual Obligation (other than pursuant to this Guarantee). (d) No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Guarantor, threatened by or against the Guarantor of any of its Subsidiaries or against any of its or their respective properties or revenues (x) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby, or (y) which could reasonably be expected to have a Material Adverse Effect. 7 7 SECTION 4. COVENANTS The Guarantor covenants and agrees with the Administrative Agent and the other Guaranteed Parties that, from and after the date of this Guarantee until the Guaranteed Obligations shall have been paid in full, no Letter of Credit shall be outstanding and the Commitments shall have terminated: 4.1 COVENANTS IN CREDIT AGREEMENT. The Guarantor shall take, or shall refrain from taking, as the case may be, each action that is necessary to be taken or not taken, as the case may be, so that no Default or Event of Default is caused by the failure to take such action or to refrain from taking such action by the Guarantor or any of its Subsidiaries. SECTION 5. THE ADMINISTRATIVE AGENT 5.1 AUTHORITY OF ADMINISTRATIVE AGENT. The Guarantor acknowledges that the rights and responsibilities of the Administrative Agent under this Guarantee with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Guarantee or any amendment, supplement or other modification of this Guarantee shall, as between the Administrative Agent and the Guaranteed Parties, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Administrative Agent and the Guarantor, the Administrative Agent shall be conclusively presumed to be acting as agent for the Guaranteed Parties with full and valid authority so to act or refrain from acting, and the Guarantor shall be under any obligation, or entitlement, to make any inquiry respecting such authority. SECTION 6. MISCELLANEOUS 6.1 AMENDMENTS IN WRITING. None of the terms or provisions of this Guarantee may be waived, amended, supplemented or otherwise modified except by a written instrument executed by the Guarantor and the Administrative Agent, PROVIDED that any provision of this Guarantee imposing obligations on the Guarantor may be waived by the Administrative Agent in a written instrument executed by the Administrative Agent. 6.2 NOTICES. All notices, requests and demands to or upon the Administrative Agent or the Guarantor hereunder shall be effected in the manner provided for in subsection 11.2 of the Credit Agreement; PROVIDED that any such notice, request or demand to or upon the Guarantor shall be addressed to the Guarantor at: 5915 Landerbrook Drive Mayfield Heights, Ohio 44124 Attention: Joseph Gaglioti Fax: (216) 461-3489. 8 8 with a copy to: Jones, Day, Reavis & Pogue North Point 90 Lakeside Avenue Cleveland, Ohio 44114 Attention: David P. Porter, Esq. Fax: (216) 579-0212 6.3 NO WAIVER BY COURSE OF CONDUCT: CUMULATIVE REMEDIES: Neither the Administrative Agent nor any other Guaranteed Party shall by any act (except by a written instrument pursuant to Section 6.1), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. No failure to exercise, nor any delay in exercising, on the part of the Administrative Agent or any other Guaranteed Party, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Administrative Agent or any other Guaranteed Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Administrative Agent or such other Guaranteed Party would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law. 6.4 ENFORCEMENT EXPENSES: INDEMNIFICATION. (a) The Guarantor agrees to pay or reimburse each Guaranteed Party and Administrative Agent for all their respective costs and expenses incurred in collecting against the Guarantor under the guarantee contained in Section 2 or otherwise enforcing any rights under this Guarantee, including, without limitation, the fees and disbursements of counsel (including the allocated fees and expenses of in-house counsel) to each Guaranteed Party and of counsel to the Administrative Agent. (b) The Guarantor agrees to pay, and to save the Administrative Agent and the Guaranteed Parties harmless from, any and all liabilities with respect to, or resulting from any delay in paying, and all stamp, excise, sales or other taxes which may be payable or determined to be payable in connection with any of the transactions contemplated by this Guarantee. (c) The Guarantor agrees to pay, and to save the Administrative Agent and the Guaranteed Parties harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Guarantee (collectively, the "INDEMNIFIED LIABILITIES") to the extent the Borrowers would be required to do so pursuant to Section 11.5 of the Credit Agreement. (d) The agreements in this Section 6.4 shall survive repayment of the Guaranteed Obligations and all other amounts payable under the Credit Agreement and the other Loan Documents. 9 9 6.5 SUCCESSORS AND ASSIGNS. This Guarantee shall be binding upon the successors and assigns of the Guarantor and shall inure to the benefit of the Administrative Agent and the Guaranteed Parties and their successors and assigns; PROVIDED that the Guarantor may assign, transfer or delegate any of its rights or obligations under this Guarantee without the prior written consent of the Administrative Agent. 6.6 SET-OFF. The Guarantor hereby irrevocably authorizes the Administrative Agent and each other Guaranteed Party at any time and from time to time without notice to the Guarantor or any Borrower, any such notice being expressly waived by the Guarantor and by the Borrowers, upon any amount remaining unpaid after it becomes due and payable by the Guarantor hereunder to set-off and appropriate and apply against any such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Administrative Agent or such other Guaranteed Party to or for the credit or the account of the Guarantor, or any part thereof in such amounts as the Administrative Agent or such other Guaranteed Party may elect. The Administrative Agent and each other Guaranteed Party shall notify the Guarantor promptly of any such set-off and the application made by the Administrative Agent or such other Guaranteed Party of the proceeds thereof; PROVIDED that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Administrative Agent and each other Guaranteed Party under this Section 6.6 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Administrative Agent or such other Guaranteed Party may have. 6.7 SEVERABILITY. Any provision of this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 6.8 SECTION HEADINGS. The Section headings used in this Guarantee are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 6.9 INTEGRATION. This Guarantee and the other Loan Documents represent the agreement of the Guarantor, the Administrative Agent and the other Guaranteed Parties with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any other Guaranteed Party relative to subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents. 6.10 GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 10 6.11 SUBMISSION TO JURISDICTION: WAIVERS. The Guarantor hereby irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Guarantee, or for recognition and enforcement of any judgement in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Guarantor at its address referred to in Section 6.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any exemplary, punitive or consequential damages. 6.12 ACKNOWLEDGEMENTS. The Guarantor hereby acknowledges that: (a) it has been advised by counsel in the negotiation, execution and delivery of this Guarantee; (b) neither the Administrative Agent nor any other Guaranteed Party has any fiduciary relationship with or duty to the Guarantor arising out of or in connection with this Guarantee or any of the other Loan Documents, and the relationship between the Guarantor, on the one hand, and the Administrative Agent and the Guaranteed Parties, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and (c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Guaranteed Parties or among the Guarantor and the Guaranteed Parties. 11 11 6.13 WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 6.14 RELEASES. At such time as the Revolving Credit Loans, the Reimbursement Obligations and the other Guaranteed Obligations shall have been paid in full, the Commitments have been terminated and no Letters of Credit shall be outstanding, this Guarantee and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent and the Guarantor hereunder shall terminate, all without delivery of any instrument or performance of any act by any party. At the request and sole expense of the Guarantor following any such termination, the Administrative Agent shall execute and deliver to the Guarantor such documents as the Guarantor shall reasonable request to evidence such termination. 12 12 IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly executed and delivered as of the date first above written. COLE NATIONAL CORPORATION By: /s/ J. Gaglioti -------------------------------------- Title: Vice President & Treasurer EX-10.52 5 EXHIBIT 10.52 1 Exhibit 10.52 COLE NATIONAL CORPORATION EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (as amended, modified or otherwise supplemented from time to time, the "AGREEMENT") is entered into as of January 18, 2000 (the "EFFECTIVE DATE") between Cole National Corporation, a Delaware corporation ("Company"), and Larry Pollock, an individual residing in the State of Ohio (the "Executive"). WHEREAS, the Company desires to retain the services of the Executive, initially as President, Chief Operating Officer and a Member of the Board of Directors; WHEREAS, concurrently herewith, the Company and the Executive are entering into a Restricted Stock Agreement (the "RESTRICTED STOCK AGREEMENT" attached hereto as Exhibit A), pursuant to which the Company is granting the Executive an award of restricted stock; WHEREAS, concurrently herewith, the Company and the Executive are entering into a Nonqualified Stock Option Agreement No.1 ("OPTION AGREEMENT NO.1" attached hereto as Exhibit B), pursuant to which the Company is granting an award for nonqualified stock options; WHEREAS, concurrently herewith, the Company and the Executive are entering into a Nonqualified Stock Option Agreement No.2 ("OPTION AGREEMENT NO.2" attached hereto as Exhibit C), pursuant to which the Company is granting an award for nonqualified stock options; WHEREAS, the Executive will borrow money from the Company as evidenced by a promissory note (the "SECURED PROMISSORY NOTE" attached hereto as Exhibit D) pursuant to which the Company is making a recourse loan for a term of four (4) years to the Executive which is secured by a related Stock Pledge Agreement (the "STOCK PLEDGE AGREEMENT" attached hereto as Exhibit E); and WHEREAS, the Executive desires to provide his services to the Company on the terms and conditions herein provided. NOW, THEREFORE, in consideration of the premises and of the covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. DEFINITIONS. In addition to terms defined elsewhere herein, the following terms when used in this Agreement with initial capital letters shall have the meanings set forth below: 2 (a) "CAUSE" means that, prior to any termination of the Executive's employment, the Executive shall have: (i) committed any willful misconduct, fraud or criminal activity (excluding traffic violations or other minor offenses) which commission is materially inimical to the interests of the Company, whether for his personal benefit or in connection with his duties for the Company; or (ii) intentionally or knowingly violated any anti-fraud provision of the federal or state securities laws; or (iii) wrongful]y disclosed secret processes or confidential information of the Company or any Subsidiary; or (iv) wrongfully engaged in any Competitive Activity. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for "Cause" hereunder unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the Board then in office at a meeting of the Board called and held for such purpose, after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive's counsel (if the Executive chooses to have counsel present at such meeting), to be heard before the Board, finding that, in the good faith opinion of the Board, the Executive had committed an act constituting "Cause" as herein defined and specifying the particulars thereof in detail. Nothing herein will limit the right of the Executive or his beneficiaries to contest the validity or propriety of any such determination. (b) "CHANGE IN CONTROL" means the occurrence during the Term of any of the following events: (i) the Company merges into itself, or is merged or consolidated with, another entity and as a result of such merger or consolidation less than 51% of the voting power of the then-outstanding voting securities of the surviving or resulting entity immediately after such transaction are directly or indirectly beneficially owned in the aggregate by the former stockholders of the Company immediately prior to such transaction; (ii) all or substantially all the assets accounted for on the consolidated balance sheet of the Company are sold or transferred to one or more entities or persons, and as a result of such sale or transfer less than 51% of the voting power of the then-outstanding voting securities of such entity or person immediately after such sale or transfer is directly or indirectly beneficially held in the aggregate by the former stockholders of the Company immediate]y prior to such transaction or series of transactions, it being acknowledged that a sale, transfer or other disposition of Things Remembered, Inc. or its assets is not such a sale of all or substantially all of the Company's assets; 2 3 (iii) A person, within the meaning of Section 3(a)(9) or 13(d)(3) (as in effect on the date of this Agreement) of the Securities Exchange Act of 1934, (the "EXCHANGE ACT") becomes the beneficial owner (as defined in Rule 13d-3 of the Securities and Exchange Commission pursuant to the Exchange Act) of (i) 15% or more but less than 35% of the voting power of the then outstanding voting securities of the Company without prior approval of the Company's Board, or (ii) 35% or more of the voting power of the then-outstanding voting securities of the Company; PROVIDED, HOWEVER, that the foregoing does not apply to any such acquisition that is made by (w) any Subsidiary; (x) any employee benefit plan of the Company or any Subsidiary; or (y) any person or group of which employees of the Company or of any Subsidiary control a greater than 25% interest unless the Board of Directors of the Company determines that such person or group is making a "hostile acquisition;" or (z) any person or group of which the Executive is an affiliate; or (iv) a majority of the members of the Board of Directors of the Company are not Continuing Directors, where a "CONTINUING DIRECTOR" is any member of the Board of Directors of the Company who (x) was a member of the Board of Directors of the Company on the date of this Agreement or (y) was nominated for election or elected to such Board of Directors with the affirmative vote of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election; (c) "COMMON STOCK" means shares of common stock of the Company, par value $.001 per share. (d) "DISABILITY" or "DISABLED" means that (i) a physician selected by the Company and reasonably satisfactory to the Executive certifies that the Executive suffers from a physical or a mental disability; and (ii) as a result of such disability the Board of Directors of the Company, in the exercise of its reasonable judgment based on such physician's report, determines that the Executive has been or is reasonably anticipated to be unable to perform his duties under this Agreement for at least ninety (90) days out of a one hundred twenty (120) successive day period. For the purpose of determining whether he is disabled, the Executive agrees that, if requested by the Company, he will submit to a physical examination by such physician, not more frequently than once a year, the cost of such examination to be paid by the Company. (e) "GOOD REASON" means: (i) Following a Change in Control, either (x) a majority of the members of the Board of Directors of the Company immediately prior to the change in control are not Continuing Directors; or (y) Jeffrey A. Cole is terminated by the Company other than for cause or voluntarily terminates his employment other than for disability (or death) as Chairman of the Board of the Company; or 3 4 (ii) Whether or not a Change in Control has occurred, there has been a substantial adverse change resulting in a reduction in the nature or scope of the duties or titles of the Executive held immediately prior to such change, or the Executive's principal office is relocated to a location more than 50 miles from either Twinsburg, Ohio or Shaker Heights, Ohio, it being acknowledged that a sale, transfer or other disposition of Things Remembered, Inc. or its assets is not such a substantial adverse change. (f) "SUBSIDIARY" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations (or a group of corporations that themselves are Subsidiaries) other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. For purposes of this Agreement, the continuous employment of the Executive with the Company or a Subsidiary will not be deemed interrupted, and the Executive will not be deemed to have ceased to be an employee of the Company or any Subsidiary, by reason of the transfer of his employment among the Company and its Subsidiaries (g) "TERMINATION DATE" means the date the Executive's employment with the Company ends for any reason. 2. EMPLOYMENT. The Company hereby employs the Executive, and Executive hereby accepts employment with the Company, on the terms and conditions set forth in this Agreement. 3. TERM. The term (the "Term") of the Executive's employment under this Agreement will be for four (4) years commencing on the date of this Agreement (the "Effective Date") and ending on the fourth anniversary of such date. 4. POSITIONS AND DUTIES. (a) The Executive will serve as President and Chief Operating Officer, and will be nominated to serve as a member of the Board of Directors of the Company. The Executive will serve in such offices or positions to which he is elected or appointed by the Board of Directors or the Chief Executive Officer of the Company consistent with his duties as President and Chief Operating Officer. The Executive's service as an officer or director of the Company and of any of the direct or indirect, wholly or partially owned subsidiaries of the Company or of any of the Subsidiaries, will be encompassed within any reference made in this Agreement to employment with the Company. (b) The Executive will report to the Chief Executive Officer of the Company. (c) The Executive will, subject to the powers and authority reserved in or by the Board of Directors of the Company, have the authority and responsibility customarily attending each corporate office held by him pursuant to Section 4(a). In addition, the Executive will hold such other offices in and perform such other executive and administrative duties for the Company as the Board of Directors or Chief Executive Officer of the Company determine are appropriate. The Executive shall devote substantially all of his time, energy, and attention to the 4 5 affairs and operations of the Company; provided, however, that the Executive may devote reasonable periods of time during normal business hours to (i) serving as a director or trustee in any organization or business so long as such activity would not constitute a violation of Section 11 of this Agreement, or (ii) engaging in charitable and community activities, or (iii) engaging in unrelated business investments so long as such positions or activities do not, in the opinion of the Company's Board of Directors, substantially detract from his performance of his duties for the Company. The Executive may continue to serve as a director of Borders Group, Inc., so long as such activity would not constitute a violation of Section 11 of this Agreement. The Executive shall obtain approval from the Compensation Committee of the Board of Directors prior to accepting a position as a director of any public company. (d) The Company shall cause the election of the Executive to its Board of Directors no later than January 31, 2000, and shall thereafter cause his nomination for re-election as a Director throughout the Term. In the event the Executive's employment with the Company terminates, the Executive shall promptly resign from the Board of Directors. 5. COMPENSATION. During the Term: (a) SALARY. The Company will pay the Executive an aggregate annual base salary of $50,000. (b) BONUS. The Executive will receive an annual bonus equal to 100% of the annual bonus paid to the Chief Executive Officer from time to time in accordance with the existing annual bonus plan for senior management of the Company or any future bonus plans adopted for senior management generally of the Company, excluding discretionary bonuses and options and stock grants to the Chief Executive Officer. Notwithstanding the foregoing, the Board of Directors of the Company may, in its sole discretion without any obligation hereunder to the Executive, consider the payment of a cash bonus to the Executive for the first fiscal year of the Company commencing after the Effective Date. (c) INVESTMENT IN COMPANY STOCK. The Executive agrees that he will purchase for his own account 262,500 shares of Common Stock within one hundred eighty (180) days of the Effective Date (the "PURCHASED SHARES"). The Company shall grant such reasonable extensions, in light of the circumstances, as may be requested by the Executive. In no event will Executive be required to expend more than Two Million Six Hundred Thirty-Five Thousand Dollars ($2,635,000) for the Purchased Shares. The Executive also may purchase for his own account an additional 262,500 shares of Common Stock (the "ADDITIONAL SHARES"). The Executive agrees that in no event will he, as a result of his own volition, purchase or otherwise acquire, directly or indirectly, for his own account, more than 525,000 shares (included in this total are the Purchased Shares, the Additional Shares, any shares acquired as a result of the Executive's exercise of Option No.2, and any shares acquired under Company sponsored stock based plans, excluding shares acquired as a result of exercise in whole or in part of Option No.1 and other options or stock purchase rights that may be granted to the Executive by the Company in the future). In addition to the 525,000 shares, the Executive may acquire shares of Common Stock through the exercise of Option No. 1 and options and stock purchase rights that may be granted to the Executive by the Company in the future. The required and permitted number or kind of shares shall be adjusted by the Board of Directors of the Company or the Compensation 5 6 Committee of such Board, as such Board or Committee may in good faith determine is equitably required to prevent dilution or enlargement of the rights of the Executive under this Section 5(c) and otherwise would result from (i) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, or (ii) any merger, consolidation, spin-off, split-off, spin-out, split up, reorganization, partial or complete liquidation or other distribution of assets, or issuance of rights to purchase securities, or (iii) any distribution of the holders of the Common Stock of rights or warrants to purchase equity interests of the Company, or (iv) any other corporation transaction or event having an effect similar to any of the foregoing. (d) RESTRICTED STOCK AWARD. The Company will award to the Executive 525,000 shares of restricted Common Stock (the "RESTRICTED STOCK AWARD"), subject to the terms and conditions of the Restricted Stock Agreement. (e) NONQUALIFIED STOCK OPTIONS. (i) The Company will grant the Executive under the Option Agreement No. 1 an option to purchase 262,500 shares of Common Stock ("OPTION NO. 1"), subject to the terms and conditions of the Option Agreement No.1. (ii) The Company will grant the Executive under Option Agreement No.2 an option to purchase 100,000 shares of Common Stock ("OPTION NO.2"), subject to the terms and conditions of Option Agreement No. 2. (f) SECURED RESTRICTED STOCK LOAN. If the Executive makes a timely Section 83(b) election for federal income tax purposes, the Company will enter into a secured recourse loan with the Executive evidenced by the Secured Promissory Note for a term of four (4) years in an amount equal to the tax on the Restricted Stock Award resulting from such election, subject to the terms and conditions of Secured Promissory Note and the Stock Pledge Agreement. (g) EXPENSES AND ALLOWANCES. The Executive is authorized in carrying out his responsibilities and duties under this Agreement, to incur reasonable business expenses for the benefit of the Company, including business expenses for transportation, entertainment, travel, lodging and similar items. The Executive will be provided with a current model company automobile, in accordance with policies applicable to other senior executives generally, or an equivalent cash allowance. All such expenses referred to above will either be paid directly by the Company or the Company shall promptly reimburse the Executive for expenditures upon the submission, from time to time, of itemized accountings for such expenditures. (h) VACATIONS. The Executive will be entitled to 5 weeks of vacation in each calendar year or such greater amount of vacation as may be permitted under the employment policies of the Company in accordance with its policies applicable to other senior executive employees generally. (i) EMPLOYEE BENEFIT PLANS. The Executive will be eligible to participate in the employee pension and welfare benefit plans maintained by the Company for 6 7 senior executives, as the same may be modified, supplemented or replaced from time to time; provided, however, the Executive shall not participate in the Cole National Group, Inc. 1999 Supplemental Retirement Benefit Plan. The option grants and restricted stock grant hereunder shall not be treated as compensation for purposes of any Company sponsored employee pension benefit plans. (j) OTHER AGREEMENTS. The rights and obligations of the parties under the Restricted Stock Agreement, Option Agreement No. 1, Option Agreement No. 2, the Secured Promissory Note and the Stock Pledge Agreement (collectively the "OTHER AGREEMENTS") will be governed by the terms and conditions of such Other Agreements and will not be enlarged or affected hereby, unless otherwise provided herein. 6. DEATH OR DISABILITY DURING EMPLOYMENT. If the Executive dies or is disabled during the term of this Agreement, Company shall pay to the Executive, in case of his Disability, or to the beneficiary or beneficiaries designated by the Executive in case of his death, or if the Executive is legally incompetent or no such designation of death beneficiary has been made, then to the Executive's personal representative, the compensation that would otherwise be payable to the Executive pursuant to Section 5(a) and 5(b) of this Agreement for the period of time up to the date of his death or Disability. 7. TERMINATION WITHOUT CAUSE OR FOR GOOD REASON PRIOR TO A CHANGE IN CONTROL. (a) If the Executive's employment is terminated by the Company without Cause or by the Executive for Good Reason prior to a Change in Control and on or before the first anniversary of the Effective Date, the Company will forgive seventy-five percent (75%) of the principal on the then unpaid balance of the Secured Promissory Note and will make a cash payment of one million dollars ($1,000,000) to the Executive. (b) If the Executive's employment is terminated by the Company without Cause or by the Executive for Good Reason prior to a Change in Control and after the first anniversary and on or before the second anniversary of the Effective Date, the Company will forgive twenty-five percent (25%) of the principal on the then unpaid balance of the Secured Promissory Note. (c) Notwithstanding any other provisions of this Section 7, if for any reason 100% of the Restricted Stock becomes nonforfeitable under the provisions of the Restricted Stock Agreement, no portion of the principal on the Secured Promissory Note will be forgiven. (d) If, prior to the second anniversary of the Effective Date, either (i) a majority of the members of the Board of Directors of the Company are not Continuing Directors, or (ii) Jeffrey A. Cole is terminated by the Company or voluntarily resigns as Chairman of the Board of the Company, 7 8 and no Change in Control has occurred, then, if Executive voluntarily terminates his employment with the Company other than for Good Reason, the Company will forgive one hundred percent (100%) of the principal on the then unpaid balance of the Secured Promissory Note. (e) The foregoing are in addition to and do not modify benefits under the Restricted Stock Agreement, Option Agreement No.1 and Option Agreement No.2. 8. TERMINATION WITHOUT CAUSE OR FOR GOOD REASON FOLLOWING A CHANGE IN CONTROL. (a) If the Executive's employment is terminated by the Company without Cause or by the Executive for Good Reason following a Change in Control and on or before the first anniversary of the Effective Date, the Company will forgive fifty percent (50%) of the principal on the then unpaid balance of the Secured Promissory Note. (b) If the Executive's employment is terminated by the Company without Cause or by the Executive for Good Reason following a Change in Control and after the first anniversary and on or before the second anniversary of the Effective Date, the Company will forgive twenty-five percent (25%) of the principal of the then unpaid balance of the Secured Promissory Note. (c) Notwithstanding any other provisions of this Section 8, if for any reason 100% of the Restricted Stock becomes nonforfeitable under the provisions of the Restricted Stock Agreement, no portion of the principal on the Secured Promissory Note will be forgiven. (d) The foregoing are in addition to and do not modify benefits under the Restricted Stock Agreement, Option Agreement No.1 and Option Agreement No.2. 9. TERMINATION FOR CAUSE. Upon termination of the Executive's employment with the Company for Cause the Company shall pay to the Executive his base salary up to his Termination Date. The Executive will forfeit any bonus payments and any unvested Restricted Stock and unvested Options. 10. STOCK SALES AND REGISTRATION RIGHTS. (a) Executive shall retain full legal and beneficial ownership of the Purchased Shares and the Restricted Shares for the duration of the Term, except that: (i) upon shares of restricted Common Stock becoming nonforfeitable under the Restricted Stock Agreement, and subject to the pledge of shares under the Stock Pledge Agreement, the Executive may reduce his ownership of shares of Purchased Shares and nonforfeitable shares under the Restricted Stock Agreement to an amount that, in the aggregate, equals the then forfeitable shares under the Restricted Stock Award; and (ii) upon a Change in Control, all restrictions under this provision lapse. 8 9 (b) Upon the shares of restricted Common Stock becoming nonforfeitable under the Restricted Stock Agreement, at the request of the Executive, the Company shall register for resale under the Securities Act of 1933 the number of shares of Purchased Shares and nonforfeitable shares under the Restricted Stock Agreement that the Executive is then entitled to sell under Section 12(a); provided, however, that: (i) the Company is only obligated to register the shares using a short-form registration statement on Form S-3 or any equivalent successor form that the Company is then eligible to use and only one such registration; (ii) the Company's Board of Directors, in their sole discretion, may impose reasonable black-out periods surrounding material events; (iii) the Company will have no obligation to register any shares that the Executive is able to resell pursuant to the terms of Rule 144 within three months of the date of the Executive's request for registration; (iv) the Executive, if he is then an employee of the Company, shall cooperate with the Company in reasonable efforts to minimize the impact on the Company of his trading; and (v) the Company will use its best efforts to register the shares that may be acquired through exercise of the options granted under the Option Agreement No. 1 on Form S-8. 11. (a) CONFIDENTIALITY. During the Term and at any time thereafter, the Executive shall not disclose, furnish, disseminate, make available, or, except in the ordinary course of performing his duties on behalf of the Company, use any trade secrets or confidential business and technical information of the Subsidiaries, the Company, any direct or indirect, wholly or partially owned subsidiaries of the Company or any of the Subsidiaries, or customers of any of the Subsidiaries, without limitation as to when it was acquired by him or whether it was compiled or obtained by or furnished to him while he was employed by the Company. Such trade secrets and confidential business and technical information are considered to include, without limitation, the vendor lists, vendor terms and programs, merchandise costs, financial statistics, research data, or any other statistics and plans contained in monthly and annual review books, profit plans, capital plans, critical issues, annual plans, strategic plans, or merchandising, marketing, real estate, or store operations plans. The Executive specifically acknowledges that all such information, whether reduced to writing or maintained in his mind or memory and whether compiled by the Subsidiaries and/or the Company and/or him, derives independent economic value from not being readily known to or ascertainable by proper means by others who can obtain economic value from its disclosure or use, that reasonable efforts have been put forth by the Subsidiaries or the Company to maintain the secrecy of such information, that such information is and will remain the sole property of the Subsidiaries or the Company and that any retention and use of such information during or after the termination of his employment relationship with the Subsidiaries or the Company (except in the course of performing his duties) 9 10 under this Agreement will constitute a misappropriation of the trade secrets of the Subsidiaries or the Company; PROVIDED, HOWEVER, that his restriction will not apply to information which is in the public domain or otherwise made public by other through no fault of the Executive, or as may be required by law. (b) NON-COMPETITION. Except as may otherwise be approved in advance by the Company's Board of Directors, during the Term and for a period of two (2) years (the "NON-COMPETE PERIOD") after the termination of his employment either for Cause, without Cause or by his voluntary resignation, the Executive shall not compete, directly or indirectly with any of the Subsidiaries or the Company. Without limiting the generality of the foregoing, the Executive shall not: (i) enter into or engage in any business which competes with business of any of the Subsidiaries or the Company; (ii) solicit customers, business, patronage, or orders for, or sell, any products in competition with, or for any business that competes with, the business of any of the Subsidiaries or the Company; or (iii) divert, entice, or otherwise take away any customers, business, patronage or orders of any of the Subsidiaries or the Company or attempt to do so; or (iv) promote or assist, financially or otherwise, any person, firm, association, partnership, corporation, or any other entity engaged in any business which he competes with the business of any of the Subsidiaries or the Company. For the purposes of this Section 11(b), the Executive understands, acknowledges and agrees that he will be competing if he engages in any or all of the activities set forth in this Section 11(b) directly as an individual for his own account, or indirectly as a partner, joint venture, employee, agent, salesman, consultant, officer and/or director of any firm, association, corporation, or other entity, or as a stockholder of any corporation in which he owns, directly or indirectly, individually or in the aggregate, more than one percent (1%) of the outstanding stock. (c) NON-SOLICITATION. The Executive shall not directly or indirectly solicit or induce or attempt to solicit or induce any employees) or any sales representative(s), agent(s) or consultant(s) of any of the Subsidiaries, the Company or any direct or indirect, wholly or partially owned subsidiaries of the Company or any of the Subsidiaries to terminate their employment, representation or other association with such entity. (d) COOPERATION AND ASSISTANCE. During the Term and thereafter, the Executive will provide reasonable cooperation to the Company and the Subsidiaries in litigation and regulatory matters that relate to events that occurred during his periods of employment with the Company, the Subsidiaries and its or their predecessors, and will provide reasonable assistance to the Company and the Subsidiaries with matters relating to their corporate history from the periods of his employment with them or their predecessors. The Executive will be 10 11 entitled to reasonable additional compensation and reimbursement of reasonable costs and expenses relating to any such cooperation or assistance that occurs following the Term. (e) REMEDIES. The Executive expressly acknowledges and agrees that the remedy at law for any breach by him of his obligations under this Section 11 will be inadequate and that the damages flowing from such breach are not readily susceptible to being measured in monetary terms. Accordingly, he acknowledges and agrees that upon his violation of any obligation in this Section 11, the Subsidiaries and/or Company will be entitled to immediate injunctive relief and may obtain a temporary order restraining any threatened or further breach without the necessity of proof of actual damage. Nothing in this Agreement will be deemed to limit the remedies of the Subsidiaries or the Company at law or in equity for any breach by the Executive of any of the obligations in this Section 11 that may be pursued or availed of by the Subsidiaries or the Company. 12. STANDSTILL AGREEMENT. (a) During the Non-Compete Period, the Executive agrees that he will vote all shares directly or indirectly beneficially owned by him for the election of the slate of nominees for election to the Board of Directors of the Company selected by a majority of the members of the Board of Directors, and for the approval of all matters recommended by a majority of the members of the Company's Board of Directors, if any recommendation is made. (b) The Executive shall be present in person or by proxy at any meeting of Stockholders so that all shares of Common Stock owned by the Executive may be counted for the purposes of determining the presence of a quorum at such meeting. (c) The Executive further agrees that he will not join in any group or contest to acquire the Company's shares during the Non-Compete Period. (d) The Executive agrees that for a period commencing on the Effective Date through the end of the Non-Compete Period, except within the terms of a specific request from the Company, the Executive may not as a principal, or agent of another person, propose or publicly announce or otherwise disclose an intent to propose, or enter into or agree to enter into, singly or with any other person or directly or indirectly, (i) any form of business combination, acquisition, or other transaction relating to the Company or any majority-owned affiliate thereof, (ii) any form of restructuring, recapitalization or similar transaction with respect to the Company or any such affiliate, or (iii) any demand, request or proposal to amend, waive or terminate any provision of this Section 12(d) of this Agreement, nor except as aforesaid during such period will the Executive, as a principal, or agent of another person, (1) make, or in any way participate in, any solicitation of proxies with respect to any securities entitled to vote generally in the election of directors of the Company (together with direct or indirect options or other rights to acquire any such securities, "Voting Securities"), (including by the execution of action by written consent), become a participant in any election contest with respect to the Company, seek to influence any person with respect to any Voting Securities or demand a copy of the Company's list of its shareholders or other books and records, (2) participate in or encourage the formation of any partnership, syndicate, or other group which owns or seeks or offers to acquire beneficial ownership of any Voting Securities or which seeks to affect control 11 12 of the Company or for the purpose of circumventing any provision of this Agreement, or (3) otherwise act, alone or in concert with others (including by providing financing for another person), to seek or to offer to control or influence, in any manner, the management, Board of Directors, or policies of the Company, except in his capacity as an officer or director of the Company. 13. ENTIRE AGREEMENT: CONTINUING INDEMNIFICATION RIGHTS. (a) This Agreement and the Other Agreements shall constitute the entire agreements between the parties hereto with respect to the subject matters covered by this Agreement and the Other Agreements, and shall supersede all prior verbal or written agreements, covenants, communications, understandings, commitments, representations or warranties, whether oral or written, by any party hereto or any of its representatives pertaining to such subject matter. The Executive shall not be entitled to any other payments or benefits, or damages, except as expressly provided for in this Agreement and the Other Agreements. (b) This Agreement shall not affect any indemnification or other rights under any indemnification agreement between the Executive and the Company or the Company's by-laws. The Company shall provide coverage for the Executive under the directors' and officers' liability coverage maintained by Company, as in effect from time to time, to the same extent as other current senior executive officers and directors of the Company. 14. CHOICE OF LAW. This Agreement was entered into, and the negotiations proceeding this Agreement were conducted in Cleveland, Ohio, and this Agreement is intended to be performed within the State of Ohio, which is the principal residence of the Executive. Accordingly, the validity and interpretation of this Agreement will be determined in accordance with the internal laws of the State of Ohio without giving effect to the choice of law provision thereof. 15. NOTICES. Any notices required or permitted to the given under this Agreement is to be in writing and either given by personal delivery or deemed to be delivered three (3) days after deposit, postage pre-paid, in the U.S. certified or registered mail, return receipt requested, or one (1) business day after deposit, prepaid, with a guaranteed overnight delivery service, addressed as follows: 12 13 If to the Company: Cole National Corporation 5915 Landerbrook Drive Mayfield Heights, Ohio 44124 Attention: General Counsel If to the Executive: Larry Pollock 18100 South Park Blvd. Shaker Heights, Ohio 44120 or at such other address as is specified in written notice given in the manner required in this Agreement. 16. WAIVER OF BREACH. The waiver by either the Company or the Executive of a breach of any provisions of this Agreement will not operate or be construed as a waiver of any subsequent breach by either party. 17. BINDING EFFECT. This Agreement will be binding upon and shall inure to the benefit of both the Executive and the Company and their respective successors, heirs and legal representatives, but neither this Agreement nor any rights under this Agreement may be assigned by the Executive or Company without the written consent of the other. 18. SEVERABILITY. If any portion of this Agreement is invalid or illegal, such invalidity or illegality will not render this Agreement invalid or illegal as a whole but the invalid or illegal portions are to be stricken herefrom and the remainder of this Agreement will be binding on the parties and their successors and assigns as if such invalid or illegal provisions were never included in this Agreement from the first instance. 19. AMENDMENTS. No amendment or variation of the terms of this Agreement will be valid unless the same are in writing signed by all parties. 20. SECTION REFERENCES. Unless otherwise specified, all references in this Agreement to section will be construed to refer to sections of this Agreement. This Employment Agreement has been executed by the parties on the date and year first above written. COLE NATIONAL CORPORATION By: /s/ Jeffrey A. Cole ---------------------------------------------- Title: By: Chairman, CEO ---------------------------------------------- Title: /s/ Larry Pollock -------------------------------------------------- Larry Pollock 13 14 The following exhibits to this agreement have been separately filed with the following reference numbers:

Exhibit Description Exhibit Reference ------- ----------- ----------------- A Restricted Stock Agreement 10.53 B Nonqualified Stock Option Agreement No. 1 10.54 C Nonqualified Stock Option Agreement No. 2 10.55

15 EXHIBIT D --------- SECURED PROMISSORY NOTE ----------------------- $____________ Date: _____________, 2000 FOR VALUE RECEIVED, the undersigned, Larry Pollock ("Borrower"), hereby unconditionally promises to pay to the order of Cole National Corporation, a Delaware corporation (the "Company"), the principal sum of__________________ ($______) in lawful money of the United States of America and in immediately available funds, on January ___, 2004(1) unless earlier required by the terms of this Secured Promissory Note and to pay simple interest (computed on the basis of a 365 day year) on the unpaid principal amount hereof from and after the date of this Secured Promissory Note until the entire principal amount hereof has been paid in full, at the rate of____% per annum.(2) Interest is payable on each anniversary of the date of this Secured Promissory Note with respect to the period ending on such anniversary, and at maturity or upon full prepayment of the principal hereof. Not later than five business days prior to the date on which payment of interest is due, the Company shall give written notice to the Borrower of the amount of the payment due on such date. For purposes of this Promissory Note, a "business day" shall mean any day other than a Saturday, Sunday or federal holiday and shall consist of the time period from 12:01 a.m. through 12:00 Midnight Eastern time. This Secured Promissory Note is delivered in consideration of a loan by the Company to the Borrower in connection with the award by the Company of 525,000 shares of Class A Common Stock, par value $.001 per share (such shares being the "Common Stock"), of the Company in accordance with the terms of a certain Restricted Stock Agreement (the "Agreement") dated as of January 19, 2000 between the Company and the Borrower. Payment of the principal of and interest on this Secured Promissory Note is secured pursuant to the terms of the Stock Pledge Agreement dated this date between Borrower and the Company. This Secured Promissory Note is subject to the following further terms and conditions: 1. PAYMENT AND PREPAYMENT. - --------------------- 1 The 4th anniversary of the date of the Employment Agreement. 2 Applicable AFR as of date of Note. 16 (a) All payments of principal and interest on this Secured Promissory Note shall be made to the Company or its order in lawful money of the United States of America and in immediately available funds at the offices of the Company at its then principal place of business (or at such other place as the holder hereof shall notify Borrower in writing). Borrower may, at his option, prepay this Secured Promissory Note in whole or in part at any time or from time to time without penalty or premium. Any prepayments of any portion of the principal amount of this Secured Promissory Note shall be accompanied by payment of all interest accrued but unpaid hereunder. (b) Concurrently with any payment of any portion of this Secured Promissory Note pursuant to paragraph 1(a) hereof or any prepayment of any portion of the principal amount of this Secured Promissory Note pursuant to paragraph 1(b) hereof, the Company shall make a notation of such application or payment on this Secured Promissory Note. If full payment of all unpaid principal of and accrued and unpaid interest on this Secured Promissory Note is made, this Secured Promissory Note shall be cancelled. Any partial payment or prepayment shall be applied first to accrued and unpaid interest hereon and then to the unpaid installments of principal hereof in the inverse order of their maturity. 2. CONVERSION TO DEMAND NOTE. In the event that the Borrower shall cease to be employed by the Company or any of its subsidiaries, then the unpaid principal of and accrued and unpaid interest on this Secured Promissory Note shall, upon demand by the Company given in writing to the Borrower, become immediately due and payable, subject, however, to the terms of the Employment Agreement dated as of January 19, 2000 between Borrower and the Company. 3. EVENTS OF DEFAULT. Upon the occurrence of any of the following events ("Events of Default"): (a) Failure to pay any principal of this Promissory Note, including any prepayments required hereunder, when due which shall remain unremedied for thirty (30) days; or (b) Failure to pay any interest due under this Secured Promissory Note which shall remain unremedied for thirty (30) days following the date when such installment was originally due hereunder, provided, however, that the notice required to be given pursuant to the last sentence of the first paragraph of this Secured Promissory Note has been given in accordance with the terms thereof, or (c) A petition is filed by or against the Borrower seeking the entry of an order for relief under the bankruptcy laws of the United States, as now or hereafter amended or supplemented, or there is an appointment of a permanent receiver or a permanent trustee of all or substantially all the 2 17 property of the Borrower or an assignment is made by the Borrower for the benefit of creditors; then, and in any such event, the holder of this Secured Promissory Note may declare, by notice of default given to Borrower, the entire principal amount of this Secured Promissory Note to be forthwith due and payable, whereupon the entire principal amount of this Secured Promissory Note outstanding shall become due and payable without presentment, demand, protest and notices of any kind or of dishonor, all of which are hereby expressly waived. Upon the occurrence of an Event of Default, the accrued and unpaid interest hereunder shall thereafter bear the same rate of interest as the principal hereunder, but in no event shall such interest be charged which would violate any applicable usury law. If an Event of Default shall occur hereunder, Borrower shall pay costs of collection, including reasonable attorneys' fees, incurred by the holder in the enforcement hereof. No delay or failure by the holder of this Secured Promissory Note in the exercise of any right or remedy shall preclude other or future exercise thereof or the exercise of any other right or remedy. 4. ADDITIONAL RESTRICTIONS UPON OCCURRENCE OF AN EVENT OF DEFAULT. In case an Event of Default shall occur and be continuing, the Borrower agrees that he will not, without the prior written consent of the Company (which consent shall not be unreasonably withheld), sell, assign, transfer, exchange, or otherwise dispose of, or grant any option with respect to, any shares of Common Stock then beneficially owned or thereafter acquired by the Borrower, nor will he create, incur or permit to exist any pledge, lien, mortgage, hypothecation, security interest, charge, option or any other encumbrances with respect to any shares of Common Stock, or any interest therein, or any proceeds thereof. 5. MISCELLANEOUS: (a) The provisions of this Secured Promissory Note shall be governed by and construed in accordance with the laws of the State of Ohio, without regard to the conflicts of laws rules thereof. (b) All notices and other communication hereunder shall be in writing and will be deemed to have been duly given if delivered in person or mailed by certified mail or guaranteed overnight delivery service to the Company at its principal executive offices and to the Borrower at the last address reflected in the Company's records. (c) The paragraph headings contained in this Promissory Note are for reference purposes only and shall not affect in any way the meaning or interpretations of the provisions thereof. 3 18 IN WITNESS WHEREOF, this Secured Promissory Note has been duly executed and delivered by Borrower on the date first written above. ----------------------------------- Borrower: Larry Pollock Witness: - --------------------------------------- 4 19 EXHIBIT E --------- STOCK PLEDGE AGREEMENT THIS AMENDED AND RESTATED STOCK PLEDGE AGREEMENT (this "Agreement") dated as of______________ 2000(1) is made by Larry Pollock (the "Pledgor") to Cole National Corporation, a Delaware corporation (the "Company"). RECITALS -------- A. Pledgor has entered into a Restricted Stock Agreement with the Company, pursuant to which the Pledgor has been granted 525,000 restricted shares of common stock, par value $.001 of the Company (such shares being the "Common Stock" or the "Shares"). B. In connection with a Section 83(b) election for federal income tax purposes, the Pledgor has borrowed from the Company the principal amount of ___________________ ($_______), and in consideration therefor, has delivered to the Company the Secured Promissory Note of the Pledgor, dated January 19, 2000, for such principal amount (the "Promissory Note"). C. The Pledgor wishes to affirm the grant of security and assurance to the Company in order to secure the payment of the principal of and interest on the Promissory Note and to that effect to pledge to the Company the Shares. AGREEMENT --------- NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows: 1. PLEDGE. (a) The Pledgor hereby pledges, assigns, hypothecates, transfers, and delivers to the Company, all the Shares (the "Pledged Stock") and hereby grants - ---------------------------- 1 Date will be the same as that of the Promissory Note. 20 to the Company, a first lien on, and security interest in, the Pledged Stock and in all proceeds thereof, together with appropriate undated stock powers duly executed in blank, as collateral security for the prompt and complete payment when due (whether at the stated maturity, by acceleration or otherwise) of the unpaid principal of and interest on the Promissory Note. In the event any Shares are forfeited under the Restricted Stock Agreement, such Shares shall be returned to the Company, and shall no longer be subject to the pledge of this Stock Pledge Agreement. (b) On or after January 18, 2002, the Company shall release, at Pledgor's written request, that number of shares that exceed a number of shares that, multiplied by the per share closing trading price for the Common Stock on the New York Stock Exchange on the date of release, equals two hundred percent (200%) of the balance (principal and interest) then due on the Promissory Note. 2. ADMINISTRATION SECURITY. The following provisions shall govern the administration of the Pledged Stock: (a) So long as no Event of Default has occurred and is continuing (as used herein, "Event of Default" shall mean the occurrence of any Event of Default under the Promissory Note), the Pledgor shall be entitled to act with respect to the Pledged Stock in any manner not inconsistent with the provisions of this Agreement, the Promissory Note or any document or instrument delivered or to be delivered pursuant to or in connection with the Promissory Note. (b) If, while this Agreement is in effect, the Pledgor shall become entitled to receive or shall receive any stock certificate (including, without limitation, any certificate representing a stock dividend or a distribution in connection with any reclassification, increase or reduction of capital, or issued in connection with any reorganization), option or rights, in substitution of, in exchange for, or in respect of, any shares of any Pledged Stock, the Pledgor agrees to accept the same as the Company's agent and to hold the same in trust on behalf of and for the benefit of the Company and to deliver the same forthwith to the Company in the exact form received, with the endorsement of the Pledgor when necessary and/or appropriate undated stock powers duly executed in blank, to be held by the Company subject to the terms hereof, as additional collateral security for the payment of the principal of and interest on the Promissory Note. In case any distribution of capital shall be made on or in respect of the Pledged Stock or any property shall be distributed upon or with respect to the Pledged Stock pursuant to the recapitalization or reclassification of the capital of the Company or pursuant to the reorganization of the Company, the property so distributed shall be delivered to the Company to be held by it as additional collateral security for the payment of the principal of and interest on the Promissory Note. All sums of money and property so paid or distributed in respect of the Pledged Stock which are received by the Pledgor shall, until paid or delivered to the Company, be held by the Pledgor in trust as additional collateral security for the payment of the principal of and interest on the Promissory Note. 2 21 All property at any time pledged with the Company hereunder (whether or not described herein) and all income therefrom and proceeds thereof, are herein collectively sometimes called the "Collateral." (c) Notwithstanding paragraphs 1 and 2(b) hereof, unless an Event of Default shall have occurred and be continuing, the Pledgor shall be entitled to receive all cash or stock dividends but not stock splits paid in respect of the Pledged Stock and, unless the Company shall have given notice pursuant to paragraph 3 of its intention to exercise all voting and stockholder rights with respect to the Pledged Stock and any stock dividends thereof, to vote the Pledged Stock and any stock dividends thereof and to give consents, waivers and ratifications in respect of the Pledged Stock and any stock dividends thereof; PROVIDED, HOWEVER, that no vote shall be cast or consent, waiver or ratification given or action taken which would impair the Collateral or be inconsistent with or violate any provision of this Agreement, the Promissory Note, or any document or instrument delivered or to be delivered pursuant to or in connection with the Promissory Note. (d) Notwithstanding any payment or payments made by the Pledgor hereunder, or the receipt of any amounts by the Company with respect to the Collateral, or any set-off or application of funds of the Pledgor by the Company, the Pledgor shall not be entitled to be subrogated to any of the rights of the Company against any Collateral held by the Company for the payment of the principal of and interest on the Promissory Note until the principal of and interest on the Promissory Note are paid in full. (e) The Pledgor shall immediately upon request by the Company and in confirmation of the security interests hereby created, execute and deliver to the Company such further instruments, deeds, transfers, assurances and agreements, in form and substance satisfactory to the Company, as the Company shall request, including any financing statement and amendments thereto, or any other documents, as required under Ohio law and any other applicable law to protect the security interests created hereunder. (f) Subject to any sale by the Company or other disposition by the Company of the Pledged Stock or any stock dividends thereon or other property pursuant to this Agreement and subject to Section 6 below, the Pledged Stock and any other Collateral shall be returned to the Pledgor upon full payment of the principal of and interest on the Promissory Note. 3. RIGHTS OF THE COMPANY. The Company shall not be liable for failure to collect or realize upon the principal of and interest on the Promissory Note or any collateral security therefor, or any part thereof, or for any delay in so doing nor shall the Company be under any obligation to take any action whatsoever with regard thereto. Any or all shares of the Pledged Stock and any stock dividends thereon held by the Company hereunder may, if an Event of Default has occurred and is continuing, provided that the Company shall have given prior written notice of its intention to do so to the Pledgor, be registered in the name of the Company 3 22 or its nominee, and the Company or its nominee may thereafter exercise all voting and stockholder rights at any meeting of the Company and exercise any and all rights of conversion, exchange, subscription or any other rights, privileges or options pertaining to any shares of the Pledged Stock and any stock dividends thereon as if it were the absolute owner thereof, including without limitation, the right to exchange at its discretion, any and all of the Pledged Stock and any stock dividends thereon upon the merger, consolidation, reorganization, recapitalization or other readjustment of the Company or upon the exercise by the Company of any right, privilege or option pertaining to any shares of the Pledged Stock and any stock dividends thereon, and in connection therewith, to deposit and deliver any and all of the Pledged Stock and any stock dividends thereon with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as it may determine, all without liability except to account for property actually received by it, but the Company shall have no duty to exercise any of the aforesaid rights, privileges or options and shall not be responsible for any failure to do so or delay in so doing. 4. REMEDIES IN CASE OF AN EVENT OF DEFAULT. (a) In case an Event of Default shall have occurred and be continuing, the Company shall have all of the remedies of a secured party under the Ohio Uniform Commercial Code, and, without limiting the foregoing, shall have the right, subject to any necessary regulatory approvals, to sell, assign and deliver the whole or, from time to time, any part of the Collateral or any interest in any part thereof, at any private sale or at public auction, with or without demand of performance or other demand, advertisement or notice of the time or place of sale or adjournment thereof or otherwise, each of which demands, advertisements and/or notices are hereby expressly waived (except the Company shall give 10 days' notice to the Pledgor of the time and place of any sale pursuant to this Section 4), for cash, on credit or for other property, for immediate or future delivery, and for such price or prices and on such terms as the Company shall, in its sole discretion, determine, the Pledgor hereby waiving and releasing any and all right or equity of redemption whether before or after sale hereunder. At any such sale the Company may bid for and purchase the whole or any part of the Collateral so sold free from any such right or equity of redemption. The Company shall apply the net proceeds of any such sale, after deducting all reasonable costs and expenses of every kind incurred therein or incidental to the care, safekeeping or otherwise of any and all of the Collateral or in any way relating to its rights hereunder, including reasonable attorney's fees and legal expenses, to the payment in whole or in part of the principal of and interest on the Promissory Note, in such order as the Company may elect, the Pledgor remaining liable for any deficiency remaining unpaid after such application, and only after so applying such net proceeds and after the payment by the Company of any other amount required by any provision of law, including, without limitation, Section 9-504(l)(c) of the Uniform Commercial Code, need the Company account for the surplus, if any, to the Pledgor The Pledgor agrees that the Company need not give more than ten days' notice of the time and place of any public sale or of the time after which a private sale or other intended disposition is to take place and that such notice is reasonable notification of such matters. No notification need 4 23 be given to the Pledgor if it has signed after default a statement renouncing or modifying any right to notification of sale or other intended disposition. (b) The Pledgor recognizes that the Company may be unable to effect a public sale of all or a part of the Pledged Stock or other securities held as part of the Collateral by reason of certain prohibitions contained in the Securities Act of 1933 (the "Act"), or in the rules and regulations promulgated thereunder, but may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obliged to agree, among other things, to acquire the Pledged Stock or such other securities for their own account, for investment and not with a view to the distribution or resale thereof. The Pledgor agrees that private sales so made may be at prices and on other terms less favorable to the seller than if the Pledged Stock or such other securities were sold at public sale, and that the Company has no obligation to delay the sale of the Pledged Stock or such other securities for the period of time necessary to permit the registration of the Pledged Stock or such other securities for public sale under the Act. The Pledgor agrees that a private sale or sales made under the foregoing circumstances shall be deemed to have been made in a commercially reasonable manner. (c) If any consent, approval or authorization of any state, municipal or other governmental department, agency or authority should be necessary to effectuate any sale or disposition by the Company pursuant to this Section 4 of the Pledged Stock or other securities held as part of the Collateral, the Pledgor will execute all such applications and other instruments as may be required in connection with securing any such consent, approval or authorization, and will otherwise use his best effort to secure the same. (d) Neither failure nor delay on the part of the Company to exercise any right, remedy, power or privilege provided for herein or by statute or at law or in equity shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, remedy, power or privilege preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. 5. PLEDGOR'S OBLIGATIONS NOT AFFECTED. The obligations of the Pledgor under this Agreement shall remain in full force and effect with regard to, and shall not be impaired or affected by: (a) any subordination, amendment or modification of or addition or supplement to the Promissory Note, or any assignment or transfer thereof: (b)any exercise or non-exercise by the Company of any right, remedy, power or privilege under or in respect of this Agreement, the Promissory Note, or any waiver of any such right, remedy, power or privilege; (c) any waiver, consent, extension, indulgence or other action or inaction in respect of this Agreement or the Promissory Note, or any assignment or transfer of any thereof; or (d) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like, of the Company or its successors, whether or not the Pledgor shall have notice or knowledge of any of the foregoing. 6. TRANSFER BY PLEDGOR. Without the prior written consent of the Company, the Pledgor agrees that he will not sell, assign, transfer, exchange, or otherwise dispose of, or 5 24 grant any option with respect to, the collateral, nor will he create, incur or permit to exist any pledge, lien, mortgage, hypothecation, security interest, charge, option or any other encumbrance with respect to any of the collateral, or any interest therein, or any proceeds thereof, except for the lien and security interest provided for by this Agreement. 7. REPRESENTATION, WARRANTIES AND COVENANTS OF THE PLEDGOR. The Pledgor represents and warrants that (a) he is the legal, record and beneficial owner of, and has good and marketable title to, the Pledged Stock, subject to no pledge, lien, mortgage, hypothecation, security interest, charge, option or other encumbrance whatsoever, except the lien and security interest created by this Agreement and the terms of the Restricted Stock Agreement; (b)he has the authority and legal right to pledge all the Pledged Stock pursuant to this Agreement; and (c) the pledge, assignment and delivery of such Pledged Stock pursuant to this Agreement creates a valid first lien on and a first perfected security interest in such shares of the Pledged Stock, and the proceeds thereof, subject to no prior pledge, lien, mortgage, hypothecation, security interest, charge, option or encumbrance or to any agreement purporting to grant to any third party a security interest in the property or assets of the Pledgor which would include the Pledged Stock. The Pledgor covenants and agrees that he will defend the Company's right, title and security interest in and to the Pledged Stock and the proceeds thereof against the claims and demands of all persons whomsoever; and covenants and agrees that he will have like title to and right to pledge any other property at any time hereafter pledged to the Company as Collateral hereunder and will likewise defend the Company's right thereto and security interest therein. 8. ATTORNEY-IN-FACT. The Company or its successor is hereby appointed the attorney-in-fact of the Pledgor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument which the Company reasonably may deem necessary or advisable to accomplish the purposes hereof, including without limitation, the execution of the applications and other instruments described in Section 4(c), which appointment as attorney-in-fact is irrevocable as one coupled with an interest. 9 TERMINATION. Upon payment in full of the principal of and interest on the Promissory Note and upon the due performance of and compliance with all the provisions of the Promissory Note, this Agreement shall terminate and the Pledgor shall be entitled to the return of such of the Collateral as has not theretofore been sold, released from this Agreement pursuant to Section 6 or otherwise applied pursuant to the provisions of this Agreement. 10. NOTICES. All notices or other communications required or permitted to be given hereunder shall be in writing and will be deemed to have been duly given if delivered in person or mailed by certified mail or guaranteed overnight delivery service to the Company at its principal executive offices and to the Pledgor at the last address reflected in the Company's records. 11. MISCELLANEOUS. The Company and its assigns shall have no obligation in respect of the Collateral, except to hold and dispose of the same in accordance with the terms of this Agreement. Neither this Agreement nor any provisions hereof may be amended, modified, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the amendment, modification, waiver, discharge or termination is sought. The provisions of this Agreement shall be binding upon the successors and assigns of 6 25 the Pledgor. The captions in this Agreement are for convenience of reference only and shall not define or limit the provisions hereof. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, without regard to the rules of conflicts of laws thereof. This Agreement may be executed in multiple counterparts, each of which shall be an original, but all of which taken together shall constitute one instrument. 12. OBLIGATION TO PROVIDE SUBSTITUTE COLLATERAL. In the event that the number of Shares that may become nonforfeitable is reduced pursuant to Section 4(b)(i) of the Restricted Stock Agreement, and the Company's Board of Directors, in its sole discretion, determines that the pledge of Shares under this Agreement is inadequate collateral for the obligations of the Pledgor under the Promissory Note, the Company may request, and Pledgor shall promptly deliver, as security, such additional shares of Common Stock or other collateral as the Board of Directors may reasonably determine is sufficient to secure the Pledgor's obligations under the Promissory Note. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of January ___, 2000. COLE NATIONAL CORPORATION By:_____________________________ Its: PLEDGOR ________________________________ Name: Larry Pollock Number of Shares pledged: 525,000 Principal amount of Promissory Note: $___________ 7 EX-10.53 6 EXHIBIT 10.53 1 Exhibit 10.53 EXHIBIT A COLE NATIONAL CORPORATION RESTRICTED STOCK AGREEMENT THIS RESTRICTED STOCK AGREEMENT (as amended, modified or supplemented from time to time, this "AGREEMENT") dated January 18, 2000 is made by and between Cole National Corporation, a Delaware corporation (the "COMPANY"), and Larry Pollock, an individual residing in the State of Ohio (the "GRANTEE"). WHEREAS, the Compensation Committee (the "COMMITTEE") of the Board of Directors of the Company (the "BOARD") has authorized by resolution the execution of a restricted stock agreement in the form hereof; and WHEREAS, the Grantee and the Company entered into an Employment Agreement (the "EMPLOYMENT AGREEMENT") on January 18, 2000 (the "EFFECTIVE DATE"); NOW, THEREFORE, in consideration of the Grantee's acceptance of the terms and conditions of this Agreement, and subject to the terms of this Agreement, the Company hereby awards to the Grantee 525,000 shares (together with all other shares of Common Stock that become subject to this Agreement, collectively, the "RESTRICTED SHARES") of the Company's common stock, par value $.001 per share ("COMMON STOCK"): 1. ISSUANCE OF COMMON STOCK. The Restricted Shares covered by this Agreement shall be represented by certificates registered in the name of the Grantee and bearing a legend referring to the restrictions set forth in this Agreement. 2. RESTRICTION ON TRANSFER OF COMMON STOCK. The Restricted Shares may not be transferred, sold, pledged, exchanged, assigned or otherwise encumbered or disposed of by the Grantee, except to the Company, until they have become nonforfeitable in accordance with Section 3 of this Agreement. Any purported transfer, encumbrance or other disposition of the Restricted Shares that is in violation of this Section 2 will be null and void, and the other party to any such purported transaction will not obtain any rights to or interest in the Restricted Shares. The Committee or the Board may, in their sole and absolute discretion, waive the restrictions set forth in this Section 2 with respect to all or any portion of the Restricted Shares granted under this Agreement. At the reasonable request of Grantee, the Company shall cooperate with Grantee to permit transfers to family members or trusts controlled by Grantee or members of his immediate family to facilitate estate planning. Any transferee must agree to be bound by the terms and conditions of this Agreement in a writing in form and substance reasonably acceptable to the Company. 3. PURCHASE OF COMMON STOCK. On or before the date that is one-hundred eighty (180) days after the Effective Date (the "LAST PURCHASE DATE") the Grantee shall purchase 2 for his account not less than 262,500 shares of Common Stock or such lesser number as are acquired by the Maximum Purchase Amount (the "PURCHASED SHARES"). The Company shall grant such reasonable extensions, in light of the circumstances, as may be requested by the Executive. In no event will Executive be required to expend more than Two Million Six Hundred Thirty-Five Thousand Dollars ($2,635,000; the "Maximum Purchase Amount") for the Purchased Shares. 4. VESTING OF COMMON STOCK. (a) Except as otherwise set forth in this Section 4 and in Section 5, the Restricted Shares will become nonforfeitable as follows: (i) fifty percent (50%) of the Restricted Shares will become nonforfeitable on the second anniversary of the Effective Date; and (ii) twenty-five percent (25%) of the original number of Restricted Shares awarded will become nonforfeitable on each of the third and fourth anniversaries of the Effective Date; and (iii) notwithstanding the provisions of Section 4(a)(ii), if, for any period of 20 consecutive trading days commencing on or after the second anniversary of the Effective Date and ending on or prior to the fourth anniversary of the Effective Date, the closing stock trading price of the Common Stock on the New York Stock Exchange equals or exceeds $25.00 per share, and Grantee's employment has not terminated, all Restricted Shares not then nonforfeitable will become nonforfeitable as of the close of business of the last trading day in such 20 day period. (b) Anything in this Agreement to the contrary notwithstanding: (i) in the event the Grantee has not purchased for his account the minimum number of 262,500 Purchased Shares or expended the Maximum Purchase Amount as required by Section 3 by the Last Purchase Date (including any extensions thereof), or, if earlier, the date on which any Restricted Shares become nonforfeitable, for each share of Common Stock less than the minimum 262,500 Purchased Shares that have not been purchased by Grantee, two (2) Restricted Shares shall be forfeited; such forfeiture to affect, first, those shares that would otherwise become nonforfeitable at the next earliest date, so as to reduce the number of shares that will otherwise become nonforfeitable at that date, before having any effect on subsequent tranches, and second, those shares in subsequent tranches in a like serial fashion. (ii) Purchased Shares shall include shares acquired by Grantee upon exercise of all or part of an option to acquire shares of Common Stock granted on the Effective Date to the Grantee pursuant to 2 3 Nonqualified Stock Option Agreement No. 2 between the Company and the Grantee but not shares inquired pursuant to Nonqualified Stock Option Agreement No. 1 between the Company and the Grantee; and (iii) no additional Restricted Shares shall become nonforfeitable if at the time they would otherwise become nonforfeitable the Grantee does not own a number of unrestricted shares of Common Stock at least equal to the lesser of the aggregate number of Restricted Shares which have not yet become nonforfeitable or the Purchased Shares. (c) If prior to a change in control the Grantee's employment is terminated by the Company without Cause or by Grantee for Good Reason and: (i) the termination occurs on or before the first anniversary of the Effective Date, an aggregate of twenty-five percent (25%) of the original number of shares of Restricted Shares awarded (as may be reduced by Section 4(b)(i)) will immediately become nonforfeitable; or (ii) the termination occurs after the first anniversary and on or before the second anniversary of the Effective Date, an aggregate of seventy-five percent (75%) of the original number of Restricted Shares (as reduced by Section 4(b)(i)) will immediately become nonforfeitable; or (iii) the termination occurs after the second anniversary of the Effective Date, all Restricted Shares awarded will immediately become nonforfeitable; or (iv) notwithstanding the provisions of Section 4(c)(i), (ii) and (iii), if, for the period of 20 consecutive trading days ending immediately prior to the date of termination of employment the closing stock trading price of the Common Stock on the New York Stock Exchange equals or exceeds $25.00 per share, all Restricted Shares not then nonforfeitable will become nonforfeitable as of the close of business of the last trading day in such 20 day period. (d) In the event of the occurrence of a Change in Control, and the Grantee's employment is terminated without Cause or by Grantee for Good Reason and: (i) the termination occurs on or before the first anniversary of the Effective Date, an aggregate of fifty percent (50%) of the original number of the Restricted Shares (as reduced by Section 4(b)(i)) awarded will immediately become nonforfeitable; 3 4 (ii) the termination occurs after the first anniversary and on or before the second anniversary of the Effective Date, an aggregate of seventy-five percent (75%) of the original number of the Restricted Shares (as reduced by Section 4(b)(i)) awarded will immediately become nonforfeitable; (iii) the termination occurs after the second anniversary of the Effective Date, all Restricted Shares awarded will immediately become nonforfeitable; and (iv) notwithstanding the provisions of Section 4(c)(i), (ii) and (iii), if, for the period of 20 consecutive trading days ending immediately prior to the date of termination of employment the closing stock trading price of the Common Stock on the New York Stock Exchange equals or exceeds $25.00 per share, all Restricted Shares not then nonforfeitable will become nonforfeitable as of the close of business of the last trading day in such 20 day period. (e) If the Grantee's employment terminates as a result of his death or Disability: (i) on or before the first anniversary of the Effective Date, an aggregate of twenty-five percent (25%) of the original number of Restricted Shares awarded (as may be reduced by Section 4(b)(i)) will immediately become nonforfeitable; (ii) after the first anniversary and on or before the second anniversary of the Effective Date, an aggregate of fifty percent (50%) of the original number of Restricted Shares awarded (as may be reduced by Section 4(b)(i)) will immediately become nonforfeitable; (iii) after the second anniversary and on or before the third anniversary of the Effective Date, an aggregate of seventy-five percent (75%) of the Restricted Shares awarded (as may be reduced by Section 4(b)(i)) will immediately become nonforfeitable; (iv) after the third anniversary of the Effective Date, all Restricted Shares (as may be reduced by Section 4(b)(i)) awarded will immediately become nonforfeitable. 5 TERMINATION OF RIGHTS AND FORFEITURE OF COMMON STOCK. Except for Restricted Shares that have become nonforfeitable in accordance with Section 4, all of the Restricted Shares will be forfeited if the Grantee ceases to be employed by the Company or a Subsidiary. In the event of a forfeiture, any certificate(s) representing the Restricted Shares will be canceled. 4 5 6 DIVIDEND, VOTING AND OTHER RIGHTS. (a) Except as otherwise provided in this Agreement, the Grantee will have all of the rights of a stockholder with respect to the Restricted Shares, including the right to vote the Restricted Shares and receive any dividends that may be paid thereon; PROVIDED, HOWEVER, that any additional shares of Common Stock or other securities that the Grantee may become entitled to receive pursuant to a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, separation or reorganization or any other change in the capital structure of the Company will be subject to the same restrictions as the Restricted Shares. (b) Cash dividends, if any, and any other distributions paid on the Restricted Shares will be sequestered by the Company until such time as such Restricted Shares become nonforfeitable in accordance with Section 4 and will, to the extent practicable, be deemed to be reinvested (at the Stock Price on the dividend payment date) on an immediate basis in additional shares of Common Stock from the Company's treasury, which will be subject to the same restrictions as the underlying Restricted Shares granted under this Agreement. If Restricted Shares are forfeited pursuant to Section 5, all dividends and other distributions, together with the earnings thereon, with respect to such Restricted Shares will likewise be forfeited. 7 RETENTION OF STOCK CERTIFICATE(S) BY COMPANY. Any certificates representing Restricted Shares will be held in custody by the Company together with a stock power endorsed in blank by the Grantee with respect thereto, until those shares have become nonforfeitable in accordance with Section 4. 8 HOLDING PERIOD. Any sale of shares by the Grantee is subject to the provisions of the Employment Agreement. 9 COMPLIANCE WITH LAW. Grantee acknowledges that Grantee is an accredited investor as defined in Regulation D promulgated under the Securities Act of 1933, has complete access to the Company's financial and other information, is fully capable of making an investment decision concerning the Company's Common Stock without assistance of third parties, and has no intention to distribute any of the Restricted Shares to third parties. Grantee is receiving the grant of Restricted Shares in connection with and as an inducement to Grantee's accepting employment as an executive officer of the Company. 10. ADJUSTMENTS: (a) The Board of Directors of the Company or the Compensation Committee shall make any adjustments in the number or kind of shares of Common Stock or other securities covered by this Agreement as such Board or Committee may in good faith determine is equitably required to prevent dilution or enlargement of the rights of the Grantee that otherwise would result from (i) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, or (ii) any merger, consolidation, spin-off, split-off, spin-out, split up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights to purchase securities, or (iii) any distribution to the holders of the Common Stock of rights or warrants to purchase equity interests of the Company, or (iv) any other corporate transaction or event having an effect similar to any of the foregoing. Moreover, in the event of any such transaction or event, the Board of Directors 5 6 or the Compensation Committee, in its discretion, may provide in substitution for any or all outstanding awards under this Agreement such alternative consideration as it, in good faith, may determine to be equitable in the circumstances and may require in connection therewith the surrender of all awards so replaced. (b) In the event that any provision of this Agreement would result in a calculation of a number of shares in amounts other than a whole number, the number of shares so calculated will be reduced or increased to the nearest whole number (rounding 0.50 up), with the effect of any such rounding deemed to attached to the last group of shares to be so calculated (with the calculations to be conducted in alphabetical or numerical order, as applicable). 11. WITHHOLDING TAXES. If the Company is required to withhold any federal, state, local or foreign tax in connection with any issuance of restricted or nonrestricted shares of Common Stock or other securities pursuant to this Agreement, it will be a condition to such issuance that the Grantee make provisions satisfactory to the Company for payment of all such taxes. In the event that the Grantee desires to have an amount greater than the Withholding Amount withheld, the excess over the Withholding Amount must be paid to the Company in cash. 12. RIGHT TO TERMINATE EMPLOYMENT. No provision of this Agreement will limit in any way whatsoever any right that the Company or a Subsidiary may otherwise have to terminate the employment of the Grantee at any time. 13. RELATION TO OTHER BENEFITS. Any economic or other benefit to the Grantee under this Agreement shall not be taken into account in determining any benefits to which the Grantee may be entitled under any profit-sharing, retirement or other benefit or compensation plan maintained by the Company or a Subsidiary and shall not affect the amount of any insurance coverage available to any beneficiary under any insurance plan covering employees of the Company or a Subsidiary. 14. AMENDMENTS. No amendment or variation of the terms of this Agreement will be valid unless the same are in writing signed by all parties. 15. SEVERABILITY. In the event that one or more of the provisions of this Agreement are invalidated for any reason by a court of competent jurisdiction, any provision so invalidated will be deemed to be separable from the other provisions hereof, and the remaining provisions hereof will continue to be valid and fully enforceable. 16. GOVERNING LAW. This Agreement is made under, and will be construed in accordance with, the laws of the State of Ohio without regard to conflict of law principles of such state. 17. TAXES. Grantee will make a proper election under Section 83(b) of the Internal Revenue Code of 1986, as amended, no later than 30 days after the date of this Agreement with respect to all of the Restricted Shares. 6 7 18. DEFINITIONS. As used in this Agreement, the terms "CAUSE," "CHANGE IN CONTROL," "GOOD REASON" and "SUBSIDIARY" shall have the meanings set forth in the Employment Agreement, and the term "STOCK Price" means the closing price of the Common Stock on the New York Stock Exchange on which the Common Stock is traded. This Restricted Stock Agreement has been executed by the parties at Cleveland, Ohio. COLE NATIONAL CORPORATION By: /s/ Jeffrey A. Cole ----------------------------- Name: Jeffrey A. Cole Title: Chairman, CEO /s/ Larry Pollock --------------------------------- Larry Pollock 7 EX-10.54 7 EXHIBIT 10.54 1 Exhibit 10.54 EXHIBIT B COLE NATIONAL CORPORATION Nonqualified Stock Option Agreement No. 1 ----------------------------------------- This Nonqualified Stock Option Agreement No. 1 (this "AGREEMENT") is entered into between the individual optionee named on the signature page hereof (the "OPTIONEE") and Cole National Corporation, a Delaware corporation (the "COMPANY"), as of the Grant Date. Certain capitalized terms used herein are defined in Paragraph 8. WHEREAS, the Compensation Committee of the Board of Directors of the Company (the "BOARD") has authorized a grant of stock options on the terms hereof to the Optionee; WHEREAS, the Optionee and the Company have entered into an employment agreement (the "EMPLOYMENT AGREEMENT") as of January 18, 2000 (the "EFFECTIVE DATE"); and NOW, THEREFORE, the Company hereby grants to the Optionee options (the "OPTIONS") to purchase the number of shares of common stock ("COMMON STOCK"), par value $.001 per share, of the Company's Common Stock shown as the Original Award on Attachment I hereto; and agrees to cause certificates for any shares purchased hereunder to be delivered to the Optionee upon payment of the purchase price in full, all subject, however, to the terms and conditions hereinafter set forth. 1. EXERCISE. (a) Except as otherwise provided herein, fifty percent (50%) of the Options will become exercisable (until terminated as hereinafter provided) on the first anniversary of the Effective Date, and the remaining fifty percent (50%) of the Options will become exercisable (until terminated as hereinafter provided) on the second anniversary of the Effective Date. (b) If, on or prior to the first anniversary of the Effective Date, a Change in Control occurs and Grantee's employment is terminated by the Company without cause or by the Grantee with Good Reason, fifty percent (50%) of the Options will become exercisable (until terminated as hereinafter provided) on the date Grantee's employment terminates, and all remaining Unvested Options will be forfeited and cancelled. (c) If, after the first anniversary of the Effective Date and prior to the second anniversary of the Effective Date, either (i) Grantee's employment is terminated by the Company without cause or (ii) a Change in Control occurs, and Grantee terminates employment with Good Reason, all Options not then exercisable will become exercisable (until terminated as hereinafter provided) on the date Grantee's employment terminates. 2 (d) If, for any period of 20 consecutive trading days commencing after the first anniversary of the Effective Date and ending on or prior to the second anniversary of the Effective Date, the closing stock trading price of the Common Stock on the New York Stock Exchange equals or exceeds $25.00 per share, and Optionee's employment has not terminated, all Options not then exercisable will become exercisable (until terminated as hereinafter provided) as of the close of business of the last trading day in such 20 day period. (e) To the extent exercisable, the Options may be exercised in whole or in part from time to time. (f) If the Optionee's employment is terminated for Cause, all remaining Unvested Options will be forfeited and cancelled. (g) Any exercise of the Options must be made in writing by the Optionee delivered to the Secretary of the Company. 2. EXERCISE PRICE AND PAYMENT. (a) The Options will be exercisable for Vested Shares at the Exercise Price shown on Attachment I hereto. (b) The Exercise Price for any shares may be paid in cash or by check. 3. TERMINATION. The Options will terminate and all Unvested and Vested Options then outstanding will be forfeited on the earliest of the following dates: (a) Immediately if the Executive voluntarily resigns (other than with Good Reason as provided below); or (b) one year after the date on which the Optionee ceases to be an employee of the Company or a Subsidiary by reason of death or Disability; or (c) one year after termination of employment by the Company for any reason other than Cause, or after termination of employment by the Optionee with Good Reason ; or (d) Immediately (i) upon the Optionee accepting employment with a Competitor without the prior written approval of the Company's Chief Executive Officer or (ii) upon a material breach by the Optionee of any applicable agreement with the Company relating to non-competition, non-solicitation or maintaining of Company confidences; (e) thirty days after the Optionee is terminated by the Company for Cause; or (f) Ten years from the Grant Date. 2 3 4. TRANSFERABILITY. Unless otherwise approved by the Compensation Committee in its sole and absolute discretion following a request from the Optionee or the Optionee's guardian or legal representative, the Options are not transferable by the Optionee otherwise than by will or the laws of descent and distribution. If another type of transfer is approved by the Compensation Committee, a transfer will only be effective when the transferee of the Options enters into an agreement with the Company (in form and substance acceptable to the Company) agreeing to be bound by the provisions of this Agreement as if such transferee were the Optionee. If exercised during the lifetime of the Optionee, the Options are exercisable only by the Optionee or by the Optionee's guardian or legal representative, or by an transferee authorized as provided in this Paragraph. At the reasonable request of Grantee, the Company shall cooperate with Grantee to permit transfers to family members or trusts controlled by Grantee or members of his immediate family to facilitate estate planning. Any transferee must agree to be bound by the terms and conditions of this Agreement in a writing in form and substance reasonably acceptable to the Company. 5. SECURITIES LAWS. The Options are not exercisable if such exercise would involve a violation of any applicable federal, state or other securities law, and the Company hereby agrees to make reasonable efforts to comply with such securities laws. The Options are not exercisable unless under said laws at the time of exercise the shares of Common Stock or other securities purchasable hereunder are exempt, are the subject matter of an exempt transaction, or are registered in accordance with such laws. 6. ADJUSTMENTS. (a) The Board of Directors or the Compensation Committee shall make such adjustment in the option price and in the number or kind of shares of Common Stock or other securities covered by the Options as such Board or Committee may in good faith determine is equitably required to prevent dilution or enlargement of the rights of the Optionee that otherwise would result from (i) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, or (ii) any merger, consolidation, spin-off, split-off, spin-out, split up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights to purchase securities, or (iii) any distribution to the holders of the Common Stock of rights or warrant to purchase equity interests of the Company, or (iv) any other corporate transaction or event having an effect similar to any of the foregoing. Moreover, in the event of any such transaction or event, the Board of Directors or the Compensation Committee, in its discretion, may provide in substitution for any or all outstanding awards under the Options such alternative consideration as it, in good faith, may determine to be equitable in the circumstances and may require in connection therewith the surrender of all awards so replaced. (b) In the event that any provision of this Agreement would result in a calculation of a number of shares in amounts other than a whole number, the number of shares so calculated will be reduced or increased to the nearest whole number (rounding 0.50 up), with the effect of any such rounding deemed to attach to the last group of shares to be so calculated (with calculations to be conducted in alphabetical or numerical order, as applicable). 3 4 7. WITHHOLDING. If the Company is required to withhold any federal, state, local or foreign tax in connection with the exercise of the Options, it will be a condition to such exercise that the Optionee make provision satisfactory to the Company for payment of all such taxes. 8. DEFINITIONS. The terms "CAUSE," "CHANGE IN CONTROL," "GOOD REASON" and "SUBSIDIARY" shall have the meaning provided in the Employment Agreement and the following capitalized terms have meanings as set forth below. (a) "COMPETITOR" means any Person that competes with any then-existing business of the Company or any Subsidiary. (b) "EXERCISE PRICE" means the exercise price per share indicated as the Exercise Price per share on Attachment I hereto. (c) "GRANT DATE" means the date so indicated on Attachment I hereto. (d) "ORIGINAL AWARD" means the number of shares of Common Stock indicated as the Original Award on Attachment I hereto. (e) "PERSON" means any corporation, partnership, limited liability company, association, firm, other entity or individual(s). (f) "UNVESTED SHARES" means, as of any given time, those shares of Common Stock relating to the Options that are not, at the time in question, otherwise permitted, under the terms of this Agreement, to be acquired pursuant to the exercise of the Options. (g) "VESTED SHARES" means, as of any given time, those shares of Common Stock relating to the Options that are, at the time in question, otherwise permitted, under the terms of this Agreement, to be acquired pursuant to the exercise of the Options. 4 5 9. ACKNOWLEDGMENT. The undersigned Optionee hereby acknowledges receipt of an executed original of this Agreement and accepts the Options granted hereunder. EXECUTED at Cleveland, Ohio as of the date first set forth above. COLE NATIONAL CORPORATION By: /s/ Jeffrey A. Cole ----------------------------------- Name: Jeffrey A. Cole Title: Chairman, CEO ----------------------------------- /s/ Larry Pollock -------------------------------------- OPTIONEE - Larry Pollock 5 6 Attachment I to Nonqualified Stock Option Agreement No. 1 Name of Optionee: Larry Pollock Name of Employer: Cole National Corporation Position: President, Chief Operating Officer and Member Board of Directors Number of Shares in the Original Award: 262,500 Grant Date: January 18, 2000 Exercise Price per Share: $10.00 6 EX-10.55 8 EXHIBIT 10.55 1 Exhibit 10.55 EXHIBIT C COLE NATIONAL CORPORATION NONQUALIFIED STOCK OPTION AGREEMENT NO. 2 This Nonqualified Stock Option Agreement No. 2 (this "Agreement") is entered into between Larry Pollock (the "Optionee") and Cole National Corporation, a Delaware corporation (the "Company"), as of January 18, 2000. Certain capitalized terms used herein are defined in Paragraph 8. WHEREAS, the Compensation Committee of the Board of Directors of the Company has authorized a grant of stock options on the terms hereof to the Optionee; WHEREAS, the Optionee and the Company have entered into an employment agreement (the "Employment Agreement") as of January 18, 2000 (the "Effective Date"); and NOW, THEREFORE, the Company hereby grants to the Optionee options (the "Options") to purchase the number of shares of common stock ("Common Stock"), par value $.001 per share, of the Company's Common Stock shown as the Original Award on Attachment I hereto; and agrees to cause certificates for any shares purchased hereunder to be delivered to the Optionee upon payment of the purchase price in full, all subject, however, to the terms and conditions hereinafter set forth. 1. EXERCISE. (a) The Options (until terminated as hereinafter provided) are vested and exercisable immediately. (b) The Options may be exercised in whole or in part from time to time. (c) Any exercise of the Options must be made in writing by the Optionee delivered to the Secretary of the Company. 2. EXERCISE PRICE AND PAYMENT. (a) The Options will be exercisable for Shares at the Exercise Price shown on Attachment I hereto. (b) The Exercise Price for any shares may be paid in cash or by check. 3. TERMINATION. The Options will terminate and all Options then outstanding will be forfeited on the earliest of the following dates: (a) Immediately if the Optionee terminates employment with the Company for any reason; or 2 (b) Ninety (90) days from the Grant Date. 4. TRANSFERABILITY. The Options are not transferable by the Optionee. 5. SECURITIES LAWS. The Options are not exercisable if such exercise would involve a violation of any applicable federal, state or other securities law, and the Company hereby agrees to make reasonable efforts to comply with such securities laws. The Options are not exercisable unless under said laws at the time of exercise the shares of Common Stock or other securities purchasable hereunder are exempt, are the subject matter of an exempt transaction, or are registered in accordance with such laws. 6. ADJUSTMENTS. (a) The Board of Directors or the Compensation Committee shall make such adjustment in the option price and in the number or kind of shares of Common Stock or other securities covered by the Options as such Board or Committee may in good faith determine is equitably required to prevent dilution or enlargement of the rights of the Optionee that otherwise would result from (i) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, or (ii) any merger, consolidation, spin-off, split-off, spin-out, split up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights to purchase securities, or (iii) any distribution to the holders of the Common Stock of rights or warrant to purchase equity interests of the Company, or (iv) any other corporate transaction or event having an effect similar to any of the foregoing. Moreover, in the event of any such transaction or event, the Board of Directors or the Compensation Committee, in its discretion, may provide in substitution for any or all outstanding awards under the Options such alternative consideration as it, in good faith, may determine to be equitable in the circumstances and may require in connection therewith the surrender of all awards so replaced. (b) In the event that any provision of this Agreement would result in a calculation of a number of shares in amounts other than a whole number, the number of shares so calculated will be reduced or increased to the nearest whole number (rounding 0.50 up), with the effect of any such rounding deemed to attach to the last group of shares to be so calculated (with calculations to be conducted in alphabetical or numerical order, as applicable). 7. WITHHOLDING. If the Company is required to withhold any federal, state, local or foreign tax in connection with the exercise of the Options, it will be a condition to such exercise that the Optionee make provision satisfactory to the Company for payment of all such taxes. 8. DEFINITIONS. The term "Subsidiary" shall have the meaning provided in the Employment Agreement, and the following capitalized terms have meanings as set forth below. (a) "Exercise Price" means the exercise price per share indicated as the Exercise Price per share on Attachment I hereto. (b) "Grant Date" means the date so indicated on Attachment I hereto. 2 3 (c) "Original Award" means the number of shares of Common Stock indicated as the Original Award on Attachment I hereto. (d) "Person" means any corporation, partnership, limited liability company, association, firm, other entity or individual(s). 9. ACKNOWLEDGMENT. The undersigned Optionee hereby acknowledges receipt of an executed original of this Agreement and accepts the Options granted hereunder. EXECUTED at Cleveland, Ohio as of the date first set forth above. COLE NATIONAL CORPORATION By: /s/ Jeffrey A. Cole -------------------------------- Name: Jeffrey A. Cole Title: Chairman, CEO /s/ Larry Pollock ----------------------------------- OPTIONEE - Larry Pollock 3 4 ATTACHMENT I to Nonqualified Stock Option Agreement No. 2 Name of Optionee: Larry Pollock Name of Employer: Cole National Corporation Position: President, Chief Operating Officer and Member Board of Directors Number of Shares in the Original Award: 100,000 Grant Date: January 18, 2000 Exercise Price per Share: The average of the closing prices of the Common Stock traded on the New York Stock Exchange for the twenty (20) trading day period ending on the tenth trading day after the Grant Date. 4 EX-10.56 9 EXHIBIT 10.56 1 Exhibit 10.56 STANDSTILL AGREEMENT Standstill Agreement (this "AGREEMENT"), dated as of November 22, 1999, by and between COLE NATIONAL CORPORATION, a Delaware corporation (the "COMPANY"), and HAL INTERNATIONAL N.V., a Netherlands Antilles Company, for itself and its Affiliates (as defined below; collectively, HAL International N.V. and its Affiliates are "STOCKHOLDER"). RECITALS A. As of the date of this Agreement, Stockholder beneficially owns approximately 14.2% of the outstanding shares of common stock, $.001 par value per share (the "COMMON SHARES"), of the Company. Stockholder has expressed its desire to increase its ownership above the 15.0% threshold through open-market purchases. This increase would trigger the rights granted to the Company's stockholders under the Rights Agreement, dated as of August 22, 1995, by and between the Company and National City Bank, as rights agent, as amended (the "EXISTING RIGHTS AGREEMENT"), and would also trigger the provisions of ss.203 of the Delaware General Corporation Law ("SS.203") and Article Tenth of the Company's amended and restated Certificate of Incorporation ("ARTICLE TENTH"). B. The Company is willing, contemporaneously with the effectiveness of this Agreement, to cause the rights under the Existing Rights Agreement to be redeemed and adopt a new rights agreement (the "NEW RIGHTS AGREEMENT") that permits Stockholder to increase its ownership above the 15.0% threshold to 25.0% of the Common Shares outstanding at any time, and the Company's Directors will also approve Stockholder's increased ownership for purposes of ss.203 and Article Tenth. C. As a result of the anticipated increase in Stockholder's ownership of the Common Shares, the parties desire to provide for certain agreements with respect to the ownership and voting by Stockholder of the Common Shares and other matters. AGREEMENT NOW, THEREFORE, in consideration of the agreements, rights, obligations and covenants contained herein and other good and valuable consideration, the sufficiency and receipt of which is hereby acknowledged, the Company and Stockholder hereby agree as follows: SECTION 1. DEFINITIONS 1.1 CERTAIN DEFINITIONS. In addition to the other terms defined in this Agreement, for purposes of this Agreement, the following terms have the following meanings: 2 (a) A Person is deemed to be an "AFFILIATE" of another Person in accordance with the term "Affiliate" as defined in Rule 12d-2 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), as in effect on the date of this Agreement. (b) A Person is deemed a "BENEFICIAL OWNER" of or to "BENEFICIALLY OWN" any Common Shares in accordance with the term "beneficial ownership" as defined in Rule 13d-3 under the Exchange Act as in effect on the date of this Agreement, and also includes Common Shares that such Person or any Affiliate of such Person has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise. (c) "CLAIM" means any action, claim, complaint, cause of action, debt, demand or suit. (d) "DEMAND REGISTRATION RIGHTS" means the right of Stockholder to have a registration statement filed by the Company and declared effective with respect to the Common Shares held by Stockholder in accordance with the provisions of Section 3.1. (e) "PERCENTAGE LIMITATION" means 25.0% of the Total Voting Power outstanding as of the date of measurement. If, on June 30, 2001, Stockholder is the beneficial owner of less than 20.0% of the Total Voting Power outstanding at that date, the Percentage Limitation for the period following that date will be reduced to the greater of (i) the Total Voting Power Beneficially Owned by Stockholder or (ii) 15.0%; provided, however, that if the percentage ownership limitations (i) that would trigger the effects of the rights issued under the New Rights Agreement (or any successor rights agreement) with respect to any third party and (ii) that are contained in the definitions of "interested stockholder" in ss.203 and Article Tenth, are hereafter modified to a number that is higher than 15.0%, the Percentage Limitation will be equal to such higher limit. (f) "REGISTRATION PERIOD" means the period commencing on the 270th day following the date of this Agreement and ending on the earlier of the termination of the Standstill Period or such time as Stockholder owns less than 10.0% of the Restricted Securities. (g) "SEC" means the Securities and Exchange Commission. (h) "SECURITIES ACT" means the Securities Act of 1933, as amended. (i) "SPECIFIED MATTERS" means: (i) mergers and consolidations in which the holders of Common Shares do not retain a majority of the outstanding voting power of the surviving corporation; (ii) any proposed liquidation of the Company or sale of all or substantially all of its assets (other than to an entity or entities in which the holders of Common Shares own the majority of votes that the holders of the surviving 2 3 corporation are entitled to vote generally in the election of directors); (iii) any amendment of the Company's certificate of incorporation that would increase the authorized number of Common Shares or shares senior to common stock, unless the amendment is solely to permit or to reflect a stock split or increase in Common Shares through a stock dividend; or (iv) any amendment of the Company's certificate of incorporation that would impose limitations on the rights of Stockholder in its capacity as a stockholder, other than those (x) agreed to by Stockholder in this Agreement or otherwise or (y) that are applicable to all stockholders equally. (j) "STANDSTILL PERIOD" means the period commencing on the date of this Agreement and ending on the fifth anniversary of the date of this Agreement. (k) "UNDERWRITER(S)" means any one or more investment banking or brokerage firms to or through whom Stockholder may offer and sell Common Shares pursuant to a transaction requiring the filing of a registration statement under the Securities Act, including one or more of such firms who manage such public offering through such Underwriters. (l) "TOTAL VOTING POWER" means the maximum number of votes that the holders of the Company's capital stock are entitled to vote generally in the election of directors. (m) "TRANSFER" means offer, sale, disposition, transfer or hypothecation of Common Shares. SECTION 2. STANDSTILL ARRANGEMENTS 2.1 ACQUISITION OF SECURITIES. (a) During the Standstill Period, Stockholder shall not, directly or indirectly, acquire any Common Shares or securities convertible, exchangeable or otherwise exercisable for Common Shares or other securities that are entitled to vote generally in the election of Directors of the Company, in each case now or hereafter outstanding (collectively, "SECURITIES," and all Securities Beneficially Owned by Stockholder being referred to herein as "RESTRICTED SECURITIES"), if the effect of the acquisition would be to increase Stockholder's aggregate Beneficial Ownership of Restricted Securities to greater than the Percentage Limitation, unless the acquisition of shares in excess of the Percentage Limitation has been approved in advance by a majority of the Company's Directors excluding any designee of the Stockholder pursuant to Section 2.11 of this Agreement. 3 4 (b) Following the Standstill Period, Stockholder shall not, directly or indirectly, acquire any Securities, if the effect of the acquisition would be to increase Stockholder's aggregate Beneficial Ownership of Restricted Securities to greater than the Percentage Limitation, unless the acquisition of shares in excess of the Percentage Limitation has been approved in advance by a majority of the Company's Directors excluding any designee of the Stockholder pursuant to Section 2.11 of this Agreement. (c) Notwithstanding the foregoing, if Stockholder inadvertently acquires a non-material amount of Securities in excess of the limitations set forth in this Section 2.1, and disposes of the excess amount of Securities within 10 days after the Stockholder becomes aware of such breach (it being deemed to have notice of the number of Securities reported by the Company as outstanding in any periodic report filed with the SEC), then no breach of this Section 2.1 will be deemed to have occurred. If any action of the Company or any of its Affiliates, including a buy back of capital stock of the Company, increases the Total Voting Power Beneficially Owned by Stockholder above 25.0% of the Total Voting Power outstanding at the time of measurement, Stockholder shall be deemed to own no more than the Percentage Limitation applicable at such time and shall not be required to dispose of any of its Restricted Securities. 2.2 VOTING. Commencing on the date of this Agreement and through the Company's annual meeting of stockholders for and during 2001, Stockholder shall take such action as may be required so that all Common Shares that Stockholder Beneficially Owns and that are entitled to vote are voted (or in the case of action by written consent, consents are given with respect to such shares): (a) FOR the election of the slate of nominees for election to the Board of Directors of the Company (the "BOARD") selected by a majority of the members of the Board (the "DIRECTORS"); and (b) except with respect to Specified Matters, FOR the approval of all matters recommended by a majority of the Directors, if any recommendation is made. Notwithstanding the foregoing, Stockholder shall not be under any limitation regarding the voting of the Common Shares that Stockholder Beneficially Owns if the Company fails to fulfill its obligations under this Agreement. 2.3 VOTING TRUST OR ARRANGEMENT. During the Standstill Period, Stockholder shall not deposit any Restricted Securities in a voting trust or subject any Restricted Securities to any arrangement or agreement with respect to the voting of such Restricted Securities. 2.4 QUORUM. During the Standstill Period, Stockholder, as holder of Restricted Securities, shall be present, in person or by proxy, at any meeting of stockholders of the Company so that all Restricted Securities may be counted for the purpose of determining the existence of a quorum at such meeting. 2.5 PROXY SOLICITATIONS. During the Standstill Period, without the express prior written approval of the Company, Stockholder shall not: 4 5 (a) solicit proxies or initiate, propose or become a "participant" in a "solicitation" (as such terms are defined in Regulation 14A under the Exchange Act), in opposition to any matter that has been recommended by a majority of the Directors or seek to advise, encourage or influence any individual, firm, corporation, partnership or other entity (a "PERSON") with respect to the voting of or giving of consent with respect to Securities in such manner, or induce or attempt to induce any Person to initiate any stockholder proposal. Notwithstanding the foregoing, and except for any matter governed by Section 2.2 of this Agreement, Stockholder has the right to solicit proxies, propose or become a "participant" in a "solicitation" (as such terms are defined in Regulation 14A under the Exchange Act) in opposition to the solicitation by any third party on any matter (an "OPPOSITION SOLICITATION"); (b) execute any written consent in lieu of a meeting of holders of the Common Shares except a written consent solicited by or on behalf of the Board; or (c) induce any other Person to initiate, propose or become a "participant" in a "solicitation" in opposition to any matter that has been recommended by a majority of the Directors or in support of any stockholder proposal relating to the Company, as described in Rule 14a-8 under the Exchange Act. 2.6 STOCKHOLDER MEETINGS. During the Standstill Period, without the express prior written approval of the Company, Stockholder shall not call or seek to have called, or assist, directly or indirectly, any other Person in calling or seeking to call, any special meeting of Stockholders of the Company for any reason. 2.7 STOCKHOLDER LISTS. During the Standstill Period, without the express prior written approval of the Company or in connection with an Opposition Solicitation, Stockholder shall not seek, request to obtain, or assist, directly or indirectly, any other Person in seeking, requesting or obtaining, any list of security holders of the Company. 2.8 GROUP PARTICIPATION. During the Standstill Period, without the express prior written approval of the Company, Stockholder shall not join a partnership, limited partnership, syndicate or other group, or otherwise act in concert with any Person (other than an Affiliate of Stockholder), for the purpose of acquiring, holding, voting or, except as contemplated pursuant to this Agreement, disposing of Restricted Securities. 2.9 SOLICITATIONS OF OFFERS. During the Standstill Period, without the express prior written approval of the Company, Stockholder shall not, and shall cause its directors, officers, employees, agents (including investment bankers), partners and Affiliates not to, directly or indirectly, engage in negotiations with, provide any information to, induce or attempt to induce or give encouragement to, any Person (other than to the Company's chief executive officer or, with respect to the Director designated by Stockholder pursuant to Section 2.11 of this Agreement, pursuant to that Director's fiduciary duties to the Company), in furtherance of any change in control of the Company (whether pursuant to a tender or exchange offer, a stock or asset sale or a merger, consolidation, amalgamation, plan of arrangement or any other form of transaction) or for any sale of any assets of the Company (other than where there is a shared ownership by Stockholder and the Company or its subsidiaries of the assets or of the entity, other than the Company or any of its subsidiaries, that owns the assets), or any other transaction that would be inconsistent with or frustrate the purpose of this Agreement. 5 6 2.10 LEGENDS AND STOP TRANSFER ORDERS. (a) Stockholder shall cause the certificate or other instrument representing Restricted Securities to have the following legend: The securities represented by this certificate are subject to the provisions of the Standstill Agreement, dated as of November 22, 1999, a copy of which is on file at the office of the Secretary of Cole National Corporation. (b) Stockholder agrees to the entry of stop transfer orders with the transfer agent (or agents) and the registrar (or registrars) of the Company against the Transfer other than in compliance with the requirements of this Agreement or legended securities of which Stockholder from time to time is the Beneficial Owner. (c) The Company agrees to the removal of the legend required by Section 2.10(a) and the stop transfer orders in Section 2.10(b) on expiration of the Standstill Period or upon notice of a Transfer permitted pursuant to this Agreement to a Person that is not an Affiliate of Stockholder. 2.11 DIRECTOR NOMINEES. (a) If, prior to June 30, 2001, Stockholder acquires 20.0% or more of the Total Voting Power outstanding at the date of acquisition, then, until the earlier of (i) the expiration of the Standstill Period, and (ii) the date on which Stockholder owns less than 10.0% of the Total Voting Power, Stockholder may deliver to Company a notice stating that it desires to implement this Section 2.11 and designating one person (who either will be (x) Iain Watson or (y) any other person designated by Stockholder and approved by a majority of the Directors, which approval may not be unreasonably withheld) as a nominee for election to the Board. Promptly after receiving the foregoing notice from Stockholder, the Company shall cause (A) the total number of members of the Board to be increased by one member over the number authorized as of the date of such notice, and (B) the vacancy so created to be filled with the Stockholder's designee. Thereafter, with respect to each annual meeting of stockholders of the Company until the earlier of (i) the expiration of the Standstill Period, and (ii) the date on which Stockholder owns less than 10.0% of the Total Voting Power, Company shall use its best efforts to cause its Directors to solicit proxies for, and recommend that the Company's stockholders vote in favor of, the Stockholder's designee. (b) If during the Standstill Period a designee of Stockholder ceases to be a Director for any reason other than expiration of the designee's term, the Company shall promptly, upon the request of Stockholder, use its reasonable best efforts to cause the election or appointment of a person selected by Stockholder (who will be any person approved by a majority of the Directors, which approval may not be unreasonably withheld) to replace such designee. The right to designate a Director pursuant to this Section 2.11 is personal to Stockholder and may not be transferred in any manner except to a wholly owned Affiliate of Stockholder. (c) Prior to the Company's Annual General Meeting of Stockholders in 2000, the Company shall cause the size of the Board to be increased as necessary to give effect to the rights of Stockholder under Section 2.11(a), and decreased, at the Company's discretion, at 6 7 such time(s) as Stockholder's Beneficial Ownership falls below 10.0% of the Total Voting Power. (d) Upon expiration of the Standstill Period or the date on which Stockholder Beneficially Owns less than 10.0% of the Total Voting Power, Stockholder shall cause its designee as Director immediately to resign from the Board. 2.12 REPORTS. Stockholder shall promptly provide to the Company copies of any reports or schedules filed by Stockholder with the SEC pursuant to Regulation 13D-G (or any successor provision) promulgated under the Exchange Act within one business day of filing. 2.13 [INTENTIONALLY OMITTED] 2.14 CONTROL. Except as otherwise required by law, during the Standstill Period Stockholder shall not, without the prior written consent of the chief executive officer or majority of independent Directors of the Company, (a) make any public announcement with respect to, or submit any proposal for, the acquisition of Beneficial Ownership of any Securities if the effect of such acquisition would be to cause the Beneficial Ownership of Stockholder to exceed the Percentage Limitation, or for or with respect to any extraordinary transaction or merger, consolidation, sale of substantial assets or business combination involving the Company or any of its Affiliates, whether or not any Persons other than Stockholder are involved and whether or not such proposal might require the making of a public announcement by the Company, (b) propose any individual for election to the Board other than as permitted by Section 2.11, (c) seek the removal of any Director other than the Director designated by Stockholder pursuant to Section 2.11, or (d) otherwise seek to control the management or policies of the Company or any of its Affiliates, including, without limitation, taking any action to seek to obtain representation on the Board or the board of directors of any Affiliate of the Company other than as permitted by Section 2.11. 2.15 COMMUNICATIONS. (a) Regardless of any dispute that may arise in the future between Stockholder and the Company, Stockholder shall not, and shall cause its Affiliates not to, during the Standstill Period, (i) disparage or criticize the Company or its Affiliates, or their respective current or former officers, directors or employees, to competitors, current employees, vendors, customers or any other Person or (ii) make or solicit any comments, statements or the like to the media or to others that may be considered derogatory or detrimental to the good name or business reputation of the Company or any of the aforementioned individuals; provided, however, that the foregoing does not limit Stockholder from responding to legal process or governmental inquiry or otherwise complying with applicable laws or regulations. (b) Regardless of any dispute that may arise in the future between Stockholder and the Company, Company shall not, and shall cause its Affiliates not to, during the Standstill Period, (i) disparage or criticize the Stockholder or its Affiliates, or their respective current or former officers, directors or employees, to competitors, current employees, vendors, customers or any other Person or (ii) make or solicit any comments, statements or the like to the media or to others that may be considered derogatory or detrimental to the good name or business reputation of Stockholder or any of the aforementioned individuals; provided, however, that the foregoing does not limit the Company from responding to legal process or governmental inquiry or otherwise complying with applicable laws or regulations. 7 8 2.16 LITIGATION. During the Standstill Period, Stockholder shall not institute, prosecute or pursue against the Company (or any of its officers, Directors, representatives, trustees, employees, attorneys, advisors, agents, Affiliates or associates) (a) any Claim with respect to any action hereafter approved by a majority of the Directors that is only properly assertable derivatively in the right of the Company or (b) any Claim on behalf of a class of the Company's security holders; provided, however, that the foregoing does not limit the Company or Stockholder from enforcing this Agreement or from pursuing Claims not relating to or arising under this Agreement. 2.17 [INTENTIONALLY OMITTED] 2.18 RIGHT OF FIRST OFFER. During the Standstill Period Stockholder shall not Transfer, whether in one or in more than one transaction, Restricted Securities that constitute 10.0% or more of the Company's Total Voting Power to a single purchaser or to purchasers who are Affiliates of one another or who are part of a group (a "THIRD PARTY PURCHASER"), unless it first follows the practice set forth in this Section 2.18: (a) Prior to making any offer to Transfer to a Third Party Purchaser, Restricted Securities that constitute 10.0% or more of the Company's Total Voting Power, Stockholder shall first offer such Restricted Securities to the Company by sending written notice (a "BID REQUEST NOTICE") to the Company that states the number of Restricted Securities proposed to be sold (the OFFERED SECURITIES"). (b) For a period of 30 business days following the delivery of the Bid Request Notice, the Company will have the right to offer to purchase the Offered Securities at a price per share that the Company communicates to Stockholder in a written notice (the "OFFER NOTICE"). The Company's offer will be irrevocable for 10 business days after its delivery to Stockholder. The failure of the Company to respond to a Bid Request Notice within the 30 business day period will be deemed to be a waiver by the Company of any right to purchase the Offered Securities. (c) For a period of 10 business days after the delivery of the Offer Notice, Stockholder may accept the Company's offer and sell the Offered Securities to the Company. Stockholder's acceptance of the offer must be in writing and delivered to the Company on or before the tenth business day following receipt of the Offer Notice. (d) Stockholder's acceptance of the Company's offer will be irrevocable. The closing of the sale will take place no later than 10 business days following Stockholder's acceptance. The Company shall pay for the Restricted Securities in cash by wire transfer to an account specified by Stockholder in writing and Stockholder shall deliver certificates representing the Offered Securities. Stockholder shall make representations and warranties to the Company that Stockholder owns the Offered Securities, free and clear of any liens, encumbrances or restrictions, and that Stockholder has full power and authority to deliver the Offered Securities to the Company. (e) If the Company delivers an Offer Notice to Stockholder within the period specified in Section 2.18(b), and Stockholder does not accept the Company's offer, then 8 9 for a period of 120 days following the date of the Offer Notice, Stockholder may sell all, but not less than all, of the Offered Securities to a Third Party Purchaser at a price that is at least 105% of the price set forth in the Company's Offer Notice. If the Company does not deliver an Offer Notice within the period specified in Section 2.18(b), then for a period of 150 days following the date of the Bid Request Notice, Stockholder may sell all, but not less than all, of the Offered Securities to a Third Party Purchaser. If the Offered Securities have not been sold within such 120-day period (as extended, if necessary, pursuant to the preceding sentence), then Stockholder has no right to sell any Offered Securities unless it provides the Company with a new Offer pursuant to clause (a) of this Section 2.18. (f) Unless Stockholder has accepted the Company's offer to purchase the Offered Securities, Stockholder may Transfer the Offered Securities at any price to any Third Party Purchaser so long as the aggregate amount of Restricted Securities Transferred to the Third Party Purchaser is less than 10.0% of the Total Voting Power outstanding at the time of each Transfer. (g) The Company may assign its rights under this Section 2.18 to other persons who will then be entitled to purchase such securities. SECTION 3. REGISTRATION RIGHTS 3.1 DEMAND REGISTRATION RIGHTS. (a) At any time during the Registration Period, Stockholder may deliver to the Company a written request (a "DEMAND REGISTRATION REQUEST") that the Company register any or all of the Restricted Securities. The Company shall, as soon as practicable following the Demand Registration Request, prepare and file a registration statement (on a then appropriate form) with the SEC under the Securities Act, covering such number of the Restricted Securities as Stockholder requests to be included in such registration statement and to take all necessary steps to have such Restricted Securities qualified for sale under state securities or blue sky laws. The Company shall use its commercially reasonable efforts to have such registration statement declared effective by the SEC (within the meaning of the Securities Act) as soon as practicable thereafter and shall take all necessary action (including, if required, the filing of any supplements or post-effective amendments to such registration statement) to keep such registration statement effective to permit the lawful sale of such Restricted Securities included thereunder for a period of 90 days, subject, however, to the further terms and conditions set forth in Sections 3.1(b) through (e) and Section 3.2 through 3.7. (b) If the Company is eligible to register the Stockholder's Restricted Securities for resale on a Form S-3 Registration, or any successor short-form registration statement, Stockholder may exercise the Demand Registration Rights more than one time, but cannot request registration for less than 5% of the Total Voting Power outstanding at the time the request is made. If the Company is not eligible to register the Stockholder's Restricted Securities for resale on a Form S-3 Registration Statement, or any successor short-form registration statement, Stockholder may exercise the Demand Registration Rights only one time on a Form S-1 Registration Statement (or successor form), and cannot request registration for less than 5% of the Total Voting Power outstanding at the time the request is made. 9 10 (c) If preparation of a registration statement is commenced by the Company in response to the exercise by Stockholder of the Demand Registration Right, but that registration statement is not filed with the SEC at the instance or request of the Company for any reason, Stockholder will not be deemed to have exercised the Demand Registration Right. (d) If any registration statement filed by the Company with the SEC pursuant to the provisions of this Section 3.1 is withdrawn prior to the completion of the sale or other disposition of the Restricted Securities included thereunder, then the following provisions, whichever applicable, will govern: (i) If the withdrawal is effected at the instance or upon the request of the Company for any reason other than the failure of Stockholder to comply with its obligations hereunder with respect to such registration, then the filing thereof by the Company will be excluded in determining whether Stockholder has exercised any of its Demand Registration Rights hereunder with respect to the filing of such registration statement. (ii) If the withdrawal is effected at the instance or upon the request of Stockholder, then the filing thereof by the Company will be deemed an exercise of the Demand Registration Right with respect to the filing of such registration statement. (e) The Company may delay the filing of any registration statement, delay the effectiveness of any registration statement once filed, or suspend the use of a prospectus forming a part of a registration statement, for up to 90 days if the Company determines that it is in possession of material non-public information the disclosure of which would, in the reasonable judgment of the Company, have a material adverse effect on a pending acquisition, disposition or financing transaction that is material to the Company or would provide premature disclosure of information not otherwise required to have been disclosed. The Company will not be required to maintain the effectiveness of any Registration Statement on Form S-1 (or any successor form) for more than 180 days. The Company shall provide notice to the Stockholder of any delay or suspension, or termination of effectiveness under this Section 3.1(e). 3.2 EXPENSES. Unless otherwise required by law, rule or regulations, Stockholder shall bear and pay all fees, costs and expenses incident to registration statements filed pursuant to Section 3.1 and incident to keeping them effective and in compliance with all federal and state securities laws, rules and regulations (including, without limitation, registration fees, blue sky qualification fees and expenses, exchange listing fees and expenses, reasonable legal fees and expenses (including the reasonable legal fees and expenses of one law firm selected by Company and for all fees and expenses of counsel to Stockholder), printing costs, costs of any special audits or accounting fees), as well as underwriting discounts and commissions with respect to its Restricted Securities included therein. Notwithstanding the foregoing, the Company shall be responsible for its own legal fees and expenses, the cost of obtaining its independent accountant's consent, and the costs of preparing and filing the first two registration statements pursuant to Demand Registration Rights, if the prospectus contained in the registration statements are "non-marketing prospectuses;" that is, containing information required by SEC rules but not lengthy business descriptions. A prospectus will be deemed to be a "non-marketing prospectus" if it is of fewer than 10 pages in length. In addition, if the Company is not eligible to register the Stockholder's Restricted Securities for resale on a Form S-3 Registration Statement because the Company, through its own actions or omissions, fails to 10 11 meet the "Registrant Requirements" set forth in General Instructions I.A of current Form S-3 (or equivalent provisions of any successor form, but excluding limitations based on market capitalization or similar concepts), the Company shall be responsible for its own legal fees and expenses, the cost of obtaining its independent accountant's consent, and the costs of preparing and filing one registration statements on Form S-1 or any successor form, regardless of the length of the prospectus. Stockholder has the right to select the Underwriter and selling agents, subject to the Company's approval (which may not be unreasonably withheld), in connection with registration relating to the exercise of its Demand Registration Rights. 3.3 INFORMATION TO BE FURNISHED. If any of the Restricted Securities are to be included in a registration statement under Section 3.1, Stockholder and the Company shall furnish the following information and documents: (a) Stockholder shall furnish to the Company all information required by the Securities Act to be furnished by sellers of securities for inclusion in the registration statement, together with all such information that Stockholder has or can reasonably obtain and that may reasonably be required by the Company in order to have such registration statement become effective and such Restricted Securities qualified for sale under applicable state securities laws. (b) The Company shall make reasonably available for inspection by Stockholder or by any Underwriter, attorney or other agent of any Stockholder or Underwriter all information reasonably requested by such Persons. (c) The Company shall use its reasonable best efforts to obtain, at Stockholder's expense except as provided in Section 3.2, all legal opinions, auditors' consents, comfort letters and expert cooperation necessary or deemed desirable by Stockholder to complete the registration process. 3.4 REGISTRATION TO BE KEPT EFFECTIVE. In connection with any registration of the Restricted Securities pursuant to this Agreement, the Company shall, at Stockholder's expense, (a) keep effective and maintain such registration and any related qualifications of the Restricted Securities under state securities laws for such period as may be necessary for Stockholder, the Underwriters and selling agents to dispose of such shares, from time to time to amend or supplement the prospectus used in connection therewith to the extent necessary to comply with applicable laws, and (b) furnish to Stockholder such number of copies of the registration statement, the prospectus constituting a part thereof, and any amendment or supplement thereto as Stockholder requests in order to facilitate the disposition of the registered Restricted Securities. 3.5 CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligations of the Company to cause the Restricted Securities owned by Stockholder to be registered under the Securities Act are subject to each of the following limitations, conditions and qualifications: (a) The Company may require, as a condition to fulfilling its obligations to register the Restricted Securities under Section 3.1, that Stockholder execute reasonable and customary indemnification agreements for the benefit of the Underwriters of the registration; PROVIDED, HOWEVER, that a Stockholder may not be required as such a condition to indemnify the 11 12 Underwriters except with respect to information furnished by Stockholder for use in such registration statement. (b) The Company will not be required to fulfill any registration obligations under this Agreement if the Company provides Stockholder with an opinion of counsel reasonably acceptable to Stockholder stating that Stockholder is free to sell in the manner proposed by it the Restricted Securities that Stockholder desires to register without registering such Restricted Securities. 3.6 REGISTRATION UNDER STATE SECURITIES LAWS. The Company shall use its best efforts, at Stockholder's expense, to register or qualify any Restricted Securities included in a registration statement pursuant to Section 3.1 under state "blue sky" or similar securities laws in such jurisdictions as Stockholder reasonably requests and to take such other action as may be reasonably necessary to enable Stockholder to sell its Restricted Securities in the jurisdiction where such registration or qualification was made, PROVIDED, however, that the Company will not be required to qualify to do business in any jurisdiction in which it is not so qualified or to execute a general consent to service of process in any jurisdiction in which it has not executed such a consent. 3.7 RULE 144. The Company shall file any and all reports required to be filed by it under the Exchange Act and the rules and regulations adopted by the SEC thereunder, and shall take such further action as Stockholder may request, all to the extent required from time to time to enable Stockholder to sell the Restricted Securities without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 under the Securities Act, as such rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the SEC. 12 13 SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to Stockholder as follows: 4.1 CORPORATE EXISTENCE, DUE AUTHORIZATION AND EXECUTION OF THE COMPANY. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, with full corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder, and to consummate the transactions contemplated hereby. This Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action of the Company. This Agreement has been duly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. 4.2 NO CONFLICTS. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby does not conflict with, or result in any violation of or default under, any provision of the Certificate of Incorporation or Bylaws of the Company. SECTION 5. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER Stockholder represents and warrants to the Company as follows: 5.1 CORPORATE EXISTENCE, DUE AUTHORIZATION AND EXECUTION OF STOCKHOLDER. Stockholder is a company duly formed, validly existing, and in good standing under the laws of The Netherlands, with full power and authority to execute and deliver this Agreement, to perform its obligations hereunder, and to consummate the transactions contemplated hereby. This Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action of Stockholder. This Agreement has been duly executed and delivered by Stockholder and constitutes a legal, valid and binding obligation of Stockholder, enforceable against Stockholder in accordance with its terms. 5.2 NO CONFLICTS. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby does not conflict with, or result in any violation of or default under, any provision of the charter documents of Stockholder or of any agreement or instrument binding upon Stockholder. 5.3 OWNERSHIP OF COMMON SHARES. As of the date of this Agreement (a) Stockholder Beneficially Owns 2,102,100 Common Shares and (b) neither Stockholder nor any Affiliate of Stockholder Beneficially Owns any other Securities. 13 14 SECTION 6. OPTICAL INDUSTRY 6.1 NON-COMPETITION BY STOCKHOLDER. Commencing November 15, 2001, if and for so long as Stockholder has a right to designate a person to be a Director of the Company pursuant to Section 2.11 of this Agreement, Stockholder shall not, directly or indirectly through franchisees or otherwise, engage in the ownership, operation or management of retail stores offering eye care products in North America or the Carribean other than through the participation by Stockholder in the Company or the Company's Affiliates. 6.2 NO CHANGE TO EXISTING NON-COMPETITION AGREEMENTS. Nothing in this Agreement modifies or otherwise affects the existing covenants not-to-compete contained in Article 6 of the Purchase Agreement dated as of 24 September, 1996 between the Company and HAL Investments B.V. SECTION 7. MISCELLANEOUS 7.1 SPECIFIC ENFORCEMENT. The parties acknowledge and agree that the Company or Stockholder would be irreparably damaged in the event any provision of this Agreement were not performed in accordance with its specific terms or were otherwise breached. It is accordingly agreed that the Company or Stockholder will be entitled to an injunction or injunctions to prevent breaches of this Agreement and to specifically enforce this Agreement and the terms and provisions thereof in any action instituted in any court of the United States or any state thereof having subject matter jurisdiction, in addition to any other remedy to which the Company or Stockholder may be entitled, at law or in equity. 7.2 MODIFICATION; WAIVER. (a) This Agreement may be modified in any manner and at any time by written instrument executed by Stockholder and the Company and (b) any of the terms, covenants, and conditions of this Agreement may be waived at any time by the party entitled to the benefit of such term, covenant or condition. 7.3 NOTICES. All notices, requests, demands, claims, and other communications hereunder must be in writing and be delivered by certified or registered mail (first class postage pre-paid), guaranteed overnight delivery or facsimile transmission: (a) if to the Company to: Cole National Corporation 5915 Landerbrook Drive Mayfield Heights, Ohio 44124 ATTENTION: Chief Executive Officer facsimile: 440-461-3489 14 15 with a copy to: Jones, Day, Reavis & Pogue 901 Lakeside Avenue Cleveland, Ohio 44114 ATTENTION: David P. Porter facsimile: 216-579-0212 (b) if to Stockholder to: HAL International N.V. 5 Avenue des Citronniers MC 98000 Monaco ATTENTION: Arie van't Hof facsimile: 011-377-93255434 with a copy to: HAL Investments Inc. 535 Cowper Street Suite 300 Palo Alto, California 94301 ATTENTION: Iain Watson facsimile: 650-326-5064 and a copy to: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, New York 10019 ATTENTION: Matthew Nimetz facsimile: 212-757-3990 (c) or, in each case, at such other address or to such other Person as may be specified in writing to the other party. Any notice given by mail or guaranteed overnight delivery will be deemed delivered, if sent in accordance with this Section 7.3, five business days after the date of mailing, one business day after the date sent by guaranteed overnight delivery, and immediately after a notice is given by facsimile if an appropriate confirming receipt is received. 7.4 PARTIES IN INTEREST; ASSIGNMENT. This Agreement and all the provisions hereof are binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, but, except as otherwise provided for in this Agreement, neither this Agreement nor any of the rights, interests and obligations hereunder may be assigned by any party hereto without the prior written consent of the other parties hereto. Nothing in this 15 16 Agreement, whether expressed or implied, is to be construed to give any Person other than the parties hereto any legal or equitable right, remedy or claim under or in respect of this Agreement. 7.5 COUNTERPARTS. This Agreement may be executed in one or more counterparts, all of which constitute one and the same instrument. 7.6 HEADINGS; REFERENCES. The article and section headings of this Agreement are for convenience of reference only and are not to be deemed to alter or affect the meaning or interpretation of any provisions hereof. Unless otherwise specified, references to "Articles", "Sections" and "Schedules" are to Articles and Sections of, and Schedules to, this Agreement. 7.7 GOVERNING LAW; JURISDICTION; VENUE. This Agreement is to be governed by and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and to be performed therein, without regard to the conflicts of laws rules of such state. The parties agree that the state and federal courts located in Cuyahoga County, Ohio, being the county in which the Company currently has its principal headquarters, will have exclusive jurisdiction in any action, suit or proceeding based on or arising out of this Agreement and the parties hereby: (a) submit to the personal jurisdiction of such courts; (b) consent to service of process in connection with any action, suit or proceeding based on or arising out of this Agreement; and (c) waive any requirement (whether imposed by statute, rule of court or otherwise) with respect to personal jurisdiction, venue or service of process. 7.8 SEVERABILITY. If one or more of the provisions of this Agreement are held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions of this Agreement will remain in full force and effect. 7.9 TERMINATION. If at June 30, 2001, Stockholder Beneficially Owns less than 20.0% of the Total Voting Power and thereafter Stockholder's Beneficial Ownership drops to less than 15.0% of the Total Voting Power, Sections 2, 3 and 6 of this Agreement will terminate and cease to be of any further force or effect. Thereafter, Stockholder shall not purchase Securities in excess of 15.0% of the Total Voting Power; provided, however, that if the percentage ownership limitations (i) that would trigger the effects of the rights issued under the New Rights Agreement (or any successor rights agreement) with respect to any third party and (ii) that are contained in the definitions of "interested stockholder" in ss.203 and Article Tenth, are hereafter modified to a number that is higher than 15.0%, the 15.0% limitation will increase to such higher limit. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 16 17 IN WITNESS WHEREOF, the Company and Stockholder have caused their duly authorized representatives to execute this Agreement as of the date first above written. COLE NATIONAL CORPORATION By: /s/ Jeffrey A. Cole --------------------------------- Name: Jeffrey A. Cole Title: Chairman HAL INTERNATIONAL N.V. By: /s/ M. Van Der Vorm --------------------------------- Name: M. Van Der Vorm Title: Managing Director EX-10.57 10 EXHIBIT 10.57 1 Exhibit 10.57 December 22, 1999 Cole National Corporation 5915 Landerbrook Drive, Suite 300 Mayfield Heights, Ohio 44124 Gentlemen: In consideration of my employment as Vice President/Controller for Cole National Corporation and the benefits I derive from Paragraph L hereof (but without thereby creating any fixed or contractual employment term, understanding that my employment can be terminated, with or without cause and with or without notice, at any time at the option of either the Company or me), I hereby agree with the Company (for purposes of this letter agreement, the "Company" shall mean Cole Vision Corporation or any of its present or future parent, subsidiary or indirect subsidiary or affiliated entities by which I am employed or on behalf of which I provide services) as follows: A. During the term of my employment I will not compete, directly or indirectly, with the Company. In accordance with this restriction, but without limiting its terms, I will not: (1) enter into or engage in any business which competes with the business of the Company; or (2) solicit customers, business, patronage, or orders for, or sell, any product or products in competition with, or for any business that competes with, the business of the Company; or (3) divert, entice, or take away any customers, business, patronage or orders of the Company or attempt to do so; or (4) promote or assist, financially or otherwise, any person, firm, association or corporation or any other entity engaged in any business which competes with the business of the Company. B. For a period of twelve (12) months following termination of my employment with the Company, I will not enter into or engage in any business that competes with the Company's business. C. For a period of twelve (12) months following termination of my employment with the Company, I will not solicit customers, business, patronage, or orders for, or sell any product(s) in competition with the Company's business. D. For a period of twelve (12) months following termination of my employment with the Company, I will not divert, entice, or otherwise take away any customers, business, patronage, or orders of the Company, or attempt to do so. E. For a period of twelve (12) months following termination of my employment with the Company, I will not promote or assist financially or otherwise, any person, firm, association, partnership, corporation, or any other entity engaged in any business which competes with the Company's business. F. For the purposes of Paragraphs A through E, inclusive, I understand that I will be competing if I engage in any or all of the activities set forth therein directly as an individual on my own account, or indirectly as a partner, joint venturer, employee, agent, salesman, consultant, officer and/or 2 Cole National Corporation Page 2 December 22, 1999 director of any firm, association, corporation, or other entity, or as a stockholder of any corporation in which I own, directly or indirectly, individually or in the aggregate, more than one percent (1%) of the outstanding stock. G. For the purposes of Paragraphs B through E, inclusive, the Company's business is defined as the manufacture, production, sale, marketing and/or distribution of any product(s) and/or the rendering of any service(s) that are the same as or similar to those manufactured, produced, sold, marketed, distributed and/or rendered, as of the date of my termination, by the Company. H. I understand that the activities set forth in Paragraphs B through E, inclusive, shall be prohibited only within the United States, Canada and Puerto Rico or such lesser geographic area as to which or for which I was assigned or had responsibility at the time of my termination or at any time during the twelve (12) month period immediately preceding my termination. I. If it shall be judicially determined that I have violated any of my obligations under Paragraphs B through E, inclusive, then the period applicable to the obligation which I shall have been determined to have violated shall automatically be extended by a period of time equal in length to the period during which said violation(s) occurred. J. I also agree that I will not directly or indirectly at any time solicit or induce or attempt to solicit or induce any employee(s) or any sales representative(s), agent(s) or consultant(s) of the Company or any of its parent, subsidiary or affiliate entities to terminate their employment, representation or other association with the Company or such entity. K. During the period of my employment and at any time thereafter, I will not disclose, furnish, disseminate, make available or, except in the ordinary course of performing my duties on behalf of the Company, use any trade secrets or confidential business and technical information of the Company, or its parent, subsidiaries or affiliated entities or its customers, without limitation as to when it was acquired by me or whether it was compiled or obtained by, or furnished to me while I was employed by the Company. Such trade secrets and confidential business and technical information are considered to include, without limitation, the vision care plans, vendor lists, vendor terms and programs, merchandise costs, financial statistics, research data, or any other statistics and plans contained in monthly and annual review books, profit plans, capital plans, critical issues plans, strategic plans, or merchandising, marketing, real estate, or store operations plans. I specifically acknowledge that all such information, whether reduced to writing or maintained in my mind or memory and whether compiled by the Company and/or me derives independent economic value from not being readily known to or ascertainable by proper means by others who can obtain economic value from its disclosure or use, that reasonable efforts have been put forth by the Company to maintain the secrecy of such information, that such information is and will remain the sole property of the Company and that any retention and use of such information during or after the termination of my relationship with the Company (except in the course of performing my duties) shall constitute a misappropriation of the Company's trade secrets; provided, however, that this restriction shall not apply to information which is in the public domain or otherwise made public by others through no fault of mine. L. It is further understood and agreed that in the event my employment with the Company should be terminated by the Company without cause ("cause" for this purpose means gross neglect of duty, material breach of this Agreement, dishonesty, disloyalty, the inability to discharge my duties due to alcohol or drug addiction, or other misconduct inimicable to the best interests of the Company), I will receive, in full and complete settlement of any claims for compensation which I may have, a continuation of my annual base salary, in effect at the time of the termination of my employment, for a period of up to twelve (12) months immediately following such termination, payable in accordance with the Company's payroll schedule; provided, however, that in the event I obtain employment, any consulting assignments or any self-employment during said twelve (12) month period (and upon obtaining such employment or assignments I will promptly notify the Company of same), the payment of any unpaid balance hereunder, effective as of the date of such new employment, shall be: 3 Cole National Corporation Page 3 December 22, 1999 (1) canceled if the annual base salary of my new employment equals or exceeds my annual base salary at the Company at the time of my termination; or (2) reduced to the amount by which my annual base salary at the Company at the time of my termination exceeds the annual base salary of my new employment prorated on the basis of the time remaining in said twelve (12) month period; or (3) reduced by any amounts otherwise payable pursuant to subparagraphs (i) or (ii) above by any consulting and self-employment income earned or paid to me during such periods. As used herein, "annual base salary of my new employment" shall equal the greater of (x) the actual annual base salary of my new employment or (y) the average annual base salary payable to persons holding comparable positions as I then do with my new employer with businesses comparable to my then-new employer. It is the intent of this Paragraph L that I will be assured of the payment of an amount at least equal to my annual base salary at the time of my termination at the Company for a period of twelve (12) months following such termination, whether through payments from the Company, my new employer, or as consulting or self-employment income or a combination of payments from the Company, my new employer and consulting and self-employment income. I further agree to use my best efforts to obtain suitable employment following such termination. In no event, however, upon the termination of my employment by the Company, without cause, shall I receive less than the amount of money which is payable, if any, in accordance with the Company's severance pay policy in effect at the time of my termination. M. I expressly agree and understand that the remedy at law for any breach by me of this Agreement will be inadequate and that the damages flowing from such breach are not readily susceptible to being measured in monetary terms. Accordingly, it is acknowledged that upon my violation of any provision of this Agreement, the Company shall be entitled to immediate injunctive relief and may obtain a temporary order restraining any threatened or further breach without the necessity of proof of actual damage. Nothing in this Agreement shall be deemed to limit the Company's remedies at law or in equity for any breach by me of any of the provisions of this Agreement which may be pursued or availed of by the Company. N. This Agreement is not assignable by either party without the prior written consent of the other except that the Company may assign it without such consent to any parent, subsidiary or affiliated entity, and upon such entity's assumption of the Company's duties and obligations hereunder, such entity shall succeed to each of the Company's rights hereunder. Upon such assignment and assumption, I agree to and will become an employee of such entity, and all references to the Company in this Agreement shall, as the context requires, be deemed to be to the entity to which such assignment, assumption and employment relate. O. No modification, waiver, amendment or addition to any of the terms of this Agreement shall be effective, except as set forth in a writing signed by me and the Company. The failure of the Company to enforce any provision of this Agreement shall not be construed to be a waiver of such provision or of the right of the Company thereafter to enforce each and every provision. P. This Agreement and any amendments thereto shall become effective on the date of acceptance by the Company and shall be governed by, and construed in accordance with, the internal, substantive laws of the State of Ohio. I agree that the state and federal courts located in the State of Ohio shall have jurisdiction in any action, suit or proceeding against me arising out of this Agreement and I hereby: (a) submit to the personal jurisdiction of such courts; (b) consent to service of process in connection with 4 Cole National Corporation Page 4 December 22, 1999 any action, suit or proceeding against me; and (c) waive any other requirement (whether imposed by statute, rule of court or otherwise) with respect to personal jurisdiction, venue or service of process. Q. This Agreement supersedes the provisions of each and every other agreement or understanding, whether oral or written, between the undersigned and the Company relating to the subject matter contained herein, and any such agreement or understanding shall be of no further force and effect. The provisions of this Agreement are severable and if any one or more provisions may be determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions and any partially unenforceable provision, to the extent enforceable in any jurisdiction, shall, nevertheless, be binding and enforceable. The parties hereto agree that when fully executed, the foregoing shall constitute a legally enforceable Agreement between us, which also shall inure to the benefit of the Company's successors and assigns. Finally, I represent that prior to signing this Agreement, I have read, fully understand and voluntarily agree to the terms and conditions as stated above, that I was not coerced to sign this Agreement, that I was not under duress at the time I signed this Agreement and that, prior to signing this Agreement, I had adequate time to consider entering into this Agreement, including without limitation, the opportunity to discuss the terms and conditions of this Agreement, as well as its legal consequences, with an attorney of my choice. Very truly yours, By: /s/ William P. Lahiff, Jr. ------------------------------- William P. Lahiff, Jr. Acknowledged and agreed to as of this 3 day of January, 2000 COLE NATIONAL CORPORATION By: /s/ Leslie D. Dunn ------------------------------------ Leslie D. Dunn Senior Vice President EX-10.58 11 EXHIBIT 10.58 1 Exhibit 10.58 December 15, 1999 Mr. William P. Lahiff, Jr. 9973 Royal Valley Drive North Royalton, OH 44133 Dear Bill: We are pleased to offer you the opportunity to become VICE PRESIDENT, CONTROLLER for Cole National Corporation, reporting to the CFO. The following highlights the terms and conditions of our offer. Full details of the benefit programs are provided in a separate mailing. 1. EFFECTIVE DATE: December 30, 1999. 2. SALARY: Your initial salary will be $150,000 payable in accordance with the bi-weekly payroll schedule. 3. OPERATING BONUS: You will participate in a Management Incentive Plan for Fiscal Year 2000 that could pay a bonus of up to fifty (50%) percent of your annualized salary, the last 10% of such bonus being paid in restricted Cole National Corporation stock, if pre-set Cole Optical and Cole National profit contribution goals are achieved. For the 2000 fiscal year, you will be eligible for a full year bonus and guaranteed a minimum bonus of $50,000, payable in April, 2001. 4. STOCK OPTIONS: We will request that the Board of Directors of Cole National Corporation grant you an option to purchase 5,000 shares of Cole National Corporation stock, at a per share price equal to the closing stock price on the date of grant. The options granted to you will vest at 25% per year from the date of the grant. 5. AUTOMOBILE: You may choose a company automobile with a value of up to $34,500 or a cash allowance in place of a company provided automobile. The cash allowance will be based on an average monthly lease for an automobile costing $34,500. 6. MERIT INCREASE: Your salary will be reviewed annually, and adjustments, when they occur, will be effective in April, beginning with April 1, 2001. 2 7. GROUP MEDICAL PLAN: If you elect, you and your eligible dependents will be eligible for group coverage provided by the Prudential Insurance Company of America or Cigna after completion of ninety (90) days of continuous service. In the meantime, we will offer to pay your COBRA health insurance premiums during the 90-day waiting period. 8. TERM LIFE INSURANCE/ACCIDENTAL DEATH AND DISMEMBERMENT INSURANCE (AD&D): You would be eligible to participate in Cole Vision's Life Insurance Program, which provides a coverage at no cost to you in an amount equal to two (2) times your annual base salary. You may elect to purchase additional amounts of term insurance equal to one (1) or (2) times your base salary for a nominal cost to you. 9. SHORT-TERM DISABILITY PLAN: After a six (6) month waiting period, you would be eligible for benefits up to a maximum of thirteen (13) weeks beginning with the first day of absence. 10. EXECUTIVE LONG-TERM DISABILITY PLAN: In accordance with the terms of this plan, you would be eligible for a monthly benefit of up to sixty (60%) percent of your monthly base salary, up to a maximum of fifteen thousand dollars ($15,000) per month. You will be eligible to participate in this plan following ninety (90) days of continuous employment. Benefits are payable after a waiting period of ninety (90) days after the onset of disability. 11. DENTAL: Cole Vision offers a Dental Plan to eligible full-time employees, after ninety (90) days of employment. CIGNA Insurance Company features cleaning and examinations at no charge and other procedures at very low rates when using CIGNA dentists provide the plan. 12. TRAVEL ACCIDENT PLAN: You would be eligible for this benefit upon the commencement of your employment. 13. 401(K) SAVINGS PLAN: You would be eligible for participation after one year of service. Pre-tax contributions to the pay are at the employee's expense; however, Cole National has made a discretionary matching contribution to the plan for each of the last four years equaling 15% of the employee's contribution since 1996. Merrill Lynch administers the plan and Cole National pays all administrative expenses. 14. PENSION PLAN: You would be eligible for participation after one (1) year of employment and vested in the plan after five (5) years of service. 15. VACATION: You will be eligible for three (3) weeks vacation in 2000. 3 16. TERMINATION/NON-COMPETE AGREEMENT: A letter to be signed upon your acceptance of employment has been provided. Please note the terms with respect to the activities you would be prohibited from participating in for a period of twelve (12) months after the termination of your employment. In return, should the Company without cause terminate your employment, you will be entitled to receive a continuation of your then annual base salary for a period of 12 months following such termination. Any salary received from new employment will offset this payment. In addition, you would be eligible to receive outplacement benefits. 17. EMPLOYMENT AT WILL: NOTHING contained in this offer letter is intended to create a fixed or contractual employment term between you and the Company and you understand and acknowledge that if you accept this offer, you are and will continue to be an employee at will, that your employment with the Company can be terminated with or without cause and with or without notice, at any time at the option of either you or the Company. Bill, we believe you have the talent, leadership and style to make an immediate contribution to our company. I would be happy to discuss any details of this offer with you personally. I look forward to hearing from you soon. If you accept this offer, please sign the enclosed copy of this letter, as well as, both signed copies of the Termination/Non-Compete Agreement, and return them to me in the enclosed envelope. Sincerely, Patricia M. Luzier Sr. VP, Human Resources & Process Improvement Enclosures Agreed to and acknowledged the 20th day of December, 1999. /s/ William P. Lahiff, Jr. - --------------------------------------------------- Signature /jls EX-10.59 12 EXHIBIT 10.59 1 Exhibit 10.59 October 14, 1999 Cole National Corporation 5915 Landerbrook Drive Mayfield Heights, OH 44124 Gentlemen: This letter agreement (the "1999 Letter Agreement") supplements and amends in part the letter agreement of April 9, 1993 between me and Cole National Corporation (the "Company"), a copy of which is attached ("Salary Continuation Agreement"). I have discussed with Jeffrey Cole my desire to step down as Vice President and Controller of the Company. After discussion, we have mutually agreed to the following: 1. I agree to remain as an employee of the Company through January 14, 2000 and will not commence employment with any future employer until after that date. Between the date hereof and the close of business on January 14, 2000, I will continue to serve at the discretion of the Board of Directors of the Company as the Vice President, Controller and Chief Accounting Officer of the Company and in such positions with the direct and indirect subsidiaries of the Company as I have on the date hereof. I agree to perform the responsibilities of such positions until such time as the Board of Directors of the Company or an authorized officer of the Company otherwise directs, but in no event later than January 14, 2000. My employment with the Company shall terminate at the close of business on January 14, 2000 and I hereby resign all positions with the Company and each of its subsidiaries effective as of the close of business on January 14, 2000 or such earlier date as may be requested by the Company notwithstanding that I will remain an employee of the Company until the close of business on January 14, 2000. 2. In consideration of my performance of my agreement to remain an employee of the Company through the close of business on January 14, 2000 on the terms set forth in Section 1 above, you have agreed as follows: a. Paragraph L of the Salary Continuation Agreement is amended and restated in its entirety to read as follows: 2 "L. It is further understood and agreed that in the event my employment with the Company should be terminated (i) by the Company without cause prior to January 14, 2000 ("cause" for this purpose means gross neglect of duty, material breach of this Letter Agreement dated October 13, 1999 or of the Salary Continuation Agreement dated April 9, 1993, dishonesty, disloyalty, the inability to discharge my duties due to alcohol or drug addiction, or other misconduct inimitable to the best interests of the Company) or (ii) I have remained employed by the Company pursuant to and subject to the terms of Section 1 of the Letter Agreement dated October 13, 1999 until the close of business on January 14, 2000, I will receive, in full and complete settlement of any claims for compensation which I may have, a continuation of my annual base salary, in effect at the time of the termination of employment, for a period of up to twelve (12) months immediately following such termination, payable in accordance with the Company's payroll schedule; provided, however, that in the event I obtain employment during said twelve (12) month period (and upon obtaining such employment I will promptly notify the Company of same), the payment of any unpaid balance hereunder, effective as of the date of such new employment, shall be: (x) cancelled if the annual base salary of my new employment equals or exceeds my annual base salary at the Company at the time of my termination; or (y) reduced to the amount by which my annual base salary at the Company at the time of my termination exceeds the annual base salary of my new employment prorated on the basis of the time remaining in said twelve (12) month period; or (z) reduced by the amounts of any consulting or self-employment income earned or paid to me during such period. I understand that I will not be entitled to any payments under this Agreement unless (i) my employment is terminated by the Company without cause prior to January 14, 2000 or (ii) I remain employed by the Company pursuant to and subject to the terms of Section 1 of the Letter Agreement dated October 13, 1999 until the close of business on January 14, 2000. As used herein, "annual base salary of my new employment" shall equal the greater of (x) the actual annual base salary of my new employment or (y) the average annual base salary payable to persons holding comparable positions as I then do with my new employer with businesses comparable to my then-new employer. It is the intent of this Paragraph L that I will be assured of the payment of an amount at least equal to my annual base salary at the time of my termination at the Company for a period of twelve (12) months following such termination as set forth in subparagraph (i) and (ii) above as applicable, whether through payments from the Company, my new employer, or consulting or self-employment income 2 3 or a combination of payments from the Company and my new employer and consulting and self-employment income. Promptly upon obtaining my new employment or consulting or self-employment, I will notify the Company of that fact and provide details concerning my new position and compensation or income. I further agree to use my best efforts to obtain suitable employment following such termination. I will not be entitled to any payments under any severance pay policy or practice of the Company in effect at any time and this Paragraph L shall be in lieu thereof." b. The Company agrees to provide me with executive outplacement services from the vendor of my choice among the vendors made available by the Company until I first obtain employment after the term of my employment ends with the Company at the close of business on January 14, 2000 but in no event longer than twelve (12) months following such date. Preliminary consultations may begin earlier. c. If I am receiving monies pursuant to Paragraph L of the Salary Continuation Agreement, the Company agrees that until April 1, 2000, I may continue to use the car the Company currently provides to me. I agree I will pay for the gas and routine maintenance. The Company will provide insurance as currently provided. It will be at the Company's discretion whether or not to make any major expenditures with respect to such car. 3. In consideration of the Company's agreeing to the provisions of Section 2 of this Letter Agreement, I hereby agree as follows: a. I agree to the provisions of Section 1 of this Letter Agreement. b. I will keep confidential the terms of this Letter Agreement until it is made public by the Company in its SEC filings. c. Unless required by law, I will not publicly comment in a manner adverse to the Company concerning the status, plans or prospects of the business of the Company or any matter involving the Company. d. I will cooperate fully with the Company and the Company's counsel in connection with any present and future actual or threatened litigation or administrative proceeding involving the Company that relates to events, occurrences or matters related to the period of my employment with the Company. This cooperation will include but not be limited to (i) making myself reasonably available for interviews and discussions with the Company's counsel as well as for depositions and trial testimony; (ii) if depositions or trial testimony are to occur, making myself reasonably available and cooperating in the preparation therefore as and to the extent that the Company or its counsel reasonably requests; and (iii) refraining from impeding the Company's prosecution or defense of such litigation or administrative proceeding. Further, at the request of the Chairman or 3 4 President of the Company I will make myself reasonably available for consultation and advice to employees of the Company and its subsidiaries at times and for periods that are mutually agreeable; it is understood that under normal circumstances the obligation under this sentence will be substantially performed within the first 18 months after termination. I understand that I will be reimbursed by the Company for my reasonable travel, lodging, long distance telephone and similar expenses, incurred in connection with such cooperation. e. At the request of the Company, I will assist in the preparation of a job description for use in the Company's search for my successor and in the transition of my responsibilities to such person. f. I will not receive any bonus with respect to the 1999 fiscal year of the Company. g. In recognition of my voluntary resignation of my employment, all of my stock option grants from the Company will terminate on the last day of my employment. h. My participation in the Executive Medical Expense Reimbursement Plan (MERP) and long-term disability plan will cease as to expenses incurred or events after January 14, 2000 or such earlier date as my employment should terminate. Any future crediting under any Supplemental Retirement Plan (SERP) of the Company will cease on January 14, 2000 or such earlier date as my employment should terminate. My participation in health, dental and life insurance programs, as well as the Company's 401(K) Plan, the 1999 Employee Stock Purchase Plan and the Deferred Compensation Plan for Executives and Other Senior Management shall continue through the end of the period in which I am receiving payments under Paragraph L of the Salary Continuation Agreement at the same cost to me as available to other employees generally. My participation in the Cole National Group Retirement Plan shall be governed by the terms of such plan. i. I may use the name of the chief executive officer of the Company or his delegate as a reference in my employment search. 4. In entering into this Letter Agreement, I acknowledge the confidentiality, non-solicitation and non-competition and other restrictions imposed on me by the remaining provisions of the Salary Continuation Agreement, and confirm that I understand that these restrictions and all other provisions of the Salary Continuation Agreement, except as specifically amended by this Letter Agreement, remain in full force and effect, without alteration. I represent that prior to signing this Letter Agreement, I have read, fully understand and voluntarily agree to the terms and conditions stated above, that I was not coerced to sign this Letter Agreement, that I was not under duress at the time I signed this Letter Agreement, and that, prior to signing this Letter Agreement, I had adequate 4 5 time to consider its terms, including the opportunity should I have chosen to discuss this Letter Agreement and its legal consequences with an attorney of my choice. 5. This Letter Agreement shall be binding upon and inure to the benefit of the Company and any successor of or to the Company. Very truly yours, /s/ Wayne L. Mosley Wayne L. Mosley Agreed to and acknowledged as of the 14th day of October, 1999 in Mayfield Heights, Ohio. COLE NATIONAL CORPORATION By: /s/ Leslie D. Dunn ----------------------------------------- Leslie D. Dunn, Sr. Vice President, General Counsel 5 EX-10.60 13 EXHIBIT 10.60 1 Exhibit 10.60 [COLE NATIONAL LOGO] EXECUTIVE OFFICES March 23, 2000 Mr. Thomas Kaung 12 Pepper Ridge Road Pepper Pike, OH 44124 Dear Tom: We are pleased to offer you the opportunity to become Executive Vice President and Chief Financial Officer. You will report to me and play a leadership role in working with Larry and me to reinvigorate our growth. The following highlights the terms of our offer: 1. EFFECTIVE DATE: Upon election as an officer by Board of Directors. 2. SALARY: Your base salary will be $375,000 per year, payable in accordance with the bi-weekly executive payroll schedule, starting with the effective date. 3. OPERATING BONUS: You will participate in a Management Incentive Plan as such program is in effect from time to time for senior officers of Cole National Corporation. Your bonus, if any, for Fiscal Year 2000 will be based on the full $375,000. 4. STOCK OPTIONS: We will request that the Board of Directors of Cole National Corporation grant you an option for 50,000 shares of Cole National Corporation stock, at a per share price equal to the closing stock price on the date of grant and another option for 50,000 shares at a per share exercise price of $10.00. These options will have a two year vesting period with half of each grant vesting at the end of the first year and the remainder at the end of the second year. These options would be granted as of the date you are elected as an officer by the Board. 5. MERIT INCREASE: Your salary will be reviewed and adjustments, if any, will be made in the discretion of the CEO and Board. 6. AUTOMOBILE: You may choose a company automobile with a value of up to $45,850. 2 7. GROUP MEDICAL PLAN: If you elect, you and your eligible dependents will be eligible to participate in the Cole Group coverage. Additionally, if you do elect coverage, you will also be eligible to participate in our MERP Executive Supplemental Plan while you are employed, details of which we can provide at a later date. If you remain employed by the Company until the Retirement Date (as defined below) and thereafter upon termination of your employment for any reason (other than for Cause) or if prior to the Retirement Date your employment is terminated by the Company without Cause or by you following a change in control or for Good Reason (all as defined in the Stock Option Agreement dated this date between you and the Company), the Company shall provide you and your spouse to the extent reasonably possible with such group medical benefits under its group medical plan as it then currently provides to its employees generally at the same cost to you as it then charges to the Company's employees until November 1, 2005. You will not then be entitled to MERP. 8. SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS (SERP): You will not participate in any of the Supplemental executive retirement plans of the Company except for such benefits as you may have from your previous employment with the Company. 9. TERM LIFE INSURANCE/ACCIDENTAL DEATH & DISMEMBERED INSURANCE (AD&D): You will be eligible to participate in Cole National's life insurance program, which provides a coverage at no cost to you in an amount equal to two times your base salary. You may elect to purchase additional amounts of Term Insurance equal to one or two times your base salary at your cost. 10. SHORT-TERM DISABILITY PLAN: After a six (6) month waiting period, you would be eligible for benefits up to a maximum of thirteen (13) weeks beginning with the first day of absence. 11. EXECUTIVE LONG-TERM DISABILITY PLAN: In accordance with the terms of this plan, you would be eligible for a monthly benefit of up to sixty (60%) percent of your monthly base salary, up to a maximum of fifteen thousand dollars ($15,000) per month. You will be eligible to participate in this plan following ninety (90) days of continuous employment. Benefits are payable after a waiting period of ninety (90) days after the onset of disability. 12. DEFERRED COMPENSATION PLAN: You would be eligible to participate in the Deferred Compensation Plan (DCP) after 90 days of continuous service. This is a non-qualified compensation deferral plan that allows you to defer up to 100% of your salary and/or bonus. The Company will match 10% of the first 10% of your compensation contributed to the plan in Cole National Common Stock after the end of each Plan year. Plan details will be sent to you upon hire. 13. PENSION PLAN: Your participation in the Cole National Group Retirement Plan will be governed by the terms of such plan.. 14. VACATION: You will be eligible for four (4) weeks of vacation, beginning in fiscal 2000. 3 15. RECRUITMENT RESPONSIBILITY: It is currently anticipated that you will retire on February 1, 2003 or such other date as we shall mutually agree ("Retirement Date"). You acknowledge that one of your responsibilities shall be to commence active recruitment for your successor not later than twelve (12) months prior to your Retirement Date with the objective that the person so selected will commence his/her employment six months prior to your Retirement Date. 16. TERMINATION/NON-COMPETE AGREEMENT: A letter to be signed in connection with your acceptance of employment setting forth certain noncompetition and termination provisions has been provided as a condition of your employment. Sincerely, /s/Jeffrey A. Cole ------------------------------------ Jeffrey A. Cole Chairman and Chief Executive Officer Agreed to and acknowledged this 23 day of March, 2000. ---- /s/Thomas T. S. Kaung - --------------------------------- Thomas T. S. Kaung Enclosure: Non-Compete Agreement EX-10.61 14 EXHIBIT 10.61 1 Exhibit 10.61 March 23, 2000 Cole National Corporation 5915 Landerbrook Drive Mayfield Heights, OH 44124 Gentlemen: In consideration of my employment as Executive Vice President of Cole National Corporation (the "Company") and the benefits I derive from Paragraph L hereof (but without thereby creating any fixed or contractual employment term, understanding that my employment can be terminated, with or without cause and with or without notice, at any time at the option of either the Company or me), I hereby agree with the Company as follows: A. During the term of my employment I will not compete, directly or indirectly, with the Company (which hereafter shall include the Company and its direct and indirect subsidiaries). In accordance with this restriction, but without limiting its terms, I will not: (a) enter into or engage in any business which competes with the business of the Company; or (b) solicit customers, business, patronage, or orders for, or sell, any product or products in competition with, or for any business that competes with, the business of the Company; or (c) divert, entice, or take away any customers, business, patronage or orders of the Company or attempt to do so; or (d) promote or assist, financially or otherwise, any person, firm, association or corporation or any other entity engaged in any business which competes with the business of the Company. B. For a period of eighteen (18) months following termination of my employment with the Company, I will not enter into or engage in any business that competes with the Company's business. C. For a period of eighteen (18) months following termination of my employment with the Company, I will not solicit customers, business, patronage, or orders for, or sell any product(s) in competition with the Company's business. D. For a period of eighteen (18) months following termination of my employment with the Company, I will not divert, entice, or otherwise take away any customers, business, patronage, or orders of the Company, or attempt to do so. E. For a period of eighteen (18) months following termination of my employment with the Company, I will not promote or assist financially or otherwise, any person, firm, association, partnership, corporation, or any other entity engaged in any business which competes with the Company's business. F. For the purposes of Paragraphs A through E, inclusive, I understand that I will be competing if I engage in any or all of the activities set forth therein directly as an individual on my own account, or indirectly as a partner, joint venturer, employee, agent, salesman, consultant, officer and/or director of any 2 firm, association, corporation, or other entity, or as a stockholder of any corporation in which I own, directly or indirectly, individually or in the aggregate, more than one percent (1%) of the outstanding stock. G. For the purposes of Paragraphs B through E, inclusive, the Company's business is defined as the manufacture, production, sale, marketing and/or distribution of any product(s) and/or the rendering of any service(s) that are the same as or similar to those manufactured, produced, sold, marketed, distributed and/or rendered, as of the date of my termination, by the Company. H. I understand that the activities set forth in Paragraphs B through E, inclusive, shall be prohibited only within the United States, Canada and Puerto Rico or such lesser geographic area as to which or for which I was assigned or had responsibility at the time of my termination or at any time during the twelve (12) month period immediately preceding my termination. I. If it shall be judicially determined that I have violated any of my obligations under Paragraphs B through E, inclusive, then the period applicable to the obligation which I shall have been determined to have violated shall automatically be extended by a period of time equal in length to the period during which said violation(s) occurred. J. I also agree that I will not directly or indirectly at any time solicit or induce or attempt to solicit or induce any employee(s) or any sales representative(s), agent(s) or consultant(s) of the Company or any of its parent, subsidiary or affiliate entities to terminate their employment, representation or other association with the Company or such entity. K. During the period of my employment and at any time thereafter, I will not disclose, furnish, disseminate, make available or, except in the ordinary course of performing my duties on behalf of the Company, use any trade secrets or confidential business and technical information of the Company, or its parent, subsidiaries or affiliated entities or its customers, without limitation as to when it was acquired by me or whether it was compiled or obtained by, or furnished to me while I was employed by the Company. Such trade secrets and confidential business and technical information are considered to include, without limitation, the vision care plans, vendor lists, vendor terms and programs, merchandise costs, financial statistics, research data, or any other statistics and plans contained in monthly and annual review books, profit plans, capital plans, critical issues plans, strategic plans, or merchandising, marketing, real estate, or store operations plans. I specifically acknowledge that all such information, whether reduced to writing or maintained in my mind or memory and whether compiled by the Company and/or me derives independent economic value from not being readily known to or ascertainable by proper means by others who can obtain economic value from its disclosure or use, that reasonable efforts have been put forth by the Company to maintain the secrecy of such information, that such information is and will remain the sole property of the Company and that any retention and use of such information during or after the termination of my relationship with the Company (except in the course of performing my duties) shall constitute a misappropriation of the Company's trade secrets; provided, however, that this restriction shall not apply to information which is in the public domain or otherwise made public by others through no fault of mine or as may be required by Law. L. It is further understood and agreed that in the event my employment with the Company should be terminated by the Company without "Cause" or by me for "Good Reason" or after a change in control (i) any time prior to February 1, 2002, I will receive, in full and complete settlement of any claims for compensation which I may have, a continuation of my annual base salary, in effect at the time of the termination of my employment, for a period of up to eighteen (18) months immediately following such termination or (ii) any time on or after February 1, 2002 until February 1, 2003, I will receive as full and complete settlement for any claims for compensation I may have, a continuation of my annual base salary in effect at the time of termination of employment, for a period ending on January 31, 2003, such amounts to be payable in accordance with the Company's payroll schedule; (the relevant period of such salary continuation shall be referred to as the "Salary Continuation Period"). Notwithstanding the foregoing, in the event I obtain employment any consulting assignments or any self-employment during the relevant Salary Continuation Period (and upon obtaining such employment or assignments I will promptly notify the Company of same), the payment of any unpaid balance hereunder, effective as of the date upon which I obtain new employment or assignment, shall be: 3 (i) canceled if the annual base salary of my new employment equals or exceeds my annual base salary at the Company at the time of my termination; or (ii) reduced to the amount by which my monthly base salary at the Company at the time of my termination exceeds the monthly base salary of my new employment prorated on the basis of the time remaining in the relevant Salary Continuation Period; or (iii) reduced by amounts of any consulting or self-employment income earned or paid to me during the relevant Salary Continuation Period. For purposes of this Agreement, monthly base salary shall be defined as my annual base salary divided by twelve (12). As used herein, "annual base salary of my new employment" shall equal the greater of (x) the actual monthly base salary of my new employment or (y) if (x) is not reasonable, the average monthly base salary payable to persons holding comparable positions as I then do with my new employer with businesses comparable to my then-new employer. As used herein, "Good Reason", "Change of Control" and "Cause" shall have the same meanings a set forth in those two certain Non-Qualified Stock Option Agreements between me and Cole National Corporation dated March 23, 2000. M. I expressly agree and understand that the remedy at law for any breach by me of this Agreement will be inadequate and that the damages flowing from such breach are not readily susceptible to being measured in monetary terms. Accordingly, it is acknowledged that upon my violation of any provision of this Agreement, the Company shall be entitled to immediate injunctive relief and may obtain a temporary order restraining any threatened or further breach without the necessity of proof of actual damage. Nothing in this Agreement shall be deemed to limit the Company's remedies at law or in equity for any breach by me of any of the provisions of this Agreement which may be pursued or availed of by the Company. N. This Agreement is not assignable by either party without the prior written consent of the other; provided, however, the Company may assign this Agreement to its parent, any subsidiary or affiliated entity and such entity shall succeed to each of the Company's rights hereunder. Upon such assignment, all references to the Company in this Agreement shall, as the context requires, be deemed to be to the entity to which such assignment, assumption and employment relate. O. No modification, waiver, amendment or addition to any of the terms of this Agreement shall be effective, except as set forth in a writing signed by me and the Company. The failure of the Company to enforce any provision of this Agreement shall not be construed to be a waiver of such provision or of the right of the Company thereafter to enforce each and every provision. P. This Agreement and any amendments thereto shall become effective on the date of acceptance by the Company and shall be governed by, and construed in accordance with, the internal, substantive laws of the State of Ohio. I agree that the state and federal courts located in the State of Ohio shall have jurisdiction in any action, suit or proceeding against me arising out of this Agreement and I hereby: (a) submit to the personal jurisdiction of such courts; (b) consent to service of process in connection with any action, suit or proceeding against me; and (c) waive any other requirement (whether imposed by statute, rule of court or otherwise) with respect to personal jurisdiction, venue or service of process. Q. Except for that certain letter dated March 23, 2000, this Agreement supersedes the provisions of each and every other agreement or understanding, whether oral or written, between the undersigned and the Company relating to the subject matter contained herein, and any such agreement or understanding shall be of no further force and effect. The provisions of this Agreement are severable and if any one or more provisions may be determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions and any partially unenforceable provision, to the extent enforceable in any 4 jurisdiction, shall, nevertheless, be binding and enforceable. The parties hereto agree that when fully executed, the foregoing shall constitute a legally enforceable Agreement between us, which also shall inure to the benefit of the Company's successors and assigns. Finally, I represent that prior to signing this Agreement, I have read, fully understand and voluntarily agree to the terms and conditions as stated above, that I was not coerced to sign this Agreement, that I was not under duress at the time I signed this Agreement and that, prior to signing this Agreement, I had adequate time to consider entering into this Agreement, including without limitation, the opportunity to discuss the terms and conditions of this Agreement, as well as its legal consequences, with an attorney of my choice. Very truly yours, By: /s/ Thomas T. S. Kaung -------------------------------- Thomas T. S. Kaung Acknowledged and agreed to as of this 23 day of March, 2000. COLE NATIONAL CORPORATION By: /s/ Jeffrey A. Cole ------------------------------------- Jeffrey A. Cole Chairman and CEO EX-10.62 15 EXHIBIT 10.62 1 Exhibit 10.62 Type 2 -A- Non Plan ------------------- New Officer ----------- Kaung - Grant 1 --------------- COLE NATIONAL CORPORATION Nonqualified Stock Option Agreement This Nonqualified Stock Option Agreement (this "Agreement") is entered into between the individual optionee named on the signature page hereof (the "Optionee") and Cole National Corporation, a Delaware corporation (the "Company"), as of the Grant Date. Certain capitalized terms used herein are defined in Paragraph 8. WHEREAS, Optionee has made the grant of options hereunder a condition of his acceptance of the Company's offer of employment as Executive Vice President and Chief Financial Officer of the Company; WHEREAS, the Compensation Committee of the Board of Directors of the Company has authorized a grant of stock options on the terms hereof to the Optionee in order to induce him to accept such employment; and NOW, THEREFORE, the Company hereby grants to the Optionee options (the "Options") pursuant to the Company's 1999 Broad Based Employee Stock Option Plan (the "Plan") to purchase the number of shares of common stock ("Common Stock"), par value $.001 per share, of the Company's Common Stock shown as the Original Award on the signature page hereof; and agrees to cause certificates for any shares purchased hereunder to be delivered to the Optionee upon payment of the purchase price in full, all subject, however, to the terms and conditions of the Plan and as hereinafter set forth. 1. EXERCISE. (a) Except as otherwise provided herein, the Options (until terminated as hereinafter provided) will become vested and exercisable as follows: 2 Type 2-A - Non Plan - New Officer --------------------------------- 2 --------------------------------------------------------------------------- --------------------------------------------------------------------------- 1/2 of the Original Award The first anniversary of the Grant Date; and --------------------------------------------------------------------------- 1/2 of the Original Award The second anniversary of the Grant Date. --------------------------------------------------------------------------- To the extent exercisable, the Options may be exercised in whole or in part from time to time. (b) If prior to the second anniversary of the date of this Agreement, a Change in Control occurs, all the Options, in addition to any vesting pursuant to the provisions of Paragraph 1(a) above, will become exercisable in full as to any then Unvested Shares. (c) If, prior to the second anniversary of the Grant Date, a Termination Event occurs or Optionee terminates his employment for Good Reason, the Options will, in addition to any prior vesting pursuant to Paragraph 1(a) above, immediately become exercisable with respect to those Unvested Shares that would have vested on the next succeeding anniversary of the Grant Date (if the Termination Event occurs on an anniversary of the Grant Date, no additional Options will become vested and exercisable besides those that became vested and exercisable as of that anniversary). Thereupon, all remaining unvested Options will be forfeited and cancelled. (d) If the Optionee dies or becomes permanently disabled while in the employ of the Company or any Subsidiary, the Options will, in addition to any vesting pursuant to Paragraph 1(a) above, immediately become exercisable with respect to those Unvested Shares that would have vested on or before the end of twelve months from the date of death. Thereupon, all remaining Unvested Options will be forfeited and cancelled. (e) If Optionee's employment is terminated for Cause, all unvested Options will be forfeited and cancelled. 3 Type 2-A - Non Plan - New Officer --------------------------------- 3 (f) Any exercise of the Options must be made in writing by the Optionee delivered to the Secretary of the Company. To the extent exercisable, the Options may be exercised in whole or in part from time to time. 2. EXERCISE PRICE AND PAYMENT; RELOAD OPTIONS. (a) The Options will be exercisable for Vested Shares (whether such vesting occurs pursuant to Paragraph 1(a), 1(b), 1(c) or 1(d)) at the Exercise Price shown on the signature page hereof. (b) The Exercise Price for any shares may be paid in cash or by check. 3. TERMINATION. The Options will terminate and all Unvested and Vested Options then outstanding will be forfeited on the earliest of the following dates: (a) On the date on which the Optionee voluntarily resigns (other than for Good Reason or after a Change of Control) if prior to the Retirement Date without the consent of the Chairman of the Board (unless otherwise provided in an agreement relating to employment) or ceases to be an employee of the Company or a Subsidiary by reason of termination of employment for Cause; (b) Subject to possible extension pursuant to Paragraph 3(c) below and subject to the provisions of Paragraph 3(d) below, five years after either (i) the date on which the Optionee ceases to be an employee of the Company or a Subsidiary if Optionee remains employed until the Retirement Date or earlier resigns with the consent of the Chairman of the Board or (ii) the date of permanent disability of the Optionee if the Optionee becomes permanently disabled while an employee of the Company or a Subsidiary; 4 Type 2-A - Non Plan - New Officer --------------------------------- 4 (c) One year after the date of the death of the Optionee if the Optionee dies while an employee of the Company or a Subsidiary or one year after the date of death of the Optionee if the Optionee dies during the fifth year of the five year period referred to in Paragraph 3(b) above; (d) One year after the date of a Termination Event or Optionee terminates his employment with Good Reason or after a Change in Control, both prior to the Retirement Date; (e) Immediately (x) upon the Optionee accepting employment with a Competitor without the prior written approval of the Company's Chief Executive Officer or (y) upon a material breach by the Optionee of any applicable agreement with the Company or a Subsidiary relating to non-competition, non-solicitation or maintaining of Company confidences; or (f) Ten years from the Grant Date. 4. TRANSFERABILITY. Unless otherwise approved by the Compensation Committee following a request from the Optionee or the Optionee's guardian or legal representative, the Options are not transferable by the Optionee otherwise than by will or the laws of descent and distribution. If another type of transfer is approved by the Compensation Committee, a transfer will only be effective when the transferee of the Options enters into an agreement with the Company (in form and substance acceptable to the Company) agreeing to be bound by the provisions of this Agreement as if such transferee were the Optionee. If exercised during the lifetime of the Optionee, the Options are exercisable only by the Optionee or by the 5 Type 2-A - Non Plan - New Officer --------------------------------- 5 Optionee's guardian or legal representative, or by an transferee authorized as provided in this Paragraph. 5. SECURITIES LAWS. The Options are not exercisable if such exercise would involve a violation of any applicable federal, state or other securities law, and the Company hereby agrees to make reasonable efforts to comply with such securities laws. The Options are not exercisable unless under said laws at the time of exercise the shares of Common Stock or other securities purchasable hereunder are exempt, are the subject matter of an exempt transaction, or are registered in accordance with such laws. 6. ADJUSTMENTS. (a)The Board of Directors or the Compensation Committee shall make such adjustment in the option price and in the number or kind of shares of Common Stock or other securities covered by the Options as such Board or Committee may in good faith determine is equitably required to prevent dilution or enlargement of the rights of the Optionee that otherwise would result from (i) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, or (ii) any merger, consolidation, spin-off, split-off, spin-out, split up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights to purchase securities, or (iii) any distribution to the holders of the Common Stock of rights or warrant to purchase equity interests of the Company, or (iv) any other corporate transaction or event having an effect similar to any of the foregoing. Moreover, in the event of any such transaction or event, the Board of Directors or the Compensation Committee, in its discretion, may provide in substitution for any or all outstanding awards under the Options such alternative consideration as it, in good faith, may 6 Type 2-A - Non Plan - New Officer --------------------------------- 6 determine to be equitable in the circumstances and may require in connection therewith the surrender of all awards so replaced. (b) In the event that any provision of this Agreement would result in a calculation of a number of shares in amounts other than a whole number, the number of shares so calculated will be reduced or increased to the nearest whole number (rounding 0.50 up), with the effect of any such rounding deemed to attach to the last group of shares to be so calculated (with calculations to be conducted in alphabetical or numerical order, as applicable). 7. WITHHOLDING. If the Company is required to withhold any federal, state, local or foreign tax in connection with the exercise of the Options, it will be a condition to such exercise that the Optionee make provision satisfactory to the Company for payment of all such taxes. 8. DEFINITIONS. The following capitalized terms have meanings as set forth below. "Cause" means Optionee's gross neglect of duty, material dishonesty in the performance of Optionee's duties or his failure to discharge his duties due to alcohol or drug addiction. "Change in Control" means if at any time any of the following events shall have occurred: (a) the Company merges into itself, or is merged or consolidated with, another corporation and as a result of such merger or consolidation less than 51% of the voting power of the then-outstanding voting securities of the surviving or resulting corporation 7 Type 2-A - Non Plan - New Officer --------------------------------- 7 immediately after such transaction are directly or indirectly beneficially owned in the aggregate by the former stockholders of the Company immediately prior to such transaction; (b) all or substantially all the assets accounted for on the consolidated balance sheet of the Company are sold or transferred to one or more corporations or persons, and as a result of such sale or transfer less than 51% of the voting power of the then-outstanding voting securities of such corporation or person immediately after such sale or transfer is directly or indirectly beneficially held in the aggregate by the former stockholders of the Company immediately prior to such transaction or series of transactions; (c) A person, within the meaning of Section 3(a)(9) or 13(d)(3) (as in effect on the date hereof) of the Securities Exchange Act of 1934, becomes the beneficial owner (as defined in Rule 13d-3 of the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934) of (i) 15% or more but less than 35% of the voting power of the then- outstanding voting securities of the Company without the prior approval by the Board, or (ii) 35% or more of the voting power of the then-outstanding voting securities of the Company; PROVIDED, HOWEVER, that the foregoing does not apply to any such acquisition that is made by (w) any subsidiary of the Company; (x) any employee benefit plan of the Company or of any Subsidiary or (y) any person or group of which employees of the Company or of any Subsidiary control a greater than 25% interest unless the Board of Directors of the Company determines that such person or group is making a "hostile acquisition;" (d) A majority of the members of the Board of Directors of the Company or of any Subsidiary are not Continuing Directors, where a "Continuing Director" is any member of the Board of Directors of the Company or, with respect to a Subsidiary, of such 8 Type 2-A - Non Plan - New Officer --------------------------------- 8 Subsidiary who (x) was a member of the Board of Directors of the Company or, with respect to a Subsidiary, of such Subsidiary on the date hereof or (y) was nominated for election or elected to such Board of Directors with the affirmative vote of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. "Competitor" means any Person that competes with any then-existing business of the Company or any Subsidiary. "Exercise Price" means the exercise price per share indicated as the Exercise Price per share on the signature page hereof. "Full-time Employee" means a person having the status of a full-time employee of the Company or a Subsidiary working at least 20 hours a week, including a person who is on a short-term disability, parental or other leave under an applicable benefit plan or other approved leave. "Good Reason" means (i) Jeffrey A. Cole is terminated by the Company other than for cause or (ii) Jeffrey A. Cole voluntarily terminates his employment other than for disability or death as Chairman of the Board of the Company. "Grant Date" means the date indicated on the signature page hereof as the Grant Date. "Original Award" means the number of shares of Common Stock indicated as the Original Award on the signature page hereof. "Person" means any corporation, partnership, limited liability company, association, firm, other entity or individual(s). 9 Type 2-A - Non Plan - New Officer --------------------------------- 9 "Retirement Date" means February 1, 2003 or such other date as the Company and Optionee shall agree. "Stock Price" means the closing price of the Common Stock on the principal exchange on which the Common Stock is traded. "Subsidiary" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations (or a group of corporations that themselves are Subsidiaries) other than the last corporation in the unbroken chain owns stock possessing fifty percent or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. For purposes of this Agreement, the continuous employment of the Optionee with the Company or a Subsidiary will not be deemed interrupted, and the Optionee will not be deemed to have ceased to be an employee of the Company or any Subsidiary, by reason of the transfer of his employment among the Company and its Subsidiaries. "Termination Event" means the Optionee's ceasing to be an employee of the Company or its Subsidiaries by reason of termination by the employer of the Optionee's employment without Cause. "Trading Days" means days on which the principal exchange on which the Common Stock is traded is open for trading, regardless whether actual trading in the Common Stock occurs. "Unvested Shares" means, as of any given time, those shares of Common Stock relating to the Options that are not, at the time in question, otherwise permitted, under the terms of this Agreement, to be acquired pursuant to the exercise of the Options. 10 Type 2-A - Non Plan - New Officer --------------------------------- 10 "Vested Shares" means, as of any given time, those shares of Common Stock relating to the Options that are, at the time in question, otherwise permitted, under the terms of this Agreement, to be acquired pursuant to the exercise of the Options. 9. ACKNOWLEDGMENT. The undersigned Optionee hereby acknowledges receipt of an executed original of this Agreement and accepts the Options granted hereunder. 11 Type 2-A - Non Plan - New Officer --------------------------------- 11 Nonqualified Stock Option Agreement ----------------------------------- EXECUTED at Cleveland, Ohio as of the date first set forth above. COLE NATIONAL CORPORATION By: /s/ Leslie D. Dunn --------------------------------- Title: Senior Vice President /s/ Thomas T. S. Kaung ------------------------------------ OPTIONEE - Thomas T. S. Kaung Name of Optionee: Thomas T. S. Kaung Name of Employer: Cole National Corporation Position: Executive Vice President and Chief Financial Officer Number of Shares in the Original Award: 50,000 Grant Date: March 23, 2000 Exercise Price per Share: $10.00 EX-10.63 16 EXHIBIT 10.63 1 Exhibit 10.63 Type 2 -A- Non Plan ------------------- New Officer ----------- Kaung - Grant 2 --------------- COLE NATIONAL CORPORATION Nonqualified Stock Option Agreement This Nonqualified Stock Option Agreement (this "Agreement") is entered into between the individual optionee named on the signature page hereof (the "Optionee") and Cole National Corporation, a Delaware corporation (the "Company"), as of the Grant Date. Certain capitalized terms used herein are defined in Paragraph 8. WHEREAS, Optionee has made the grant of options hereunder a condition of his acceptance of the Company's offer of employment as Executive Vice President and Chief Financial Officer of the Company; WHEREAS, the Compensation Committee of the Board of Directors of the Company has authorized a grant of stock options on the terms hereof to the Optionee in order to induce him to accept such employment; and NOW, THEREFORE, the Company hereby grants to the Optionee options (the "Options") pursuant to the Company's 1999 Broad Based Employee Stock Option Plan (the "Plan") to purchase the number of shares of common stock ("Common Stock"), par value $.001 per share, of the Company's Common Stock shown as the Original Award on the signature page hereof; and agrees to cause certificates for any shares purchased hereunder to be delivered to the Optionee upon payment of the purchase price in full, all subject, however, to the terms and conditions of the Plan and as hereinafter set forth. 1. EXERCISE. (a) Except as otherwise provided herein, the Options (until terminated as hereinafter provided) will become vested and exercisable as follows: 2 Type 2-A - Non Plan - New Officer --------------------------------- 2 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- 1/2 of the Original Award The first anniversary of the Grant Date; and ---------------------------------------------------------------------------- 1/2 of the Original Award The second anniversary of the Grant Date. ---------------------------------------------------------------------------- To the extent exercisable, the Options may be exercised in whole or in part from time to time. (b) If prior to the second anniversary of the date of this Agreement, a Change in Control occurs, all the Options, in addition to any vesting pursuant to the provisions of Paragraph 1(a) above, will become exercisable in full as to any then Unvested Shares. (c) If, prior to the second anniversary of the Grant Date, a Termination Event occurs or Optionee terminates his employment for Good Reason, the Options will, in addition to any prior vesting pursuant to Paragraph 1(a) above, immediately become exercisable with respect to those Unvested Shares that would have vested on the next succeeding anniversary of the Grant Date (if the Termination Event occurs on an anniversary of the Grant Date, no additional Options will become vested and exercisable besides those that became vested and exercisable as of that anniversary). Thereupon, all remaining unvested Options will be forfeited and cancelled. (d) If the Optionee dies or becomes permanently disabled while in the employ of the Company or any Subsidiary, the Options will, in addition to any vesting pursuant to Paragraph 1(a) above, immediately become exercisable with respect to those Unvested Shares that would have vested on or before the end of twelve months from the date of death. Thereupon, all remaining Unvested Options will be forfeited and cancelled. (e) If Optionee's employment is terminated for Cause, all unvested Options will be forfeited and cancelled. 3 Type 2-A - Non Plan - New Officer --------------------------------- 3 (f) Any exercise of the Options must be made in writing by the Optionee delivered to the Secretary of the Company. To the extent exercisable, the Options may be exercised in whole or in part from time to time. 2. EXERCISE PRICE AND PAYMENT; RELOAD OPTIONS. (a) The Options will be exercisable for Vested Shares (whether such vesting occurs pursuant to Paragraph 1(a), 1(b), 1(c) or 1(d)) at the Exercise Price shown on the signature page hereof. (b) The Exercise Price for any shares may be paid in cash or by check. 3. TERMINATION. The Options will terminate and all Unvested and Vested Options then outstanding will be forfeited on the earliest of the following dates: (a) On the date on which the Optionee voluntarily resigns (other than for Good Reason or after a Change of Control) if prior to the Retirement Date without the consent of the Chairman of the Board (unless otherwise provided in an agreement relating to employment) or ceases to be an employee of the Company or a Subsidiary by reason of termination of employment for Cause; (b) Subject to possible extension pursuant to Paragraph 3(c) below and subject to the provisions of Paragraph 3(d) below, five years after either (i) the date on which the Optionee ceases to be an employee of the Company or a Subsidiary if Optionee remains employed until the Retirement Date or earlier resigns with the consent of the Chairman of the Board or (ii) the date of permanent disability of the Optionee if the Optionee becomes permanently disabled while an employee of the Company or a Subsidiary; 4 Type 2-A - Non Plan - New Officer --------------------------------- 4 (c) One year after the date of the death of the Optionee if the Optionee dies while an employee of the Company or a Subsidiary or one year after the date of death of the Optionee if the Optionee dies during the fifth year of the five year period referred to in Paragraph 3(b) above; (d) One year after the date of a Termination Event or Optionee terminates his employment with Good Reason or after a Change in Control, both prior to the Retirement Date; (e) Immediately (x) upon the Optionee accepting employment with a Competitor without the prior written approval of the Company's Chief Executive Officer or (y) upon a material breach by the Optionee of any applicable agreement with the Company or a Subsidiary relating to non-competition, non-solicitation or maintaining of Company confidences; or (f) Ten years from the Grant Date. 4. TRANSFERABILITY. Unless otherwise approved by the Compensation Committee following a request from the Optionee or the Optionee's guardian or legal representative, the Options are not transferable by the Optionee otherwise than by will or the laws of descent and distribution. If another type of transfer is approved by the Compensation Committee, a transfer will only be effective when the transferee of the Options enters into an agreement with the Company (in form and substance acceptable to the Company) agreeing to be bound by the provisions of this Agreement as if such transferee were the Optionee. If exercised during the lifetime of the Optionee, the Options are exercisable only by the Optionee or by the 5 Type 2-A - Non Plan - New Officer --------------------------------- 5 Optionee's guardian or legal representative, or by an transferee authorized as provided in this Paragraph. 5. SECURITIES LAWS. The Options are not exercisable if such exercise would involve a violation of any applicable federal, state or other securities law, and the Company hereby agrees to make reasonable efforts to comply with such securities laws. The Options are not exercisable unless under said laws at the time of exercise the shares of Common Stock or other securities purchasable hereunder are exempt, are the subject matter of an exempt transaction, or are registered in accordance with such laws. 6. ADJUSTMENTS. (a)The Board of Directors or the Compensation Committee shall make such adjustment in the option price and in the number or kind of shares of Common Stock or other securities covered by the Options as such Board or Committee may in good faith determine is equitably required to prevent dilution or enlargement of the rights of the Optionee that otherwise would result from (i) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, or (ii) any merger, consolidation, spin-off, split-off, spin-out, split up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights to purchase securities, or (iii) any distribution to the holders of the Common Stock of rights or warrant to purchase equity interests of the Company, or (iv) any other corporate transaction or event having an effect similar to any of the foregoing. Moreover, in the event of any such transaction or event, the Board of Directors or the Compensation Committee, in its discretion, may provide in substitution for any or all outstanding awards under the Options such alternative consideration as it, in good faith, may 6 Type 2-A - Non Plan - New Officer --------------------------------- 6 determine to be equitable in the circumstances and may require in connection therewith the surrender of all awards so replaced. (b) In the event that any provision of this Agreement would result in a calculation of a number of shares in amounts other than a whole number, the number of shares so calculated will be reduced or increased to the nearest whole number (rounding 0.50 up), with the effect of any such rounding deemed to attach to the last group of shares to be so calculated (with calculations to be conducted in alphabetical or numerical order, as applicable). 7. WITHHOLDING. If the Company is required to withhold any federal, state, local or foreign tax in connection with the exercise of the Options, it will be a condition to such exercise that the Optionee make provision satisfactory to the Company for payment of all such taxes. 8. DEFINITIONS. The following capitalized terms have meanings as set forth below. "Cause" means Optionee's gross neglect of duty, material dishonesty in the performance of Optionee's duties or his failure to discharge his duties due to alcohol or drug addiction. "Change in Control" means if at any time any of the following events shall have occurred: (a) the Company merges into itself, or is merged or consolidated with, another corporation and as a result of such merger or consolidation less than 51% of the voting power of the then-outstanding voting securities of the surviving or resulting corporation 7 Type 2-A - Non Plan - New Officer --------------------------------- 7 immediately after such transaction are directly or indirectly beneficially owned in the aggregate by the former stockholders of the Company immediately prior to such transaction; (b) all or substantially all the assets accounted for on the consolidated balance sheet of the Company are sold or transferred to one or more corporations or persons, and as a result of such sale or transfer less than 51% of the voting power of the then-outstanding voting securities of such corporation or person immediately after such sale or transfer is directly or indirectly beneficially held in the aggregate by the former stockholders of the Company immediately prior to such transaction or series of transactions; (c) A person, within the meaning of Section 3(a)(9) or 13(d)(3) (as in effect on the date hereof) of the Securities Exchange Act of 1934, becomes the beneficial owner (as defined in Rule 13d-3 of the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934) of (i) 15% or more but less than 35% of the voting power of the then- outstanding voting securities of the Company without the prior approval by the Board, or (ii) 35% or more of the voting power of the then-outstanding voting securities of the Company; PROVIDED, HOWEVER, that the foregoing does not apply to any such acquisition that is made by (w) any subsidiary of the Company; (x) any employee benefit plan of the Company or of any Subsidiary or (y) any person or group of which employees of the Company or of any Subsidiary control a greater than 25% interest unless the Board of Directors of the Company determines that such person or group is making a "hostile acquisition;" (d) A majority of the members of the Board of Directors of the Company or of any Subsidiary are not Continuing Directors, where a "Continuing Director" is any member of the Board of Directors of the Company or, with respect to a Subsidiary, of such 8 Type 2-A - Non Plan - New Officer --------------------------------- 8 Subsidiary who (x) was a member of the Board of Directors of the Company or, with respect to a Subsidiary, of such Subsidiary on the date hereof or (y) was nominated for election or elected to such Board of Directors with the affirmative vote of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. "Competitor" means any Person that competes with any then-existing business of the Company or any Subsidiary. "Exercise Price" means the exercise price per share indicated as the Exercise Price per share on the signature page hereof. "Full-time Employee" means a person having the status of a full-time employee of the Company or a Subsidiary working at least 20 hours a week, including a person who is on a short-term disability, parental or other leave under an applicable benefit plan or other approved leave. "Good Reason" means (i) Jeffrey A. Cole is terminated by the Company other than for cause or (ii) Jeffrey A. Cole voluntarily terminates his employment other than for disability or death as Chairman of the Board of the Company. "Grant Date" means the date indicated on the signature page hereof as the Grant Date. "Original Award" means the number of shares of Common Stock indicated as the Original Award on the signature page hereof. "Person" means any corporation, partnership, limited liability company, association, firm, other entity or individual(s). 9 Type 2-A - Non Plan - New Officer --------------------------------- 9 "Retirement Date" means February 1, 2003 or such other date as the Company and Optionee shall agree. "Stock Price" means the closing price of the Common Stock on the principal exchange on which the Common Stock is traded. "Subsidiary" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations (or a group of corporations that themselves are Subsidiaries) other than the last corporation in the unbroken chain owns stock possessing fifty percent or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. For purposes of this Agreement, the continuous employment of the Optionee with the Company or a Subsidiary will not be deemed interrupted, and the Optionee will not be deemed to have ceased to be an employee of the Company or any Subsidiary, by reason of the transfer of his employment among the Company and its Subsidiaries. "Termination Event" means the Optionee's ceasing to be an employee of the Company or its Subsidiaries by reason of termination by the employer of the Optionee's employment without Cause. "Trading Days" means days on which the principal exchange on which the Common Stock is traded is open for trading, regardless whether actual trading in the Common Stock occurs. "Unvested Shares" means, as of any given time, those shares of Common Stock relating to the Options that are not, at the time in question, otherwise permitted, under the terms of this Agreement, to be acquired pursuant to the exercise of the Options. 10 Type 2-A - Non Plan - New Officer --------------------------------- 10 "Vested Shares" means, as of any given time, those shares of Common Stock relating to the Options that are, at the time in question, otherwise permitted, under the terms of this Agreement, to be acquired pursuant to the exercise of the Options. 9. ACKNOWLEDGMENT. The undersigned Optionee hereby acknowledges receipt of an executed original of this Agreement and accepts the Options granted hereunder. 11 Type 2-A - Non Plan - New Officer --------------------------------- 11 Nonqualified Stock Option Agreement ----------------------------------- EXECUTED at Cleveland, Ohio as of the date first set forth above. COLE NATIONAL CORPORATION By: /s/ Leslie D. Dunn ----------------------------------- Title: /s/ Thomas T. S. Kaung -------------------------------------- OPTIONEE - Thomas T. S. Kaung Name of Optionee: Thomas T. S. Kaung Name of Employer: Cole National Corporation Position: Executive Vice President and Chief Financial Officer Number of Shares in the Original Award: 50,000 Grant Date: March 23, 2000 Exercise Price per Share: $6.500 EX-10.66 17 EXHIBIT 10.66 1 Exhibit 10.66 INSTRUMENT DESIGNATING PARTICIPANT OF THE COLE NATIONAL GROUP, INC. 1999 SUPPLEMENTAL RETIREMENT BENEFIT PLAN 1. PARTICIPANT. Cole National Group, Inc. (the "Company") hereby adopts the Cole National Group, Inc. 1999 Supplemental Retirement Benefit Plan (the "Plan") effective as of January 1, 2000, for the benefit of the following employee: Leslie D. Dunn. 2. SPECIAL PROVISIONS. (a) For purposes of calculating the benefit payable to Leslie D. Dunn in accordance with the Plan, the definitions and actuarial assumptions used shall be the same as those used for purposes of calculating benefits under the Cole National Group, Inc. Retirement Plan (the "Pension Plan"). (b) For purposes of calculating the benefit payable to Leslie D. Dunn in accordance with the Plan and the Cole National Group, Inc. Supplemental Pension Plan, Leslie D. Dunn shall be credited with years of service for benefit accrual equal to (i) the number of years of service she is credited with under the Pension Plan, plus (ii) ten. (c) For purposes of calculating the benefit payable to Leslie D. Dunn in accordance with the Plan, the minimum annual benefit payable to Leslie D. Dunn commencing after Leslie D. Dunn's retirement on or after her attainment of age 65 shall be the amount determined by the formula "A-B," where: A= 40% of twelve times Average Monthly Compensation, and B= the sum of (i) the annualized amounts, if any, payable to Leslie D. Dunn in accordance with the Pension Plan and the Cole National Group, Inc. Supplemental Pension Plan, assuming, in each case that she elected a single life annuity, and (ii) the installment payment deemed under (e) below to be paid to Leslie D. Dunn from the Cole National Group, Inc. Supplemental Retirement Benefit Plan. (d) For purposes of calculating the benefit payable to Leslie D. Dunn in accordance with the Plan, the minimum annual benefit payable to Leslie D. Dunn commencing after Leslie D. Dunn's retirement prior to her attainment of age 65 shall be the amount determined by the formula "(A-B) x C," where: A= twelve times Average Monthly Compensation times the percentage of Annualized Average Monthly Compensation set forth in Attachment A to this Instrument, 2 B= the sum of (i) the annualized amounts, if any, payable to Leslie D. Dunn in accordance with the Pension Plan and the Cole National Group, Inc. Supplemental Pension Plan, assuming, in each case that she elected a single life annuity, and (ii) the installment payment deemed under (e) below to be paid to Leslie D. Dunn from the Cole National Group, Inc. Supplemental Retirement Benefit Plan, C= the early retirement reduction factor set forth in Attachment A to this Instrument for her age at the time of the commencement of benefits. (e) In computing benefits under (c) and (d) above, Leslie D. Dunn's benefits under the Cole National Group, Inc. Supplemental Retirement Benefit Plan shall be adjusted so that such benefits will equal, on an actuarial present value basis, the payments that otherwise would have been due her if she had elected an annual installment payment of the Cole National Group, Inc. Supplemental Retirement Benefit Plan over her life expectancy. (f) The benefit accrued under (c) and (d) above shall be nonforfeitable on and after the date Leslie D. Dunn attains age 55. 3. CONTRIBUTIONS TO SUPPLEMENTAL RETIREMENT BENEFIT PLAN. The Company shall credit to Leslie D. Dunn's account in the Supplemental Retirement Benefit Plan at not less than the following rates, provided Leslie D. Dunn is then employed by the Company: Annual YEAR ENDED CONTRIBUTION RATE December 31, 1997 through December 31, 2001 10% December 31, 2002 and subsequent years 15% Dated as of _____________, 2000 COLE NATIONAL GROUP, INC. By: ----------------------- Title: -------------------- 2 3 ATTACHMENT A TO THE INSTRUMENT DESIGNATING PARTICIPANT OF THE COLE NATIONAL GROUP, INC. 1999 SUPPLEMENTAL RETIREMENT BENEFIT PLAN FOR LESLIE D. DUNN ------------------------------- If Leslie D. Dunn retires before age 65, the following percentage of Annual Average Monthly Compensation and early retirement reduction factors apply: - -------------------------------------------------------------------------------- Early Retirement Reduction Percentage of Annualized Factors for Benefit Age at Average Monthly Commencement prior to Retirement Compensation Age 65* - -------------------------------------------------------------------------------- 55 10.0 0.50 - -------------------------------------------------------------------------------- 56 15.0 0.55 - -------------------------------------------------------------------------------- 57 20.0 0.60 - -------------------------------------------------------------------------------- 58 22.5 0.65 - -------------------------------------------------------------------------------- 59 25.0 0.70 - -------------------------------------------------------------------------------- 60 27.5 0.75 - -------------------------------------------------------------------------------- 61 30.0 0.80 - -------------------------------------------------------------------------------- 62 32.5 0.85 - -------------------------------------------------------------------------------- 63 35.0 0.90 - -------------------------------------------------------------------------------- 64 37.5 0.95 - -------------------------------------------------------------------------------- 65 40.0 1.00 (no reduction) - -------------------------------------------------------------------------------- *.004167 monthly EX-10.67 18 EXHIBIT 10.67 1 Exhibit 10.67 ADDENDUM TO EMPLOYMENT AGREEMENT -------------------------------- This Addendum amends the Employment Agreement (the "Agreement") entered into as of December 17, 1998 among Cole National Corporation, a Delaware corporation ("Parent"), Cole National Group, Inc., a Delaware corporation, Cole Vision Corporation, a Delaware corporation, Pearle, Inc., a Delaware corporation and Things Remembered, Inc., a Delaware corporation, and Jeffrey A. Cole, an individual residing in the State of Ohio ("Cole"). For purposes of Section 4(e) of the Agreement, the provision by Parent of $4,000,000 of insurance through a Split-Dollar Agreement entered into by Parent on June 4, 1999 with Jo Merrill, as Trustee of the Jeffrey A. Cole Insurance Trust, shall satisfy the Parent's obligations under such Section. The Split-Dollar Agreement provides for payment of premiums by the Parent, including acceleration of such premiums upon termination of Cole under the Agreement without cause, or upon a "change of control" as that term is defined in Section 6(c) of the Agreement, and that Parent shall protect Cole and the Trustee against income taxes and gift taxes arising from the foregoing events, as well as any action taken by Parent to cause the policy issued to the Trustee to be treated as a modified endowment contract under the Internal Revenue Code. Any of the foregoing events or actions shall constitute a "Payment" under the provisions of Section 7 of the Agreement. In addition, Parent shall create a grantor trust which, upon the occurrence of a threatened change of control or upon the termination of Cole under the Agreement without cause, shall be funded with an amount sufficient to enable the Trustee of such Trust to pay such amount to the Jeffrey A. Cole Insurance Trust and thus enable such Insurance 2 Trust to provide the Trust with fully paid up life insurance coverage to Cole's age 95, plus any additional payments to protect Cole and the Trust as provided in the preceding sentence. This Addendum has been executed by the parties on June 4, 1999. COLE NATIONAL CORPORATION By:/s/ Leslie D. Dunn ------------------------------- Title: Senior Vice President COLE NATIONAL GROUP, LNC. By:/s/ Leslie D. Dunn ------------------------------- Title: Senior Vice President PEARLE, INC. By:/s/ Leslie D. Dunn ------------------------------- Title: Senior Vice President COLE VISION CORPORATION By:/s/ Leslie D. Dunn ------------------------------- Title: Senior Vice President THINGS REMEMBERED LLNU. By:/s/ Leslie D. Dunn ------------------------------- Title: Senior Vice President /s/ JEFFREY A. COLE ---------------------------------- JEFFREY A. COLE EX-10.68 19 EXHIBIT 10.68 1 EXHIBIT 10.68 SPLIT-DOLLAR AGREEMENT THIS AGREEMENT is made and entered into as of the 4th day of June, 1999, by and between Cole National Corporation., a Delaware corporation, with principal offices and place of business in the State of Ohio (the "Corporation"), and Jo Merrill, as Trustee of the Jeffrey A. Cole Insurance Trust (the "Trust") dated June 2, 1999 (said Trustee and its successors are hereinafter referred to as the "Trustee"). WITNESSETH: ----------- WHEREAS, Jeffrey A. Cole (the "Insured Employee"), as the Chairman and Chief Executive Officer of the Corporation, is a valued officer, director and employee of the Corporation, and the Corporation desires to retain him in such capacity; WHEREAS, the Insured Employee has established the Trust to provide for the distribution to the beneficiaries of the Trust of the proceeds of certain life insurance protection; WHEREAS, such life insurance protection, payable upon the death of the Insured Employee (the "Insured"), will be provided under a policy of life insurance insuring the life of the Insured (the "Policy"), which is described in Exhibit A attached hereto and by this reference is made a part hereof, and which was issued by The Nationwide Life Insurance Company (the "Insurer"); WHEREAS, as an inducement to the continued employment of the Insured Employee with the Corporation, the Corporation desires to assist the Insured Employee with his personal life insurance program by entering into this Agreement with the Trustee; WHEREAS, the Corporation desires to pay the entire amount of the premium or premiums due on the Policy as an additional employment benefit for the Insured Employee, on the terms and conditions hereinafter set forth; WHEREAS, the Corporation wishes to have the Policy collaterally assigned to it by the Trustee, in order to secure the repayment to the Corporation of the amounts which it will pay toward the premiums on the Policy in the form of Collateral Assignment attached hereto as Exhibit 13 and by this reference is made a part hereof (the "Collateral Assignment`); and WHEREAS, the Trustee possesses all incidents of ownership in and to the Policy. NOW, THEREFORE, in consideration of the premises and of the mutual promises contained herein, the parties hereto agree as follows: 2 1. PURCHASE OF POLICY. The Trustee has purchased the Policy from the Insurer in the total face amount of $4,000,000. The parties hereto have taken all necessary actions to cause the Insurer to issue the Policy, and shall take any further actions which may be necessary to cause the Policy to conform to the provisions of this Agreement. The parties hereto agree that the Policy shall be subject to the terms and conditions of this Agreement and of the Collateral Assignment filed with the Insurer pursuant to Section 4 hereof. 2. OWNERSHIP OF POLICY. The Trustee shall be the sole and absolute owner of the Policy, and may exercise all ownership rights granted to the owners thereof by the terms of the Policy, except as may otherwise be provided herein. 3. PAYMENT OF PREMIUMS. a. Whether or not the Insured Employee is employed by the Corporation, on or before the due date of each premium due under the Policy, or within the grace period provided therein, the Corporation shall pay the full amount of the premium to the Insurer, and shall, upon request, promptly furnish the Insured Employee and the Trustee evidence of timely payment of such premium. The Corporation shall annually furnish the Insured Employee a statement of the amount of income reportable by the Insured Employee for federal and state income tax purposes, if any, as a result of the insurance protection provided under the Policy or for any other reason with respect to the Policy. b. The financial obligations of the Corporation under this Agreement shall be limited to the payment of the premium or premiums described in this Section, and the Corporation does not have or assume any liability or responsibility with respect to the obligations of the Insurer under the Policy or otherwise. Without limiting the generality of the foregoing, it is specifically provided that in the event of the insolvency or other default of payment by either the Insurer or the Trustee, the Corporation shall have no responsibility to make any payment to the Trust, the Trustees, the Insured Employee or any other person or entity to whom either the Insurer or the Trustee has an obligation, and any person or entity claiming entitlement to payments under the Policy may look only to the assets of the Insurer and any person or entity claiming entitlement to payments under the Trust may look only to the assets of the Trust. c. Dividends payable under the Policy shall be used to purchase paid-up additional insurance protection. 4. REPAYMENT OF PREMIUM PAYMENTS TO CORPORATION: COLLATERAL ASSIGNMENT. The Corporation is entitled, in accordance with the provisions of this Agreement, to the repayment to it of all of the premium or premiums it pays on the Policy pursuant to Section 3 hereof. To secure the repayment to the Corporation of the amount of the premium or premiums on the Policy paid by it hereunder, the Trustee shall assign the Policy to the Corporation as collateral under the Collateral Assignment. The Collateral Assignment shall not be terminated, altered or amended by the Trustee, without the express written consent of the Corporation. 2 3 5. CORPORATION'S INTEREST IN THE POLICY. a. The Corporation shall have an interest in the Policy equal to the amount of all of the premium or premiums it has paid under Section 3 hereof. b. The Corporation may pledge or assign its interest in the Policy, subject to the terms and conditions of this Agreement, for the sole purpose of securing a loan from a third party other than the Insurer or any affiliate of the Insurer. The amount of such loan, including accumulated interest thereon, shall not exceed the lesser of(i) the amount of the premium or premiums on the Policy paid by the Corporation hereunder or (ii) the cash surrender value of the Policy as of the date of the loan. Interest charges on such loan shall be paid by the Corporation. If the Corporation so encumbers the Policy then, upon the death of the Insured or upon termination of this Agreement, the Corporation shall promptly take all action necessary to secure the release or discharge of such encumbrance. c. The Trustee shall name the Corporation as a beneficiary under the Policy to the extent of the total amount of the premiums paid by the Corporation hereunder. 6. LIMITATIONS ON TRUSTEE'S RIGHTS IN POLICY. a. Except as otherwise provided herein, the Trustee shall not sell, assign, transfer, borrow against, surrender or cancel the Policy, nor change the beneficiary designation provision thereof as such beneficiary designation relates to the Corporation's interest in the Policy described in Section 5 hereof; without, in any such case, the express written consent of the Corporation. b. Notwithstanding any provision hereof to the contrary, the Trustee shall have the right to pledge or assign all of its right, title and interest in the Policy, subject to the Collateral Assignment. The Trustee may exercise this right by executing a written assignment delivered to the Insurer on a form acceptable to the Insurer, and delivering a copy of this form to the Corporation. Upon receipt of such form, executed by the Trustee and duly accepted by the assignee thereof, the Corporation shall consent thereto in writing, and shall thereafter treat such assignee as the sole owner of all of the Trustee's right, title and interest in and to the Policy, subject to this Agreement and the Collateral Assignment, all such rights being vested in and exercisable only by such assignee. 7. COLLECTION OF DEATH PROCEEDS. a. Upon the death of the Insured, the Corporation shall cooperate with the Trustee and any other beneficiary or beneficiaries designated by the Trustee to take whatever action is necessary to collect the death benefit provided under the Policy; when such benefit has been collected and paid as provided herein, this Agreement shall thereupon Terminate. b. Upon the death of the Insured, the Corporation shall have the unqualified right to receive a portion of such death benefit equal to the total amount of the premiums paid by it hereunder. The balance of the death benefit provided under the Policy, if any, shall be paid to 3 4 the Trust or directly to any other beneficiary or beneficiaries designated by the Trustee, in the manner and in the amount or amounts provided in the beneficiary designation provision of the Policy. In no event shall the amount payable to the Corporation hereunder exceed the Policy proceeds payable at the death of the Insured. No amount shall be paid from such death benefit to the Trust or to any other beneficiary or beneficiaries designated by the Trustee until the full amount due the Corporation hereunder has been paid. The parties hereto agree that the beneficiary designation provision of the Policy shall conform to the provisions hereof. c. Notwithstanding any provision hereof to the contrary, in the event that, for any reason whatsoever, no death benefit is payable under the Policy upon the death of the Insured and in lieu thereof the Insurer refunds all or any part of the premium or premiums paid for the Policy, the Corporation shall have the unqualified right to receive a portion of such refund equal to the total amount of the premiums paid by the Corporation hereunder, but not in excess of the amount of such refund. . 8. TERMINATION OF THE AGREEMENT PRIOR TO DEATH OF INSURANCE a. If the Policy is fully paid up sufficient to maintain coverage to the Insured's age 95 (using the Insurer's then current mortality and expense charges and lowest crediting rate for participating policies), and remains so following termination of this Agreement, then this Agreement shall terminate during the Insured's lifetime without notice upon the occurrence of the earliest of the following events: (i) total cessation of the Corporation's business; (ii) bankruptcy, receivership or dissolution of the Corporation; or (iii) June 2, 2014, or such other date thereafter on which the Corporation recovers its entire cost under the Policy. b. In addition, provided that no premium under the Policy is overdue, the Trustee may terminate this Agreement by written notice to the Corporation signed by the Trustee. Such termination shall be effective as of the date of such notice. c. Notwithstanding any other provision of this Agreement, (i) in the event of a "change of control" as that term is defined in Section 6(c) of the Employment Agreement dated as of December 17, 1998 among the Corporation, four of its subsidiaries and the Insured Employee as such agreement may be amended from time to time (the "Employment Agreement") or (ii) upon the termination of the Insured's employment with such subsidiaries for any reason not enumerated in Section 6(a)(i), (ii), (iii) or (iv) of the Employment Agreement (a "termination event"), then: (A) No later than 5 business days after a change of control of the Corporation or a termination event, the Corporation shall pay an additional amount to the Trustee sufficient to enable the Trustee to pay all additional premiums necessary to provide life insurance coverage to Insured's age 95 in the amount provided under Section 1 as of the date of the change of control or a termination event, as the case may be. 4 5 (B) For purposes of determining the amount of such additional payment or release necessary to fund the death benefits described in this Section 8(c), the Insurer's then current mortality and expense charges and lowest guaranteed crediting rate for participating policies shall be used. (C) In the event any payment under (A) causes or is deemed to cause the Policy to become a "modified endowment contract" as such term is defined in Section 7702A of the Internal Revenue Code of 1986, as amended, then upon any payment of income or excise tax by the Insured Employee or the Trustee with respect to such Policy, no later than 5 business days after any such payment the Corporation shall pay an additional payment to the Insured Employee or the Trustee sufficient to reimburse the Insured Employee or The Trustee for such taxes, including any penalties and interest. (D) In the event any payment under (A) or (C) is deemed to be taxable income and/or gifts to the Insured Employee or the Trust pursuant to applicable tax law or regulation, the Corporation shall furnish the Insured Employee and the Trustee with written notice of the amount of taxable income. The Corporation shall further pay additional compensation to the Insured Employee or the Trustee, as the case may be, in an amount sufficient to pay any applicable income taxes, and/or gift taxes, interest and penalties relating to the payments under (A) and/or (C) and the additional compensation. In addition, each payment of premium and payment to the Insured Employee and/or the Trustee under this Section 8(c) shall constitute a "Payment" under the provisions of Section 7 of the Employment Agreement. d. (i) Notwithstanding any other provision of this Agreement, in the event the Corporation takes any action which causes or is deemed to cause the Policy to become a "modified endowment contract" as defined in Section 8(c)(C), then upon payment of income or excise tax by the Trustee with respect to such Policy, no later than 5 business days after any such action the Corporation shall pay an additional payment to the Trustee sufficient to reimburse the Trustee for such taxes, including any penalties and interest. (ii) In the event any payment by the Corporation pursuant to Subsection (d)(i) is deemed to be taxable income and/or gifts to the Insured Employee or the Trust pursuant to applicable tax law or regulation, the Corporation shall furnish the Insured Employee and the Trustee with written notice of the amount of taxable income. The Corporation shall further pay additional compensation to the Insured Employee or the Trustee, as the case may be, in an amount sufficient to pay any applicable income taxes, and/or gift taxes, interest and penalties relating to the payment and the additional compensation. In addition, each payment to the Insured Employee and/or the Trustee under this Section 8(d) shall constitute a "Payment" under the provisions of Section 7 of the Employment Agreement. e. The Corporation and the Trustee each agree not to take any action without the consent of the other that causes the Policy to become a "modified endowment contract," as defined in Section 8(c)(C). 5 6 9. DISPOSITION OF THE POLICY ON TERMINATION OF THE AGREEMENT DURING THE INSURED EMPLOYEE'S LIFETIME. a. For 60 days after the date of the termination of this Agreement during the Insured Employee's lifetime, the Trustee shall have the option of obtaining the release of the Collateral Assignment. To obtain such release, the Trustee shall repay to the Corporation the total amount of the premium payments made by the Corporation hereunder. Upon receipt of such amount, the Corporation shall release the Collateral Assignment, by the execution and delivery of an appropriate instrument of release. b. If the Trustee fails to exercise such option within such 60 day period, then, at the request of the Corporation, the Trustee shall execute any document or documents required by the Insurer to transfer the interest of the Trustee in the Policy to the Corporation. Thereafter, the Trustee and the Trust shall have no further interest in and to the Policy, either under the terms thereof or under this Agreement, except as specifically provided herein. Alternatively, the Corporation may enforce its right to be repaid the amount of the premiums on the Policy paid by it from the cash surrender value of the Policy under the Collateral Assignment; provided that in the event the cash surrender value of the Policy exceeds the amount due the Corporation, such excess shall be paid to the Trustee. Any payments to the Corporation from the Policy pursuant to the preceding sentence shall first be made from the Policy's cash value attributable to the paid-up additional life insurance purchased by the Policy's dividends. 10. INSURER NOT A PARTY. The Insurer shall be fully discharged from its obligations under the Policy by payment of the Policy death benefit to the beneficiary or beneficiaries named in the Policy, subject to the terms and conditions of the Policy. In no event shall the Insurer be considered a party to this Agreement, or any modification or amendment hereof. No provision of this Agreement, nor of any modification or amendment hereof, shall in any way be construed as enlarging, changing, varying, or in any other way affecting the obligations of the Insurer as expressly provided in the Policy, except so far as the provisions hereof are made a part of the Policy by the Collateral Assignment executed by the Trustee and filed with the Insurer in connection herewith. 11. ERISA PROVISIONS; DETERMINATION OF BENEFITS. CLAIMS PROCEDURE: ADMINISTRATION. The following provisions of this Agreement are intended to meet the requirements of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), a. The Corporation is hereby designated as the administrator under this Agreement. The administrator shall have the authority to control and manage the operation and administration of this Agreement, shall have the sole and absolute discretion to interpret the provisions of this Agreement including, without limitation, by supplying omissions from, correcting deficiencies in, or resolving inconsistencies or ambiguities in, the language of this Agreement) and shall make any determinations and findings (including factual determinations and findings) with respect to the rights of the parties hereunder as may be required for the purposes of this Agreement. 6 7 b. (1) CLAIM. A person who believes that he, she or it is being denied a benefit to which he, she or it is entitled under this Agreement (a "Claimant") may file a written request for such benefit with the Corporation, setting forth his, her or its claim. The request may be addressed to the Secretary of the Corporation at its then principal place of business. (2) CLAIM DECISION. Upon receipt of a claim, the Compensation Committee of the Board of Directors of the Corporation shall provide the Claimant with a written determination within 90 days. The Compensation Committee may, however, extend the reply period for an additional 90 days for reasonable cause. If the claim is denied in whole or in part, the Compensation Committee shall provide a written determination setting forth: (a) the specific reason or reasons for such denial; (b) the specific reference to pertinent provisions of this Agreement on which such denial is based; (c) a description of any additional material or information necessary for the Claimant to perfect his, her or its claim and an explanation why such material or such information is necessary; (d) appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; and (e) the time limits for requesting a review under subsection (3) and for review under subsection (4) hereof. (3) REQUEST FOR REVIEW. Within 60 days after the receipt by the Claimant of the written determination described above, the Claimant may request in writing that the Board of Directors of the Corporation (the "Board"') review the determination of the Compensation Committee. Such request must be addressed to the Secretary of the Corporation, at his then principal place of business. The Claimant or his, her or its duly authorized representative may, but need not, review the pertinent documents and submit issues and comments in writing for consideration by the Board. If the Claimant does not request a review of the Compensation Committee's determination within such 60-day period, the Claimant shall be barred and estopped from challenging such determination. (4) REVIEW OF DECISION. Within 60 days after the Secretary's receipt of a request for review, the Board will review the Compensation Committee's determination. After considering all materials presented by the Claimant, the Board will provide a written determination setting forth the specific reasons for the decision and containing specific references to the pertinent provisions of this Agreement on which the decision is based. If special circumstances require that the 60-day period be extended, the Board will so notify the Claimant and will render the decision as soon as possible, but no later than 120 days after receipt of the request for review. c. The Corporation is the named fiduciary under the Agreement. d. The funding procedure under the Agreement is that all premiums on the Policy be remitted to the Insurer from the Corporation when due, as provided in Section 3 of this Agreement. e. The basis of payment of benefits under the Agreement is the direct payment of benefits by the Insurer, with such benefits to be based on the payment of premiums as provided in Section 3 of this Agreement. 7 8 12. AMENDMENT. This Agreement may not be amended, altered or modified, except by a written instrument signed by the parties hereto, or their respective successors or assigns, and may not be otherwise terminated except as provided herein. 13. BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of the Corporation and its successors and permitted assigns, and the Trustee, its successors, permitted assigns, heirs, executors, administrators and beneficiaries. 14. NOTICES. Any notice required or permitted to the given under this Agreement is to be in writing and either given by personal delivery or deemed to be delivered three (3) days after deposit, postage pre-paid, in the U.S. certified or registered mail, return receipt requested, addressed as follows: If to the Corporation: Cole National Corporation 5915 Landerbrook Drive Mayfield Hts., Ohio 44124 Attention: General Counsel with a copy to: Jeffrey A. Cole 5200 Three Village Drive Lyndhurst, Ohio 44124 If to the Trustee: Jo Merrill 5915 Landerbrook Drive Mayfield Heights, Ohio 44124 or at such other address as is specified in written notice given in the manner required in this Agreement. 15. NO EMPLOYMENT AGREEMENT. This Agreement shall not be deemed to constitute a contract of employment between the Corporation and the Insured Employee, nor shall any provision of this Agreement restrict the right of the Corporation to discharge the Insured Employee, or restrict the right of the Employee to terminate employment. 16. GOVERNING LAW. This Agreement, and the rights of the parties hereunder, shall be governed by and construed in accordance with the laws of the State of Ohio without regard to conflicts of laws. 8 9 IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in counterparts, as of the day and year first above written. /s/ Jo Merrill Date: June 4, 1999 -------------------------------- Trustee of the Jeffrey A. Cole Insurance Trust COLE NATIONAL CORPORATION By: /s/ Leslie D. Dunn ----------------------------- Title: Senior Vice President ------------------------- 9 10 Exhibit A --------- POLICY TERMS The following life insurance policy is subject to the attached Split-Dollar Agreement: Insurer: The Nationwide Life Insurance Company Insured: Jeffrey A. Cole Policy Number: N056058910 Face Amount: $4,000,000 Date of Issue: June 2, 1999 11 EXHIBIT B --------- COLLATERAL ASSIGNMENT For value received, Jo Merrill, as Trustee of the Jeffrey A. Cole Insurance Trust under the Trust Agreement dated June 2, 1999 (the "Assignor"), hereby assigns and transfers to Cole National Corporation, a Delaware corporation (the "Assignee"), Policy Number N056058910 issued by The Nationwide Life Insurance Company (the "Insurer") and any supplementary contracts issued in connection therewith (collectively, the "Policy") upon the life of Jeffrey A. Cole (the "Insured"), solely to the extent of the lesser of (i) the total of any and all amounts heretofore or hereafter paid or advanced by the Assignee for the payment of premiums or a portion of the premiums thereon; or (ii) upon surrender of the Policy other than upon the death of the Insured, the cash surrender value of the Policy increased by any outstanding Policy loans to the Trustee (i) or (ii) shall hereafter be referred to as the "Assignee's Interest"), subject. to all the terms and conditions of the Policy and to all superior liens, if any, which the Insurer may have against the Policy. The Assignor by this instrument, and Assignee by the acceptance of the assignment, hereby agree to the conditions and provisions herein set forth. 1. The Assignor is the owner of the Policy and may exercise any and all rights of ownership with respect thereto, except as otherwise specifically provided herein. It is expressly agreed that only the following specific rights are included in this assignment and pass by virtue hereof to the Assignee and may be exercised solely by the Assignee: (a) The right to collect the net proceeds of the Policy when it becomes a claim, by the death the Insured, up to the amount of the Assignee's Interest. (b) The right to obtain, upon surrender of the Policy by the Assignor, the amount of the cash surrender proceeds up to the amount of the Assignee's Interest. (c) The right to pledge or assign the Policy as security for a loan from a third party. 2. The Insurer is hereby authorized to recognize the Assignee's claims to rights hereunder without investigating the reason for any action taken by the Assignee, or the giving of any notice, or the application to be made by the Assignee of any amounts to be paid to the Assignee. The receipt of the Assignee for any sums received shall be a full discharge and release therefor to the Insurer. 12 Executed as of this 4th day of June, 1999. ---------------------------------------------- Trustee of the Jeffrey A. Cole Insurance Trust COLE NATIONAL CORPORATION By -------------------------------------------- Title: 2 EX-10.69 20 EXHIBIT 10.69 1 Exhibit 10.69 SEVENTH AMENDMENT SEVENTH AMENDMENT, dated as of April 21, 2000 (this "AMENDMENT"), to the Credit Agreement, dated as of November 15, 1996 (as amended, supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"), among COLE VISION CORPORATION, a Delaware corporation ("COLE VISION"), THINGS REMEMBERED, INC., a Delaware corporation ("THINGS REMEMBERED") and PEARLE, INC., a Delaware corporation ("PEARLE"; Cole Vision, Things Remembered and Pearle each being referred to as a "BORROWER" and collectively as the "BORROWERS"), the several banks and other financial institutions from time to time parties thereto (collectively, the "LENDERS") and CANADIAN IMPERIAL BANK OF COMMERCE, a Canadian-chartered bank acting through its New York Agency, as administrative agent for the Lenders thereunder (in such capacity, the "ADMINISTRATIVE AGENT"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Borrowers, the Lenders and the Administrative Agent are parties to the Credit Agreement; WHEREAS, the Borrowers have requested that the Administrative Agent and the Lenders amend certain provisions of the Credit Agreement as set forth herein; and WHEREAS, the Administrative Agent and the Lenders are willing to effect such amendment, but only upon the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Borrowers, the Lenders and the Administrative Agent hereby agree as follows: 1. DEFINED TERMS. Unless otherwise defined herein, terms defined in the Credit Agreement shall have such meanings when used herein. 2. AMENDMENT TO SUBSECTION 1.1. Subsection 1.1 of the Credit Agreement is hereby amended by: (a) inserting the following new definition in its proper alphabetical order: "SEVENTH AMENDMENT EFFECTIVE DATE": April 29, 2000. (b) "COVENANT MODIFICATION PERIOD": the period from and including January 30, 2000 to and including June 29, 2000. 2 3. AMENDMENT TO SUBSECTION 7.2(c). Subsection 7.2(c) of the Credit Agreement is hereby amended by deleting "(90 days in the case of the fiscal year ending January 29, 2000)" where it appears therein and substituting in lieu thereof "(May 19, 2000, in the case of the fiscal year ending January 29, 2000)". 4. REPRESENTATIONS AND WARRANTIES. Each Borrower hereby confirms, reaffirms and restates the representations and warranties made by it in Section 5 of the Credit Agreement, PROVIDED that each reference to the Credit Agreement therein shall be deemed to be a reference to the Credit Agreement after giving effect to this Amendment. Each Borrower represents and warrants that, after giving effect to this Amendment, no Default or Event of Default has occurred and is continuing. 5. CONDITIONS TO EFFECTIVENESS. This Amendment shall become effective on the date (the "AMENDMENT EFFECTIVE DATE") on which the Borrowers, the Lenders, and the Administrative Agent shall have executed and delivered to the Administrative Agent this Amendment, and the Guarantors and Cole National Corporation shall have executed and delivered to the Administrative Agent the Acknowledgment and Consent attached hereto. 6. CONTINUING EFFECT OF CREDIT AGREEMENT. This Amendment shall not constitute a waiver, amendment or modification of any other provision of the Credit Agreement not expressly referred to herein and shall not be construed as a waiver or consent to any further or future action on the part of the Borrowers that would require a waiver or consent of the Lenders or the Administrative Agent. Except as expressly amended or modified herein, the provisions of the Credit Agreement are and shall remain in full force and effect. 7. COUNTERPARTS. This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts (including by facsimile transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of copies of this Amendment signed by all the parties shall be lodged with the Borrowers and the Administrative Agent. 8. PAYMENT OF EXPENSES. The Borrowers agree, jointly and severally, to pay or reimburse the Administrative Agent for all of its out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of this Amendment and any other documents prepared in connection herewith, and the consummation and administration of the transactions contemplated hereby, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent. 9. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 3 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. COLE VISION CORPORATION By: /s/ Joseph Gaglioti ---------------------------------- Name: Joseph Gaglioti Title: Vice President & Treasurer THINGS REMEMBERED, INC. By: /s/ Joseph Gaglioti ---------------------------------- Name: Joseph Gaglioti Title: Vice President & Treasurer PEARLE, INC. By: /s/ Joseph Gaglioti ---------------------------------- Name: Joseph Gaglioti Title: Vice President & Treasurer CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY, as Administrative Agent By: ---------------------------------- Name: Title: CIBC INC. By: Name: ---------------------------------- Title: 4 CREDIT SUISSE FIRST BOSTON By: ___________________________________ Name: Title: By: ___________________________________ Name: Title: FIRST UNION NATIONAL BANK By: ___________________________________ Name: Title: NATIONAL CITY BANK By: ___________________________________ Name: Title: KEYBANK NATIONAL ASSOCIATION By: ___________________________________ Name: Title: FIFTH THIRD BANK, NORTHEASTERN OHIO By: ___________________________________ Name: Title: 5 ACKNOWLEDGMENT AND CONSENT (i) Cole National Corporation ("CNC"), as Guarantor under the Guarantee, dated as of March 7, 2000 (as amended, supplemented or otherwise modified from time to time, the "CNC GUARANTEE"), made by CNC in favor of the Administrative Agent, for the benefit of the Lenders, and (ii) each of the other undersigned corporations, as Guarantors under the Guarantee and Collateral Agreement, dated as of November 15, 1996 (as amended, supplemented or otherwise modified from time to time, the "GUARANTEE AND COLLATERAL AGREEMENT"), made by the undersigned corporations in favor of the Administrative Agent, for the benefit of the Lenders, hereby (a) consents to the transactions contemplated by this Amendment, and (b) acknowledges and agrees that the guarantees (and grants of collateral security therefor) contained in such CNC Guarantee and Guarantee and Collateral Agreement, as applicable, are, and shall remain, in full force and effect after giving effect to this Amendment, and all prior modifications to the Credit Agreement. COLE NATIONAL CORPORATION By: /s/ Joseph Gaglioti ------------------------------------ Name: Joseph Gaglioti Title: Vice President & Treasurer BAY CITIES OPTICAL COMPANY By: /s/ Joseph Gaglioti ------------------------------------ Name: Joseph Gaglioti Title: Vice President & Treasurer WESTERN STATES OPTICAL, INC. By: /s/ Joseph Gaglioti ------------------------------------ Name: Joseph Gaglioti Title: Vice President & Treasurer COLE VISION SERVICES, INC. By: /s/ Joseph Gaglioti ------------------------------------ Name: Joseph Gaglioti Title: Vice President & Treasurer 6 COLE MANAGEMENT SERVICES, INC. By: /s/ Joseph Gaglioti ---------------------------------- Name: Joseph Gaglioti Title: Vice President & Treasurer PEARLE VISIONCARE, INC. By: /s/ Joseph Gaglioti ---------------------------------- Name: Joseph Gaglioti Title: Vice President & Treasurer PEARLE VISION MANAGED CARE -- HMO OF TEXAS, INC. By: /s/ Joseph Gaglioti ---------------------------------- Name: Joseph Gaglioti Title: Vice President & Treasurer EX-21 21 EXHIBIT 21 1 EXHIBIT 21 ---------- LIST OF SUBSIDIARIES OF COLE NATIONAL CORPORATION

State of Names Subsidiaries Corporation Name Incorporation Do Business Under - ---------------- ------------- ----------------- Cole National Group, Inc. Delaware Cole Managed Vision, Inc. Delaware Cole Lens Supply, Inc. Delaware Contact Lens Supply Contact Lens Supply Co. Cole Vision Corporation Delaware Sears Optical BJ's Optical Department Target Optical Optical Factory Outlet Cole Vision Canada, Inc. New Brunswick, Canada Sears Optical Vision Club Pearle Vision Center Cole Vision Services, Inc. Delaware Western States Optical, Inc. Washington Sears Optical Things Remembered, Inc. Delaware Things Remembered Things Remembered Engraved Gifts Things Engraved HQ Gifts Gifts Remembered Pearle, Inc. Delaware Pearle VisionCare, Inc. California Pearle Vision (HMO) Pearle Vision Center of Commonwealth of Puerto Rico Pearle Vision Center Puerto Rico, Inc. Pearle Vision Express Pearle Express Pearle Vision, Inc. Delaware Pearle Vision Pearle Vision Center Pearle Vision Express Pearle Eyelab Express Pearle Eye-Tech Express Pearle Express Pearle Vision Managed Care HMO of Texas, Inc. Texas American Vision Centers, Inc. Delaware American Vision Centers Eyes First NuVision, Inc. Michigan Pearle Vision Vision Maintenance Organization, Inc. Michigan

EX-24 22 EXHIBIT 24 1 EXHIBIT 24 POWER OF ATTORNEY COLE NATIONAL CORPORATION KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer of Cole National Corporation, a Delaware corporation, hereby constitutes and appoints Jeffrey A. Cole, William P. Lahiff, Jr., and Joseph Gaglioti, and each of them, as the true and lawful attorney or attorneys-in-fact, with full power of substitution and revocation, for the undersigned and in the name, place and stead of the undersigned, to sign on behalf of the undersigned an Annual Report on Form 10-K for the fiscal year ended January 29, 2000, pursuant to Section 13 of the Securities Exchange Act of 1934 and to sign any and all amendments to such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting to said attorney or attorneys-in-fact, and each of them, full power and authority to do so and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorney or attorneys-in-fact or any of them or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Executed as of the 23rd day of March, 2000. /s/ Thomas T.s. Kaung /s/ Larry Pollock - ------------------------------------ ------------------------------- Thomas T.S. Kaung Larry Pollock Executive Vice President President and Director and Chief Financial Officer (Principal Financial Officer) /s/ Charles A. Ratner ------------------------------- Charles A. Ratner /s/ Timothy F. Finley Director - ------------------------------------ Timothy F. Finley Director /s/ Walter J. Salmon ------------------------------- /s/ Irwin N. Gold Walter J. Salmon - ------------------------------------ Irwin N. Gold Director Director /s/ Peter V. Handal /s/ Jeffrey A. Cole - ------------------------------------ ------------------------------- Peter V. Handal Jeffrey A. Cole Director Chairman and Chief Executive Officer and Director (Principal Executive Officer) EX-27 23 EXHIBIT 27

<ARTICLE> 5

<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENTS OF OPERATIONS FILED AS PART OF THE ANNUAL REPORT ON FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT ON FORM 10-K.

<MULTIPLIER> 1,000 <PERIOD-TYPE> 12-MOS <FISCAL-YEAR-END> JAN-29-2000 <PERIOD-START> JAN-31-1999 <PERIOD-END> JAN-29-2000 <CASH> 28,953 <SECURITIES> 0 <RECEIVABLES> 54,156 <ALLOWANCES> 7,557 <INVENTORY> 116,514 <CURRENT-ASSETS> 204,460 <PP&E> 267,633 <DEPRECIATION> 144,249 <TOTAL-ASSETS> 588,271 <CURRENT-LIABILITIES> 140,561 <BONDS> 284,584 <PREFERRED-MANDATORY> 0 <PREFERRED> 0 <COMMON> 16 <OTHER-SE> 146,500 <TOTAL-LIABILITY-AND-EQUITY> 588,271 <SALES> 1,066,422 <TOTAL-REVENUES> 1,066,422 <CGS> 359,704 <TOTAL-COSTS> 1,037,309 <OTHER-EXPENSES> 0 <LOSS-PROVISION> 0 <INTEREST-EXPENSE> 24,448 <INCOME-PRETAX> 4,655 <INCOME-TAX> 2,657 <INCOME-CONTINUING> 2,008 <DISCONTINUED> 0 <EXTRAORDINARY> 0 <CHANGES> 0 <NET-INCOME> 2,008 <EPS-BASIC> 0.13 <EPS-DILUTED> 0.13

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M;G0@9&%T960@36%Y(#8L(#$Y.3<@7"A&:6QE($YO+B`Q+3$R.#$T7"DN*51J M#0HO1C(@,2!49@T*,3(@,"`P(#$R(#(Y-BXX-2`S-S@N.#$@5&T-"BA8+30@ M*51J#0I%5`T*96YD&AI8FET*51J M#0HM,"XQ.3`U("TQ+C(S.#(@5$0-"ELH3G5M8F5R*2TQ-S8V,2XV*$0I,"XQ M*&5S8W)I<'1I;VXI751*#0I%5`T*,"XU($<-"C`@2B`P(&H@,"XR-"!W(#$P M($T@6UTP(&0-"C$@:2`-"C$T,2XX,2`X.#DN-3,@;0T*.34N-S,@.#@Y+C4S M(&P-"CDU+C2!A;F0@4&5R9F]R;6%N8V4@*5U42@T* M-BXV.3$Q("TQ+C$Q.3$@5$0-"BA);F-E;G1I=F4@4&QA;BP@:6YC;W)P;W)A M=&5D(&)Y(')E9F5R96YC92!T;R!!;FYE>"!"('1O($-O;&4@3F%T:6]N86P@ M0V]R<&]R871I;VY<,C(R2!3 M=&%T96UE;G0@9&%T960@36%Y(#$L(#$Y.3@@7"A&:6QE($YO+B`Q+3$R.#$T M7"DN*51J#0HM-BXV.3$Q("TQ+C(Q-#0@5$0-"ELH,3`N-#`I+30T-#$N,RA4 M:&ER9"!!;65N9&UE;G0@=&\@=&AE($-R961I="!!9W)E96UE;G0L(&1A=&5D M(&%S(&]F($UA>2`Q-2P@,3DY."P@86UO;F<@0V]L92`I751*#0HV+C8Y,3$@ M+3$N,3$Y,B!41`T**%9I2!R969E&AI8FET(#$P+C0Y(&]F($-O;&4@*51J#0I4*@T**$YA=&EO M;F%L($-O2`S,"P@*51J#0I4*@T* M*#$Y.3D@7"A&:6QE($YO+B`Q+3$R.#$T7"DN*51J#0HM-BXV.3$Q("TQ+C(Q M-#0@5$0-"ELH,3`N-#4J*2TS.30Q+C,H0V]L92!.871I;VYA;"!'&AI8FET(#$P M+C4R(&]F($-O;&4@3F%T:6]N86P@0V]R<&]R871I;VY<,C(R2`S,"P@,3DY.2!<*$9I;&4@3F\N(#$M,3(X,31<*2XI M5&H-"BTV+C8Y,3$@+3$N,C$T-"!41`T*6R@Q,"XT-RHI+3,Y-#$N,RA#;VQE M($YA=&EO;F%L($=R;W5P+"!);F,N($1E9F5R2`Q+"`I751*#0HV+C8Y,3$@ M+3$N,3$Y,B!41`T**#$Y.3DL(&EN8V]R<&]R871E9"!B>2!R969E&AI8FET(#$P+C4T(&]F($-O;&4@*51J#0I4*@T**$YA=&EO;F%L($-O M2`S,"P@*51J#0I4*@T**#$Y.3D@ M7"A&:6QE($YO+B`Q+3$R.#$T7"DN*51J#0HO1C(@,2!49@T*,3(@,"`P(#$R M(#(Y-BXX-2`S-34N,CD@5&T-"BA8+34@*51J#0I%5`T*96YD&AI8FET*51J#0HM,"XQ.3`U("TQ+C(S.#(@5$0- M"ELH3G5M8F5R*2TQ-S8V,2XV*$0I,"XQ*&5S8W)I<'1I;VXI751*#0I%5`T* M,"XU($<-"C`@2B`P(&H@,"XR-"!W(#$P($T@6UTP(&0-"C$@:2`-"C$T,2XX M,2`X.#DN-3,@;0T*.34N-S,@.#@Y+C4S(&P-"CDU+C&AI8FET(#$P+C$@;V8@0V]L92`I5&H- M"B]&-"`Q(%1F#0I4*@T**$YA=&EO;F%L($-O2!0;VQL;V-K(&1A=&5D(&%S(&]F($IA;G5A2`Q."P@ M,C`P,"XI5&H-"BTV+C8Y,3$@+3$N,C$T-"!41`T*6R@Q,"XU-BDM-#0T,2XS M*%-T86YD6UE;G0N M*51J#0HM-BXV.3$Q("TQ+C(Q-#0@5$0-"ELH,3`N-C`J*2TS.30Q+C,H3&5T 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EX-4.3

   1
                                                                   Exhibit 4.3









================================================================================










                                RIGHTS AGREEMENT


                         Dated as of November 22, 1999


                                 By and Between


                           Cole National Corporation


                                      and


                              National City Bank,
                                as Rights Agent











================================================================================

   2



                               TABLE OF CONTENTS
                               -----------------


                                                                      Page
                                                                      ----

1.       Certain Definitions ............................................1

2.       Appointment of Rights Agent ....................................6

3.       Issue of Right Certificates ....................................6

4.       Form of Right Certificates .....................................8

5.       Countersignature and Registration ..............................9

6.       Transfer, Split Up, Combination and Exchange of Right
         Certificates; Mutilated, Destroyed, Lost or Stolen Right
         Certificates ..................................................10

7.       Exercise of Rights; Purchase Price; Expiration Date of
         Rights ........................................................10

8.       Cancellation and Destruction of Right Certificates ............12

9.       Company Covenants Concerning Securities and Rights ............12

10.      Record Date ...................................................15

11.      Adjustment of Purchase Price, Number and Kind of Securities
         or Number of Rights ...........................................15

12.      Certificate of Adjusted Purchase Price or Number of
         Securities ....................................................26

13.      Consolidation, Merger or Sale or Transfer of Assets or
         Earning Power .................................................27

14.      Fractional Rights and Fractional Securities ...................30

15.      Rights of Action ..............................................32

16.      Agreement of Rights Holders ...................................32

17.      Right Certificate Holder Not Deemed a Stockholder .............33

18.      Concerning the Rights Agent ...................................34

19.      Merger or Consolidation or Change of Name of Rights Agent .....34


                                      (i)
   3


                                                                      Page
                                                                      ----

20.      Duties of Rights Agent ........................................35

21.      Change of Rights Agent ........................................37

22.      Issuance of New Right Certificates ............................38

23.      Redemption ....................................................39

24.      Exchange ......................................................40

25.      Notice of Certain Events ......................................41

26.      Notices .......................................................42

27.      Supplements and Amendments ....................................43

28.      Successors; Certain Covenants .................................44

29.      Benefits of This Agreement ....................................44

30.      Governing Law .................................................44

31.      Severability ..................................................44

32.      Descriptive Headings, Etc .....................................45

33.      Determinations and Actions by the Board .......................45

34.      Counterparts ..................................................45



Exhibit A .............................................................A-1

Exhibit B .............................................................B-1

Exhibit C .............................................................C-1



                                      (ii)

   4



                                RIGHTS AGREEMENT


      This RIGHTS AGREEMENT, dated as of November 22, 1999 (this "Agreement"),
is made and entered into by and between Cole National Corporation, a Delaware
corporation (the "Company"), and National City Bank, a national banking
association (the "Rights Agent").

                                    RECITALS

      WHEREAS, on November 18, 1999, the Board of the Company authorized and
declared a dividend distribution of one right (a "Right") for each share of
Common Stock, par value $.001 per share, of the Company (a "Common Share")
outstanding as of the Close of Business (as hereinafter defined) on December 6,
1999 (the "Record Date"), each Right initially representing the right to
purchase one one-hundredth of a Preferred Share (as hereinafter defined), on the
terms and subject to the conditions herein set forth, and further authorized and
directed the issuance of one Right (subject to adjustment as provided herein)
with respect to each Common Share issued or delivered by the Company (whether
originally issued or delivered from the Company's treasury) after the Record
Date but prior to the earlier of the Distribution Date (as hereinafter defined)
and the Expiration Date (as hereinafter defined) or as provided in Section 22.
Notwithstanding anything to the contrary in this Agreement, this Agreement will
not be effective until the effectiveness of the redemption of the rights issued
pursuant to that certain Rights Agreement, dated as of August 22, 1995, as
amended, by and between the Company and National City Bank.

      NOW, THEREFORE, in consideration of the mutual agreements herein set
forth, the parties hereto hereby agree as follows:

      1. CERTAIN DEFINITIONS. For purposes of this Agreement, the following
terms have the meanings indicated:

      (a) "ACQUIRING PERSON" means any Person (other than the Company, any
Related Person or HAL (for so long as HAL is in compliance with the terms of the
Standstill Agreement, dated as of November 22, 1999, as it may be amended from
time to time, by and between the Company and HAL, and only unless and until HAL
shall have become the Beneficial Owner of a percentage of Common Shares then
outstanding that equals or exceeds the HAL Percentage, at which time HAL shall
be an Acquiring Person)) who or which, together with all Affiliates and
Associates of such Person, is the Beneficial Owner of 15% or more of the then-
outstanding Common Shares; PROVIDED, HOWEVER, that a Person will


   5


not be deemed to have become an Acquiring Person solely as a result of a
reduction in the number of Common Shares outstanding unless and until such time
as (i) such Person or any Affiliate or Associate of such Person thereafter
becomes the Beneficial Owner of additional Common Shares representing 1% or
more of the then-outstanding Common Shares, other than as a result of a stock
dividend, stock split or similar transaction effected by the Company in which
all holders of Common Shares are treated equally, or (ii) any other Person who
is the Beneficial Owner of Common Shares representing 1% or more of the
then-outstanding Common Shares thereafter becomes an Affiliate or Associate of
such Person. Notwithstanding the foregoing, if the Board of Directors of the
Company determines in good faith that a Person who would otherwise be an
"Acquiring Person" as defined pursuant to the foregoing provisions of this
paragraph (a), has become such inadvertently, and such Person divests as
promptly as practicable a sufficient number of Common Shares so that such
Person would no longer be an "Acquiring Person" as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall not be
deemed to be an "Acquiring Person" for any purposes of this Agreement.

      (b) "AFFILIATE" and "ASSOCIATE" will have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act, as in effect on the date of this Agreement, PROVIDED HOWEVER, that
a Person will not be deemed to be the Affiliate or Associate of another Person
solely because either or both Persons are or were Directors of the Company.

      (c) A Person will be deemed the "BENEFICIAL OWNER" of and to "BENEFICIALLY
OWN," any securities:

          (i) the beneficial ownership of which such Person or any of such
     Person's Affiliates or Associates, directly or indirectly, has the right to
     acquire (whether such right is exercisable immediately or only after the
     passage of time) pursuant to any agreement, arrangement or understanding
     (whether or not in writing), or upon the exercise of conversion rights,
     exchange rights, warrants, options or other rights (in each case, other
     than upon exercise or exchange of the Rights); PROVIDED, HOWEVER, that a
     Person will not be deemed the Beneficial Owner of, or to Beneficially Own,
     securities tendered pursuant to a tender or exchange offer made by or on
     behalf of such Person or any of such Person's Affiliates or Associates
     until such tendered securities are accepted for purchase or exchange; or


                                       2
   6

          (ii) which such Person or any of such Person's Affiliates or
     Associates, directly or indirectly, has or shares the right to vote or
     dispose of, including pursuant to any agreement, arrangement or
     understanding (whether or not in writing); or

          (iii) of which any other Person is the Beneficial Owner, if such
     Person or any of such Person's Affiliates or Associates has any agreement,
     arrangement or understanding (whether or not in writing) with such other
     Person (or any of such other Person's Affiliates or Associates) with
     respect to acquiring, holding, voting or disposing of any securities of the
     Company;

PROVIDED, HOWEVER, that a Person will not be deemed the Beneficial Owner of, or
to Beneficially Own, any security (A) if such Person has the right to vote such
security pursuant to an agreement, arrangement or understanding (whether or not
in writing) which (1) arises solely from a revocable proxy given to such Person
in response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations of the Exchange Act and
(2) is not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report), or (B) if such beneficial ownership arises
solely as a result of such Person's status as a "clearing agency," as defined in
Section 3(a)(23) of the Exchange Act; PROVIDED FURTHER, HOWEVER, that nothing
in this paragraph (c) will cause a Person engaged in business as an underwriter
of securities to be the Beneficial Owner of, or to Beneficially Own, any
securities acquired through such Person's participation in good faith in an
underwriting syndicate until the expiration of 40 calendar days after the date
of such acquisition, or such later date as the Directors of the Company may
determine in any specific case.

      (d) "BUSINESS DAY" means any day other than a Saturday, Sunday or a day on
which banking institutions in the State of Ohio (or such other state in which
the principal office of the Rights Agent is located) are authorized or obligated
by law or executive order to close.

      (e) "CLOSE OF BUSINESS" on any given date means 5:00 P.M., Eastern time,
on such date; PROVIDED, HOWEVER, that if such date is not a Business Day it
means 5:00 P.M., Eastern time, on the next succeeding Business Day.

      (f) "COMMON SHARES" when used with reference to the Company means the
shares of Common Stock, par value $.001 per share, of the Company; PROVIDED,
HOWEVER, that, if the Company is the



                                       3
   7


continuing or surviving corporation in a transaction described in Section 13(a)
(ii), "Common Shares" when used with reference to the Company means shares of
the capital stock or units of the equity interests with the greatest aggregate
voting power of the Company. "Common Shares" when used with reference to any
corporation or other legal entity other than the Company, including an Issuer,
means shares of the capital stock or units of the equity interests with the
greatest aggregate voting power of such corporation or other legal entity.

      (g) "COMPANY" means Cole National Corporation, a Delaware corporation.

      (h) "DISTRIBUTION DATE" means the earlier of: (i) the Close of Business on
the tenth calendar day following the Share Acquisition Date, or (ii) the Close
of Business on the tenth Business Day (or, unless the Distribution Date shall
have previously occurred, such later date as may be specified by the Board of
Directors of the Company) after the commencement of a tender or exchange offer
by any Person (other than the Company or any Related Person), if upon the
consummation thereof such Person would be the Beneficial Owner of 15% or more of
the then-outstanding Common Shares.

      (i) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

      (j) "EXPIRATION DATE" means the earliest of (i) the Close of Business
on the Final Expiration Date, (ii) the time at which the Rights are redeemed as
provided in Section 23, and (iii) the time at which all exercisable Rights are
exchanged as provided in Section 24.

      (k) "FINAL EXPIRATION DATE" means the tenth anniversary of the Record
Date.

      (l) "FLIP-IN EVENT" means any event described in clauses (A), (B) or (C)
of Section 11(a)(ii).

      (m) "FLIP-OVER EVENT" means any event described in clauses (i), (ii) or
(iii) of Section 13(a).

      (n) "HAL" shall mean HAL Holding N.V. and its Affiliates and Associates.

      (o) "HAL PERCENTAGE" shall mean 25%. However, if on June 30, 2001, HAL is
not the Beneficial Owner (as defined in the Standstill Agreement) of 20% or more
of the Total Voting Power (as defined in the Standstill Agreement) outstanding
at the close



                                       4
   8


of business on June 30, 2001, then the HAL Percentage shall be reduced to the
greater of the Total Voting Power Beneficially Owned (each as defined in the
Standstill Agreement) by HAL on June 30, 2001 or 15%.

      (p) "ISSUER" has the meaning set forth in Section 13(b).

      (q) "NASDAQ" means The NASDAQ Stock Market.

      (r) "PERSON" means any individual, firm, corporation or other legal
entity, and includes any successor (by merger or otherwise) of such entity.

      (s) "PREFERRED SHARES" means shares of Series A Junior Participating
Preferred Stock, without par value, of the Company having the rights and
preferences set forth in the form of Certificate of Designation of Series A
Junior Participating Preferred Stock attached as EXHIBIT A.

      (t) "PURCHASE PRICE" means initially $40.00 per one one-hundredth of a
Preferred Share, subject to adjustment from time to time as provided in this
Agreement.

      (u) "RECORD DATE" has the meaning set forth in the Recitals to this
Agreement.

      (v) "REDEMPTION PRICE" means $.01 per Right, subject to adjustment by
resolution of the Board of Directors of the Company to reflect any stock split,
stock dividend or similar transaction occurring after the Record Date.

      (w) "RELATED PERSON" means (i) any Subsidiary of the Company or (ii) any
employee benefit or stock ownership plan of the Company or of any Subsidiary of
the Company or any entity holding Common Shares for or pursuant to the terms of
any such plan.

      (x) "RIGHT" has the meaning set forth in the Recitals to this Agreement.

      (y) "RIGHT CERTIFICATES" means certificates evidencing the Rights, in
substantially the form attached as EXHIBIT B.

      (z) "RIGHTS AGENT" means National City Bank, unless and until a successor
Rights Agent has become such pursuant to the terms of this Agreement, and
thereafter, "Rights Agent" means such successor Rights Agent.



                                       5
   9

      (aa) "SECURITIES ACT" means the Securities Act of 1933, as amended.

      (bb) "SHARE ACQUISITION DATE" means the first date of public announcement
by the Company (by press release, filing made with the Securities and Exchange
Commission or otherwise) that an Person has become such.

      (cc) "SUBSIDIARY" when used with reference to any Person means any
corporation or other legal entity of which a majority of the voting power of the
voting equity securities or equity interests is owned, directly or indirectly,
by such Person; PROVIDED, HOWEVER, that for purposes of Section 13(b),
"Subsidiary" when used with reference to any Person means any corporation or
other legal entity of which at least 20% of the voting power of the voting
equity securities or equity interests is owned, directly or indirectly, by such
Person.

      (dd) "TRADING DAY" means any day on which the principal national
securities exchange on which the Common Shares are listed or admitted to trading
is open for the transaction of business or, if the Common Shares are not listed
or admitted to trading on any national securities exchange, a Business Day.

      (ee) "TRIGGERING EVENT" means any Flip-in Event or Flip-over Event.

      2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the Rights
Agent to act as agent for the Company and the holders of the Rights (who, in
accordance with Section 3, will also be, prior to the Distribution Date, the
holders of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment and hereby
certifies that it complies with the requirements of the New York Stock Exchange
governing transfer agents and registrars. The Company may from time to time act
as Co-Rights Agent or appoint such Co-Rights Agents as it may deem necessary or
desirable. Any actions which may be taken by the Rights Agent pursuant to the
terms of this Agreement may be taken by any such Co-Rights Agent. To the extent
that any Co-Rights Agent takes any action pursuant to this Agreement, such
Co-Rights Agent will be entitled to all of the rights and protections of, and
subject to all of the applicable duties and obligations imposed upon, the Rights
Agent pursuant to the terms of this Agreement.

      3. ISSUE OF RIGHT CERTIFICATES. (a) Until the Distribution Date, (i) the
Rights will be evidenced by the certificates representing Common Shares
registered in the names of the record holders thereof (which certificates
representing


                                       6
   10


Common Shares will also be deemed to be Right Certificates), (ii) the Rights
will be transferable only in connection with the transfer of the underlying
Common Shares, and (iii) the surrender for transfer of any certificates
evidencing Common Shares in respect of which Rights have been issued will also
constitute the transfer of the Rights associated with the Common Shares
evidenced by such certificates.

      (b) Rights will be issued by the Company in respect of all Common Shares
(other than Common Shares issued upon the exercise or exchange of any Right)
issued or delivered by the Company (whether originally issued or delivered from
the Company's treasury) after the Record Date but prior to the earlier of the
Distribution Date and the Expiration Date. Certificates evidencing such Common
Shares will have stamped on, impressed on, printed on, written on, or otherwise
affixed to them the following legend or such similar legend as the Company may
deem appropriate and as is not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule or regulation of any
stock exchange or transaction reporting system on which the Common Shares may
from time to time be listed or quoted, or to conform to usage:

     This Certificate also evidences and entitles the holder hereof to certain
     Rights as set forth in a Rights Agreement between Cole National Corporation
     and National City Bank, dated as of November 22, 1999, as the same may be
     amended from time to time (the "Rights Agreement"), the terms of which are
     hereby incorporated herein by reference and a copy of which is on file at
     the principal executive offices of Cole National Corporation. The Rights
     are not exercisable prior to the occurrence of certain events specified in
     the Rights Agreement. Under certain circumstances, as set forth in the
     Rights Agreement, such Rights may be redeemed, may be exchanged, may
     expire, may be amended, or may be evidenced by separate certificates and no
     longer be evidenced by this Certificate. Cole National Corporation will
     mail to the holder of this Certificate a copy of the Rights Agreement, as
     in effect on the date of mailing, without charge promptly after receipt of
     a written request therefor. Under certain circumstances as set forth in the
     Rights Agreement, Rights that are or were beneficially owned by an
     Acquiring Person or any Affiliate or Associate of an Acquiring Person (as
     such terms are defined in the Rights Agreement) may become null and void.



                                       7
   11


      (c) Any Right Certificate issued pursuant to this Section 3 that
represents Rights beneficially owned by an Acquiring Person or any Associate or
Affiliate thereof and any Right Certificate issued at any time upon the transfer
of any Rights to an Acquiring Person or any Associate or Affiliate thereof or to
any nominee of such Acquiring Person, Associate or Affiliate and any Right
Certificate issued pursuant to Section 6 or 11 hereof upon transfer, exchange,
replacement or adjustment of any other Right Certificate referred to in this
sentence, shall be subject to and contain the following legend or such similar
legend as the Company may deem appropriate and as is not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage:

     The Rights represented by this Right Certificate are or were beneficially
     owned by a Person who was an Acquiring Person or an Affiliate or an
     Associate of an Acquiring Person (as such terms are defined in the Rights
     Agreement). This Right Certificate and the Rights represented hereby may
     become null and void in the circumstances specified in Section 11(a)(ii)
     or Section 13 of the Rights Agreement.

      (d) As promptly as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign and the Company
will send or cause to be sent (and the Rights Agent will, if requested, send),
by first class, insured, postage prepaid mail, to each record holder of Common
Shares as of the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right Certificate evidencing
one Right for each Common Share so held, subject to adjustment as provided
herein. As of and after the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.

      (e) In the event that the Company purchases or otherwise acquires any
Common Shares after the Record Date but prior to the Distribution Date, any
Rights associated with such Common Shares will be deemed canceled and retired so
that the Company will not be entitled to exercise any Rights associated with the
Common Shares so purchased or acquired.

      4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the form of
election to purchase and the form of assignment to be printed on the reverse
thereof) will be substantially in the form attached as EXHIBIT B with such
changes and marks of identification or designation, and such legends, summaries
or


                                       8
   12


endorsements printed thereon, as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or transaction
reporting system on which the Rights may from time to time be listed or quoted,
or to conform to usage. Subject to the provisions of Section 22, the Right
Certificates, whenever issued, on their face will entitle the holders thereof to
purchase such number of one one-hundredths of a Preferred Share as are set forth
therein at the Purchase Price set forth therein, but the Purchase Price, the
number and kind of securities issuable upon exercise of each Right and the
number of Rights outstanding will be subject to adjustment as provided herein.

      5. COUNTERSIGNATURE AND REGISTRATION. (a) The Right Certificates will be
executed on behalf of the Company by its Chairman of the Board, its President or
any Vice President, either manually or by facsimile signature, and will have
affixed thereto the Company's seal or a facsimile thereof which will be attested
by the Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates will be manually countersigned by
the Rights Agent and will not be valid for any purpose unless so countersigned.
In case any officer of the Company who signed any of the Right Certificates
ceases to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent, and issued and delivered
by the Company with the same force and effect as though the person who signed
such Right Certificates had not ceased to be such officer of the Company; and
any Right Certificate may be signed on behalf of the Company by any person who,
at the actual date of the execution of such Right Certificate, is a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such officer.

      (b) Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at the principal office of the Rights Agent designated for such
purpose and at such other offices as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange or any transaction reporting system on
which the Rights may from time to time be listed or quoted, books for
registration and transfer of the Right Certificates issued hereunder. Such books
will show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each


                                       9
   13


of the Right Certificates and the date of each of the Right Certificates.

      6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. (a) Subject to the
provisions of Sections 7(d) and if, at any time after the Close of Business on
the Distribution Date and prior to the Expiration Date, any Right Certificate or
Right Certificates representing exercisable Rights may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-hundredths
of a Preferred Share (or other securities, as the case may be) as the Right
Certificate or Right Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any such Right Certificate
or Rights Certificates must make such request in a writing delivered to the
Rights Agent and must surrender the Right Certificate or Right Certificates to
be transferred, split up, combined or exchanged at the principal office of the
Rights Agent designated for such purpose. Thereupon or as promptly as
practicable thereafter, subject to the provisions of Sections 7(d) and 14, the
Company will prepare, execute and deliver to the Rights Agent, and the Rights
Agent will countersign and deliver, a Right Certificate or Right Certificates,
as the case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.

      (b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, if requested by the Company,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will prepare, execute and
deliver a new Right Certificate of like tenor to the Rights Agent and the Rights
Agent will countersign and deliver such new Right Certificate to the registered
holder in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.

      7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS. (a) The
registered holder of any Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part at any time
after the



                                       10
   14


Distribution Date and prior to the Expiration Date, upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the office or offices of the Rights Agent
designated for such purpose, together with payment in cash, in lawful money of
the United States of America by certified check or bank draft payable to the
order of the Company, equal to the sum of (i) the exercise price for the total
number of securities as to which such surrendered Rights are exercised and (ii)
an amount equal to any applicable transfer tax required to be paid by the holder
of such Right Certificate in accordance with the provisions of Section 9(d).

      (b) Upon receipt of a Right Certificate representing exercisable Rights
with the form of election to purchase duly executed, accompanied by payment as
described above, the Rights Agent will promptly (i) requisition from any
transfer agent of the Preferred Shares (or make available, if the Rights Agent
is the transfer agent) certificates representing the number of one
one-hundredths of a Preferred Share to be purchased (and the Company hereby
irrevocably authorizes and directs its transfer agent to comply with all such
requests), or, if the Company elects to deposit Preferred Shares issuable upon
exercise of the Rights hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing such number of one
one-hundredths of a Preferred Share as are to be purchased (and the Company
hereby irrevocably authorizes and directs such depositary agent to comply with
all such requests), (ii) after receipt of such certificates (or depositary
receipts, as the case may be), cause the same to be delivered to or upon the
order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder, (iii) when appropriate,
requisition from the Company or any transfer agent therefor (or make available,
if the Rights Agent is the transfer agent) certificates representing the number
of equivalent common shares to be issued in lieu of the issuance of Common
Shares in accordance with the provisions of Section 11(a)(iii), (iv) when
appropriate, after receipt of such certificates, cause the same to be delivered
to or upon the order of the registered holder of such Right Certificate,
registered in such name or names as may be designated by such holder, (v) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of the issuance of fractional shares in accordance with the provisions of
Section 14 or in lieu of the issuance of Common Shares in accordance with the
provisions of Section 11(a)(iii), (vi) when appropriate, after receipt, deliver
such cash to or upon the order of the registered holder of such Right
Certificate, and (vii) when appropriate, deliver any due bill or other
instrument provided to the Rights Agent by the


                                       11
   15

Company for delivery to the registered holder of such Right Certificate as
provided by Section 11(1).

      (c) In case the registered holder of any Right Certificate exercises less
than all the Rights evidenced thereby, the Company will prepare, execute and
deliver a new Right Certificate evidencing Rights equivalent to the Rights
remaining unexercised and the Rights Agent will countersign and deliver such new
Right Certificate to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14.

      (d) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company will be obligated to undertake any action with
respect to any purported transfer, split up, combination or exchange of any
Right Certificate pursuant to Section 6 or exercise of a Right Certificate as
set forth in this Section 7 unless the registered holder of such Right
Certificate has (i) completed and signed the certificate following the form of
assignment or the form of election to purchase, as applicable, set forth on the
reverse side of the Right Certificate surrendered for such transfer, split up,
combination, exchange or exercise and (ii) provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company may reasonably request.

      8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange will, if surrendered to the Company or to any of its
stock transfer agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, will be canceled by it,
and no Right Certificates will be issued in lieu thereof except as expressly
permitted by the provisions of this Agreement. The Company will deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent will so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent will deliver
all canceled Right Certificates to the Company, or will, at the written request
of the Company, destroy such canceled Right Certificates, and in such case will
deliver a certificate of destruction thereof to the Company.

      9. COMPANY COVENANTS CONCERNING SECURITIES AND RIGHTS. The Company
covenants and agrees that:

          (a) It will cause to be reserved and kept available out of its
     authorized and unissued Preferred Shares or any



                                       12
   16


Preferred Shares held in its treasury, a number of Preferred Shares that will be
sufficient to permit the exercise in full of all outstanding Rights in
accordance with Section 7.

      (b) So long as the Preferred Shares (and, following the occurrence of a
Triggering Event, Common Shares and/or other securities) issuable upon the
exercise of the Rights may be listed on a national securities exchange, or
quoted on Nasdaq, it will endeavor to cause, from and after such time as the
Rights become exercisable, all securities reserved for issuance upon the
exercise of Rights to be listed on such exchange, or quoted on Nasdaq, upon
official notice of issuance upon such exercise.

      (c) It will take all such action as may be necessary to ensure that all
Preferred Shares (and, following the occurrence of a Triggering Event, Common
Shares and/or other securities) delivered upon exercise of Rights, at the time
of delivery of the certificates for such securities, will be (subject to payment
of the Purchase Price) duly authorized, validly issued, fully paid and
nonassessable securities.

      (d) It will pay when due and payable any and all federal and state
transfer taxes and charges that may be payable in respect of the issuance or
delivery of the Right Certificates and of any certificates representing
securities issued upon the exercise of Rights; PROVIDED, HOWEVER, that the
Company will not be required to pay any transfer tax or charge which may be
payable in respect of any transfer or delivery of Right Certificates to a person
other than, or the issuance or delivery of certificates or depositary receipts
representing securities issued upon the exercise of Rights in a name other than
that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise, or to issue or deliver any certificates or depositary
receipts representing securities issued upon the exercise of any Rights until
any such tax or charge has been paid (any such tax or charge being payable by
the holder of such Right Certificate at the time of surrender) or until it has
been established to the Company's reasonable satisfaction that no such tax is
due.

      (e) It will use its best efforts (i) to file on an appropriate form, as
soon as practicable following the later of the Share Acquisition Date and the
Distribution Date, a registration statement under the Securities Act with
respect to the securities issuable upon exercise of the Rights, (ii) to cause
such registration statement to become effective as soon as practicable after
such filing, and (iii) to cause



                                       13
   17


such registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities and
(B) the Expiration Date. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the Rights.
The Company may temporarily suspend, for a period of time after the date set
forth in clause (i) of the first sentence of this Section 9(e), the
exercisability of the Rights in order to prepare and file such registration
statement and to permit it to become effective. Upon any such suspension, the
Company will issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. In addition, if the Company
determines that a registration statement should be filed under the Securities
Act or any state securities laws following the Distribution Date, the Company
may temporarily suspend the exercisability of the Rights in each relevant
jurisdiction until such time as a registration statement has been declared
effective and, upon any such suspension, the Company will issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. Notwithstanding anything in this Agreement to the contrary,
the Rights will not be exercisable in any jurisdiction if the requisite
registration or qualification in such jurisdiction has not been effected or the
exercise of the Rights is not permitted under applicable law.

      (f) Notwithstanding anything in this Agreement to the contrary, after the
later of the Share Acquisition Date and the Distribution Date it will not take
(or permit any Subsidiary to take) any action if at the time such action taken
it is reasonably foreseeable that such action will eliminate or otherwise
diminish the benefits intended to be afforded by the Rights.

      (g) In the event that the Company is obligated to issue other securities
of the Company and/or pay cash pursuant to Section 11, 13, 14 or 24 it will make
all arrangements necessary so that such other securities and/or cash are
available for distribution by the Rights Agent, if and when appropriate.


                                       14
   18


      10. RECORD DATE. Each Person in whose name any certificate representing
Preferred Shares (or Common Shares and/or other securities, as the case may be)
is issued upon the exercise of Rights will for all purposes be deemed to have
become the holder of record of the Preferred Shares (or Common Shares and/or
other securities, as the case may be) represented thereby on, and such
certificate will be dated, the date upon which the Right Certificate evidencing
such Rights was duly surrendered and payment of the Purchase Price (and all
applicable transfer taxes) was made; PROVIDED, HOWEVER, that if the date of such
surrender and payment is a date upon which the transfer books of the Company for
the Preferred Shares (or Common Shares and/or other securities, as the case may
be) are closed, such Person will be deemed to have become the record holder of
such securities on, and such certificate will be dated, the next succeeding
Business Day on which the transfer books of the Company for the Preferred Shares
(or Common Shares and/or other securities, as the case may be) are open. Prior
to the exercise of the Rights evidenced thereby, the holder of a Right
Certificate will not be entitled to any rights of a holder of any security for
which the Rights are or may become exercisable, including, without limitation,
the right to vote, to receive dividends or other distributions, or to exercise
any preemptive rights, and will not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.

      11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SECURITIES OR NUMBER
OF RIGHTS. The Purchase Price, the number and kind of securities issuable upon
exercise of each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.

     (a) (i) In the event that the Company at any time after the Record Date (A)
     declares a dividend on the Preferred Shares payable in Preferred Shares,
     (B) subdivides the outstanding Preferred Shares, (C) combines the
     outstanding Preferred Shares into a smaller number of Preferred Shares, or
     (D) issues any shares of its capital stock in a reclassification of the
     Preferred Shares (including any such reclassification in connection with a
     consolidation or merger in which the Company is the continuing or surviving
     corporation), except as otherwise provided in this Section 11(a), the
     Purchase Price in effect at the time of the record date for such dividend
     or of the effective date of such subdivision, combination or
     reclassification and/or the number and/or kind of shares of capital stock
     issuable on such date upon exercise of a Right, will be proportionately
     adjusted so that the holder of any Right exercised after such time is
     entitled to receive upon payment of the



                                       15
   19


     Purchase Price then in effect the aggregate number and kind of shares of
     capital stock which, if such Right had been exercised immediately prior to
     such date and at a time when the transfer books of the Company for the
     Preferred Shares were open, the holder of such Right would have owned upon
     such exercise (and, in the case of a reclassification, would have retained
     after giving effect to such reclassification) and would have been entitled
     to receive by virtue of such dividend, subdivision, combination or
     reclassification; PROVIDED, HOWEVER, that in no event shall the
     consideration to be paid upon the exercise of one Right be less than the
     aggregate par value of the shares of capital stock issuable upon exercise
     of one Right. If an event occurs which would require an adjustment under
     both this Section 11(a)(i) and Section 11(a)(ii) or Section 13, the
     adjustment provided for in this Section 11(a)(i) will be in addition to,
     and will be made prior to, any adjustment required pursuant to Section
     11(a)(ii) or Section 13.

         (ii) Subject to the provisions of Section 24, if:

          (A) any Person becomes an Acquiring Person; or

          (B) any Acquiring Person or any Affiliate or Associate of any
     Acquiring Person, directly or indirectly, (1) merges into the Company or
     otherwise combines with the Company and the Company is the continuing or
     surviving corporation of such merger or combination (other than in a
     transaction subject to Section 13), (2) merges or otherwise combines with
     any Subsidiary of the Company, (3) in one or more transactions (otherwise
     than in connection with the exercise, exchange or conversion of securities
     exercisable or exchangeable for or convertible into shares of any class of
     capital stock of the Company or any of its Subsidiaries) transfers cash,
     securities or any other property to the Company or any of its Subsidiaries
     in exchange (in whole or in part) for shares of any class of capital stock
     of the Company or any of its Subsidiaries or for securities exercisable or
     exchangeable for or convertible into shares of any class of capital stock
     of the Company or any of its Subsidiaries, or otherwise obtains from the
     Company or any of its Subsidiaries, with or without consideration, any
     additional shares of any class of capital stock of the Company or any of
     its Subsidiaries or securities exercisable or exchangeable for or
     convertible into shares of any class of capital stock of the Company or any
     of its Subsidiaries (otherwise than as part of a pro rata distribution to
     all holders of shares of any class of capital stock of the Company, or any
     of its Subsidiaries), (4) sells, purchases,



                                       16
   20

     leases, exchanges, mortgages, pledges, transfers or otherwise disposes (in
     one or more transactions) to, from, with or of, as the case may be, the
     Company or any of its Subsidiaries (otherwise than in a transaction subject
     to Section 13), any property, including securities, on terms and conditions
     less favorable to the Company than the Company would be able to obtain in
     an arm's-length transaction with an unaffiliated third party, (5) receives
     any compensation from the Company or any of its Subsidiaries other than
     compensation as a director or a regular full-time employee, in either case
     at rates consistent with the Company's (or its Subsidiaries') past
     practices, or (6) receives the benefit, directly or indirectly (except
     proportionately as a stockholder), of any loans, advances, guarantees,
     pledges or other financial assistance or any tax credits or other tax
     advantage provided by the Company or any of its Subsidiaries; or

          (C) during such time as there is an Acquiring Person, there is any
     reclassification of securities of the Company (including any reverse stock
     split), or any recapitalization of the Company, or any merger or
     consolidation of the Company with any of its Subsidiaries, or any other
     transaction or series of transactions involving the Company or any of its
     Subsidiaries (whether or not with or into or otherwise involving an
     Acquiring Person), other than a transaction subject to Section 13, which
     has the effect, directly or indirectly, of increasing by more than 1% the
     proportionate share of the outstanding shares of any class of equity
     securities of the Company or any of its Subsidiaries, or of securities
     exercisable or exchangeable for or convertible into equity securities of
     the Company or any of its Subsidiaries, of which an Acquiring Person, or
     any Affiliate or Associate of any Acquiring Person, is the Beneficial
     Owner;

     then, and in each such case, from and after the latest of the Distribution
     Date, the Share Acquisition Date and the date of the occurrence of such
     Flip-in Event, proper provision will be made so that each holder of a
     Right, except as provided below, will thereafter have the right to receive,
     upon exercise thereof in accordance with the terms of this Agreement at an
     exercise price per Right equal to the product of the then-current Purchase
     Price multiplied by the number of one one-hundredths of a Preferred Share
     for which a Right was exercisable immediately prior to the date of the
     occurrence of such Flip-in Event (or, if any other Flip-in Event shall have
     previously occurred, the product of the then-current Purchase Price
     multiplied by the number of



                                       17
   21


     one one-hundredths of a Preferred Share for which a Right was exercisable
     immediately prior to the date of the first occurrence of a Flip-in Event),
     in lieu of Preferred Shares, such number of Common Shares as equals the
     result obtained by (x) multiplying the then-current Purchase Price by the
     number of one one-hundredths of a Preferred Share for which a Right was
     exercisable immediately prior to the date of the occurrence of such Flip-in
     Event (or, if any other Flip-in Event shall have previously occurred,
     multiplying the then-current Purchase Price by the number of one
     one-hundredths of a Preferred Share for which a Right was exercisable
     immediately prior to the date of the first occurrence of a Flip-in Event),
     and dividing that product by (y) 50% of the current per share market price
     of the Common Shares (determined pursuant to Section 11(d)) on the date of
     the occurrence of such Flip-in Event. Notwithstanding anything in this
     Agreement to the contrary, from and after the first occurrence of a Flip-in
     Event, any Rights that are Beneficially Owned by (A) any Acquiring Person
     (or any Affiliate or Associate of any Acquiring Person), (B) a transferee
     of any Acquiring Person (or any such Affiliate or Associate) who becomes a
     transferee after the occurrence of a Flip-in Event, or (C) a transferee of
     any Acquiring Person (or any such Affiliate or Associate) who became a
     transferee prior to or concurrently with the occurrence of a Flip-in Event
     pursuant to either (1) a transfer from an Acquiring Person to holders of
     its equity securities or to any Person with whom it has any continuing
     agreement, arrangement or understanding regarding the transferred Rights or
     (2) a transfer which the Directors of the Company have determined is part
     of a plan, arrangement or understanding which has the purpose or effect of
     avoiding the provisions of this Section 11(a)(ii), and subsequent
     transferees of any of such Persons, will be void without any further action
     and any holder of such Rights will thereafter have no rights whatsoever
     with respect to such Rights under any provision of this Agreement. The
     Company will use all reasonable efforts to ensure that the provisions of
     this Section 11(a)(ii) are complied with, but will have no liability to any
     holder of Right Certificates or any other Person as a result of its failure
     to make any determinations with respect to an Acquiring Person or its
     Affiliates, Associates or transferees hereunder. Upon the occurrence of a
     Flip-in Event, no Right Certificate that represents Rights that are or have
     become void pursuant to the provisions of this Section 11(a)(ii) will
     thereafter be issued pursuant to Section 3 or Section 6, and any Right
     Certificate delivered to the Rights Agent that represents Rights that are
     or have become void pursuant to the provisions of this Section


                                       18
   22


     11(a)(ii) will be canceled. Upon the occurrence of a Flip-over Event, any
     Rights that shall not have been previously exercised pursuant to this
     Section 11 (a)(ii) shall thereafter be exercisable only pursuant to
     Section 13 and not pursuant to this Section 11(a)(ii).

     (iii) Upon the occurrence of a Flip-in Event, if there are not sufficient
     Common Shares authorized but unissued or issued but not outstanding to
     permit the issuance of all the Common Shares issuable in accordance with
     Section 11(a)(ii) upon the exercise of a Right, the Board of Directors of
     the Company will use its best efforts promptly to authorize and, subject to
     the provisions of Section 9(e), make available for issuance additional
     Common Shares or other equity securities of the Company having equivalent
     voting rights and an equivalent value (as determined in good faith by the
     Board of Directors of the Company) to the Common Shares (for purposes of
     this Section 11(a)(iii), "equivalent common shares"). In the event that
     equivalent common shares are so authorized, upon the exercise of a Right in
     accordance with the provisions of Section 7, the registered holder will be
     entitled to receive (A) Common Shares, to the extent any are available, and
     (B) a number of equivalent common shares, which the Board of Directors of
     the Company has determined in good faith to have a value equivalent to the
     excess of (x) the aggregate current per share market value on the date of
     the occurrence of the most recent Flip-in Event of all the Common Shares
     issuable in accordance with Section 11(a)(ii) upon the exercise of a Right
     (the "Exercise Value") over (y) the aggregate current per share market
     value on the date of the occurrence of the most recent Flip-in Event of any
     Common Shares available for issuance upon the exercise of such Right;
     PROVIDED, HOWEVER, that if at any time after 90 calendar days after the
     latest of the Share Acquisition Date, the Distribution Date and the date of
     the occurrence of the most recent Flip-in Event, there are not sufficient
     Common Shares and/or equivalent common shares available for issuance upon
     the exercise of a Right, then the Company will be obligated to deliver,
     upon the surrender of such Right and without requiring payment of the
     Purchase Price, Common Shares (to the extent available), equivalent common
     shares (to the extent available) and then cash (to the extent permitted by
     applicable law and any agreements or instruments to which the Company is a
     party in effect immediately prior to the Share Acquisition Date), which
     securities and cash have an aggregate value equal to the excess of (1) the
     Exercise Value over (2) the product of the then-current Purchase Price
     multiplied by the number of one one-hundredths of a Preferred Share for
     which a Right


                                       19
   23

     was exercisable immediately prior to the date of the occurrence of the most
     recent Flip-in Event (or, if any other Flip-in Event shall have previously
     occurred, the product of the then-current Purchase Price multiplied by the
     number of one one-hundredths of a Preferred Share for which a Right would
     have been exercisable immediately prior to the date of the occurrence of
     such Flip-in Event if no other Flip-in Event had previously occurred). To
     the extent that any legal or contractual restrictions prevent the Company
     from paying the full amount of cash payable in accordance with the
     foregoing sentence, the Company will pay to holders of the Rights as to
     which such payments are being made all amounts which are not then
     restricted on a pro rata basis and will continue to make payments on a pro
     rata basis as promptly as funds become available until the full amount due
     to each such Rights holder has been paid.

      (b) In the event that the Company fixes a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or securities having equivalent
rights, privileges and preferences as the Preferred Shares (for purposes of this
Section 11(b), "equivalent preferred shares")) or securities convertible into
Preferred Shares or equivalent preferred shares at a price per Preferred Share
or equivalent preferred share (or having a conversion price per share, if a
security convertible into Preferred Shares or equivalent preferred shares) less
than the current per share market price of the Preferred Shares (determined
pursuant to Section 11(d)) on such record date, the Purchase Price to be in
effect after such record date will be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which is the number of Preferred Shares outstanding on such record
date plus the number of Preferred Shares which the aggregate offering price of
the total number of Preferred Shares and/or equivalent preferred shares so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current per share market
price and the denominator of which is the number of Preferred Shares outstanding
on such record date plus the number of additional Preferred Shares and/or
equivalent preferred shares to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible);
PROVIDED, HOWEVER, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock issuable upon exercise of one Right. In case such subscription or
ice may be paid in a consideration part or all of which is in a


                                       20
   24


form other than cash, the value of such consideration will be as determined in
good faith by the Board of Directors of the Company, whose determination will be
described in a statement filed with the Rights Agent. Preferred Shares owned by
or held for the account of the Company will not be deemed outstanding for the
purpose of any such computation. Such adjustment will be made successively
whenever such a record date is fixed, and in the event that such rights, options
or warrants are not so issued, the Purchase Price will be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.

      (c) In the event that the Company fixes a record date for the making of a
distribution to all holders of Preferred Shares (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, cash (other
than a regular periodic cash dividend), assets, stock (other than a dividend
payable in Preferred Shares) or subscription rights, options or warrants
(excluding those referred to in Section 11 (b)), the Purchase Price to be in
effect after such record date will be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which is the current per share market price of the Preferred Shares
(as determined pursuant to Section 11(d)) on such record date or, if earlier,
the date on which Preferred Shares begin to trade on an ex-dividend or when
issued basis for such distribution, less the fair market value (as determined in
good faith by the Board of Directors of the Company, whose determination will be
described in a statement filed with the Rights Agent) of the portion of the
evidences of indebtedness, cash, assets or stock so to be distributed or of such
subscription rights, options or warrants applicable to one Preferred Share, and
the denominator of which is such current per share market price of the Preferred
Shares; PROVIDED, HOWEVER, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock issuable upon exercise of one Right. Such adjustments
will be made successively whenever such a record date is fixed; and in the event
that such distribution is not so made, the Purchase Price will again be adjusted
to be the Purchase Price which would then be in effect if such record date had
not been fixed.

     (d) (i) For the purpose of any computation hereunder, the "current per
     share market price" of Common Shares on any date will be deemed to be the
     average of the daily closing prices per share of such Common Shares for the
     30 consecutive Trading Days immediately prior to such date;


                                       21
   25


     PROVIDED, HOWEVER, that in the event that the current per share market
     price of the Common Shares is determined during a period following the
     announcement by the issuer of such Common Shares of (A) a dividend or
     distribution on such Common Shares payable in such Common Shares or
     securities convertible into such Common Shares (other than the Rights) or
     (B) any subdivision, combination or reclassification of such Common Shares,
     and prior to the expiration of 30 Trading Days after the ex-dividend date
     for such dividend or distribution, or the record date for such subdivision,
     combination or reclassification, then, and in each such case, the current
     per share market price will be appropriately adjusted to take into account
     ex-dividend trading or to reflect the current per share market price per
     Common Share equivalent. The closing price for each day will be the last
     sale price, regular way, or, in case no such sale takes place on such day,
     the average of the closing bid and asked prices, regular way, in either
     case as reported in the principal consolidated transaction reporting system
     with respect to securities listed or admitted to trading on the New York
     Stock Exchange or, if the Common Shares are not listed or admitted to
     trading on the New York Stock Exchange, as reported in the principal
     consolidated transaction reporting system with respect to securities listed
     on the principal national securities exchange on which the Common Shares
     are listed or admitted to trading or, if the Common Shares are not listed
     or admitted to trading on any national securities exchange, the last quoted
     price or, if not so quoted, the average of the high bid and low asked
     prices in the over-the-counter market, as reported by Nasdaq or such other
     system then in use, or, if on any such date the Common Shares are not
     quoted by any such organization, the average of the closing bid and asked
     prices as furnished by a professional market maker making a market in the
     Common Shares selected by the Board of Directors of the Company. If the
     Common Shares are not publicly held or not so listed or traded, or are not
     the subject of available bid and asked quotes, "current per share market
     price" will mean the fair value per share as determined in good faith by
     the Board of Directors of the Company, whose determination will be
     described in a statement filed with the Rights Agent.

          (ii) For the purpose of any computation hereunder, the "current per
     share market price" of the Preferred Shares will be determined in the same
     manner as set forth above for Common Shares in Section 11(d)(i), other
     than the last sentence thereof. If the current per share market price of
     the Preferred Shares cannot be determined in the manner



                                       22
   26


     provided above, the "current per share market price" of the Preferred
     Shares will be conclusively deemed to be an amount equal to the current
     per share market price of the Common Shares multiplied by one hundred (as
     such number may be appropriately adjusted to reflect events such as stock
     splits, stock dividends, recapitalizations or similar transactions
     relating to the Common Shares occurring after the date of this Agreement).
     If neither the Common Shares nor the Preferred Shares are publicly held or
     so listed or traded, or the subject of available bid and asked quotes,
     "current per share market price" of the Preferred Shares will mean the
     fair value per share as determined in good faith by the Board of Directors
     of the Company, whose determination will be described in a statement filed
     with the Rights Agent. For all purposes of this Agreement, the current per
     share market price of one one-hundredth of a preferred Share will be equal
     to the current per share market price of one Preferred Share divided by
     one hundred.

      (e) Except as set forth below, no adjustment in the Purchase Price will be
required unless such adjustment would require an increase or decrease of at
least 1% in such price; PROVIDED, HOWEVER, that any adjustments which by reason
of this Section 11(e) are not required to be made will be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 will be made to the nearest cent or to the nearest one one-millionth
of a Preferred Share or one ten-thousandth of a Common Share or other security,
as the case may be. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 will be made no later than the
earlier of (i) three years from the date of the transaction which requires such
adjustment and (ii) the Expiration Date.

      (f) If as a result of an adjustment made pursuant to Section 11(a), the
holder of any Right thereafter exercised becomes entitled to receive any
securities of the Company other than Preferred Shares, thereafter the number
and/or kind of such other securities so receivable upon exercise of any Right
(and/or the Purchase Price in respect thereof) will be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Preferred Shares (and the Purchase Price
in respect thereof) contained in this Section 11, and the provisions of Sections
7, 9, 10, 13 and 14 with respect to the Preferred Shares (and the Purchase Price
in respect thereof) will apply on like terms to any such other securities (and
the Purchase Price in respect thereof).


                                       23
   27


      (g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder will evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share issuable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.

      (h) Unless the Company has exercised its election as provided in Section
11(i), upon each adjustment of the Purchase Price pursuant to Section 11(b) or
Section 11(c), each Right outstanding immediately prior to the making of such
adjustment will thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-hundredths of a Preferred Share
(calculated to the nearest one one-millionth of a Preferred Share) obtained by
(i) multiplying (x) the number of one one-hundredths of a Preferred Share
issuable upon exercise of a Right immediately prior to such adjustment of the
Purchase Price by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.

      (i) The Company may elect, on or after the date of any adjustment of the
Purchase Price, to adjust the number of Rights in substitution for any
adjustment in the number of one one-hundredths of a Preferred Share issuable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights will be exercisable for the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights will become that number of Rights (calculated
to the nearest one ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase Price. The Company
will make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. Such record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, will be at least 10 calendar days later than the
date of the public announcement. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i), the
Company will, as promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right Certificates evidencing,
subject to the provisions of Section 14, the additional Rights to which such
holders are entitled as a result of such adjustment, or, at the


                                       24
   28



option of the Company, will cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
are entitled after such adjustment. Right Certificates so to be distributed will
be issued, executed, and countersigned in the manner provided for herein (and
may bear, at the option of the Company, the adjusted Purchase Price) and will be
registered in the names of the holders of record of Right Certificates on the
record date specified in the public announcement.

      (j) Without respect to any adjustment or change in the Purchase Price
and/or the number and/or kind of securities issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number and kind of securities which were
expressed in the initial Right Certificate issued hereunder.

      (k) Before taking any action that would cause an adjustment reducing the
Purchase Price below one one-hundredth of the then par value, if any, of the
Preferred Shares or below the then par value, if any, of any other securities of
the Company issuable upon exercise of the Rights, the Company will take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
Preferred Shares or such other securities, as the case may be, at such adjusted
Purchase Price.

      (l) In any case in which this Section 11 otherwise requires that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of Preferred Shares or other securities of the Company, if any,
issuable upon such exercise over and above the number of Preferred Shares or
other securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment; PROVIDED,
HOWEVER, that the Company delivers to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
Preferred Shares or other securities upon the occurrence of the event requiring
such adjustment.

      (m) Notwithstanding anything in this Agreement to the contrary, the
Company will be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in its


                                       25
   29


good faith judgment the Board of Directors of the Company determines to be
advisable in order that any (i) consolidation or subdivision of the Preferred
Shares, (ii) issuance wholly for cash of Preferred Shares at less than the
current per share market price therefor, (iii) issuance wholly for cash of
Preferred Shares or securities which by their terms are convertible into or
exchangeable for Preferred Shares, (iv) stock dividends, or (v) issuance of
rights, options or warrants referred to in this Section 11, hereafter made by
the Company to holders of its Preferred Shares is not taxable to such
stockholders.

      (n) Notwithstanding anything in this Agreement to the contrary, in the
event that the Company at any time after the Record Date prior to the
Distribution Date (i) pays a dividend on the outstanding Common Shares payable
in Common Shares, (ii) subdivides the outstanding Common Shares, (iii) combines
the outstanding Common Shares into a smaller number of shares, or (iv) issues
any shares of its capital stock in a reclassification of the outstanding Common
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation), the
number of Rights associated with each Common Share then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, will be
proportionately adjusted so that the number of Rights thereafter associated with
each Common Share following any such event equals the result obtained by
multiplying the number of Rights associated with each Common Share immediately
prior to such event by a fraction the numerator of which is the total number of
Common Shares outstanding immediately prior to the occurrence of the event and
the denominator of which is the total number of Common Shares outstanding
immediately following the occurrence of such event. The adjustments provided for
in this Section 11(n) will be made successively whenever such a dividend is paid
or such a subdivision, combination or reclassification is effected.

      12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SECURITIES.
Whenever an adjustment is made as provided in Section 11 or Section 13, the
Company will promptly (a) prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Preferred Shares and the
Common Shares a copy of such certificate, and (c) if such adjustment is made
after the Distribution Date, mail a brief summary of such adjustment to each
holder of a Right Certificate in accordance with Section 26.


                                       26
   30


      13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER.
(a) In the event that:

          (i) at any time after a Person has become an Acquiring Person, the
     Company consolidates with, or merges with or into, any other Person and the
     Company is not the continuing or surviving corporation of such
     consolidation or merger; or

          (ii) at any time after a Person has become an Acquiring Person, any
     Person consolidates with the Company, or merges wIth or into the Company,
     and the Company is the continuing or surviving corporation of such merger
     or consolidation and, in connection with such merger or consolidation, all
     or part of the Common Shares is changed into or exchanged for stock or
     other securities of any other Person or cash or any other property; or

          (iii) at any time after a Person has become an Acquiring Person, the
     Company, directly or indirectly, sells or otherwise transfers (or one or
     more of its Subsidiaries sells or otherwise transfers), in one or more
     transactions, assets or earning power (including without limitation
     securities creating any obligation on the part of the Company and/or any of
     its Subsidiaries) representing in the aggregate more than 50% of the assets
     or earning power of the Company and its Subsidiaries (taken as a whole) to
     any Person or Persons other than the Company or one or more of its wholly
     owned Subsidiaries;

then, and in each such case, proper provision will be made so that from and
after the latest of the Share Acquisition Date, the Distribution Date and the
date of the occurrence of such Flip-over Event (A) each holder of a Right
thereafter has the right to receive, upon the exercise thereof in accordance
with the terms of this Agreement at an exercise price per Right equal to the
product of the then-current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the Share Acquisition Date, such number of duly authorized,
validly issued, fully paid, nonassessable and freely tradeable Common Shares of
the Issuer, free and clear of any liens, encumbrances and other adverse claims
and not subject to any rights of call or first refusal, as equals the result
obtained by (x) multiplying the then-current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right is exercisable immediately
prior to the Share Acquisition Date and dividing that product by (y) 50% of the
current per share market price of the Common Shares of the Issuer (determined
pursuant to Section 11(d)), on the date of the occurrence of such Flip-over
Event; (B) the Issuer will


                                       27
   31


thereafter be liable for, and will assume, by virtue of the occurrence of such
Flip-over Event, all the obligations and duties of the Company pursuant to this
Agreement; (C) the term "Company" will thereafter be deemed to refer to the
Issuer; and (D) the Issuer will take such steps (including without limitation
the reservation of a sufficient number of its Common Shares to permit the
exercise of all outstanding Rights) in connection with such consummation as may
be necessary to assure that the provisions hereof are thereafter applicable, as
nearly as reasonably may be possible, in relation to its Common Shares
thereafter deliverable upon the exercise of the Rights.

      (b) For purposes of this Section 13, "Issuer" means (i) in the case of any
Flip-over Event described in Sections 13(a)(i) or (ii) above, the Person that is
the continuing, surviving, resulting or acquiring Person (including the Company
as the continuing or surviving corporation of a transaction described in Section
13(a)(ii) above), and (ii) in the case of any Flip-over Event described in
Section 13(a)(iii) above, the Person that is the party receiving the greatest
portion of the assets or earning power (including without limitation securities
creating any obligation on the part of the Company and/or any of its
Subsidiaries) transferred pursuant to such transaction or transactions;
PROVIDED, HOWEVER, that, in any such case, (A) if (1) no class of equity
security of such Person is, at the time of such merger, consolidation or
transaction and has been continuously over the preceding 12-month period,
registered pursuant to Section 12 of the Exchange Act, and (2) such Person is a
Subsidiary, directly or indirectly, of another Person, a class of equity
security of which is and has been so registered, the term "Issuer" means such
other Person; and (B) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, a class of equity security of two or more
of which are and have been so registered, the term "Issuer" means whichever of
such Persons is the issuer of the equity security having the greatest aggregate
market value. Notwithstanding the foregoing, if the Issuer in any of the
Flip-over Events listed above is not a corporation or other legal entity having
outstanding equity securities, then, and in each such case, (x) if the Issuer is
directly or indirectly wholly owned by a corporation or other legal entity
having outstanding equity securities, then all references to Common Shares of
the Issuer will be deemed to be references to the Common Shares of the
corporation or other legal entity having outstanding equity securities which
ultimately controls the Issuer, and (y) if there is no such corporation or other
legal entity having outstanding equity securities, (I) proper provision will be
made so that the Issuer creates or otherwise makes available for purposes of the
exercise of the Rights in accordance with the terms of this Agreement, a kind or


                                       28
   32


kinds of security or securities having a fair market value at least equal to the
economic value of the Common Shares which each holder of a Right would have been
entitled to receive if the issuer had been a corporation or other legal entity
having outstanding equity securities; and (II) all other provisions of this
Agreement will apply to the issuer of such securities as if such securities were
Common Shares.

      (c) The Company will not consummate any Flip-over Event if, (i) at the
time of or immediately after such Flip-over Event, there are or would be any
rights, warrants, instruments or securities outstanding or any agreements or
arrangements in effect which would eliminate or substantially diminish the
benefits intended to be afforded by the Rights, (ii) prior to, simultaneously
with or immediately after such Flip-over Event, the stockholders of the Person
who constitutes, or would constitute, the Issuer for purposes of Section 13(a)
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates or Associates, or (iii) the form or nature of the
organization of the Issuer would preclude or limit the exercisability of the
Rights. In addition, the Company will not consummate any Flip-over Event unless
the Issuer has a sufficient number of authorized Common Shares (or other
securities as contemplated in Section 13(b) above) which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this Section 13 and unless prior to such consummation the Company and the
Issuer have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in subsections (a) and (b) of this Section 13
and further providing that as promptly as practicable after the consummation of
any Flip-over Event, the Issuer will:

          (A) prepare and file a registration statement under the Securities Act
     with respect to the Rights and the securities issuable upon exercise of the
     Rights on an appropriate form, and use its best efforts to cause such
     registration statement to (1) become effective as soon as practicable after
     such filing and (2) remain effective (with a prospectus at all times
     meeting the requirements of the Securities Act) until the Expiration Date;

          (B) take all such action as may be appropriate under, or to ensure
     compliance with, the securities or "blue sky" laws of the various states in
     connection with the exercisability of the Rights; and

          (C) deliver to holders of the Rights historical financial statements
     for the Issuer and each of its


                                       29
   33


     Affiliates which comply in all respects with the requirements for
     registration on Form 10 under the Exchange Act.

      (d) The provisions of this Section 13 will similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that a
Flip-over Event occurs at any time after the occurrence of a Flip-in Event,
except for Rights that have become void pursuant to Section 11(a)(ii), Rights
that shall not have been previously exercised will cease to be exercisable in
the manner provided in Section 11(a)(ii) and will thereafter be exercisable in
the manner provided in Section 13(a).

      14. FRACTIONAL RIGHTS AND FRACTIONAL SECURITIES. (a) The Company will not
be required to issue fractions of Rights or to distribute Right Certificates
which evidence fractional Rights. In lieu of such fractional Rights, the Company
will pay as promptly as practicable to the registered holders of the Right
Certificates with regard to which such fractional Rights otherwise would be
issuable, an amount in cash equal to the same fraction of the current market
value of one Right. For the purposes of this Section 14(a), the current market
value of one Right is the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights otherwise would
have been issuable. The closing price for any day is the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other system then in
use, or if on any such date the Rights are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors of
the Company. If the Rights are not publicly held or are not so listed or traded,
or are not the subject of available bid and asked quotes, the current market
value of one Right will mean the fair value thereof as determined in good faith
by the Board of


                                       30
   34

Directors of the Company, whose determination will be described in a statement
filed with the Rights Agent.

      (b) The Company will not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-hundredth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-hundredth of a Preferred Share
may, at the election of the Company, be evidenced by depositary receipts
pursuant to an appropriate agreement between the Company and a depositary
selected by it, provided that such agreement provides that the holders of such
depositary receipts have all the rights, privileges and preferences to which
they are entitled as beneficial owners of the Preferred Shares represented by
such depositary receipts. In lieu of fractional Preferred Shares that are not
integral multiples of one one-hundredth of a Preferred Share, the Company may
pay to any Person to whom or which such fractional Preferred Shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of one Preferred Share. For purposes of this Section 14(b),
the current market value of one Preferred Share is the closing price of the
Preferred Shares (as determined in the same manner as set forth for Common
Shares in the second sentence of Section 11(d)(i)) for the Trading Day
immediately prior to the date of such exercise; PROVIDED, HOWEVER, that if the
closing price of the Preferred Shares cannot be so determined, the closing price
of the Preferred Shares for such Trading Day will be conclusively deemed to be
an amount equal to the closing price of the Common Shares (determined pursuant
to the second sentence of Section 11(d)(i)) for such Trading Day multiplied by
one hundred (as such number may be appropriately adjusted to reflect events such
as stock splits, stock dividends, recapitalizations or similar transactions
relating to the Common Shares occurring after the date of this Agreement);
PROVIDED FURTHER, HOWEVER, that if neither the Common Shares nor the Preferred
Shares are publicly held or listed or admitted to trading on any national
securities exchange, or the subject of available bid and asked quotes, the
current market value of one Preferred Share will mean the fair value thereof as
determined in good faith by the Board of Directors of the Company, whose
determination will be described in a statement filed with the Rights Agent.

      (c) Following the occurrence of a Triggering Event, the Company will not
be required to issue fractions of Common Shares or other securities issuable
upon exercise or exchange of the Rights or to distribute certificates which
evidence any such


                                       31
   35


fractional securities. In lieu of issuing any such fractional securities, the
Company may pay to any Person to whom or which such fractional securities would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of one such security. For purposes of this Section 14(c),
the current market value of one Common Share or other security issuable upon the
exercise or exchange of Rights is the closing price thereof (as determined in
the same manner as set forth for Common Shares in the second sentence of Section
11(d)(i)) for the Trading Day immediately prior to the date of such exercise or
exchange; PROVIDED, HOWEVER, that if neither the Common Shares nor any such
other securities are publicly held or listed or admitted to trading on any
national securities exchange, or the subject of available bid and asked quotes,
the current market value of one Common Share or such other security will mean
the fair value thereof as determined in good faith by the Board of Directors of
the Company, whose determination will mean the fair value thereof as will be
described in a statement filed with the Rights Agent.

      15. RIGHTS OF ACTION. All rights of action in respect of this Agreement,
excepting the rights of action given to the Rights Agent under Section 18, are
vested in the respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the Common Shares);
and any registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the holder of any Common Shares), may in his own behalf
and for his own benefit enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
his right to exercise the Rights evidenced by such Right Certificate in the
manner provided in such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under this Agreement, and injunctive relief
against actual or threatened violations of the obligations of any Person subject
to this Agreement.

      16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by accepting the
same consents and agrees with the Company and the Rights Agent and with every
other holder of a Right that:


                                       32
   36


          (a) Prior to the Distribution Date, the Rights are transferable only
     in connection with the transfer of the Common Shares;

          (b) After the Distribution Date, the Right Certificates are
     transferable only on the registry books of the Rights Agent if surrendered
     at the principal office of the Rights Agent designated for such purpose,
     duly endorsed or accompanied by a proper instrument of transfer;

          (c) The Company and the Rights Agent may deem and treat the person in
     whose name the Right Certificate (or, prior to the Distribution Date, the
     associated Common Share certificate) is registered as the absolute owner
     thereof and of the Rights evidenced thereby (notwithstanding any notations
     of ownership or writing on the Right Certificate or the associated Common
     Share certificate made by anyone other than the Company or the Rights
     Agent) for all purposes whatsoever, and neither the Company nor the Rights
     Agent will be affected by any notice to the contrary;

          (d) Such holder expressly waives any right to receive any fractional
     Rights and any fractional securities upon exercise or exchange of a Right,
     except as otherwise provided in Section 14.

          (e) Notwithstanding anything in this Agreement to the contrary,
     neither the Company nor the Rights Agent will have any liability to any
     holder of a Right or other Person as a result of its inability to perform
     any of its obligations under this Agreement by reason of any preliminary or
     permanent injunction or other order, decree or ruling issued by a court of
     competent jurisdiction or by a governmental, regulatory or administrative
     agency or commission, or any statute, rule, regulation or executive order
     promulgated or enacted by any governmental authority, prohibiting or
     otherwise restraining performance of such obligation; PROVIDED, HOWEVER,
     that the Company will use its best efforts to have any such order, decree
     or ruling lifted or otherwise overturned as soon as possible.

      17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No holder, as such,
of any Right Certificate will be entitled to vote, receive dividends, or be
deemed for any purpose the holder of Preferred Shares or any other securities of
the Company which may at any time be issuable upon the exercise of the Rights
represented thereby, nor will anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of


                                       33
   37


the Company or any right to vote for the election of Directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 25), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance with
the provisions of this Agreement or exchanged pursuant to the provisions of
Section 24.

      18. CONCERNING THE RIGHTS AGENT. (a) The Company will pay to the Rights
Agent reasonable compensation for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company will also indemnify the Rights Agent for, and hold it
harmless against, any loss, liability, suit, action, proceeding or expense,
incurred without negligence, bad faith, or willful misconduct on the part of the
Rights Agent, for anything done or omitted to be done by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability arising
therefrom, directly or indirectly.

      (b) The Rights Agent will be protected and will incur no liability for
or in respect of any action taken, suffered, or omitted by it in connection with
its administration of this Agreement in reliance upon any Right Certificate or
certificate evidencing Preferred Shares or Common Shares or other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement or other paper or document believed by it to be genuine and to be
signed, executed, and, where necessary, verified or acknowledged, by the proper
Person or Persons.

      19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT. (a) Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent is a party, or any corporation succeeding to the corporate trust business
of the Rights Agent or any successor Rights Agent, will be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21. If at the time


                                       34
   38


such successor Rights Agent succeeds to the agency created by this Agreement any
of the Right Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of the predecessor
Rights Agent and deliver such Right Certificates so countersigned; and if at
that time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates will have the full force
provided in the Right Certificates and in this Agreement.

      (b) If at any time the name of the Rights Agent changes and at such time
any of the Right Certificates have been countersigned but not delivered, the
Rights Agent may adopt the countersignature under its prior name and deliver
Right Certificates so countersigned; and if at that time any of the Right
Certificates have not been countersigned, the Rights Agent may countersign such
Right Certificates either in its prior name or in its changed name; and in all
such cases such Right Certificates will have the full force provided in the
Right Certificates and in this Agreement.

      20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Right Certificates, by their
acceptance thereof, will be bound:

          (a) The Rights Agent may consult with legal counsel (who may be legal
     counsel for the Company), and the opinion of such counsel will be full and
     complete authorization and protection to the Rights Agent as to any action
     taken or omitted by it in good faith and in accordance with such opinion.

          (b) Whenever in the performance of its duties under this Agreement the
     Rights Agent deems it necessary or desirable that any fact or matter be
     proved or established by the Company prior to taking or suffering any
     action hereunder, such fact or matter (unless other evidence in respect
     thereof be herein specifically prescribed) may be deemed to be conclusively
     proved and established by a certificate signed by any one of the Chairman
     of the Board, the President, any Vice President, the Secretary or the
     Treasurer of the Company and delivered to the Rights Agent, and such
     certificate will be full authorization to the Rights Agent for any action
     taken or suffered in good faith


                                       35
   39


     by it under the provisions of this Agreement in reliance upon such
     certificate.

          (c) The Rights Agent will be liable hereunder only for its own gross
     negligence, bad faith or willful misconduct.

          (d) The Rights Agent will not be liable for or by reason of any of the
     statements of fact or recitals contained in this Agreement or in the Right
     Certificates (except its countersignature thereof) or be required to verify
     the same, but all such statements and recitals are and will be deemed to
     have been made by the Company only.

          (e) The Rights Agent will not be under any responsibility in respect
     of the validity of this Agreement or the execution and delivery hereof
     (except the due execution and delivery hereof by the Rights Agent) or in
     respect of the validity or execution of any Right Certificate (except its
     countersignature thereof); nor will it be responsible for any breach by
     the Company of any covenant contained in this Agreement or in any Right
     Certificate; nor will it be responsible for any adjustment required under
     the provisions of Sections 11 or 13 (including any adjustment which results
     in Rights becoming void) or responsible for the manner, method or amount of
     any such adjustment or the ascertaining of the existence of facts that
     would require any such adjustment (except with respect to the exercise of
     Rights evidenced by Right Certificates after actual notice of any such
     adjustment); nor will it by any act hereunder be deemed to make any
     representation or warranty as to the authorization or reservation of any
     shares of stock or other securities to be issued pursuant to this Agreement
     or any Right Certificate or as to whether any shares of stock or other
     securities will, when issued, be duly authorized, validly issued, fully
     paid and nonassessable.

          (f) The Company will perform, execute, acknowledge and deliver or
     cause to be performed, executed, acknowledged and delivered all such
     further and other acts, instruments and assurances as may reasonably be
     required by the Rights Agent for the carrying out or performing by the
     Rights Agent of the provisions of this Agreement.

          (g) The Rights Agent is hereby authorized and directed to accept
     instructions with respect to the performance of its duties hereunder from
     any one of the Chairman of the Board, the President, any Vice President,
     the Secretary or the Treasurer of the Company, and to apply to such
     officers


                                       36
   40


     for advice or instructions in connection with its duties, and it will not
     be liable for any action taken or suffered to be taken by it in good faith
     in accordance with instructions of any such officer.

          (h) The Rights Agent and any stockholder, director, officer or
     employee of the Rights Agent may buy, sell or deal in any of the Rights or
     other securities of the Company or become pecuniarily interested in any
     transaction in which the Company may be interested, or contract with or
     lend money to the Company or otherwise act as fully and freely as though it
     were not Rights Agent under this Agreement. Nothing herein will preclude
     the Rights Agent from acting in any other capacity for the Company or for
     any other Person.

          (i) The Rights Agent may execute and exercise any of the rights or
     powers hereby vested in it or perform any duty hereunder either itself or
     by or through its attorneys or agents, and the Rights Agent will not be
     answerable or accountable for any act, default, neglect or misconduct of
     any such attorneys or agents or for any loss to the Company resulting from
     any such act, default, neglect or misconduct, provided reasonable care was
     exercised in the selection and continued employment thereof. The Rights
     Agent will not be under any duty or responsibility to ensure compliance
     with any applicable federal or state securities laws in connection with the
     issuance, transfer or exchange of Right Certificates.

          (j) If, with respect to any Right Certificate surrendered to the
     Rights Agent for exercise, transfer, split up, combination or exchange,
     either (i) the certificate attached to the form of assignment or form of
     election to purchase, as the case may be, has either not been completed or
     indicates an affirmative response to clause l or 2 thereof, or (ii) any
     other actual or suspected irregularity exists, the Rights Agent will not
     take any further action with respect to such requested exercise, transfer,
     split up, combination or exchange without first consulting with the
     Company, and will thereafter take further action with respect thereto only
     in accordance with the Company's written instructions.

      21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor Rights Agent
may resign and be discharged from its duties under this Agreement upon 30
calendar days' notice in writing mailed to the Company and to each transfer
agent of the Preferred Shares or the Common Shares by registered or certified
mail, and to the holders of the Right Certificates by first class


                                       37
   41

mail. The Company may remove the Rights Agent or any successor Rights Agent upon
30 calendar days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Preferred
Shares and the Common Shares by registered or certified mail, and to the holders
of the Right Certificates by first class mail. If the Rights Agent resigns or is
removed or otherwise becomes incapable of acting, the Company will appoint a
successor to the Rights Agent. If the Company fails to make such appointment
within a period of 30 calendar days after giving notice of such removal or after
it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who will, with such notice, submit his Right Certificate for inspection by the
Company), then the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
will be a corporation or other legal entity organized and doing business under
the laws of the United States or of the State of New York (or of any other state
of the United States so long as such corporation is authorized to do business as
a banking institution in the State of New York), in good standing, having a
principal office in the State of New York, which is authorized under such laws
to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million. After appointment, the successor Rights Agent will be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent will deliver and transfer to the successor Rights Agent
any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company will file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Preferred Shares or the Common Shares, and mail a notice thereof in writing
to the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, will not affect
the legality or validity of the resignation or removal of the Rights Agent or
the appointment of the successor Rights Agent, as the case may be.

      22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by


                                       38
   42

its Board of Directors to reflect any adjustment or change in the Purchase Price
per share and the number or kind of securities issuable upon exercise of the
Rights made in accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale by the Company of Common Shares following
the Distribution Date and prior to the Expiration Date, the Company (a) will,
with respect to Common Shares so issued or sold pursuant to the exercise,
exchange or conversion of securities (other than Rights) issued prior to the
Distribution Date which are exercisable or exchangeable for, or convertible into
Common Shares, and (b) may, in any other case, if deemed necessary, appropriate
or desirable by the Board of Directors of the Company, issue Right Certificates
representing an equivalent number of Rights as would have been issued in respect
of such Common Shares if they had been issued or sold prior to the Distribution
Date, as appropriately adjusted as provided herein as if they had been so issued
or sold; PROVIDED, HOWEVER, that (i) no such Right Certificate will be issued
if, and to the extent that, in its good faith judgment the Board of Directors of
the Company determines that the issuance of such Right Certificate could have a
material adverse tax consequence to the Company or to the Person to whom or
which such Right Certificate otherwise would be issued and (ii) no such Right
Certificate will be issued if, and to the extent that, appropriate adjustment
otherwise has been made in lieu of the issuance thereof.

      23. REDEMPTION. (a) Prior to the Expiration Date, the Board of Directors
of the Company may, at its option, redeem all but not less than all of the
then-outstanding Rights at the Redemption Price at any time prior to the Close
of Business on the later of (i) the Distribution Date and (ii) Share Acquisition
Date. Any such redemption will be effective immediately upon the action of the
Board of Directors of the Company ordering the same, unless such action of the
Board of Directors of the Company expressly provides that such redemption will
be effective at a subsequent time or upon the occurrence or nonoccurrence of one
or more specified events (in which case such redemption will be effective in
accordance with the provisions of such action of the Board of Directors of the
Company).

      (b) Immediately upon the effectiveness of the redemption of the Rights as
provided in Section 23(a), and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights will be to receive the Redemption Price,
without interest thereon. Promptly after the effectiveness of the redemption of
the Rights as provided in Section 23(a), the Company will publicly announce
such redemption and, within 10 calendar days thereafter, will give notice of
such redemption to the holders of


                                       39
   43

the then-outstanding Rights by mailing such notice to all such holders at their
last addresses as they appear upon the registry books of the Company; PROVIDED,
HOWEVER, that the failure to give, or any defect in, any such notice will not
affect the validity of the redemption of the Rights. Any notice that is mailed
in the manner herein provided will be deemed given, whether or not the holder
receives the notice. The notice of redemption mailed to the holders of Rights
will state the method by which the payment of the Redemption Price will be made.
The Company may, at its option, pay the Redemption Price in cash, Common Shares
(based upon the current per share market price of the Common Shares (determined
pursuant to Section 11(d)) at the time of redemption), or any other form of
consideration deemed appropriate by the Board of Directors of the Company (based
upon the fair market value of such other consideration, determined by the Board
of Directors of the Company in good faith) or any combination thereof. The
Company may, at its option, combine the payment of the Redemption Price with any
other payment being made concurrently to holders of Common Shares and, to the
extent that any such other payment is discretionary, may reduce the amount
thereof on account of the concurrent payment of the Redemption Price. If legal
or contractual restrictions prevent the Company from paying the Redemption Price
(in the form of consideration deemed appropriate by the Board of Directors) at
the time of redemption, the Company will pay the Redemption Price, without
interest, promptly after such time as the Company ceases to be so prevented from
paying the Redemption Price.

      24. EXCHANGE. (a) The Board of Directors of the Company may, at its
option, at any time after the later of the Share Acquisition Date and the
Distribution Date, exchange all or part of the then-outstanding and exercisable
Rights (which will not include Rights that have become void pursuant to the
provisions of Section 11(a)(ii)) for Common Shares at an exchange ratio of one
Common Share per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the Record Date (such exchange
ratio being hereinafter referred to as the "Exchange Ratio"). Any such exchange
will be effective immediately upon the action of the Board of Directors of the
Company ordering the same, unless such action of the Board of Directors of the
Company expressly provides that such exchange will be effective at a subsequent
time or upon the occurrence or nonoccurrence of one or more specified events (in
which case such exchange will be effective in accordance with the provisions of
such action of the Board of Directors of the Company).  Notwithstanding the
foregoing, the Board of Directors of the Company will not be empowered to effect
such exchange at any time after any Person (other than the Company or any
Related Person), who or which, together with all Affiliates and Associates of
such


                                       40
   44


Person, becomes the Beneficial Owner of 50% or more of the then-outstanding
Common Shares.

      (b) Immediately upon the effectiveness of the exchange of any Rights as
provided in Section 24(a), and without any further action and without any
notice, the right to exercise such Rights will terminate and the only right with
respect to such Rights thereafter of the holder of such Rights will be to
receive that number of Common Shares equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. Promptly after the effectiveness
of the exchange of any Rights as provided in Section 24(a), the Company will
publicly announce such exchange and, within 10 calendar days thereafter, will
give notice of such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent; PROVIDED,
HOWEVER, that the failure to give, or any defect in, such notice will not affect
the validity of such exchange. Any notice that is mailed in the manner herein
provided will be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the
Common Shares for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
will be effected pro rata based on the number of Rights (other than Rights which
have become void pursuant to the provisions of Section 11(a)(ii)) held by each
holder of Rights.

      (c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute for any Common Share exchangeable for a Right (i)
equivalent common shares (as such term is used in Section 11(a)(iii)), (ii)
cash, (iii) debt securities of the Company, (iv) other assets, or (v) any
combination of the foregoing, in any event having an aggregate value, as
determined in good faith by the Board of Directors of the Company (whose
determination will be described in a statement filed with the Rights Agent),
equal to the current market value of one Common Share (determined pursuant to
Section 11(d)) on the Trading Day immediately preceding the date of the
effectiveness of the exchange pursuant to this Section 24.

      25. NOTICE OF CERTAIN EVENTS. (a) If, after the Distribution Date, the
Company proposes (i) to pay any dividend payable in stock of any class to the
holders of Preferred Shares or to make any other distribution to the holders of
Preferred Shares (other than a regular periodic cash dividend), (ii) to offer
to the holders of Preferred Shares rights, options or warrants to subscribe for
or to purchase any additional Preferred Shares or shares of stock of any class
or any other securities, rights or options, (iii) to effect any reclassification
of its


                                       41
   45


Preferred Shares (other than a reclassification involving only the subdivision
of outstanding Preferred Shares), (iv) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to permit one or more
of its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of assets or earning power (including, without limitation,
securities creating any obligation on the part of the Company and/or any of its
Subsidiaries) representing more than 50% of the assets and earning power of the
Company and its Subsidiaries, taken as a whole, to any other Person or Persons
other than the Company or one or more of its wholly owned Subsidiaries, (v) to
effect the liquidation, dissolution or winding up of the Company, or (vi) to
declare or pay any dividend on the Common Shares payable in Common Shares or to
effect a subdivision, combination or reclassification of the Common Shares then,
in each such case, the Company will give to each holder of a Right Certificate,
to the extent feasible and in accordance with Section 26, a notice of such
proposed action, which specifies the record date for the purposes of such stock
dividend, distribution or offering of rights, options or warrants, or the date
on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of the Common Shares and/or Preferred
Shares, if any such date is to be fixed, and such notice will be so given, in
the case of any action covered by clause (i) or (ii) above, at least 10 calendar
days prior to the record date for determining holders of the Preferred Shares
for purposes of such action, and, in the case of any such other action, at least
10 calendar days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the Common Shares and/or
Preferred Shares, whichever is the earlier.

      (b) In case any Triggering Event occurs, then, in any such case, the
Company will as soon as practicable thereafter give to the Rights Agent and each
holder of a Right Certificate, in accordance with Section 26, a notice of the
occurrence of such event, which specifies the event and the consequences of the
event to holders of Rights.

      26. NOTICES. (a) Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right Certificate to
or on the Company will be sufficiently given or made if sent by first class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:


                                       42
   46



                        Cole National Corporation
                        5915 Landerbrook Drive
                        Cleveland, Ohio  44124
                        Attention: General Counsel

      (b) Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right Certificate to or on the Rights Agent will be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:

                        National City Bank
                        1900 East Ninth Street
                        Cleveland, Ohio  44114
                        Attention: Corporate Trust Administration

      (c) Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate (or, if
prior the Distribution Date, to the holder of any certificate evidencing Common
Shares) will be sufficiently given or made if sent by first class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company.

      27. SUPPLEMENTS AND AMENDMENTS. Prior to the time at which the Rights
cease to be redeemable pursuant to Section 23, and subject to the last sentence
of this Section 27, the Company may in its sole and absolute discretion, and the
Rights Agent will if the Company so directs, supplement or amend any provision
of this Agreement in any respect without the approval of any holders of Rights
or Common Shares. From and after the time at which the Rights cease to be
redeemable pursuant to Section 23, and subject to the last sentence of this
Section 27, the Company may, and the Rights Agent will if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Rights or Common Shares in order (i) to cure any ambiguity, (ii) to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen any
time period hereunder, or (iv) to supplement or amend the provisions hereunder
in any manner which the Company may deem desirable; provided that no such
supplement or amendment shall adversely affect the interests of the holders of
Rights as such (other than an Acquiring Person or an Affiliate or Associate of
an Acquiring Person), and no such supplement or amendment shall cause the
Rights again to become redeemable or cause this Agreement again to become
supplementable or amendable otherwise than in accordance with the provisions of
this sentence. Without limiting the generality or effect of the


                                       43
   47


foregoing, this Agreement may be supplemented or amended to provide for such
voting powers for the Rights and such procedures for the exercise thereof, if
any, as the Board of Directors of the Company may determine to be appropriate.
Upon the delivery of a certificate from an officer of the Company which states
that the proposed supplement or amendment is in compliance with the terms of
this Section 27, the Rights Agent will execute such supplement or amendment;
PROVIDED, HOWEVER, that the failure or refusal of the Rights Agent to execute
such supplement or amendment will not affect the validity of any supplement or
amendment adopted by the Board of Directors of the Company, any of which will be
effective in accordance with the terms thereof. Notwithstanding anything in this
Agreement to the contrary, no supplement or amendment may be made which
decreases the stated Redemption Price to an amount less than $.01 per Right.

      28. SUCCESSORS; CERTAIN COVENANTS. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent will be
binding on and inure to the benefit of their respective successors and assigns
hereunder.

      29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement will be
construed to give to any Person other than the Company, the Rights Agent, and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares) any legal or equitable right, remedy or claim under
this Agreement. This Agreement will be for the sole and exclusive benefit of the
Company, the Rights Agent, and the registered holders of the Right Certificates
(or prior to the Distribution Date, the Common Shares).

      30. GOVERNING LAW. This Agreement, each Right and each Right Certificate
issued hereunder will be deemed to be a contract made under the internal
substantive laws of the State of Delaware and for all purposes will be governed
by and construed in accordance with the internal substantive laws of such State
applicable to contracts to be made and performed entirely within such State.

      31. SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement will remain in full force and
effect and will in no way be affected, impaired or invalidated; PROVIDED,
HOWEVER, that nothing contained in this Section 31 will affect the ability of
the Company under the provisions of Section 27 to supplement or amend this
Agreement to replace such invalid void or unenforceable term, provision,
covenant or


                                       44
   48


restriction with a legal, valid and enforceable term, provision, covenant or
restriction.

      32. DESCRIPTIVE HEADINGS, ETC. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and will not
control or affect the meaning or construction of any of the provisions hereof.
Unless otherwise expressly provided, references herein to Articles, Sections and
Exhibits are to Articles, Sections and Exhibits of or to this Agreement.

      33. DETERMINATIONS AND ACTIONS BY THE BOARD. For all purposes of this
Agreement, any calculation of the number of Common Shares outstanding at any
particular time, including for purposes of determining the particular percentage
of such outstanding Common Shares of which any Person is the Beneficial Owner,
will be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act. The Board of Directors of
the Company will have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board of Directors of the Company or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including without limitation
the right and power to (i) interpret the provisions of this Agreement and (ii)
make all determinations deemed necessary or advisable for the administration of
this Agreement (including any determination as to whether particular Rights
shall have become void). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, any omission with
respect to any of the foregoing) which are done or made by the Board of
Directors of the Company in good faith will (x) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights and all other
parties and (y) not subject the Board of Directors of the Company to any
liability to any Person, including without limitation the Rights Agent and the
holders of the Rights.

      34. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts will for all purposes be deemed to be
an original, and all such counterparts will together constitute but one and the
same instrument.


                                       45
   49


      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.


                                       COLE NATIONAL CORPORATION


                                    By: /s/ Joseph Gaglioti
                                       ----------------------------------
                                       Name:  Joseph Gaglioti
                                       Title: Vice President & Treasurer



                                        NATIONAL CITY BANK


                                    By:  /s/ David B. Davis
                                       ----------------------------------
                                       Name:  DAVID B. DAVIS
                                       Title: Vice President

   50



                                                                       EXHIBIT A
                                                                       ---------

                                     FORM OF

                         CERTIFICATE OF DESIGNATION OF
                 SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

                                       OF

                           COLE NATIONAL CORPORATION


      Cole National Corporation, a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation as required by Section 151 of the
General Corporation Law, effective as of ______________, 1999:

      RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Corporation by the Certificate of Incorporation of the Corporation and
pursuant to the provisions of Section 151 of the General Corporation Law of the
State of Delaware, the Board of Directors hereby amends and restates the terms
of the Series A Junior Participating Preferred Stock, without par value, as
follows:

      Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be 400,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; PROVIDED, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number of shares reserved
for issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.

      Section 2. DIVIDENDS AND DISTRIBUTIONS. (a) Subject to the rights of the
holders of any shares of any series of Preferred Stock (or any similar stock)
ranking prior and superior to the Series A Preferred Stock with respect to
dividends, the holders of shares of Series A Preferred Stock, in preference to
the holders of Common Stock, par value $.001 per share (the "Common Stock"), of
the Corporation, and of any other junior stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the first day
of March, June, September and December in each year (each such date being
referred to herein as a "Quarterly Dividend


   51


Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (i) $1.00 or (ii) subject to the provision for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash dividends, and 100
times the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions, other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by reclassification
or otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Corporation shall at any time (A)
declare or pay any dividend on the outstanding shares of Common Stock payable in
shares of Common Stock or (B) effect a subdivision, combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of dividends in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then, in each such case, the amount to which
holders of shares of Series A Preferred Stock would otherwise be entitled
immediately prior to much event under clause (ii) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.

      (b) The Corporation shall declare a dividend or distribution on the Series
A Preferred Stock as provided in paragraph (a) of this Section 2 immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); PROVIDED that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.

      (c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless (i) the date of issue of such
shares is prior to the record data for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of the first issuance of a share of Series A


                                      A-2
   52


Preferred Stock, or (ii) the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on
the shares of Series A Preferred Stock in an amount less than the total amount
of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than 60 calendar days prior to the date fixed for the payment thereof.

      Section 3. VOTING RIGHTS. The holders of shares of Series A Preferred
Stock shall have the following voting rights:

      (a) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 100 votes
an all matters submitted to a vote of the stockholders of the Corporation. In
the event the Corporation shall at any time (i) declare or pay any dividend on
the outstanding shares of Common Stock payable in shares of Common Stock or (ii)
effect a subdivision, combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of dividends in
shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then, in each such case, the number of votes per share to which holders
of shares of Series A Preferred Stock would otherwise be entitled immediately
prior to such event shall be adjusted by multiplying such number by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and this denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.

      (b) Except as otherwise provided herein, in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Series A Preferred Stock and the holders of shares
of Common Stock and any other capital stock of the Corporation having general
voting rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.


                                      A-3
   53


      (c) Except as set forth herein, or as otherwise provided by law, holders
of Series A Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.

      4. CERTAIN RESTRICTIONS. (a) Whenever quarterly dividends or other
dividends or distributions payable on the Series A Preferred stock as provided
in Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not:

          (i) declare or pay dividends, or make any other distributions, on any
     shares of stock ranking junior (either as to dividends or upon liquidation,
     dissolution or winding up) to the Series A Preferred Stock;

          (ii) declare or pay dividends, or make any other distributions, on any
     shares of stock ranking on a parity (either as to dividends or upon
     liquidation, dissolution or winding up) with the Series A Preferred Stock,
     except dividends paid ratably on the Series A Preferred Stock and all such
     parity stock on which dividends are payable or in arrears in proportion to
     the total amounts to which the holders of all such shares are then
     entitled;

          (iii) redeem or purchase or otherwise acquire for consideration shares
     of any stock ranking junior (either as to dividends or upon liquidation,
     dissolution or winding up) to the Series A Preferred Stock, provided that
     the Corporation may at any time redeem, purchase or otherwise acquire
     shares of any such junior stock in exchange for shares of any stock of the
     Corporation ranking junior (either as to dividends or upon dissolution,
     liquidation or winding up) to the Series A Preferred stock; or

          (iv) redeem or purchase or otherwise acquire for consideration any
     shares of Series A Preferred stock, or any shares of stock ranking an a
     parity with the Series A Preferred Stock, except in accordance with a
     purchase offer made in writing or by publication (as determined by the
     Board of Directors) to all holders of such shares upon such terms as the
     Board of Directors,


                                      A-4
   54

     after consideration of the respective annual dividend rates and other
     relative rights and preferences of the respective series and classes, shall
     determine in good faith will result in fair and equitable treatment among
     the respective series or classes.

      (b) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (a) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.

      Section 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.

      Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (a)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received $100 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment;
PROVIDED, HOWEVER, that the holders of shares of Series A Preferred Stock shall
be entitled to receive an aggregate amount per share, subject to the provision
for adjustment hereinafter set forth, equal to 100 times the aggregate amount to
be distributed per share to holders of shares of Common Stock, or (b) to the
holders of shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock and all such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up. In the
event the Corporation shall at any time (i) declare or pay any dividend on the
outstanding shares of Common Stock payable in shares of Common Stock or (ii)
effect a subdivision, combination or consolidation of the shares of Common


                                      A-5
   55


Stock (by reclassification or otherwise than by payment of dividends in shares
of Common Stock) into a greater or lesser number of shares of Common Stock,
then, in each such case, the aggregate amount to which each holder of shares of
Series A Preferred Stock would otherwise be entitled immediately prior to such
event under the proviso in clause (a) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

      Section 7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then, in each such case, each share
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time (a) declare or pay any dividend
on the outstanding shares of Common Stock payable in shares of Common Stock or
(b) effect a subdivision, combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of dividends
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then, in each such case, the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series A Preferred Stock
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.

      Section 8. REDEMPTION. The shares of Series A Preferred Stock shall not be
redeemable.

      Section 9. RANK. The Series A Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all series of
any other class of the Corporation's Preferred Stock.

      Section 10. AMENDMENT. The Certificate of Incorporation of the Corporation
shall not be amended in any manner which would materially alter or change the
powers,


                                      A-6
   56

preferences or special rights of the Series A Preferred Stock so an to affect
them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single series.

      IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf
of the Corporation by its Chairman and attested to by its Secretary this _____
day of ____________, 1999.


                                       COLE NATIONAL CORPORATION



                                       By:
                                          ---------------------------------


ATTEST:


- --------------------------
Leslie D. Dunn, Secretary






                                      A-7
   57


                                                                       EXHIBIT B
                                                                       ---------



                            FORM OF RIGHT CERTIFICATE


Certificate No. R-                                                   Rights
                                                        ------------


     NOT EXERCISABLE AFTER DECEMBER 6, 2009 (SUBJECT TO POSSIBLE EXTENSION AT
     THE OPTION OF THE COMPANY) OR EARLIER IF REDEEMED, EXCHANGED OR AMENDED.
     THE RIGHTS ARE SUBJECT TO REDEMPTION, EXCHANGE AND AMENDMENT AT THE OPTION
     OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
     CERTAIN CIRCUMSTANCES SPECIFIED IN THE RIGHTS AGREEMENT, RIGHTS THAT ARE OR
     WERE BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR AN
     ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
     AGREEMENT) OR A TRANSFEREE THEREOF MAY BECOME NULL AND VOID.


                                Right Certificate

                            COLE NATIONAL CORPORATION



      This certifies that ______________ ___, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions, and conditions of the
Rights Agreement, dated as of November 22, 1999 (the "Rights Agreement"),
between Cole National Corporation, a Delaware corporation (the "Company"), and
National City Bank (the "Rights Agent"), to purchase from the Company at any
time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M. (Eastern time) on the Expiration Date (as such
term is defined in the Rights Agreement) at the principal office or offices of
the Rights Agent designated for such purpose, one one-hundredth of a fully paid
nonassessable share of Series A Junior Participating Preferred Stock, without
par value (the "Preferred Shares"), of the Company, at a purchase price of
$40.00 per one one-hundredth of a Preferred Share (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase and related Certificate duly executed. If this Right Certificate is
exercised in part, the holder will be entitled to receive upon surrender hereof
another Right Certificate or Right Certificates for the number of whole Rights
not exercised. The number of Rights evidenced by this Right Certificate (and the



   58



number of one one-hundredths of a Preferred Share which may be purchased upon
exercise thereof) set forth above, and the Purchase Price set forth above, are
the number and Purchase Price as of the date of the Rights Agreement, based on
the Preferred Shares as constituted at such date.

      As provided in the Rights Agreement, the Purchase Price and/or the number
and/or kind of securities issuable upon the exercise of the Rights evidenced by
this Right Certificate are subject to adjustment upon the occurrence of certain
events.

      This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Company and the holders of the Right Certificates, which limitations of
rights include the temporary suspension of the exercisability of the Rights
under the circumstances specified in the Rights Agreement. Copies of the Rights
Agreement are on file at the above-mentioned office of the Rights Agent and can
be obtained from the Company without charge upon written request therefor. Terms
used herein with initial capital letters and hot defined herein are used herein
with the meanings ascribed thereto in the Rights Agreement.

      Pursuant to the Rights Agreement, from and after the occurrence of a
Flip-in Event, any Rights that are Beneficially Owned by (i) any Acquiring
Person (or any Affiliate or Associate of any Acquiring Person), (ii) a
transferee of any Acquiring Person (or any such Affiliate or Associate) who
becomes a transferee after the occurrence of a Flip-in Event, or (iii) a
transferee of any Acquiring Person (or any such Affiliate or Associate) who
became a transferee prior to or concurrently with the Flip-in Event pursuant to
either (a) a transfer from an Acquiring Person to holders of its equity
securities or to any Person with whom it has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (b) a transfer
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has the purpose or effect of avoiding certain
provisions of the Rights Agreement, and subsequent transferees of any of such
Persons, will be void without any further action and any holder of such Rights
will thereafter have no rights whatsoever with respect to such Rights under any
provision of the Rights Agreement. From and after the occurrence of a Flip-in
Event, no Right Certificate will be issued that represents Rights that are or
have become void pursuant to the provisions of the Rights Agreement, and any


                                      B-2
   59


Right Certificate delivered to the Rights Agent that represents Rights that are
or have become void pursuant to the provisions of the Rights Agreement will be
canceled.

      This Right Certificate, with or without other Right Certificates, may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates entitling the holder to purchase a like number of one
one-hundredths of a Preferred Share (or other securities, as the case may be) as
the Right Certificate or Right Certificates surrendered entitled such holder (or
former holder in the case of a transfer) to purchase, upon presentation and
surrender hereof at the principal office of the Rights Agent designated for such
purpose, with the Form of Assignment (if appropriate) and the related
Certificate duly executed.

      Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of $.01 per Right or may be exchanged in whole or in part. The Rights
Agreement may be supplemented and amended by the Company, as provided therein.

      The Company is not required to issue fractions of Preferred Shares (other
than fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the option of the Company, be evidenced by depositary
receipts) or other securities issuable upon the exercise of any Right or Rights
evidenced hereby. In lieu of issuing such fractional Preferred Shares or other
securities, the Company may make a cash payment, as provided in the Rights
Agreement.

      No holder of this Right Certificate, as such, will be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable upon the exercise of the Right or Rights represented hereby, nor will
anything contained herein or in the Rights Agreement be construed to confer upon
the holder hereof, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate have been exercised in accordance with the
provisions of the Rights Agreement.


                                      B-3
   60


      This Right Certificate will not be valid or obligatory for any purpose
until it has been countersigned by the Rights Agent.

      WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of ___________, ____.

[SEAL]


ATTEST:                                COLE NATIONAL CORPORATION



- -----------------------------          By:
                                          ---------------------------------
                                          Name:
                                          Title:




Countersigned:

NATIONAL CITY BANK


By:
   --------------------------
   Authorized Signature


                                      B-4



   61


                    Form of Reverse Side of Right Certificate



                               FORM OF ASSIGNMENT
                               ------------------

                (To be executed by the registered holder if such
                holder desires to transfer the Right Certificate)



      FOR VALUE RECEIVED, ___________________________ hereby sells, assigns and
transfers unto _______________________________________________________________
______________________________________________________________________________
                  (Please print name and address of transferee)

______________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.

Dated:
      --------------, ---

                                       -----------------------------------
                                       Signature


Signature Guaranteed:


                                      B-5
   62



                                  CERTIFICATE
                                  -----------


      The undersigned hereby certifies by checking the appropriate boxes that:

      (1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being sold, assigned, transferred, split up, combined or exchanged by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Person (as such terms are defined in the Rights
Agreement);

      (2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Right Certificate from any
Person who is, was or became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person.


Dated:
      --------------, ---

                                       -----------------------------------
                                       Signature



                                      B-6
   63





                          FORM OF ELECTION TO PURCHASE
                          ----------------------------


                      (To be executed if holder desires to
                        exercise the Right Certificate)



TO COLE NATIONAL CORPORATION:

      The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Right Certificate to purchase the one one-hundredths of a
Preferred Share or other securities issuable upon the exercise of such Rights
and requests that certificates for such securities be issued in the name of and
delivered to:

Please insert social security
or other identifying number:
                            ------------------------------------------------

- ----------------------------------------------------------------------------
                        (Please print name and address)

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

If such number of Rights is not all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
will be registered in the name of and delivered to:

Please insert social security
or other identifying number:
                            ------------------------------------------------

- ----------------------------------------------------------------------------
                        (Please print name and address)

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


Dated:
      --------------, ---

                                       -----------------------------------
                                       Signature


Signature Guaranteed:




                                      B-7

   64



                                  CERTIFICATE
                                  -----------


      The undersigned hereby certifies by checking the appropriate boxes that:

      (1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Person (as such terms are defined pursuant
to the Rights Agreement);

      (2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Right Certificate from any
Person who is, was, or became an Acquiring Person or an Affiliate or Associate
of an Acquiring Person.


Dated:
      --------------, ---

                                       -----------------------------------
                                       Signature



                                     NOTICE


      Signatures on the foregoing Form of Assignment and Form of Election to
Purchase and in the related Certificates must correspond to the name as written
upon the face of this Right Certificate in every particular, without alteration
or enlargement or any change whatsoever.

      Signatures must be guaranteed by an eligible guarantor institution (banks,
stockbrokers, savings and loan associations and credit unions with membership in
an approved medallion signature program) pursuant to Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended.




                                      B-8

   65

                                                                       EXHIBIT C
                                                                       ---------



                 SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK


      The Board of Directors (the "Board") of Cole National Corporation (the
"Company") has declared a dividend distribution of one right (a "Right") for
each outstanding share of Common Stock, par value $.001 per share (the "Common
Shares"), of the Company. The distribution is payable on December 6, 1999 (the
"Record Date") to the stockholders of record as of the close of business on the
Record Date. Each Right entitles the registered holder thereof to purchase from
the Company one one-hundredth of a share of Series A Junior Participating
Preferred Stock, without par value (the "Preferred Shares"), of the Company at a
price (the "Purchase Price") of $40.00 per one one-hundredth of a Preferred
Share, subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement, dated as of November 22, 1999 (the "Rights
Agreement"), between the Company and National City Bank, as Rights Agent (the
"Rights Agent").

      Under the Rights Agreement, the Rights will be evidenced by the
certificates evidencing Common Shares until the earlier (the "Distribution
Date") of: (i) the close of business on the tenth calendar day following the
first date (the "Share Acquisition Date") of public announcement (A) that a
person or group (other than (1) HAL Holding N.V. and its Affiliates and
Associates (each as defined in the Rights Agreement) ("HAL"), for so long as HAL
is in compliance with the terms of the Standstill Agreement, dated as of
November 22, 1999, between the Company and HAL or (2) the Company, a subsidiary
or employee benefit or stock ownership plan of the Company or any of its
affiliates or associates), together with its affiliates and associates, has
acquired beneficial ownership of 15% or more of the outstanding Common Shares or
(B) that HAL has acquired beneficial ownership of a number of Common Shares in
excess of the HAL Percentage (as defined below) (any such person or group being
hereinafter called an "Acquiring Person") or (ii) the close of business on the
tenth business day (or such later date as may be specified by the Board)
following the commencement of a tender offer or exchange offer by a person
(other than the Company, a subsidiary or employee benefit or stock ownership
plan of the Company or any of its affiliates or associates), the consummation of
which would result in beneficial ownership by such person of 15% or more of the
outstanding Common Shares. "HAL Percentage" means 25% to and including November
___, 2000, at which time the HAL Percentage snall be reduced to (i) 15%, if HAL
is not the beneficial owner of 15% or more of the Common Shares of the Company
outstanding at



   66


the close of business on November __, 2000 or (ii) if HAL is the beneficial
owner of 15% or more of the Common Shares of the Company outstanding at the
close of business on November ___, 2000, the percentage so beneficially owned by
HAL (rounded to the nearest percent), which shall not exceed 25%.

      The Rights Agreement provides that, until the Distribution Date, the
Rights may be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption, exchange or expiration of the Rights),
any certificate evidencing Common Shares of the Company issued upon transfer or
new issuance of the Common Shares will contain a notation incorporating the
Rights Agreement by reference. Until the Distribution Date (or earlier
redemption, exchange or expiration of the Rights), the surrender for transfer
of any certificates evidencing Common Shares will also constitute the transfer
of the Rights associated with such certificates. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of Common Shares as
of the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights. No Right is exercisable at any time
prior to the Distribution Date. The Rights will expire on the tenth anniversary
of the Record Date (the "Final Expiration Date") unless earlier redeemed,
exchanged or amended by the Company as described below. Until a Right is
exercised, the holder thereof, as such, will have no rights as a stockholder of
the Company, including the right to vote or to receive dividends.

      The Purchase Price payable, and the number of the Preferred Shares or
other securities issuable, upon exercise of the Rights will be subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of Preferred Shares of certain rights or
warrants to subscribe for or purchase the Preferred Shares at a price, or
securities convertible into the Preferred Shares with a conversion price, less
than the then-current market price of the Preferred Shares, or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness,
cash (excluding regular periodic cash dividends), assets, stock (excluding
dividends payable in the Preferred Shares) or subscription rights or warrants
(other than those referred to above). The number of outstanding Rights and the
number of one one-hundredths of the Preferred Shares issuable upon exercise of
each Right will be subject to adjustment in the event of a stock dividend on the
Common Shares payable in Common Shares or a subdivision, combination or
reclassification of



                                      C-2
   67


Common Shares occurring, in any such case, prior to the Distribution Date.

      The Preferred Shares issuable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled, in connection with the
declaration of a dividend on the Common Shares, to a preferential dividend
payment equal to the greater of (i) $1.00 per share and (ii) an amount equal to
100 times the related dividend declared per Common Share. Subject to customary
anti-dilution provisions, in the event of liquidation, the holders of Preferred
Shares will be entitled to a preferential liquidation payment equal to the
greater of (a) $100 per share and (b) an amount equal to 100 times the
liquidation payment made per Common Share. Because of the nature of the
Preferred Shares' dividend, voting and liquidation rights, the value of the one
one-hundredth interest in a Preferred Share purchasable upon exercise of a Right
should approximate the value of one Common Share.

      Rights will be exercisable to purchase Preferred Shares only after the
Distribution Date occurs and prior to the occurrence of a Flip-in Event as
described below. A Distribution Date resulting from the commencement of a tender
offer or exchange offer described in clause (ii) of the second paragraph of this
summary could precede the occurrence of a Flip-in Event and thus result in the
Rights being exercisable to purchase Preferred Shares. A Distribution Date
resulting from any occurrence described in clause (i) of the second paragraph
of this summary would necessarily follow the occurrence of a Flip-in Event and
thus result in the Rights being exercisable to purchase Common Shares or other
securities as described below.

      Under the Rights Agreement, in the event (a "Flip-in Event") that (i) any
person or group, together with its affiliates and associates, becomes an
Acquiring Person, (ii) any Acquiring Person or any affiliate or associate
thereof merges into or combines with the Company and the Company is the
surviving corporation, (iii) any Acquiring Person or any affiliate or associate
thereof effects certain other transactions with the Company, or (iv) during such
time as there is an Acquiring Person the Company effects certain transactions,
in each case as described in the Rights Agreement, then, in each such case,
proper provision will be made so that from and after the latest of the Share
Acquisition Date, the Distribution Date and the date of the occurrence of such
Flip-in Event each holder of a Right, other than Rights that are or were owned
beneficially by an Acquiring Person (which, from and after the date of a Flip-in
Event, will be void), will have the right to receive, upon exercise thereof at
the then-current exercise price of the Right,



                                      C-3

   68


that number of Common Shares (or, under certain circumstances, an economically
equivalent security or securities of the Company) that at the time of such
Flip-in Event have a market value of two times the exercise price of the Right.

      In the event (a "Flip-over Event") that, at any time after a person has
become an Acquiring Person, (i) the Company merges with or into any person and
the Company is not the surviving corporation, (ii) any person merges with or
into the Company and the Company is the surviving corporation, but all or part
of the Common Shares are changed or exchanged for stock or other securities of
any other person or cash or any other property, or (iii) 50% or more of the
Company's assets or earning power, including securities creating obligations of
the Company, are sold, in each case as described in the Rights Agreement, then,
and in each such case, proper provision will be made so that from and after the
latest of the Share Acquisition Date, the Distribution Date and the date of the
occurrence of such Flip-over Event, each holder of a Right, other than Rights
which have beoome void, will thereafter have the right to receive, upon the
exercise thereof at the then-current exercise price of the Right, that number of
shares of common stock (or, under certain circumstances, an economically
equivalent security or securities) of such other person that at the time of such
Flip-over Event nave a market value of two times the exercise price of the
Right.

      From and after the later of the Share Acquisition Date and the
Distribution Date, Rights (other than any Rights that have become void) will be
exercisable as described above, upon payment of the aggregate exercise price in
cash. In addition, at any time after the later of the Share Acquisition Date and
the Distribution Date and prior to the acquisition by any person or group of
affiliated or associated persons of 50% or more of the outstanding Common
Shares, the Company may exchange the Rights (other than any rights that have
become void), in whole or in part, at an exchange ratio of one Common Share per
Right (subject to adjustment).

      With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment in the Purchase
Price of at least 1%. The Company will not be required to issue fractional
Preferred Shares (other than fractions that are integral multiples of one
one-hundredth of a Preferred Share, which may, at the option of the Company, be
evidenced by depositary receipts) or fractional Common Shares or other
securities issuable upon the exercise of Rights. In lieu of issuing such
securities, the Company may make a cash payment, as provided in the Rights
Agreement.



                                      C-4
   69


      The Company may, at its option, redeem the Rights in whole, but not in
part, at a price of $.01 per Right, subject to adjustment (the "Redemption
Price"), at any time prior to the close of business on the later of the
Distribution Date and the Share Accuisition Date. Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption Price.

      The Rights Agreement may be amended by the Company without the approval of
any holders of Rights Certificates, including amendments that increase or
decrease the Purchase Price, that add other events requiring adjustment to the
Purchase Price payable and the number of the Preferred Shares or other
securities issuable upon the exercise of the Rights or that modify procedures
relating to the redemption of the Rights, except that no amendment may be made
that decreases the stated Redemption Price to an amount less than $.01 per
Right.

      The Board will have the exclusive power and authority to administer the
Rights Agreement and to exercise all rights and powers specifically granted to
the Board or to the Company therein, or as may be necessary or advisable in the
administration of the Rights Agreement, including without limitation the right
and power to interpret the provisions of the Rights Agreement and to make all
determinations deemed necessary or advisable for the administration of the
Rights Agreement (including any determination to redeem or not redeem the Rights
or to amend or not amend the Rights Agreement). All such actions, calculations,
interpretations and determinations (including any omission with respect to any
of the foregoing) which are done or made by the Board in good faith will be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties and will not subject the Board to any liability
to any person, including without limitation the Rights Agent and the holders of
the Rights.

      A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company.

      This summary description of the Rights is as of the Record Date, does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is incorporated herein by this reference.



                                      C-5

EX-10.50

   1
                                                                Exhibit 10.50

                          SIXTH AMENDMENT AND WAIVER

     SIXTH AMENDMENT AND WAIVER, dated as of March 7, 2000 (this "AMENDMENT AND
WAIVER"), to the Credit Agreement, dated as of November 15, 1996 (as amended,
supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"),
among COLE VISION CORPORATION, a Delaware corporation ("COLE VISION"), THINGS
REMEMBERED, INC., a Delaware corporation ("THINGS REMEMBERED") and PEARLE,
INC., a Delaware corporation ("PEARLE"; Cole Vision, Things Remembered and
Pearle each being referred to as a "BORROWER" and collectively as the
"BORROWERS"), the several banks and other financial institutions from time to
time parties thereto (collectively, the "LENDERS") and CANADIAN IMPERIAL BANK OF
COMMERCE, a Canadian-chartered bank acting through its New York Agency, as
administrative agent for the Lenders thereunder (in such capacity, the
"ADMINISTRATIVE AGENT").

                              W I T N E S S E T H:
                              - - - - - - - - - -

     WHEREAS, the Borrowers, the Lenders and the Administrative Agent are
parties to the Credit Agreement;

     WHEREAS, the Borrowers have requested that the Administrative Agent and
the Lenders amend and waive certain provisions of the Credit Agreement as set
forth herein; and

     WHEREAS, the Administrative Agent and the Lenders are willing to effect
such amendment and waiver, but only upon the terms and subject to the
conditions set forth herein;

     NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the Borrowers, the Lenders and the
Administrative Agent hereby agree as follows:

     1. DEFINED TERMS. Unless otherwise defined herein, terms defined in the
Credit Agreement shall have such meanings when used herein.

     2. AMENDMENT TO SUBSECTION 1.1. Subsection 1.1 of the Credit Agreement is
hereby amended by:

          (a) inserting the following new definitions in their proper
     alphabetical order:

              "COVENANT MODIFICATION PERIOD": the period from and including
          January 30, 2000 to and including April 29, 2000.

              "SIXTH AMENDMENT EFFECTIVE DATE": March 7, 2000.
   2
                                                                               2

          (b) changing the definition of "Available Revolving Credit
    Commitment" to read in its entirety as follows:

               "AVAILABLE REVOLVING CREDIT COMMITMENT": as to any Lender at any
          time, an amount equal to the excess, if any, of (a) the amount of such
          Lender's Revolving Credit Commitment at such time OVER (b) the sum of
          (i) the aggregate unpaid principal amount at such time of all
          Revolving Credit Loans made by such Lender and (ii) an amount equal to
          such Lender's Revolving Credit Commitment Percentage of the
          outstanding L/C Obligations at such time; collectively, as to all the
          Lenders, the "AVAILABLE REVOLVING CREDIT COMMITMENTS", PROVIDED that,
          for purposes of subsection 2.1, "Available Revolving Credit
          Commitments" shall be reduced during the Covenant Modification Period
          by an amount equal to $25,000,000 in the event that the Leverage Ratio
          as of the end of the fiscal quarter of CNG ending on January 29, 2000
          is greater than 3.50 to 1.00.

          3. AMENDMENT TO SUBSECTION 2.4. Subsection 2.4 of the Credit
Agreement is hereby amended by changing such subsection to read in its entirety
as follows:

          "2.4 COMMITMENT FEES: OTHER FEES. (a) The Borrowers agree, jointly and
     severally, to pay to the Administrative Agent for the account of each
     Lender, a commitment fee for the period from and including the first day of
     the Revolving Credit Commitment Period to the Revolving Credit Commitment
     Termination Date, computed at the rate per annum set forth under the
     heading "Commitment Fees" on Schedule II opposite the percentage which is
     the average daily amount of the Aggregate Outstanding Revolving Credit of
     all Lenders during the period for which payment is made constitutes of the
     average daily amount of the Available Revolving Credit Commitment of such
     Lender during such payment period, payable quarterly in arrears on the last
     day of each fiscal quarter of CNG and on the Revolving Credit Commitment
     Termination Date, commencing on the first of such days to occur after the
     Closing Date. Notwithstanding the foregoing, the commitment fee for the
     period from and including the first day of the Sixth Amendment Effective
     Date to June 30, 2000 shall be 0.75% per annum of the average daily amount
     of the Revolving Credit Commitment of such Lender during such period,
     payable as set forth above.

          (b) The Borrowers agree, jointly and severally, to pay to the
     Administrative Agent for the account of each Lender, a utilization fee for
     the period from and including the Sixth Amendment Effective Date to June
     30, 2000, (i) if the average daily amount of the aggregate principal amount
     of all Revolving Credit Loans outstanding during such period is greater
     than 66-2/3% of the average aggregate Revolving Credit Commitments during
     such period, computed at 0.50% per annum on the average daily principal
     amount of such Lender's outstanding Revolving Credit Loans during such
     period and (ii) if the average daily amount of the aggregate principal
     amount of all Revolving Credit Loans outstanding during such period is less
     than or equal to 66-2/3% but greater than 33-1/3% of the average aggregate
     Revolving Credit Commitments during such period, computed at
   3
                                                                               3

     0.25% per annum on the average daily principal amount of such Lender's
     outstanding Revolving Credit Loans."

          4. AMENDMENT TO SUBSECTION 7.2(c). Subsection 7.2(c) of the Credit
Agreement is hereby amended by inserting "(90 days in the case of the fiscal
year ending January 29, 2000)" after the word "Borrowers" therein.

          5. AMENDMENT TO SUBSECTIONS 8.1(a) AND 8.1(b). Subsections 8.1(a)
and 8.1(b) of the Credit Agreement are hereby amended by deleting such
subsections in their entireties and substituting in lieu thereof the following:

          "(a) LEVERAGE RATIO. Permit the Leverage Ratio at any time during any
     of the test periods set forth below to be greater than the ratio set forth
     opposite such test period set forth below:

               TEST PERIOD                                       LEVERAGE RATIO
               -----------                                       --------------

          June 30, 2000 - July 29, 2000                          3.75 to 1.00
          June 30, 2000 - August 4, 2001                         3.50 to 1.00
          August 5, 2001 - February 2, 2002                      3.25 to 1.00
          February 3, 2002 - Revolving Credit Termination Date   3.00 to 1.00

          (b) ADJUSTED INTEREST COVERAGE RATIO. Permit the Adjusted Interest
     Coverage Ratio as of the end of each fiscal quarter of CNG ending on or
     about any of the dates set forth below to be less than the ratio set forth
     opposite such date below:

                                                             ADJUSTED
               FISCAL QUARTER ENDING                   INTEREST COVERAGE RATIO
               ---------------------                   -----------------------

               July 29, 2000                           1.50 to 1.00
               October 31, 2000                        1.50 to 1.00
               February 3, 2001                        1.50 to 1.00

               April 29, 2001                          1.50 to 1.00
               August 4, 2001                          1.50 to 1.00
               October 31, 2001                        1.50 to 1.00
               February 2, 2002                        1.50 to 1.00

               Thereafter                              1.60 to 1.00"




   4
                                                                               4

          6. ADDITIONAL AMENDMENT TO SUBSECTION 8.1. Subsection 8.1 of the
Credit Agreement is hereby amended by inserting the following new paragraph (d)
at the end thereof:

          "(d) EBITDA. Permit EBITDA for any period of four consecutive fiscal
     quarters of CNG ending with any fiscal quarter set forth below to be less
     than the amount set forth below opposite such fiscal quarter:

                FISCAL QUARTER ENDING             EBITDA
                ---------------------             ------

                April 29, 2000                    $55,000,000

     PROVIDED that, for the purposes of this subsection 8.1(d), restructuring
     charges incurred in such period in connection with the optical business of
     the Borrowers, deducted in calculating Net Income for such period, shall be
     included in the determination of EBITDA, PROVIDED FURTHER that the amount
     of such restructuring charges that may be so included in the determination
     of EBITDA shall not exceed $2,000,000.".

          7. AMENDMENT TO SUBSECTION 8.2(i). Subsection 8.2(i) of the Credit
Agreement is hereby amended by deleting such subsection in its entirety and
substituting in lieu thereof the following:

          "(i) Indebtedness of the Borrowers and their Subsidiaries in an
     aggregate principal amount not exceeding as to the Borrowers and their
     Subsidiaries $10,000,000 at any time outstanding; PROVIDED that no
     Indebtedness shall be created, incurred or assumed pursuant to this
     subsection 8.2(i) during the Covenant Modification Period".

          8. AMENDMENT TO SUBSECTION 8.7(c). Subsection 8.7(c) of the Credit
Agreement is hereby amended by deleting such subsection in its entirety and
substituting in lieu thereof the following:

          "(c) so long as no Default or Event of Default shall have occurred and
     be continuing or would occur after giving effect to such dividend,
     dividends to CNG in an aggregate amount not to exceed $30,000,000 solely to
     allow CNG to repurchase CNG Notes and/or Senior Subordinated Notes without
     violating Section 9(m); PROVIDED that no dividends shall be declared or
     paid pursuant to this subsection 8.7(c) during the Covenant Modification
     Period;".

          9. AMENDMENT TO SUBSECTION 8.7(d). Subsection 8.7(d) of the Credit
Agreement is hereby amended by deleting such subsection in its entirety and
substituting in lieu thereof the following:

          "(d) so long as no Default or Event of Default shall have occurred and
     be continuing or would occur after giving effect to such dividend,
     dividends to CNG in an aggregate amount not to exceed $4,000,000 solely to
     allow CNG or CNC to repurchase, redeem, or otherwise acquire or retire for
     value, any Capital Stock of CNG or CNC or
   5
                                                                               5

     any current or former Subsidiary of CNG held by any of CNG's (or any of its
     Subsidiaries') current or former employees; PROVIDED that no dividends
     shall be declared or paid pursuant to this subsection 8.7(d) during the
     Covenant Modification Period;".

          10. AMENDMENT TO SUBSECTION 8.8 Subsection 8.8 of the Credit Agreement
is hereby amended by deleting such subsection in its entirety and substituting
in lieu thereof the following:

          "8.8 LIMITATION ON CAPITAL AND OTHER EXPENDITURES.

          (a) Make any expenditure in respect of the purchase or other
     acquisition of fixed or capital assets (a "CAPITAL EXPENDITURE") except for
     expenditures in the ordinary course of business not exceeding, in the
     aggregate for the Borrowers and their Subsidiaries during any of the test
     periods set forth below, the amount set forth opposite such test period set
     forth below:

                  TEST PERIOD                                        AMOUNT
                  -----------                                        ------

             January 30, 2000 - February 3, 2001                     $45,000,000
             February 4, 2001 - February 2, 2002                     $50,000,000
             February 3, 2002 - Revolving Credit Termination Date    $55,000,000

     PROVIDED that the aggregate amount of expenditures made pursuant to this
     subsection 8.8 for the period of four consecutive fiscal quarters of the
     Borrowers and their Subsidiaries ending April 29, 2000, shall not exceed
     $40,000,000; or

          (b) Make, during the fiscal quarter of the Borrowers ending April 29,
     2000, any expenditure in respect of the development of computer systems
     owned or operated by the Borrowers and their Subsidiaries except for
     expenditures in the ordinary course of business not exceeding $6,000,000 in
     the aggregate for the Borrowers and their Subsidiaries.".

     11. AMENDMENT TO SUBSECTION 8.9(e). Subsection 8.9(e) of the Credit
Agreement is hereby amended by deleting such subsection in its entirety and
substituting in lieu thereof the following:

          "(e) so long as no Default or Event of Default has occurred and is
     continuing or would occur after giving effect to such Investment,
     Investments in franchises in a business related to the optical business of
     Pearle and Cole Vision as conducted on the Closing Date in an aggregate
     amount not to exceed $15,000,000 during any fiscal year; PROVIDED that the
     aggregate amount of Investments made pursuant to this subsection 8.9(e)
     during the fiscal quarter of CNG ending April 29, 2000 shall not exceed
     $5,000,000; and".
   6
                                                                               6

                  12. AMENDMENT TO SUBSECTION 8.9(f). Subsection 8.9(f) of the
Credit Agreement is hereby amended by deleting such subsection in its entirety
and substituting in lieu thereof the following:

                  "(f) Investments, other than the purchase of CNG Notes or the
         Senior Subordinated Notes, in an aggregate amount not to exceed
         $10,000,000; PROVIDED that the aggregate amount of Investments made
         pursuant to this subsection 8.9(f) during the Covenant Modification
         Period shall not exceed $1,000,000.".

                  13. AMENDMENT TO SUBSECTION 9(m). Subsection 9(m)(i)(x) of
the Credit Agreement is hereby amended by deleting such subsection in its
entirety and substituting in lieu thereof the following:

         "(x)(so long as no Default or Event of Default has occurred and is
         continuing or would occur as a result of such repurchase and so long as
         no such repurchase occurs during the Covenant Modification Period),
         repurchases by CNG of such of the CNG notes and/or Senior Subordinated
         Notes that it is able to repurchase for an aggregate purchase price
         (including fees and expenses incurred in connection with such
         repurchase) not to exceed $30,000,000 and".

                  14. ADDITIONAL AMENDMENT TO SECTION 9. Section 9 is hereby
amended by inserting the following new paragraph (o) after paragraph (n)
thereof:

         "(o) CNC shall (i) create, incur, assume or suffer to exist any
         Indebtedness, except Indebtedness outstanding on the Sixth Amendment
         Effective Date; (ii) make any Investments, except Investments in Pearle
         Europe B.V. in an aggregate amount not to exceed $10,000,000; or (iii)
         create, incur, assume or suffer to exist any Lien upon any of its
         property, assets or revenues, whether now owned or hereafter
         acquired.".

                  15. AMENDMENT TO SCHEDULE II TO CREDIT AGREEMENT. Schedule II
to the Credit Agreement is hereby amended by deleting such Schedule in its
entirety and inserting in lieu thereof the revised Schedule II attached hereto
as Exhibit A.

                  16. WAIVER. The Lenders hereby waive any Default or Event of
Default arising from violation of subsection 8.1(b) of the Credit Agreement for
the period ended January 29, 2000.

                  17. AMENDMENT FEE. In consideration of the agreement of the
Lenders to consent to the amendments and waiver contained herein, the Borrowers
agree to pay to each Lender which so consents on or prior to March 7, 2000 (by
executing and delivering to the Administrative Agent or its counsel this
Amendment and Waiver on or prior to such date), an amendment fee in an amount
equal to .25% of the amount of such Lender's Commitment, payable on the
effective date of this Amendment and Waiver in immediately available funds to
the Administrative Agent on behalf of such Lender.



   7
                                                                               7

                  18. REPRESENTATIONS AND WARRANTIES. Each Borrower hereby
confirms, reaffirms and restates the representations and warranties made by it
in Section 5 of the Credit Agreement, PROVIDED that each reference to the Credit
Agreement therein shall be deemed to be a reference to the Credit Agreement
after giving effect to this Amendment and Waiver. Each Borrower represents and
warrants that, after giving effect to this Amendment and Waiver, no Default or
Event of Default has occurred and is continuing.

                  19. CONDITIONS TO EFFECTIVENESS. This amendment and Waiver
shall become effective on the date (the "AMENDMENT EFFECTIVE DATE") on which all
of the following conditions precedent have been satisfied or waived:

                  (a) the Borrowers, the Lenders, and the Administrative Agent
         shall have executed and delivered to the Administrative Agent this
         Amendment and Waiver, and the Guarantors shall have executed and
         delivered to the Administrative Agent the Acknowledgment and Consent
         attached hereto;

                  (b) Cole National Corporation shall have executed and
         delivered to the Administrative Agent a Guarantee with terms and
         conditions satisfactory to the Administrative Agent; and

                  (c) the Borrowers shall have paid the fees referred to in
         Section 17 above.

                  20. CONTINUING EFFECT OF CREDIT AGREEMENT. This amendment and
Waiver shall not constitute a waiver, amendment or modification of any other
provision of the Credit Agreement not expressly referred to herein and shall not
be construed as a waiver or consent to any further or future action on the part
of the Borrowers that would require a waiver or consent of the Lenders or the
Administrative Agent. Except as expressly amended or modified herein, the
provisions of the Credit Agreement are and shall remain in full force and
effect.

                  21. COUNTERPARTS. This amendment and Waiver may be executed
by one or more of the parties to this Amendment and Waiver on any number of
separate counterparts (including by facsimile transmission), and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Amendment and Waiver signed by all the
parties shall be lodged with the Borrowers and the Administrative Agent.

                  22. PAYMENT OF EXPENSES. The borrowers agree, jointly and
severally, to pay or reimburse the Administrative Agent for all of its
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of this Amendment and Waiver and any other documents
prepared in connection herewith, and the consummation and administration of the
transactions contemplated hereby, including, without limitation, the reasonable
fees and disbursements of counsel to the Administrative Agent.

   8
                                                                               8


                  23. GOVERNING LAW. THIS AMENDMENT AND WAIVER AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
   9
     IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Waiver to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.

                              COLE VISION CORPORATION

                              By: /s/ Joseph Gaglioti
                              ---------------------------------------------
                              Name: Joseph Gaglioti
                              Title: Treasurer and Assistant Secretary

                              THINGS REMEMBERED, INC.

                              By: /s/ Joseph Gaglioti
                              ---------------------------------------------
                              Name: Joseph Gaglioti
                              Title: Treasurer and Assistant Secretary

                              PEARLE, INC.

                              By: /s/ Joseph Gaglioti
                              ---------------------------------------------
                              Name: Joseph Gaglioti
                              Title: Vice President, Treasurer  and
                                     Assistant Secretary
   10

                              CANADIAN IMPERIAL BANK OF COMMERCE,
                                NEW YORK AGENCY,
                                as Administrative Agent

                              By: /s/ Katherine Bass
                              ---------------------------------------------
                              Name: Katherine Bass
                              Title: Executive Director
                                     CIBC World Markets Corp. as Agent

                              CIBC INC.

                              By: /s/ Katherine Bass
                              ---------------------------------------------
                              Name: Katherine Bass
                              Title: Executive Director
                                     CIBC World Markets Corp. as Agent

                              CREDIT SUISSE FIRST BOSTON

                              By:
                              ---------------------------------------------
                              Name:
                              Title:

                              By:
                              ---------------------------------------------
                              Name:
                              Title:

   11

                              CANADIAN IMPERIAL BANK OF COMMERCE,
                                NEW YORK AGENCY,
                                as Administrative Agent

                              By:
                              ---------------------------------------------
                              Name:
                              Title:

                              CIBC INC.

                              By:
                              ---------------------------------------------
                              Name:
                              Title:

                              CREDIT SUISSE FIRST BOSTON

                              By: /s/ Robert Hetu
                              ---------------------------------------------
                              Name: Robert Hetu
                              Title: Vice President

                              By: /s/ Chris T. Horgan
                              ---------------------------------------------
                              Name: Chris T. Horgan
                              Title: Vice President


   12

                              FIRST UNION NATIONAL BANK

                              By: /s/ Thomas M. Harder
                              ---------------------------------------------
                              Name: Thomas M. Harder
                              Title: Vice President

                              NATIONAL CITY BANK

                              By:
                              ---------------------------------------------
                              Name:
                              Title:

                              KEYBANK NATIONAL ASSOCIATION

                              By:
                              ---------------------------------------------
                              Name:
                              Title:

                              FIFTH THIRD BANK, NORTHEASTERN OHIO

                              By:
                              ---------------------------------------------
                              Name:
                              Title:

   13

                              FIRST UNION NATIONAL BANK

                              By:
                              ---------------------------------------------
                              Name:
                              Title:

                              NATIONAL CITY BANK

                              By: /s/ Chris D. Thornton
                              ---------------------------------------------
                              Name: Chris D. Thornton
                              Title: Vice President

                              KEYBANK NATIONAL ASSOCIATION

                              By:
                              ---------------------------------------------
                              Name:
                              Title:

                              FIFTH THIRD BANK, NORTHEASTERN OHIO

                              By:
                              ---------------------------------------------
                              Name:
                              Title:

   14

                              FIRST UNION NATIONAL BANK

                              By:
                              ---------------------------------------------
                              Name:
                              Title:

                              NATIONAL CITY BANK

                              By:
                              ---------------------------------------------
                              Name:
                              Title:

                              KEYBANK NATIONAL ASSOCIATION

                              By: /s/ Mark A. LoSchiavo
                              ---------------------------------------------
                              Name: Mark A. LoSchiavo
                              Title: Assistant Vice President

                              FIFTH THIRD BANK, NORTHEASTERN OHIO

                              By:
                              ---------------------------------------------
                              Name:
                              Title:

   15

                              FIRST UNION NATIONAL BANK

                              By:
                              ---------------------------------------------
                              Name:
                              Title:

                              NATIONAL CITY BANK

                              By:
                              ---------------------------------------------
                              Name:
                              Title:

                              KEYBANK NATIONAL ASSOCIATION

                              By:
                              ---------------------------------------------
                              Name:
                              Title:

                              FIFTH THIRD BANK, NORTHEASTERN OHIO

                              By: /s/ James P. Byrnes
                              ---------------------------------------------
                              Name: James P. Byrnes
                              Title: Vice President


   16
                                                                              12

                                                                    EXHIBIT A TO
                                                      SIXTH AMENDMENT AND WAIVER

                                                                     Schedule II
                                                                     -----------
                                                             to Credit Agreement
                                                             -------------------

            Applicable Margin Calculation for Revolving Credit Loans
            --------------------------------------------------------


                                   ABR Loans                   Eurodollar Loans
Leverage Ratio                     Applicable Margin           Applicable Margin
- --------------                     -----------------           -----------------

Greater than 3.25 to 1.00               1.25%                         2.25%

Greater than 3.00 to 1.00,
but less than or equal to
3.25 to 1.00                            1.00%                         2.00%

Greater than 2.50 to 1.00,
but less than or equal to
3.00 to 1.00                             .75%                         1.75%

Less than or equal to 2.50
to 1.00                                  .50%                         1.50%



Notwithstanding the foregoing table, (a) during the period from and including
the Sixth Amendment Effective Date until June 30, 2000, the Applicable Margin
in respect of Revolving Credit Loans shall equal (i) with respect to ABR Loans,
1.5% per annum and (ii) with respect to Eurodollar Loans, 2.5% per annum, and
(b) the Applicable Margin will be adjusted on each Adjustment Date after the
Covenant Modification Period to the applicable rate per annum set forth above
under the heading "ABR Loans Applicable Margin" or "Eurodollar Loans Applicable
Margin" MINUS .25% per annum in the event that, immediately preceding such
Adjustment Date, (i) the senior unsecured long-term debt of CNG shall be rated
at least "BBB-" by Standard & Poor's, a division of McGraw-Hill, Inc., and (ii)
the Administrative Agent shall have received written notice of such rating from
a Borrower.
   17
                                                                              13

                                Commitment Fees
                                ---------------

Percentage of Revolving Credit
Commitments Used                                                 Commitment Fees
- ----------------                                                 ---------------

Greater than 66.6%                                                    0.375%

Greater than 33.3%, but less
than or equal to 66.6%                                                0.50%

Less than or equal to 33.3%                                           0.75%
   18
                                 CNC GUARANTEE

     GUARANTEE, dated as of March 7, 2000, made COLE NATIONAL CORPORATION, a
Delaware corporation (the "GUARANTOR"), in favor of Canadian Imperial Bank of
Commerce, as administrative agent (in such capacity, the "ADMINISTRATIVE AGENT")
for (i) the banks and other financial institutions (the "Lenders") from time to
time parties to the Credit Agreement, dated as of November 15, 1996 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among Cole Vision Corporation, Things Remembered, Inc. and Pearle, Inc.
(collectively, the "Borrowers"), the Lenders and the Administrative Agent and
(ii) the other Guaranteed Parties (as defined below).

                                  WITNESSETH:

     WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make, and have made, extensions to the Borrowers upon the terms and
subject to the conditions set forth therein;

     WHEREAS, the Borrowers are members of an affiliated group of companies that
includes the Guarantor;

     WHEREAS, the proceeds of the extensions of credit have been and will be
used in part to enable the Borrowers to make valuable transfers to the Guarantor
in connection with the operations of their respective business;

     WHEREAS, the Guarantor will derive substantial direct and indirect benefit
from the continued making of the extension of credit under the Credit Agreement;
and

     WHEREAS, it is a condition precedent to the effectiveness of the Sixth
Amendment and Waiver, dated as of March 7, 2000 (the "SIX AMENDMENT"), of the
Credit Agreement that the Guarantor shall have executed and delivered this
Guarantee to the Administrative Agent for the ratable benefit of the Guaranteed
Parties;

     NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Sixth Amendment and to
induce the Lenders to continue to make their respective extensions of credit to
the Borrowers thereunder, the Guarantor hereby agrees with the Administrative
Agent, for the ratable benefit of the Guaranteed Parties, as follows:


                            SECTION 1. DEFINED TERMS

     1.1 DEFINITIONS. (a) Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.

   19
     (b) The following terms shall have the following meanings:

     "GUARANTEE": this CNC Guarantee, as the same may be amended, supplemented
or otherwise modified from time to time.

     "GUARANTEED OBLIGATIONS": the collective reference to the Obligations and
all obligations and liabilities of the Guarantor which may arise under or in
connection with this Guarantee, whether on account of reimbursement obligations,
fees, indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Administrative Agent or to the
Lenders that are required to be paid by the Guarantor pursuant to the terms of
this Guarantee).

     "GUARANTEED PARITIES": the collective reference to the Administrative
Agent, the Lenders (including, without limitation, the Issuing Lender) and any
Affiliate of any Lender which has entered  into a Hedge Agreement with any
Borrower or any Subsidiary.

     "GUARANTOR": as defined in the preamble hereto.

     "HEDGE AGREEMENTS": as to any Person, all interest rate swaps, caps or
collar agreements or similar arrangements entered into by such Person providing
for protection against fluctuations in interest rates or currency exchange rates
of the exchange of nominal interest obligations, either generally or under
specific contingencies, including, without limitations, all Interest Rate
Protection Agreements and Permitted Hedging Arrangements with respect to
currency exchange rates.

     "OBLIGATIONS": the collective reference to the unpaid principal of and
interest on the Revolving Credit Loans and Reimbursement Obligations and all
other obligations and liabilities of the Borrowers (including, without
limitations, interest accruing at the then applicable rate provided in the
Credit Agreement after the maturity of the Revolving Credit Loans and
Reimbursement Obligations and interest accruing at the then applicable rate
provided in the Credit Agreement after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrowers, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) to the Administrative
Agent or any Lender (or, in the case of any Hedge Agreement referred to below,
any Affiliate of any Lender), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, the Credit Agreement, this
Guarantee, the other Loan Documents, any Letter of Credit or any Hedge Agreement
entered into by any Borrower with any Lender (or, in the case of any Hedge
Agreement, any Affiliate of any Lender) or any other document made, delivered or
given in connection therewith, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel
to the Administrative Agent or to the Lenders that are required to be paid by
any Borrower pursuant to the terms of any of the foregoing agreements).

   20

     1.2  OTHER DEFINITIONAL PROVISIONS. (a) The words "hereof", "herein",
"hereto" and "hereunder" and words of similar import when used in this
Guarantee shall refer to this Guarantee as a whole and not to any particular
provision of this Guarantee, and Section and Schedule references are to this
Guarantee unless otherwise specified.

     (b) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.

                              SECTION 2. GUARANTEE

     2.1 GUARANTEE. (a) The Guarantor hereby unconditionally and irrevocable
guarantees to the Administrative Agent, for the ratable benefits of the
Guaranteed Parties and their respective successors, indorsees, transferees and
assigns, the prompt and complete payment and performance by the Borrowers when
due (whether at the stated maturity, by acceleration or otherwise) of the
Guaranteed Obligations.

     (b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of the Guarantor hereunder shall in no
event exceed the amount which can be guaranteed by the Guarantor under
applicable federal and state laws relating to the insolvency of debtors.

     (c) The Guarantor agrees that the Obligations may at any time and from
time to time exceed the amount of the liability of the Guarantor hereunder
without impairing the guarantee contained in this Section 2 or affecting the
rights and remedies of the Administrative Agent or any other Guaranteed Party
hereunder.

     (d) The guarantee contained in this Section 2 shall remain in full force
and effect until the first date on which all the Obligations and the obligations
of the Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding and the
Commitments shall be terminated, notwithstanding that from time to time during
the term of the Credit Agreement the Borrowers may be free from any Obligations.

     (e) No payment made by any Borrower, the Guarantor, any other guarantor or
any other Person or received or collected by the Administrative Agent or any
other Guaranteed Party from any Borrower, the Guarantor, any other guarantor or
any other Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction of
or in payment of the Obligations shall be deemed to modify, reduce, release or
otherwise affect the liability of the Guarantor hereunder which shall,
notwithstanding any such payment (other than any payment made by the Guarantor
in respect of the Obligations or any payment received or collected from the
Guarantor in respect of the Obligations), remain liable for the Obligations up
to the maximum liability of the Guarantor hereunder until the first date on
which the Obligations are paid in full, no Letter of Credit shall be
outstanding and the Commitments are terminated.



   21
                                                                               4

     2.2 NO SUBROGATION.  Notwithstanding any payment made by the Guarantor
hereunder or any set-off or application of funds of the Guarantor by the
Administrative Agent or any other Guaranteed Party, the Guarantor shall not be
entitled to be subrogated to any of the rights of the Administrative Agent or
any other Guaranteed Party against any Borrower or any collateral security or
guarantee or right of offset held by the Administrative Agent or any other
Guaranteed Party for the payment of the Obligations, nor shall the Guarantor
seek or be entitled to seek any contribution or reimbursement from any Borrower
in respect of payments made by the Guarantor hereunder, until all amounts owing
to the Administrative Agent and the other Guaranteed Parties by the Borrowers
on account of the Obligations are paid in full, no Letter of Credit shall be
outstanding and the Commitments are terminated. If any amount shall be paid to
the Guarantor on account of such subrogation rights at any time when all of the
Obligations shall not have been paid in full, such amount shall be held by the
Guarantor in trust for the Administrative Agent and the other Guaranteed
Parties, segregated from other funds of the Guarantor, and shall, forthwith
upon receipt by the Guarantor, be turned over to the Administrative Agent in
the exact form received by the Guarantor (duly indorsed by the Guarantor to the
Administrative Agent, if required), to be applied against the Obligations,
whether matured or unmatured, in such order as the Administrative Agent may
determine.

     2.3 AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS. The Guarantor shall
remain obligated hereunder notwithstanding that, without any reservation of
rights against the Guarantor and without notice to or further assent by the
Guarantor, any demand for payment of any of the Obligations made by the
Administrative Agent or any other Guaranteed Party may be rescinded by the
Administrative Agent or such other Guaranteed Party and any of the Obligations
continued, and the Obligations, or the liability of any other Person upon or
for any part thereof, or any collateral security or guarantee therefor or right
of offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any other Guaranteed
Party, and the Credit Agreement and the other Loan Documents and any other
documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the
Administrative Agent (or the Majority Lenders, as the case may be) may deem
advisable from time to time, and any collateral security, guarantee or right of
offset at any time held by the Administrative Agent or any other Guaranteed
Party for the payment of the Obligations may be sold, exchanged, waived,
surrendered or released. Neither the Administrative Agent nor any other
Guaranteed Party shall have any obligation to protect, secure, perfect or
insure any Lien at any time held by it as security for the Obligations or for
the guarantee contained in this Section 2 or any property subject thereto.

     2.4 GUARANTEE ABSOLUTE AND UNCONDITIONAL. The Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Obligations
and notice of or proof of reliance by the Administrative Agent or any other
Guaranteed Party upon the guarantee contained in this Section 2 or acceptance
of the guarantee contained in this Section 2; the Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon the guarantee contained
in this Section 2; and all dealings between any Borrower and the Guarantor, on
the one hand, and the Administrative Agent and the other Guaranteed Parties, on
the other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon the guarantee
   22
                                                                               5

contained in this Section 2. The Guarantor waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the
Borrowers or the Guarantor with respect to the Obligations. The Guarantor
understands and agrees that the guarantee contained in this Section 2 shall be
construed as a continuing, absolute and unconditional guarantee of payment. The
Guarantor hereby waives, to the extent it may legally do so, any and all
defenses that it may have arising out of or in connection with any and all of
the following: (a) the validity or enforceability of the Credit Agreement or
any other Loan Document, any of the Obligations or any other collateral
security therefor or guarantee or right of offset with respect thereto at any
time or from time to time held by the Administrative Agent or any other
Guaranteed Party, (b) any defense, set-off or counterclaim (other than a
defense of payment or performance) which may at any time be available to or be
asserted by any Borrower against the Administrative Agent or any other
Guaranteed Party, (c) any change in the time, place, manner or place of
payment, amendment, or waiver or increase in the Obligations, (d) any change in
the corporate structure or existence of any Borrower or (e) any other
circumstance whatsoever (with or without notice to or knowledge of such
Borrower or the Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of any Borrower for the
Obligations, or of the Guarantor under the guarantee contained in this Section
2, in bankruptcy or in any other instance. When making any demand hereunder or
otherwise pursuing its rights and remedies hereunder against the Guarantor, the
Administrative Agent or any other Guaranteed Party may, but shall be under no
obligation to, make a similar demand on or otherwise pursue such rights and
remedies as it may have against any Borrower or any other Person or against
any collateral security or guarantee for the Obligations or any right of offset
with respect thereto, and any failure by the Administrative Agent or any other
Guaranteed Party to make any such demand, to pursue such other rights or
remedies or to collect any payments from any Borrower or any other Person or
to realize upon any such collateral security or guarantee or to exercise any
such right of offset, or any release of any Borrower or any other Person or any
such collateral security, guarantee or right of offset, shall not relieve the
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of the Administrative Agent or any other Guaranteed Party against
the Guarantor. For the purposes hereof "demand" shall include the commencement
and continuance of any legal proceedings.

     2.5  REINSTATEMENT.  The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Obligations is rescinded or must
otherwise be restored or returned by the Administrative Agent or any other
Guaranteed Party upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of any Borrower or the Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, any Borrower or the Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made.

     2.6  PAYMENTS.  The Guarantor hereby guarantees that payments hereunder
will be paid to the Administrative Agent without set-off or counterclaim in
Dollars at the office of the Administrative Agent located at 425 Lexington
Avenue, New York, New York 10017.
   23
                                                                               6

                   SECTION 3. REPRESENTATIONS AND WARRANTIES

     To induce the Administrative Agent and the Lenders to enter into the Sixth
Amendment and to induce the Lenders to continue to make their respective
extensions of credit to the Borrowers under the Credit Agreement, the Guarantor
hereby represents and warrants to the Administrative Agent and each other
Guaranteed Party that:

          (a)  The Guarantor (i) is duly organized, validly existing and in good
     standing under the laws of the jurisdiction of its organization, (ii) has
     the corporate or other organizational power and authority, and the legal
     right, to own and operate its property, to lease the property it operates
     as lessee and to conduct the business in which it is currently engaged,
     (iii) is duly qualified as a foreign corporation or other entity 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 and (iv) is in compliance with all Requirements of Law except
     to the extent that the failure to comply therewith could not, in the
     aggregate, reasonably be expected to have a Material Adverse Effect.

          (b)  The Guarantor has the corporate or other organizational power and
     authority, and the legal right, to make, deliver and perform this Guarantee
     and has taken all necessary corporate or other organizational action to
     authorize the execution, delivery and performance of this Guarantee. No
     consent or authorization of, filing with, notice to or other act by or in
     respect of, any Governmental Authority or any other Person is required in
     connection with the execution, delivery, performance, validity or
     enforceability of this Guarantee. This Guarantee has been duly executed
     and delivered on behalf of the Guarantee. This Guarantee constitutes a
     legal, valid and binding obligation of the Guarantor enforceable against
     the Guarantor in accordance with its terms, subject to the effects of
     bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
     and other similar laws relating to or affecting creditors' rights
     generally, general equitable principles (whether considered in a
     proceeding in equity or at law) and an implied covenant of good faith
     and fair dealing.

          (c)  The execution, delivery and performance of this Guarantee will
     not violate any Requirement of Law or Contractual Obligation of the
     Guarantor or of any of its Subsidiaries and will not result in, or
     require, the creation or imposition of any Lien on any of its or their
     respective properties or revenues pursuant to any such Requirements of Law
     or Contractual Obligation (other than pursuant to this Guarantee).

          (d)  No litigation, investigation or proceeding of or before any
     arbitrator or Governmental Authority is pending or, to the knowledge of the
     Guarantor, threatened by or against the Guarantor or any of its
     Subsidiaries or against any of its or their respective properties or
     revenues (x) with respect to any of the Loan Documents or any of the
     transactions contemplated hereby or thereby, or (y) which could reasonably
     be expected to have a Material Adverse Effect.
   24
                                                                               7

                            SECTION 4. COVENANTS

     The Guarantor covenants and agrees with the Administrative Agent and the
other Guaranteed Parties that, from and after the date of this Guarantee until
the Guaranteed Obligations shall have been paid in full, no Letter of Credit
shall be outstanding and the Commitments shall have terminated:

     4.1  COVENANTS IN CREDIT AGREEMENT. The Guarantor shall take, or shall
refrain from taking, as the case may be, each action that is necessary to be
taken or not taken, as the case may be, so that no Default or Event of Default
is caused by the failure to take such action or to refrain from taking such
action by the Guarantor or any of its Subsidiaries.

                     SECTION 5. THE ADMINISTRATIVE AGENT

     5.1  AUTHORITY OF ADMINISTRATIVE AGENT. The Guarantor acknowledges that the
rights and responsibilities of the Administrative Agent under this Guarantee
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Guarantee or any amendment, supplement or other modification of this
Guarantee shall, as between the Administrative Agent and the Guaranteed Parties,
be governed by the Credit Agreement and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Guarantor, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Guaranteed Parties with
full and valid authority so to act or refrain from acting, and the Guarantor
shall be under any obligation, or entitlement, to make any inquiry respecting
such authority.

                          SECTION 6. MISCELLANEOUS

     6.1  AMENDMENTS IN WRITING. None of the terms or provisions of this
Guarantee may be waived, amended, supplemented or otherwise modified except by
a written instrument executed by the Guarantor and the Administrative Agent,
PROVIDED that any provision of this Guarantee imposing obligations on the
Guarantor may be waived by the Administrative Agent in a written instrument
executed by the Administrative Agent.

     6.2  NOTICES. All notices, requests and demands to or upon the
Administrative Agent or the Guarantor hereunder shall be effected in the manner
provided for in subsection 11.2 of the Credit Agreement; PROVIDED that any
such notice, request or demand to or upon the Guarantor shall be addressed to
the Guarantor at:

               5915 Landerbrook Drive
               Mayfield Heights, Ohio 44124
               Attention: Joseph Gaglioti
               Fax: (216) 461-3489
   25
                                                                               8

with a copy to:

               Jones, Day, Reavis & Pogue
               North Point
               901 Lakeside Avenue
               Cleveland, Ohio 44114
               Attention: David P. Porter, Esq.
               Fax: (216) 579-0212

     6.3  NO WAIVER BY COURSE OF CONDUCT: CUMULATIVE REMEDIES. Neither the
Administrative Agent nor any other Guaranteed Party shall by any act (except
by a written instrument pursuant to Section 6.1), delay, indulgence, omission
or otherwise be deemed to have waived any right or remedy hereunder or to
have acquiesced in any Default or Event of Default. No failure to exercise,
nor any delay in exercising, on the part of the Administrative Agent or any
other Guaranteed Party, any right, power or privilege hereunder shall operate
as a waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by the
Administrative Agent or any other Guaranteed Party of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right
or remedy which the Administrative Agent or such other Guaranteed Party would
otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any other rights or remedies provided by law.

     6.4  ENFORCEMENT EXPENSES: INDEMNIFICATION. (a) The Guarantor agrees to
pay or reimburse each Guaranteed Party and the Administrative Agent for all
their respective costs and expenses incurred in collecting against the
Guarantor under the guarantee contained in Section 2 or otherwise enforcing
any rights under this Guarantee, including, without limitation, the fees
and disbursements of counsel (including the allocated fees and expenses of
in-house counsel) to each Guaranteed Party and of counsel to the Administrative
Agent.

     (b)  The Guarantor agrees to pay, and to save the Administrative Agent and
the Guaranteed Parties harmless from, any and all liabilities with respect to,
or resulting from any delay in paying, any and all stamp, excise, sales or
other taxes which may be payable or determined to be payable in connection with
any of the transactions contemplated by this Guarantee.

     (c)  The Guarantor agrees to pay, and to save the Administrative Agent and
the Guaranteed Parties harmless from, any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Guarantee
(collectively, the "INDEMNIFIED LIABILITIES") to the extent the Borrowers would
be required to do so pursuant to Section 11.5 of the Credit Agreement.

     (d)  The agreements in this Section 6.4 shall survive repayment of the
Guaranteed Obligations and all other amounts payable under the Credit Agreement
and the other Loan Documents.
   26
                                                                               9

     6.5  SUCCESSORS AND ASSIGNS. This Guarantee shall be binding upon the
successors and assigns of the Guarantor and shall inure to the benefit of the
Administrative Agent and the Guaranteed Parties and their successors and
assigns; PROVIDED that the Guarantor may assign, transfer or delegate any of
its rights or obligations under this Guarantee without the prior written
consent of the Administrative Agent.

     6.6  SET-OFF. The Guarantor hereby irrevocably authorizes the
Administrative Agent and each other Guaranteed Party at any time and from
time to time without notice to the Guarantor or any Borrower, any such notice
being expressly waived by the Guarantor and by the Borrowers, upon any amount
remaining unpaid after it becomes due and payable by the Guarantor hereunder to
set-off and appropriate and apply against any such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by the Administrative Agent or such other Guaranteed Party to or
for the credit or the account of the Guarantor, or any part thereof in such
amounts as the Administrative Agent or such other Guaranteed Party may elect.
The Administrative Agent and each other Guaranteed Party shall notify the
Guarantor promptly of any such set-off and the application made by the
Administrative Agent or such other Guaranteed Party of the proceeds thereof;
PROVIDED that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of the Administrative Agent and each
other Guaranteed Party under this Section 6.6 are in addition to other rights
and remedies (including, without limitation, other rights of set-off) which the
Administrative Agent or such other Guaranteed Party may have.

     6.7  SEVERABILITY. Any provision of this Guarantee which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

     6.8  SECTION HEADINGS. The Section headings used in this Guarantee are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.

     6.9  INTEGRATION. This Guarantee and the other Loan Documents represent the
agreement of the Guarantor, the Administrative Agent and the other Guaranteed
Parties with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
other Guaranteed Party relative to subject matter hereof not expressly set forth
or referred to herein or in the other Loan Documents.

     6.10 GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

   27
                                                                              10

          6.11 SUBMISSION TO JURISDICTION; WAIVERS. The Guarantor hereby
irrevocably and unconditionally:

          (a) submits for itself and its property in any legal action or
     proceeding relating to this Guarantee, or for recognition and enforcement
     of any judgement in respect thereof, to the non-exclusive general
     jurisdiction of the courts of the State of New York, the courts of the
     United States of America for the Southern District of New York, and
     appellate courts from any thereof;

          (b) consents that any such action or proceeding may be brought in such
     courts and waives any objection that it may now or hereafter have to the
     venue of any such action or proceeding in any such court or that such
     action or proceeding was brought in an inconvenient court and agrees not to
     plead or claim the same;

          (c) agrees that service of process in any such action or proceeding
     may be effected by mailing a copy thereof by registered or certified mail
     (or any substantially similar form of mail), postage prepaid, to the
     Guarantor at its address referred to in Section 6.2 or at such other
     address of which the Administrative Agent shall have been notified pursuant
     thereto;

          (d) agrees that nothing herein shall affect the right to effect
     service of process in any other manner permitted by law or shall limit the
     right to sue in any other jurisdiction; and

          (e) waives, to the maximum extent not prohibited by law, any right it
     may have to claim or recover in any legal action or proceeding referred to
     in this Section any exemplary, punitive or consequential damages.


          6.12 ACKNOWLEDGEMENTS. The Guarantor hereby acknowledges that:

          (a) it has been advised by counsel in the negotiation, execution and
     delivery of this Guarantee;

          (b) neither the Administrative Agent nor any other Guaranteed Party
     has any fiduciary relationship with or duty to the Guarantor arising out of
     or in connection with this Guarantee or any of the other Loan Documents,
     and the relationship between the Guarantor, on the one hand, and the
     Administrative Agent and the Guaranteed Parties, on the other hand, in
     connection herewith or therewith is solely that of debtor and creditor; and

          (c) no joint venture is created hereby or by the other Loan Documents
     or otherwise exists by virtue of the transactions contemplated hereby among
     the Guaranteed Parties or among the Guarantor and the Guaranteed Parties.




   28
                                                                              11


          6.13 WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS GUARANTEE OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

          6.14 RELEASES. At such time as the Revolving Credit Loans, the
Reimbursement Obligations and the other Guaranteed Obligations shall have been
paid in full, the Commitments have been terminated and no Letters of Credit
shall be outstanding, this Guarantee and all obligations (other than those
expressly stated to survive such termination) of the Administrative Agent and
the Guarantor hereunder shall terminate, all without delivery of any instrument
or performance of any act by any party. At the request and sole expense of the
Guarantor following any such termination, the Administrative Agent shall
execute and deliver to the Guarantor such documents as the Guarantor shall
reasonably request to evidence such termination.
   29
                                                                              12

          IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be
duly executed and delivered as of the date first above written.


                                        COLE NATIONAL CORPORATION


                                        By:  /s/ J. Gaglioti
                                            ---------------------------------
                                            Title: Vice President & Treasurer

   30
                           ACKNOWLEDGMENT AND CONSENT

          Each of the undersigned corporations as Guarantors under the
Guarantee and Collateral Agreement, dated as of November 15, 1996 (as amended,
supplemented or otherwise modified from time to time, the "GUARANTEE AND
COLLATERAL AGREEMENT"), made by the undersigned corporations in favor of the
Administrative Agent, for the benefit of the Lenders, hereby (a) consents to
the transactions contemplated by this Amendment and Waiver, and (b)
acknowledges and agrees that the guarantees (and grants of collateral security
therefor) contained in such Guarantee and Collateral Agreement are, and shall
remain, in full force and effect after giving effect to this Amendment and
Waiver, and all prior modifications to the Credit Agreement.



                                   BAY CITIES OPTICAL COMPANY


                                   By:  /s/ J. Gaglioti
                                       ----------------------------------------
                                       Name:  Joseph Gaglioti
                                       Title: Treasurer and Assistant Secretary


                                   WESTERN STATES OPTICAL, INC.


                                   By:  /s/ J. Gaglioti
                                       ----------------------------------------
                                       Name:  Joseph Gaglioti
                                       Title: Treasurer and Assistant Secretary


                                   COLE VISION SERVICES, INC.

                                   By:  /s/ J. Gaglioti
                                       ----------------------------------------
                                       Name:  Joseph Gaglioti
                                       Title: Treasurer and Assistant Secretary


                                   COLE MANAGEMENT SERVICES, INC.

                                   By:  /s/ J. Gaglioti
                                       ----------------------------------------
                                       Name:  Joseph Gaglioti
                                       Title: Treasurer
   31
                                   PEARLE VISIONCARE, INC.

                                   By:  /s/ J. Gaglioti
                                       ----------------------------------------
                                       Name:  Joseph Gaglioti
                                       Title: Vice President & Treasurer


                                   PEARLE VISION MANAGED CARE - HMO OF
                                     TEXAS, INC.

                                   By:  /s/ J. Gaglioti
                                       ----------------------------------------
                                       Name:  Joseph Gaglioti
                                       Title: Vice President, Treasurer & C.F.O.

EX-10.51

   1
                                                                   Exhibit 10.51


                                 CNC GUARANTEE

                  GUARANTEE, dated as of March 7, 2000, made by COLE NATIONAL
CORPORATION, a Delaware Corporation (the "GUARANTOR"), in favor of Canadian
Imperial Bank of Commerce, as administrative agent (in such capacity, the
"ADMINISTRATIVE AGENT" for (i) the banks and other financial institutions (the
"LENDERS") from time to time parties to the Credit Agreement, dated as of
November 15, 1996 (as amended, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT"), among Cole Vision Corporation, Things
Remembered, Inc. and Pearle, Inc. (collectively, the "BORROWERS"), the Lenders
and the Administrative Agent and (ii) the other Guaranteed parties (as defined
below).


                              W I T N E S S E T H:
                              - - - - - - - - - -

                  WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make, and have made, extensions of the credit to the
Borrowers upon the terms and subject to the conditions set forth therein;

                  WHEREAS, the Borrowers are members of an affiliated group of
companies that includes the Guarantor;

                  WHEREAS, the proceeds of the extensions of credit have been
and will be used in part to enable the Borrowers to make valuable transfers to
the Guarantor in connection with the operation of their respective businesses;

                  WHEREAS, the Guarantor will derive substantial direct and
indirect benefit from the continued making of the extensions of credit under
the Credit Agreement; and

                  WHEREAS, it is a condition precedent to the effectiveness of
the Sixth Amendment and Waiver, dated as of March 7, 2000 (the "SIXTH
AMENDMENT"), of the Credit Agreement that the Guarantor shall have executed and
delivered this Guarantee to the Administrative Agent for the ratable benefit of
the Guaranteed Parties;

                  NOW, THEREFORE, in consideration of the premises and to
induce the Administrative Agent and the Lenders to enter into the Sixth
Amendment and to induce the Lenders to continue to make their respective
extensions of credit to the Borrowers thereunder, the Guarantor hereby agrees
with the Administrative Agent, for the ratable benefit of the Guaranteed
Parties, as follows:

                            SECTION 1. DEFINED TERMS

                  1.1 DEFINITIONS. (a) Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given
to them in the Credit Agreement.
   2
                                                                               2

                  (b) The following terms shall have the following meanings:

                  "GUARANTEE": this CNC Guarantee, as the same may be amended,
supplemented or otherwise modified from time to time.

                  "GUARANTEED OBLIGATIONS": the collective reference to the
Obligations and all obligations and liabilities of the Guarantor which may arise
under or in connection with this Guarantee, whether on account of reimbursement
obligations, fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Administrative Agent or
to the Lenders that are required to be paid by the Guarantor pursuant to the
terms of this Guarantee).

                  "GUARANTEED PARTIES": the collective reference to the
Administrative Agent, the Lenders (including, without limitation, the Issuing
Lender) and any Affiliate of any Lender which has entered into a Hedge Agreement
with any Borrower or any Subsidiary.

                  "GUARANTOR": as defined in the preamble hereto.

                  "HEDGE AGREEMENTS": as to any Person, all interest rate swaps,
caps or collar agreements or similar arrangements entered into by such Person
providing for protection against fluctuations in interest rates or currency
exchange rates or the exchange of nominal interest obligations, either generally
or under specific contingencies, including, without limitation, all Interest
Rate Protection Agreements and Permitted Hedging Arrangements with respect to
currency exchange rates.

                  "OBLIGATIONS": the collective reference to the unpaid
principal of and interest on the Revolving Credit Loans and Reimbursement
Obligations and all other obligations and liabilities of the Borrowers
(including, without limitation, interest accruing at the then applicable rate
provided in the Credit Agreement after the maturity of the Revolving Credit
Loans and Reimbursement Obligations and interest accruing at the then applicable
rate provided in the Credit Agreement after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrowers, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) to the Administrative
Agent or any Lender (or, in the case of any Hedge Agreement referred to below,
any Affiliate of any Lender), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, the Credit Agreement, this
Guarantee, the other Loan Documents, any Letter of Credit or any Hedge Agreement
entered into by any Borrower with any Lender (or, in the case of any Hedge
Agreement, any Affiliate of any Lender) or any other document made, delivered or
given in connection therewith, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel
to the Administrative Agent or to the Lenders that are required to be paid by
any Borrower pursuant to the terms of any of the foregoing agreements).
   3
                                                                               3


                  1.2 OTHER DEFINITIONAL PROVISIONS. (a) The words "hereof,"
"herein", "hereto" and "hereunder" and words of similar import when used in
this Guarantee shall refer to this Guarantee as a whole and not to any
particular provision of this Guarantee, and Section and Schedule references
are to this Guarantee unless otherwise specified.

                  (b) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.

                              SECTION 2. GUARANTEE

                  2.1 GUARANTEE. (a) The Guarantor hereby unconditionally and
irrevocably guarantees to the Administrative Agent, for the ratable benefit of
the Guaranteed Parties and their respective successors, indorsees, transferees
and assigns, the prompt and complete payment and performance by the Borrowers
when due (whether at the stated maturity, by acceleration or otherwise) of the
Guaranteed Obligations.

                  (b) Anything herein or in any other Loan Document to the
contrary notwithstanding, the maximum liability of the Guarantor hereunder
shall in no event exceed the amount which can be guaranteed by the Guarantor
under applicable federal and state laws relating to the insolvency of debtors.

                  (c) The Guarantor agrees that the Obligations may at any time
and from time to time exceed the amount of the liability of the Guarantor
hereunder without impairing the guarantee contained in the Section 2 or
affecting the right and remedies of the Administrative Agent or any other
Guaranteed party hereunder.

                  (d) The guarantee contained in this Section 2 shall remain in
full force and effect until the first date on which all the Obligations and the
obligations of the Guarantor under the guarantee contained in this Section 2
shall have been satisfied by payment in full, no Letter of Credit shall be
outstanding and the Commitments shall be terminated, notwithstanding that from
time to time during the term of the Credit Agreement the Borrowers may be free
from any Obligations.

                  (e) No payment made by any Borrower, the Guarantor, any other
guarantor or any other Person or received or collected by the Administrative
Agent or any other Guaranteed Party from any Borrower, the Guarantor, any other
guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of the Guarantor hereunder which
shall, notwithstanding any such payment (other than any payment made by the
Guarantor in respect of the Obligations or any payment received or collected
from the Guarantor in respect of the Obligations), remain liable for the
Obligations up to the maximum liability of the Guarantor hereunder until the
first date on which the Obligations are paid in full, no Letter of Credit shall
be outstanding and the Commitments are terminated.
   4
                                                                               4


     2.2  NO SUBROGATION.  Notwithstanding any payment made by the Guarantor
hereunder or any set-off or application of funds of the Guarantor by the
Administrative Agent or any other Guaranteed Party, the Guarantor shall not be
entitled to be subrogated to any of the rights of the Administrative Agent or
any other Guaranteed Party against any Borrower or any collateral security or
guarantee or right of offset held by the Administrative Agent or any other
Guaranteed Party for the payment of the Obligations, nor shall the Guarantor
seek or be entitled to seek any contribution or reimbursement from any Borrower
in respect of payments made by the Guarantor hereunder, until all amounts owing
to the Administrative Agent and the other Guaranteed Parties by the Borrowers
on account of the Obligations are paid in full, no Letter of Credit shall be
outstanding and the Commitments are terminated. If any amount shall be paid to
the Guarantor on account of such subrogation rights at any time when all of the
Obligations shall not have been paid in full, such amount shall be held by the
Guarantor in trust for the Administrative Agent and the other Guaranteed
Parties, segregated from other funds of the Guarantor, and shall, forthwith
upon receipt by the Guarantor, be turned over to the Administrative Agent in
the exact form received by the Guarantor (duly indorsed by the Guarantor to the
Administrative Agent, if required), to be applied against the Obligations,
whether matured or unmatured, in such order as the Administrative Agent may
determine.

     2.3  AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS.  The Guarantor
shall remain obligated hereunder notwithstanding that, without any reservation
of rights against the Guarantor and without notice to or further assent by the
Guarantor, any demand for payment of any of the Obligations made by the
Administrative Agent or any other Guaranteed Party may be rescinded by the
Administrative Agent or such other Guaranteed Party and any of the Obligations
continued, and the Obligations, or the liability of any other Person upon or
for any part thereof, or any collateral security or guarantee therefor or right
of offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any other Guaranteed
Party, and the Credit Agreement and the other Loan Documents and any other
documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the
Administrative Agent (or the Majority Lenders, as the case may be) may deem
advisable from time to time, and any collateral security, guarantee or right of
offset at any time held by the Administrative Agent or any other Guaranteed
Party for the payment of the Obligations may be sold, exchanged, waived,
surrendered or released. Neither the Administrative Agent nor any other
Guaranteed Party shall have any obligation to protect, secure, perfect or
insure any Lien at any time held by it as security for the Obligations or for
the guarantee contained in this Section 2 or any property subject thereto.

     2.4  GUARANTEE ABSOLUTE AND UNCONDITIONAL.  The Guarantor waives any and
all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Administrative Agent or
any other Guaranteed Party upon the guarantee contained in this Section 2 or
acceptance of the guarantee contained in this Section 2; the Obligations, and
any of them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon the
guarantee contained in this Section 2; and all dealings between any Borrower
and the Guarantor, on the one hand, and the Administrative Agent and the other
Guaranteed Parties, on the other hand, likewise shall be conclusively presumed
to have been had or consummated in reliance upon the guarantee
   5
                                                                               5


contained in this Section 2. The Guarantor waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the
Borrowers or the Guarantor with respect to the Obligations. The Guarantor
understands and agrees that the guarantee contained in this Section 2 shall be
construed as a continuing, absolute and unconditional guarantee of payment. The
Guarantor hereby waives, to the extent it may legally do so, any and all
defenses that it may have arising out of or in connection with any and all of
the following: (a) the validity or enforceability of the Credit Agreement or
any other Loan Document, any of the Obligations or any other collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the Administrative Agent or any other Guaranteed
Party, (b) any defense, set-off or counterclaim (other than a defense of
payment or performance) which may at any time be available to or be asserted by
any Borrower against the Administrative Agent or any other Guaranteed Party,
(c) any change in the time, place, manner or place of payment, amendment, or
waiver or increase in the Obligations, (d) any change in the corporate
structure or existence of any Borrower or (e) any other circumstance
whatsoever (with or without notice to or knowledge of such Borrower or the
Guarantor) which constitutes, or might be construed to constitute, an equitable
or legal discharge of any Borrower for the Obligations, or of the Guarantor
under the guarantee contained in this Section 2, in bankruptcy or in any other
instance. When making any demand hereunder or otherwise pursuing its rights and
remedies hereunder against the Guarantor, the Administrative Agent or any other
Guaranteed Party may, but shall be under no obligation to, make a similar
demand on or otherwise pursue such rights and remedies as it may have against
any Borrower or any other Person or against any collateral security or
guarantee for the Obligations or any right of offset with respect thereto, and
any failure by the Administrative Agent or any other Guaranteed Party to make
any such demand, to pursue such other rights or remedies or to collect any
payments from any Borrower or any other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or
any release of any Borrower or any other Person or any such collateral
security, guarantee or right of offset, shall not relieve the Guarantor of any
obligation or liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of the
Administrative Agent or any other Guaranteed Party against the Guarantor. For
the purposes hereof "demand" shall include the commencement and continuance of
any legal proceedings.

     2.5  REINSTATEMENT.  The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Obligations is rescinded or must
otherwise be restored or returned by the Administrative Agent or any other
Guaranteed Party upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of any Borrower or the Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, any Borrower or the Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made.

     2.6  PAYMENTS.  The Guarantor hereby guarantees that payments hereunder
will be paid to the Administrative Agent without set-off or counterclaim in
Dollars at the office of the Administrative Agent located at 425 Lexington
Avenue, New York, New York 10017.
   6
                                                                               6


                   SECTION 3. REPRESENTATIONS AND WARRANTIES


     To induce the Administrative Agent and the Lenders to enter into the Sixth
Amendment and to induce the Lenders to continue to make their respective
extensions of credit to the Borrowers under the Credit Agreement, the Guarantor
hereby represents and warrants to the Administrative Agent and each other
Guaranteed Party that:

         (a) The Guarantor (i) is duly organized, validly existing and in good
     standing under the laws of the jurisdiction of its organization, (ii) has
     the corporate or other organizational power and authority, and the legal
     right, to own and operate its property, to lease the property it operates
     as lessee and to conduct the business in which it is currently engaged,
     (iii) is duly qualified as a foreign corporation or other entity 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 and (iv) is in compliance with all Requirements of Law except
     to the extent that the failure to comply therewith could not, in the
     aggregate, reasonably be expected to have a Material Adverse Effect.

         (b) The Guarantor has the corporate or other organizational power and
     authority, and the legal right, to make, deliver and perform this Guarantee
     and has taken all necessary corporate or other organizational action to
     authorize the execution, delivery and performance of this Guarantee. No
     consent or authorization of, filing with, notice to or other act by or in
     respect of, any Governmental Authority or any other Person is required in
     connection with the execution, delivery, performance, validity or
     enforceability of this Guarantee. This Guarantee has been duly executed and
     delivered on behalf of the Guarantee. This Guarantee constitutes a legal,
     valid and binding obligation of the Guarantor enforceable against the
     Guarantor in accordance with its terms, subject to the effects of
     bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
     and other similar laws relating to or affecting creditors' rights
     generally, general equitable principles (whether considered in a proceeding
     in equity or at law) and an implied covenant of good faith and fair
     dealing.

         (c) The execution, delivery and performance of this Guarantee will not
     violate any Requirement of Law or Contractual Obligation of the Guarantor
     or of any of its Subsidiaries and will not result in, or require, the
     creation or imposition of any Lien on any of its or their respective
     properties or revenues pursuant to any such Requirement of Law or
     Contractual Obligation (other than pursuant to this Guarantee).

         (d) No litigation, investigation or proceeding of or before any
     arbitrator or Governmental Authority is pending or, to the knowledge of the
     Guarantor, threatened by or against the Guarantor of any of its
     Subsidiaries or against any of its or their respective properties or
     revenues (x) with respect to any of the Loan Documents or any of the
     transactions contemplated hereby or thereby, or (y) which could reasonably
     be expected to have a Material Adverse Effect.
   7
                                                                               7


                              SECTION 4. COVENANTS


     The Guarantor covenants and agrees with the Administrative Agent and the
other Guaranteed Parties that, from and after the date of this Guarantee until
the Guaranteed Obligations shall have been paid in full, no Letter of Credit
shall be outstanding and the Commitments shall have terminated:

     4.1  COVENANTS IN CREDIT AGREEMENT.  The Guarantor shall take, or shall
refrain from taking, as the case may be, each action that is necessary to be
taken or not taken, as the case may be, so that no Default or Event of Default
is caused by the failure to take such action or to refrain from taking such
action by the Guarantor or any of its Subsidiaries.

                      SECTION 5. THE ADMINISTRATIVE AGENT

     5.1  AUTHORITY OF ADMINISTRATIVE AGENT.  The Guarantor acknowledges that
the rights and responsibilities of the Administrative Agent under this
Guarantee with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Guarantee or any amendment, supplement or
other modification of this Guarantee shall, as between the Administrative Agent
and the Guaranteed Parties, be governed by the Credit Agreement and by such
other agreements with respect thereto as may exist from time to time among
them, but, as between the Administrative Agent and the Guarantor, the
Administrative Agent shall be conclusively presumed to be acting as agent for
the Guaranteed Parties with full and valid authority so to act or refrain from
acting, and the Guarantor shall be under any obligation, or entitlement, to
make any inquiry respecting such authority.

                            SECTION 6. MISCELLANEOUS

     6.1  AMENDMENTS IN WRITING.  None of the terms or provisions of this
Guarantee may be waived, amended, supplemented or otherwise modified except by
a written instrument executed by the Guarantor and the Administrative Agent,
PROVIDED that any provision of this Guarantee imposing obligations on the
Guarantor may be waived by the Administrative Agent in a written instrument
executed by the Administrative Agent.

     6.2  NOTICES. All notices, requests and demands to or upon the
Administrative Agent or the Guarantor hereunder shall be effected in the manner
provided for in subsection 11.2 of the Credit Agreement; PROVIDED that any such
notice, request or demand to or upon the Guarantor shall be addressed to the
Guarantor at:

         5915 Landerbrook Drive
         Mayfield Heights, Ohio 44124
         Attention: Joseph Gaglioti
         Fax: (216) 461-3489.
   8
                                                                               8

with a copy to:

               Jones, Day, Reavis & Pogue
               North Point
               90 Lakeside Avenue
               Cleveland, Ohio 44114
               Attention: David P. Porter, Esq.
               Fax: (216) 579-0212

          6.3 NO WAIVER BY COURSE OF CONDUCT: CUMULATIVE REMEDIES: Neither the
Administrative Agent nor any other Guaranteed Party shall by any act (except by
a written instrument pursuant to Section 6.1), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default. No failure to exercise, nor any
delay in exercising, on the part of the Administrative Agent or any other
Guaranteed Party, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Administrative Agent or
any other Guaranteed Party of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the Administrative
Agent or such other Guaranteed Party would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.

          6.4 ENFORCEMENT EXPENSES: INDEMNIFICATION. (a) The Guarantor agrees to
pay or reimburse each Guaranteed Party and Administrative Agent for all their
respective costs and expenses incurred in collecting against the Guarantor under
the guarantee contained in Section 2 or otherwise enforcing any rights under
this Guarantee, including, without limitation, the fees and disbursements of
counsel (including the allocated fees and expenses of in-house counsel) to each
Guaranteed Party and of counsel to the Administrative Agent.

          (b) The Guarantor agrees to pay, and to save the Administrative Agent
and the Guaranteed Parties harmless from, any and all liabilities with respect
to, or resulting from any delay in paying, and all stamp, excise, sales or
other taxes which may be payable or determined to be payable in connection with
any of the transactions contemplated by this Guarantee.

          (c) The Guarantor agrees to pay, and to save the Administrative Agent
and the Guaranteed Parties harmless from, any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Guarantee
(collectively, the "INDEMNIFIED LIABILITIES") to the extent the Borrowers would
be required to do so pursuant to Section 11.5 of the Credit Agreement.

          (d) The agreements in this Section 6.4 shall survive repayment of the
Guaranteed Obligations and all other amounts payable under the Credit Agreement
and the other Loan Documents.
   9
                                                                               9

          6.5 SUCCESSORS AND ASSIGNS. This Guarantee shall be binding upon the
successors and assigns of the Guarantor and shall inure to the benefit of the
Administrative Agent and the Guaranteed Parties and their successors and
assigns; PROVIDED that the Guarantor may assign, transfer or delegate any of its
rights or obligations under this Guarantee without the prior written consent of
the Administrative Agent.

          6.6 SET-OFF. The Guarantor hereby irrevocably authorizes the
Administrative Agent and each other Guaranteed Party at any time and from time
to time without notice to the Guarantor or any Borrower, any such notice being
expressly waived by the Guarantor and by the Borrowers, upon any amount
remaining unpaid after it becomes due and payable by the Guarantor hereunder to
set-off and appropriate and apply against any such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by the Administrative Agent or such other Guaranteed Party to or
for the credit or the account of the Guarantor, or any part thereof in such
amounts as the Administrative Agent or such other Guaranteed Party may elect.
The Administrative Agent and each other Guaranteed Party shall notify the
Guarantor promptly of any such set-off and the application made by the
Administrative Agent or such other Guaranteed Party of the proceeds thereof;
PROVIDED that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of the Administrative Agent and each
other Guaranteed Party under this Section 6.6 are in addition to other rights
and remedies (including, without limitation, other rights of set-off) which the
Administrative Agent or such other Guaranteed Party may have.

          6.7 SEVERABILITY. Any provision of this Guarantee which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

          6.8 SECTION HEADINGS. The Section headings used in this Guarantee are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.

          6.9 INTEGRATION. This Guarantee and the other Loan Documents represent
the agreement of the Guarantor, the Administrative Agent and the other
Guaranteed Parties with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any other Guaranteed Party relative to subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.

          6.10 GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

   10
     6.11 SUBMISSION TO JURISDICTION: WAIVERS. The Guarantor hereby irrevocably
and unconditionally:

     (a)  submits for itself and its property in any legal action or proceeding
relating to this Guarantee, or for recognition and enforcement of any judgement
in respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;

     (b)  consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or
claim the same;

     (c)  agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Guarantor at its
address referred to in Section 6.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;

     (d)  agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and

     (e)  waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding referred to in this
Section any exemplary, punitive or consequential damages.

     6.12 ACKNOWLEDGEMENTS. The Guarantor hereby acknowledges that:

     (a)  it has been advised by counsel in the negotiation, execution and
delivery of this Guarantee;

     (b)  neither the Administrative Agent nor any other Guaranteed Party has
any fiduciary relationship with or duty to the Guarantor arising out of or in
connection with this Guarantee or any of the other Loan Documents, and the
relationship between the Guarantor, on the one hand, and the Administrative
Agent and the Guaranteed Parties, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and

     (c)  no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Guaranteed Parties or among the Guarantor and the Guaranteed Parties.
   11
                                                                              11

                  6.13 WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS GUARANTEE OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN.

                  6.14 RELEASES. At such time as the Revolving Credit Loans, the
Reimbursement Obligations and the other Guaranteed Obligations shall have been
paid in full, the Commitments have been terminated and no Letters of Credit
shall be outstanding, this Guarantee and all obligations (other than those
expressly stated to survive such termination) of the Administrative Agent and
the Guarantor hereunder shall terminate, all without delivery of any
instrument or performance of any act by any party. At the request and sole
expense of the Guarantor following any such termination, the Administrative
Agent shall execute and deliver to the Guarantor such documents as the
Guarantor shall reasonable request to evidence such termination.
   12
                                                                              12

                  IN WITNESS WHEREOF, the undersigned has caused this
Guarantee to be duly executed and delivered as of the date first above written.


                                    COLE NATIONAL CORPORATION



                                    By: /s/ J. Gaglioti
                                        --------------------------------------
                                        Title: Vice President & Treasurer

EX-10.52

   1
                                                                   Exhibit 10.52

                           COLE NATIONAL CORPORATION
                              EMPLOYMENT AGREEMENT


     THIS EMPLOYMENT AGREEMENT (as amended, modified or otherwise supplemented
from time to time, the "AGREEMENT") is entered into as of January 18, 2000 (the
"EFFECTIVE DATE") between Cole National Corporation, a Delaware corporation
("Company"), and Larry Pollock, an individual residing in the State of Ohio (the
"Executive").

     WHEREAS, the Company desires to retain the services of the Executive,
initially as President, Chief Operating Officer and a Member of the Board of
Directors;

     WHEREAS, concurrently herewith, the Company and the Executive are entering
into a Restricted Stock Agreement (the "RESTRICTED STOCK AGREEMENT" attached
hereto as Exhibit A), pursuant to which the Company is granting the Executive an
award of restricted stock;

     WHEREAS, concurrently herewith, the Company and the Executive are entering
into a Nonqualified Stock Option Agreement No.1 ("OPTION AGREEMENT NO.1"
attached hereto as Exhibit B), pursuant to which the Company is granting an
award for nonqualified stock options;

     WHEREAS, concurrently herewith, the Company and the Executive are entering
into a Nonqualified Stock Option Agreement No.2 ("OPTION AGREEMENT NO.2"
attached hereto as Exhibit C), pursuant to which the Company is granting an
award for nonqualified stock options;

     WHEREAS, the Executive will borrow money from the Company as evidenced by a
promissory note (the "SECURED PROMISSORY NOTE" attached hereto as Exhibit D)
pursuant to which the Company is making a recourse loan for a term of four (4)
years to the Executive which is secured by a related Stock Pledge Agreement (the
"STOCK PLEDGE AGREEMENT" attached hereto as Exhibit E); and

     WHEREAS, the Executive desires to provide his services to the Company on
the terms and conditions herein provided.

     NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

     1. DEFINITIONS. In addition to terms defined elsewhere herein, the
following terms when used in this Agreement with initial capital letters shall
have the meanings set forth below:

   2





         (a) "CAUSE" means that, prior to any termination of the Executive's
employment, the Executive shall have:

                  (i) committed any willful misconduct, fraud or criminal
         activity (excluding traffic violations or other minor offenses) which
         commission is materially inimical to the interests of the Company,
         whether for his personal benefit or in connection with his duties for
         the Company; or

                  (ii) intentionally or knowingly violated any anti-fraud
         provision of the federal or state securities laws; or

                  (iii) wrongful]y disclosed secret processes or confidential
         information of the Company or any Subsidiary; or

                  (iv) wrongfully engaged in any Competitive Activity.

         Notwithstanding the foregoing, the Executive shall not be deemed to
         have been terminated for "Cause" hereunder unless and until there shall
         have been delivered to the Executive a copy of a resolution duly
         adopted by the affirmative vote of not less than a majority of the
         Board then in office at a meeting of the Board called and held for such
         purpose, after reasonable notice to the Executive and an opportunity
         for the Executive, together with the Executive's counsel (if the
         Executive chooses to have counsel present at such meeting), to be heard
         before the Board, finding that, in the good faith opinion of the Board,
         the Executive had committed an act constituting "Cause" as herein
         defined and specifying the particulars thereof in detail. Nothing
         herein will limit the right of the Executive or his beneficiaries to
         contest the validity or propriety of any such determination.

         (b) "CHANGE IN CONTROL" means the occurrence during the Term of any of
the following events:

                  (i) the Company merges into itself, or is merged or
         consolidated with, another entity and as a result of such merger or
         consolidation less than 51% of the voting power of the then-outstanding
         voting securities of the surviving or resulting entity immediately
         after such transaction are directly or indirectly beneficially owned in
         the aggregate by the former stockholders of the Company immediately
         prior to such transaction;

                  (ii) all or substantially all the assets accounted for on the
         consolidated balance sheet of the Company are sold or transferred to
         one or more entities or persons, and as a result of such sale or
         transfer less than 51% of the voting power of the then-outstanding
         voting securities of such entity or person immediately after such sale
         or transfer is directly or indirectly beneficially held in the
         aggregate by the former stockholders of the Company immediate]y prior
         to such transaction or series of transactions, it being acknowledged
         that a sale, transfer or other disposition of Things Remembered, Inc.
         or its assets is not such a sale of all or substantially all of the
         Company's assets;



                                       2

   3

                  (iii) A person, within the meaning of Section 3(a)(9) or
         13(d)(3) (as in effect on the date of this Agreement) of the Securities
         Exchange Act of 1934, (the "EXCHANGE ACT") becomes the beneficial owner
         (as defined in Rule 13d-3 of the Securities and Exchange Commission
         pursuant to the Exchange Act) of (i) 15% or more but less than 35% of
         the voting power of the then outstanding voting securities of the
         Company without prior approval of the Company's Board, or (ii) 35% or
         more of the voting power of the then-outstanding voting securities of
         the Company; PROVIDED, HOWEVER, that the foregoing does not apply to
         any such acquisition that is made by (w) any Subsidiary; (x) any
         employee benefit plan of the Company or any Subsidiary; or (y) any
         person or group of which employees of the Company or of any Subsidiary
         control a greater than 25% interest unless the Board of Directors of
         the Company determines that such person or group is making a "hostile
         acquisition;" or (z) any person or group of which the Executive is an
         affiliate; or

                  (iv) a majority of the members of the Board of Directors of
         the Company are not Continuing Directors, where a "CONTINUING DIRECTOR"
         is any member of the Board of Directors of the Company who (x) was a
         member of the Board of Directors of the Company on the date of this
         Agreement or (y) was nominated for election or elected to such Board of
         Directors with the affirmative vote of a majority of the Continuing
         Directors who were members of such Board at the time of such nomination
         or election;

         (c) "COMMON STOCK" means shares of common stock of the Company, par
value $.001 per share.

         (d) "DISABILITY" or "DISABLED" means that (i) a physician selected by
the Company and reasonably satisfactory to the Executive certifies that the
Executive suffers from a physical or a mental disability; and (ii) as a result
of such disability the Board of Directors of the Company, in the exercise of its
reasonable judgment based on such physician's report, determines that the
Executive has been or is reasonably anticipated to be unable to perform his
duties under this Agreement for at least ninety (90) days out of a one hundred
twenty (120) successive day period. For the purpose of determining whether he is
disabled, the Executive agrees that, if requested by the Company, he will submit
to a physical examination by such physician, not more frequently than once a
year, the cost of such examination to be paid by the Company.

         (e) "GOOD REASON" means:

                  (i) Following a Change in Control, either

                           (x) a majority of the members of the Board of
                  Directors of the Company immediately prior to the change in
                  control are not Continuing Directors; or

                           (y) Jeffrey A. Cole is terminated by the Company
                  other than for cause or voluntarily terminates his employment
                  other than for disability (or death) as Chairman of the Board
                  of the Company; or



                                       3
   4

                  (ii) Whether or not a Change in Control has occurred, there
         has been a substantial adverse change resulting in a reduction in the
         nature or scope of the duties or titles of the Executive held
         immediately prior to such change, or the Executive's principal office
         is relocated to a location more than 50 miles from either Twinsburg,
         Ohio or Shaker Heights, Ohio, it being acknowledged that a sale,
         transfer or other disposition of Things Remembered, Inc. or its assets
         is not such a substantial adverse change.

         (f) "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations (or a group of corporations that themselves are Subsidiaries) other
than the last corporation in the unbroken chain owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain. For purposes of this Agreement,
the continuous employment of the Executive with the Company or a Subsidiary will
not be deemed interrupted, and the Executive will not be deemed to have ceased
to be an employee of the Company or any Subsidiary, by reason of the transfer of
his employment among the Company and its Subsidiaries

         (g) "TERMINATION DATE" means the date the Executive's employment with
the Company ends for any reason.

     2. EMPLOYMENT. The Company hereby employs the Executive, and Executive
hereby accepts employment with the Company, on the terms and conditions set
forth in this Agreement.

     3. TERM. The term (the "Term") of the Executive's employment under this
Agreement will be for four (4) years commencing on the date of this Agreement
(the "Effective Date") and ending on the fourth anniversary of such date.

     4. POSITIONS AND DUTIES. (a) The Executive will serve as President and
Chief Operating Officer, and will be nominated to serve as a member of the Board
of Directors of the Company. The Executive will serve in such offices or
positions to which he is elected or appointed by the Board of Directors or the
Chief Executive Officer of the Company consistent with his duties as President
and Chief Operating Officer. The Executive's service as an officer or director
of the Company and of any of the direct or indirect, wholly or partially owned
subsidiaries of the Company or of any of the Subsidiaries, will be encompassed
within any reference made in this Agreement to employment with the Company.

         (b) The Executive will report to the Chief Executive Officer of the
Company.

         (c) The Executive will, subject to the powers and authority reserved in
or by the Board of Directors of the Company, have the authority and
responsibility customarily attending each corporate office held by him pursuant
to Section 4(a). In addition, the Executive will hold such other offices in and
perform such other executive and administrative duties for the Company as the
Board of Directors or Chief Executive Officer of the Company determine are
appropriate. The Executive shall devote substantially all of his time, energy,
and attention to the



                                       4

   5

affairs and operations of the Company; provided, however, that the Executive may
devote reasonable periods of time during normal business hours to (i) serving as
a director or trustee in any organization or business so long as such activity
would not constitute a violation of Section 11 of this Agreement, or (ii)
engaging in charitable and community activities, or (iii) engaging in unrelated
business investments so long as such positions or activities do not, in the
opinion of the Company's Board of Directors, substantially detract from his
performance of his duties for the Company. The Executive may continue to serve
as a director of Borders Group, Inc., so long as such activity would not
constitute a violation of Section 11 of this Agreement. The Executive shall
obtain approval from the Compensation Committee of the Board of Directors prior
to accepting a position as a director of any public company.

         (d) The Company shall cause the election of the Executive to its Board
of Directors no later than January 31, 2000, and shall thereafter cause his
nomination for re-election as a Director throughout the Term. In the event the
Executive's employment with the Company terminates, the Executive shall promptly
resign from the Board of Directors.

     5. COMPENSATION. During the Term:

         (a) SALARY. The Company will pay the Executive an aggregate annual base
salary of $50,000.

         (b) BONUS. The Executive will receive an annual bonus equal to 100% of
the annual bonus paid to the Chief Executive Officer from time to time in
accordance with the existing annual bonus plan for senior management of the
Company or any future bonus plans adopted for senior management generally of the
Company, excluding discretionary bonuses and options and stock grants to the
Chief Executive Officer. Notwithstanding the foregoing, the Board of Directors
of the Company may, in its sole discretion without any obligation hereunder to
the Executive, consider the payment of a cash bonus to the Executive for the
first fiscal year of the Company commencing after the Effective Date.

         (c) INVESTMENT IN COMPANY STOCK. The Executive agrees that he will
purchase for his own account 262,500 shares of Common Stock within one hundred
eighty (180) days of the Effective Date (the "PURCHASED SHARES"). The Company
shall grant such reasonable extensions, in light of the circumstances, as may be
requested by the Executive. In no event will Executive be required to expend
more than Two Million Six Hundred Thirty-Five Thousand Dollars ($2,635,000) for
the Purchased Shares. The Executive also may purchase for his own account an
additional 262,500 shares of Common Stock (the "ADDITIONAL SHARES"). The
Executive agrees that in no event will he, as a result of his own volition,
purchase or otherwise acquire, directly or indirectly, for his own account, more
than 525,000 shares (included in this total are the Purchased Shares, the
Additional Shares, any shares acquired as a result of the Executive's exercise
of Option No.2, and any shares acquired under Company sponsored stock based
plans, excluding shares acquired as a result of exercise in whole or in part of
Option No.1 and other options or stock purchase rights that may be granted to
the Executive by the Company in the future). In addition to the 525,000 shares,
the Executive may acquire shares of Common Stock through the exercise of Option
No. 1 and options and stock purchase rights that may be granted to the Executive
by the Company in the future. The required and permitted number or kind of
shares shall be adjusted by the Board of Directors of the Company or the
Compensation

                                       5
   6

Committee of such Board, as such Board or Committee may in good faith determine
is equitably required to prevent dilution or enlargement of the rights of the
Executive under this Section 5(c) and otherwise would result from (i) any stock
dividend, stock split, combination of shares, recapitalization or other change
in the capital structure of the Company, or (ii) any merger, consolidation,
spin-off, split-off, spin-out, split up, reorganization, partial or complete
liquidation or other distribution of assets, or issuance of rights to purchase
securities, or (iii) any distribution of the holders of the Common Stock of
rights or warrants to purchase equity interests of the Company, or (iv) any
other corporation transaction or event having an effect similar to any of the
foregoing.

         (d) RESTRICTED STOCK AWARD. The Company will award to the Executive
525,000 shares of restricted Common Stock (the "RESTRICTED STOCK AWARD"),
subject to the terms and conditions of the Restricted Stock Agreement.

         (e) NONQUALIFIED STOCK OPTIONS.

                  (i) The Company will grant the Executive under the Option
         Agreement No. 1 an option to purchase 262,500 shares of Common Stock
         ("OPTION NO. 1"), subject to the terms and conditions of the Option
         Agreement No.1.

                  (ii) The Company will grant the Executive under Option
         Agreement No.2 an option to purchase 100,000 shares of Common Stock
         ("OPTION NO.2"), subject to the terms and conditions of Option
         Agreement No. 2.

         (f) SECURED RESTRICTED STOCK LOAN. If the Executive makes a timely
Section 83(b) election for federal income tax purposes, the Company will enter
into a secured recourse loan with the Executive evidenced by the Secured
Promissory Note for a term of four (4) years in an amount equal to the tax on
the Restricted Stock Award resulting from such election, subject to the terms
and conditions of Secured Promissory Note and the Stock Pledge Agreement.

         (g) EXPENSES AND ALLOWANCES. The Executive is authorized in carrying
out his responsibilities and duties under this Agreement, to incur reasonable
business expenses for the benefit of the Company, including business expenses
for transportation, entertainment, travel, lodging and similar items. The
Executive will be provided with a current model company automobile, in
accordance with policies applicable to other senior executives generally, or an
equivalent cash allowance. All such expenses referred to above will either be
paid directly by the Company or the Company shall promptly reimburse the
Executive for expenditures upon the submission, from time to time, of itemized
accountings for such expenditures.

         (h) VACATIONS. The Executive will be entitled to 5 weeks of vacation in
each calendar year or such greater amount of vacation as may be permitted under
the employment policies of the Company in accordance with its policies
applicable to other senior executive employees generally.

         (i) EMPLOYEE BENEFIT PLANS. The Executive will be eligible to
participate in the employee pension and welfare benefit plans maintained by the
Company for



                                       6

   7

senior executives, as the same may be modified, supplemented or replaced from
time to time; provided, however, the Executive shall not participate in the Cole
National Group, Inc. 1999 Supplemental Retirement Benefit Plan. The option
grants and restricted stock grant hereunder shall not be treated as compensation
for purposes of any Company sponsored employee pension benefit plans.

         (j) OTHER AGREEMENTS. The rights and obligations of the parties under
the Restricted Stock Agreement, Option Agreement No. 1, Option Agreement No. 2,
the Secured Promissory Note and the Stock Pledge Agreement (collectively the
"OTHER AGREEMENTS") will be governed by the terms and conditions of such Other
Agreements and will not be enlarged or affected hereby, unless otherwise
provided herein.

     6. DEATH OR DISABILITY DURING EMPLOYMENT. If the Executive dies or is
disabled during the term of this Agreement, Company shall pay to the Executive,
in case of his Disability, or to the beneficiary or beneficiaries designated by
the Executive in case of his death, or if the Executive is legally incompetent
or no such designation of death beneficiary has been made, then to the
Executive's personal representative, the compensation that would otherwise be
payable to the Executive pursuant to Section 5(a) and 5(b) of this Agreement for
the period of time up to the date of his death or Disability.

     7. TERMINATION WITHOUT CAUSE OR FOR GOOD REASON PRIOR TO A CHANGE IN
CONTROL. (a) If the Executive's employment is terminated by the Company without
Cause or by the Executive for Good Reason prior to a Change in Control and on or
before the first anniversary of the Effective Date, the Company will forgive
seventy-five percent (75%) of the principal on the then unpaid balance of the
Secured Promissory Note and will make a cash payment of one million dollars
($1,000,000) to the Executive.

         (b) If the Executive's employment is terminated by the Company without
Cause or by the Executive for Good Reason prior to a Change in Control and after
the first anniversary and on or before the second anniversary of the Effective
Date, the Company will forgive twenty-five percent (25%) of the principal on the
then unpaid balance of the Secured Promissory Note.

         (c) Notwithstanding any other provisions of this Section 7, if for any
reason 100% of the Restricted Stock becomes nonforfeitable under the provisions
of the Restricted Stock Agreement, no portion of the principal on the Secured
Promissory Note will be forgiven.

         (d) If, prior to the second anniversary of the Effective Date, either

                  (i)      a majority of the members of the Board of Directors
                           of the Company are not Continuing Directors, or

                  (ii)     Jeffrey A. Cole is terminated by the Company or
                           voluntarily resigns as Chairman of the Board of the
                           Company,


                                       7

   8



and no Change in Control has occurred, then, if Executive voluntarily terminates
his employment with the Company other than for Good Reason, the Company will
forgive one hundred percent (100%) of the principal on the then unpaid balance
of the Secured Promissory Note.

         (e) The foregoing are in addition to and do not modify benefits under
the Restricted Stock Agreement, Option Agreement No.1 and Option Agreement No.2.

     8. TERMINATION WITHOUT CAUSE OR FOR GOOD REASON FOLLOWING A CHANGE IN
CONTROL. (a) If the Executive's employment is terminated by the Company without
Cause or by the Executive for Good Reason following a Change in Control and on
or before the first anniversary of the Effective Date, the Company will forgive
fifty percent (50%) of the principal on the then unpaid balance of the Secured
Promissory Note.

         (b) If the Executive's employment is terminated by the Company without
Cause or by the Executive for Good Reason following a Change in Control and
after the first anniversary and on or before the second anniversary of the
Effective Date, the Company will forgive twenty-five percent (25%) of the
principal of the then unpaid balance of the Secured Promissory Note.

         (c) Notwithstanding any other provisions of this Section 8, if for any
reason 100% of the Restricted Stock becomes nonforfeitable under the provisions
of the Restricted Stock Agreement, no portion of the principal on the Secured
Promissory Note will be forgiven.

         (d) The foregoing are in addition to and do not modify benefits under
the Restricted Stock Agreement, Option Agreement No.1 and Option Agreement No.2.

     9. TERMINATION FOR CAUSE. Upon termination of the Executive's employment
with the Company for Cause the Company shall pay to the Executive his base
salary up to his Termination Date. The Executive will forfeit any bonus payments
and any unvested Restricted Stock and unvested Options.

     10. STOCK SALES AND REGISTRATION RIGHTS. (a) Executive shall retain full
legal and beneficial ownership of the Purchased Shares and the Restricted Shares
for the duration of the Term, except that:

                  (i) upon shares of restricted Common Stock becoming
         nonforfeitable under the Restricted Stock Agreement, and subject to the
         pledge of shares under the Stock Pledge Agreement, the Executive may
         reduce his ownership of shares of Purchased Shares and nonforfeitable
         shares under the Restricted Stock Agreement to an amount that, in the
         aggregate, equals the then forfeitable shares under the Restricted
         Stock Award; and

                  (ii) upon a Change in Control, all restrictions under this
         provision lapse.

                                       8
   9

         (b) Upon the shares of restricted Common Stock becoming nonforfeitable
under the Restricted Stock Agreement, at the request of the Executive, the
Company shall register for resale under the Securities Act of 1933 the number of
shares of Purchased Shares and nonforfeitable shares under the Restricted Stock
Agreement that the Executive is then entitled to sell under Section 12(a);
provided, however, that:

                  (i) the Company is only obligated to register the shares using
         a short-form registration statement on Form S-3 or any equivalent
         successor form that the Company is then eligible to use and only one
         such registration;

                  (ii) the Company's Board of Directors, in their sole
         discretion, may impose reasonable black-out periods surrounding
         material events;

                  (iii) the Company will have no obligation to register any
         shares that the Executive is able to resell pursuant to the terms of
         Rule 144 within three months of the date of the Executive's request for
         registration;

                  (iv) the Executive, if he is then an employee of the Company,
         shall cooperate with the Company in reasonable efforts to minimize the
         impact on the Company of his trading; and

                  (v) the Company will use its best efforts to register the
         shares that may be acquired through exercise of the options granted
         under the Option Agreement No. 1 on Form S-8.

         11. (a) CONFIDENTIALITY. During the Term and at any time thereafter,
the Executive shall not disclose, furnish, disseminate, make available, or,
except in the ordinary course of performing his duties on behalf of the Company,
use any trade secrets or confidential business and technical information of the
Subsidiaries, the Company, any direct or indirect, wholly or partially owned
subsidiaries of the Company or any of the Subsidiaries, or customers of any of
the Subsidiaries, without limitation as to when it was acquired by him or
whether it was compiled or obtained by or furnished to him while he was employed
by the Company. Such trade secrets and confidential business and technical
information are considered to include, without limitation, the vendor lists,
vendor terms and programs, merchandise costs, financial statistics, research
data, or any other statistics and plans contained in monthly and annual review
books, profit plans, capital plans, critical issues, annual plans, strategic
plans, or merchandising, marketing, real estate, or store operations plans. The
Executive specifically acknowledges that all such information, whether reduced
to writing or maintained in his mind or memory and whether compiled by the
Subsidiaries and/or the Company and/or him, derives independent economic value
from not being readily known to or ascertainable by proper means by others who
can obtain economic value from its disclosure or use, that reasonable efforts
have been put forth by the Subsidiaries or the Company to maintain the secrecy
of such information, that such information is and will remain the sole property
of the Subsidiaries or the Company and that any retention and use of such
information during or after the termination of his employment relationship with
the Subsidiaries or the Company (except in the course of performing his duties)



                                        9
   10

under this Agreement will constitute a misappropriation of the trade secrets of
the Subsidiaries or the Company; PROVIDED, HOWEVER, that his restriction will
not apply to information which is in the public domain or otherwise made public
by other through no fault of the Executive, or as may be required by law.

         (b) NON-COMPETITION. Except as may otherwise be approved in advance by
the Company's Board of Directors, during the Term and for a period of two (2)
years (the "NON-COMPETE PERIOD") after the termination of his employment either
for Cause, without Cause or by his voluntary resignation, the Executive shall
not compete, directly or indirectly with any of the Subsidiaries or the Company.
Without limiting the generality of the foregoing, the Executive shall not:

                  (i) enter into or engage in any business which competes with
         business of any of the Subsidiaries or the Company;

                  (ii) solicit customers, business, patronage, or orders for, or
         sell, any products in competition with, or for any business that
         competes with, the business of any of the Subsidiaries or the Company;
         or

                  (iii) divert, entice, or otherwise take away any customers,
         business, patronage or orders of any of the Subsidiaries or the Company
         or attempt to do so; or

                  (iv) promote or assist, financially or otherwise, any person,
         firm, association, partnership, corporation, or any other entity
         engaged in any business which he competes with the business of any of
         the Subsidiaries or the Company.

For the purposes of this Section 11(b), the Executive understands, acknowledges
and agrees that he will be competing if he engages in any or all of the
activities set forth in this Section 11(b) directly as an individual for his own
account, or indirectly as a partner, joint venture, employee, agent, salesman,
consultant, officer and/or director of any firm, association, corporation, or
other entity, or as a stockholder of any corporation in which he owns, directly
or indirectly, individually or in the aggregate, more than one percent (1%) of
the outstanding stock.

         (c) NON-SOLICITATION. The Executive shall not directly or indirectly
solicit or induce or attempt to solicit or induce any employees) or any sales
representative(s), agent(s) or consultant(s) of any of the Subsidiaries, the
Company or any direct or indirect, wholly or partially owned subsidiaries of the
Company or any of the Subsidiaries to terminate their employment, representation
or other association with such entity.

         (d) COOPERATION AND ASSISTANCE. During the Term and thereafter, the
Executive will provide reasonable cooperation to the Company and the
Subsidiaries in litigation and regulatory matters that relate to events that
occurred during his periods of employment with the Company, the Subsidiaries and
its or their predecessors, and will provide reasonable assistance to the Company
and the Subsidiaries with matters relating to their corporate history from the
periods of his employment with them or their predecessors. The Executive will be


                                       10

   11

entitled to reasonable additional compensation and reimbursement of reasonable
costs and expenses relating to any such cooperation or assistance that occurs
following the Term.

         (e) REMEDIES. The Executive expressly acknowledges and agrees that the
remedy at law for any breach by him of his obligations under this Section 11
will be inadequate and that the damages flowing from such breach are not readily
susceptible to being measured in monetary terms. Accordingly, he acknowledges
and agrees that upon his violation of any obligation in this Section 11, the
Subsidiaries and/or Company will be entitled to immediate injunctive relief and
may obtain a temporary order restraining any threatened or further breach
without the necessity of proof of actual damage. Nothing in this Agreement will
be deemed to limit the remedies of the Subsidiaries or the Company at law or in
equity for any breach by the Executive of any of the obligations in this Section
11 that may be pursued or availed of by the Subsidiaries or the Company.

     12. STANDSTILL AGREEMENT.

         (a) During the Non-Compete Period, the Executive agrees that he will
vote all shares directly or indirectly beneficially owned by him for the
election of the slate of nominees for election to the Board of Directors of the
Company selected by a majority of the members of the Board of Directors, and for
the approval of all matters recommended by a majority of the members of the
Company's Board of Directors, if any recommendation is made.

         (b) The Executive shall be present in person or by proxy at any meeting
of Stockholders so that all shares of Common Stock owned by the Executive may be
counted for the purposes of determining the presence of a quorum at such
meeting.

         (c) The Executive further agrees that he will not join in any group or
contest to acquire the Company's shares during the Non-Compete Period.

         (d) The Executive agrees that for a period commencing on the Effective
Date through the end of the Non-Compete Period, except within the terms of a
specific request from the Company, the Executive may not as a principal, or
agent of another person, propose or publicly announce or otherwise disclose an
intent to propose, or enter into or agree to enter into, singly or with any
other person or directly or indirectly, (i) any form of business combination,
acquisition, or other transaction relating to the Company or any majority-owned
affiliate thereof, (ii) any form of restructuring, recapitalization or similar
transaction with respect to the Company or any such affiliate, or (iii) any
demand, request or proposal to amend, waive or terminate any provision of this
Section 12(d) of this Agreement, nor except as aforesaid during such period will
the Executive, as a principal, or agent of another person, (1) make, or in any
way participate in, any solicitation of proxies with respect to any securities
entitled to vote generally in the election of directors of the Company (together
with direct or indirect options or other rights to acquire any such securities,
"Voting Securities"), (including by the execution of action by written consent),
become a participant in any election contest with respect to the Company, seek
to influence any person with respect to any Voting Securities or demand a copy
of the Company's list of its shareholders or other books and records, (2)
participate in or encourage the formation of any partnership, syndicate, or
other group which owns or seeks or offers to acquire beneficial ownership of any
Voting Securities or which seeks to affect control



                                       11
   12

of the Company or for the purpose of circumventing any provision of this
Agreement, or (3) otherwise act, alone or in concert with others (including by
providing financing for another person), to seek or to offer to control or
influence, in any manner, the management, Board of Directors, or policies of the
Company, except in his capacity as an officer or director of the Company.

     13. ENTIRE AGREEMENT: CONTINUING INDEMNIFICATION RIGHTS. (a) This Agreement
and the Other Agreements shall constitute the entire agreements between the
parties hereto with respect to the subject matters covered by this Agreement and
the Other Agreements, and shall supersede all prior verbal or written
agreements, covenants, communications, understandings, commitments,
representations or warranties, whether oral or written, by any party hereto or
any of its representatives pertaining to such subject matter. The Executive
shall not be entitled to any other payments or benefits, or damages, except as
expressly provided for in this Agreement and the Other Agreements.

         (b) This Agreement shall not affect any indemnification or other rights
under any indemnification agreement between the Executive and the Company or the
Company's by-laws. The Company shall provide coverage for the Executive under
the directors' and officers' liability coverage maintained by Company, as in
effect from time to time, to the same extent as other current senior executive
officers and directors of the Company.

     14. CHOICE OF LAW. This Agreement was entered into, and the negotiations
proceeding this Agreement were conducted in Cleveland, Ohio, and this Agreement
is intended to be performed within the State of Ohio, which is the principal
residence of the Executive. Accordingly, the validity and interpretation of this
Agreement will be determined in accordance with the internal laws of the State
of Ohio without giving effect to the choice of law provision thereof.

     15. NOTICES. Any notices required or permitted to the given under this
Agreement is to be in writing and either given by personal delivery or deemed to
be delivered three (3) days after deposit, postage pre-paid, in the U.S.
certified or registered mail, return receipt requested, or one (1) business day
after deposit, prepaid, with a guaranteed overnight delivery service, addressed
as follows:


                                       12

   13

          If to the Company:       Cole National Corporation
                                   5915 Landerbrook Drive
                                   Mayfield Heights, Ohio 44124
                                   Attention: General Counsel


         If to the Executive:      Larry Pollock
                                   18100 South Park Blvd.
                                   Shaker Heights, Ohio 44120

or at such other address as is specified in written notice given in the manner
required in this Agreement.

     16. WAIVER OF BREACH. The waiver by either the Company or the Executive of
a breach of any provisions of this Agreement will not operate or be construed as
a waiver of any subsequent breach by either party.

     17. BINDING EFFECT. This Agreement will be binding upon and shall inure to
the benefit of both the Executive and the Company and their respective
successors, heirs and legal representatives, but neither this Agreement nor any
rights under this Agreement may be assigned by the Executive or Company without
the written consent of the other.

     18. SEVERABILITY. If any portion of this Agreement is invalid or illegal,
such invalidity or illegality will not render this Agreement invalid or illegal
as a whole but the invalid or illegal portions are to be stricken herefrom and
the remainder of this Agreement will be binding on the parties and their
successors and assigns as if such invalid or illegal provisions were never
included in this Agreement from the first instance.

     19. AMENDMENTS. No amendment or variation of the terms of this Agreement
will be valid unless the same are in writing signed by all parties.

     20. SECTION REFERENCES. Unless otherwise specified, all references in this
Agreement to section will be construed to refer to sections of this Agreement.

     This Employment Agreement has been executed by the parties on the date and
year first above written.


                              COLE NATIONAL CORPORATION


                              By: /s/ Jeffrey A. Cole
                                  ----------------------------------------------
                                   Title:



                              By: Chairman, CEO
                                  ----------------------------------------------
                                   Title:


                              /s/ Larry Pollock
                              --------------------------------------------------
                              Larry Pollock


                                       13
   14
     The following exhibits to this agreement have been separately filed with
the following reference numbers:



     Exhibit        Description                              Exhibit Reference
     -------        -----------                               -----------------
                                                       
       A            Restricted Stock Agreement                      10.53

       B            Nonqualified Stock Option Agreement No. 1       10.54

       C            Nonqualified Stock Option Agreement No. 2       10.55


   15

                                                                       EXHIBIT D
                                                                       ---------


                            SECURED PROMISSORY NOTE
                            -----------------------

$____________                                          Date: _____________, 2000

     FOR VALUE RECEIVED, the undersigned, Larry Pollock ("Borrower"), hereby
unconditionally promises to pay to the order of Cole National Corporation, a
Delaware corporation (the "Company"), the principal sum of__________________
($______) in lawful money of the United States of America and in immediately
available funds, on January ___, 2004(1) unless earlier required by the terms of
this Secured Promissory Note and to pay simple interest (computed on the basis
of a 365 day year) on the unpaid principal amount hereof from and after the date
of this Secured Promissory Note until the entire principal amount hereof has
been paid in full, at the rate of____% per annum.(2) Interest is payable on each
anniversary of the date of this Secured Promissory Note with respect to the
period ending on such anniversary, and at maturity or upon full prepayment of
the principal hereof. Not later than five business days prior to the date on
which payment of interest is due, the Company shall give written notice to the
Borrower of the amount of the payment due on such date.

     For purposes of this Promissory Note, a "business day" shall mean any day
other than a Saturday, Sunday or federal holiday and shall consist of the time
period from 12:01 a.m. through 12:00 Midnight Eastern time.

     This Secured Promissory Note is delivered in consideration of a loan by the
Company to the Borrower in connection with the award by the Company of 525,000
shares of Class A Common Stock, par value $.001 per share (such shares being the
"Common Stock"), of the Company in accordance with the terms of a certain
Restricted Stock Agreement (the "Agreement") dated as of January 19, 2000
between the Company and the Borrower. Payment of the principal of and interest
on this Secured Promissory Note is secured pursuant to the terms of the Stock
Pledge Agreement dated this date between Borrower and the Company. This Secured
Promissory Note is subject to the following further terms and conditions:

     1. PAYMENT AND PREPAYMENT.


- ---------------------
1    The 4th anniversary of the date of the Employment Agreement.

2    Applicable AFR as of date of Note.


   16

          (a) All payments of principal and interest on this Secured Promissory
          Note shall be made to the Company or its order in lawful money of the
          United States of America and in immediately available funds at the
          offices of the Company at its then principal place of business (or at
          such other place as the holder hereof shall notify Borrower in
          writing). Borrower may, at his option, prepay this Secured Promissory
          Note in whole or in part at any time or from time to time without
          penalty or premium. Any prepayments of any portion of the principal
          amount of this Secured Promissory Note shall be accompanied by payment
          of all interest accrued but unpaid hereunder.

          (b) Concurrently with any payment of any portion of this Secured
          Promissory Note pursuant to paragraph 1(a) hereof or any prepayment of
          any portion of the principal amount of this Secured Promissory Note
          pursuant to paragraph 1(b) hereof, the Company shall make a notation
          of such application or payment on this Secured Promissory Note. If
          full payment of all unpaid principal of and accrued and unpaid
          interest on this Secured Promissory Note is made, this Secured
          Promissory Note shall be cancelled. Any partial payment or prepayment
          shall be applied first to accrued and unpaid interest hereon and then
          to the unpaid installments of principal hereof in the inverse order of
          their maturity.

     2. CONVERSION TO DEMAND NOTE. In the event that the Borrower shall cease to
be employed by the Company or any of its subsidiaries, then the unpaid principal
of and accrued and unpaid interest on this Secured Promissory Note shall, upon
demand by the Company given in writing to the Borrower, become immediately due
and payable, subject, however, to the terms of the Employment Agreement dated as
of January 19, 2000 between Borrower and the Company.

     3. EVENTS OF DEFAULT. Upon the occurrence of any of the following events
("Events of Default"):

          (a) Failure to pay any principal of this Promissory Note, including
          any prepayments required hereunder, when due which shall remain
          unremedied for thirty (30) days; or

          (b) Failure to pay any interest due under this Secured Promissory Note
          which shall remain unremedied for thirty (30) days following the date
          when such installment was originally due hereunder, provided, however,
          that the notice required to be given pursuant to the last sentence of
          the first paragraph of this Secured Promissory Note has been given in
          accordance with the terms thereof, or

          (c) A petition is filed by or against the Borrower seeking the entry
          of an order for relief under the bankruptcy laws of the United States,
          as now or hereafter amended or supplemented, or there is an
          appointment of a permanent receiver or a permanent trustee of all or
          substantially all the

                                       2


   17

          property of the Borrower or an assignment is made by the Borrower for
          the benefit of creditors;

then, and in any such event, the holder of this Secured Promissory Note may
declare, by notice of default given to Borrower, the entire principal amount of
this Secured Promissory Note to be forthwith due and payable, whereupon the
entire principal amount of this Secured Promissory Note outstanding shall become
due and payable without presentment, demand, protest and notices of any kind or
of dishonor, all of which are hereby expressly waived. Upon the occurrence of an
Event of Default, the accrued and unpaid interest hereunder shall thereafter
bear the same rate of interest as the principal hereunder, but in no event shall
such interest be charged which would violate any applicable usury law. If an
Event of Default shall occur hereunder, Borrower shall pay costs of collection,
including reasonable attorneys' fees, incurred by the holder in the enforcement
hereof.

     No delay or failure by the holder of this Secured Promissory Note in the
exercise of any right or remedy shall preclude other or future exercise thereof
or the exercise of any other right or remedy.

     4. ADDITIONAL RESTRICTIONS UPON OCCURRENCE OF AN EVENT OF DEFAULT. In case
an Event of Default shall occur and be continuing, the Borrower agrees that he
will not, without the prior written consent of the Company (which consent shall
not be unreasonably withheld), sell, assign, transfer, exchange, or otherwise
dispose of, or grant any option with respect to, any shares of Common Stock then
beneficially owned or thereafter acquired by the Borrower, nor will he create,
incur or permit to exist any pledge, lien, mortgage, hypothecation, security
interest, charge, option or any other encumbrances with respect to any shares of
Common Stock, or any interest therein, or any proceeds thereof.

     5. MISCELLANEOUS:

         (a) The provisions of this Secured Promissory Note shall be governed by
         and construed in accordance with the laws of the State of Ohio, without
         regard to the conflicts of laws rules thereof.

         (b) All notices and other communication hereunder shall be in writing
         and will be deemed to have been duly given if delivered in person or
         mailed by certified mail or guaranteed overnight delivery service to
         the Company at its principal executive offices and to the Borrower at
         the last address reflected in the Company's records.

         (c) The paragraph headings contained in this Promissory Note are for
         reference purposes only and shall not affect in any way the meaning or
         interpretations of the provisions thereof.

                                       3
   18

         IN WITNESS WHEREOF, this Secured Promissory Note has been duly executed
and delivered by Borrower on the date first written above.



                                             -----------------------------------
                                             Borrower: Larry Pollock



Witness:


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

                                        4



   19






                                                                       EXHIBIT E
                                                                       ---------



                             STOCK PLEDGE AGREEMENT




     THIS AMENDED AND RESTATED STOCK PLEDGE AGREEMENT (this "Agreement") dated
as of______________ 2000(1) is made by Larry Pollock (the "Pledgor") to Cole
National Corporation, a Delaware corporation (the "Company").

                                    RECITALS
                                    --------

     A. Pledgor has entered into a Restricted Stock Agreement with the Company,
pursuant to which the Pledgor has been granted 525,000 restricted shares of
common stock, par value $.001 of the Company (such shares being the "Common
Stock" or the "Shares").

     B. In connection with a Section 83(b) election for federal income tax
purposes, the Pledgor has borrowed from the Company the principal amount of
___________________ ($_______), and in consideration therefor, has delivered to
the Company the Secured Promissory Note of the Pledgor, dated January 19, 2000,
for such principal amount (the "Promissory Note").

     C. The Pledgor wishes to affirm the grant of security and assurance to the
Company in order to secure the payment of the principal of and interest on the
Promissory Note and to that effect to pledge to the Company the Shares.

                                   AGREEMENT
                                   ---------

     NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto agree as follows:

     1. PLEDGE.

          (a) The Pledgor hereby pledges, assigns, hypothecates, transfers, and
     delivers to the Company, all the Shares (the "Pledged Stock") and hereby
     grants

- ----------------------------
1 Date will be the same as that of the Promissory Note.

   20




     to the Company, a first lien on, and security interest in, the Pledged
     Stock and in all proceeds thereof, together with appropriate undated stock
     powers duly executed in blank, as collateral security for the prompt and
     complete payment when due (whether at the stated maturity, by acceleration
     or otherwise) of the unpaid principal of and interest on the Promissory
     Note. In the event any Shares are forfeited under the Restricted Stock
     Agreement, such Shares shall be returned to the Company, and shall no
     longer be subject to the pledge of this Stock Pledge Agreement.

          (b) On or after January 18, 2002, the Company shall release, at
     Pledgor's written request, that number of shares that exceed a number of
     shares that, multiplied by the per share closing trading price for the
     Common Stock on the New York Stock Exchange on the date of release, equals
     two hundred percent (200%) of the balance (principal and interest) then due
     on the Promissory Note.

     2. ADMINISTRATION SECURITY. The following provisions shall govern the
administration of the Pledged Stock:

          (a) So long as no Event of Default has occurred and is continuing (as
     used herein, "Event of Default" shall mean the occurrence of any Event of
     Default under the Promissory Note), the Pledgor shall be entitled to act
     with respect to the Pledged Stock in any manner not inconsistent with the
     provisions of this Agreement, the Promissory Note or any document or
     instrument delivered or to be delivered pursuant to or in connection with
     the Promissory Note.

          (b) If, while this Agreement is in effect, the Pledgor shall become
     entitled to receive or shall receive any stock certificate (including,
     without limitation, any certificate representing a stock dividend or a
     distribution in connection with any reclassification, increase or reduction
     of capital, or issued in connection with any reorganization), option or
     rights, in substitution of, in exchange for, or in respect of, any shares
     of any Pledged Stock, the Pledgor agrees to accept the same as the
     Company's agent and to hold the same in trust on behalf of and for the
     benefit of the Company and to deliver the same forthwith to the Company in
     the exact form received, with the endorsement of the Pledgor when necessary
     and/or appropriate undated stock powers duly executed in blank, to be held
     by the Company subject to the terms hereof, as additional collateral
     security for the payment of the principal of and interest on the Promissory
     Note. In case any distribution of capital shall be made on or in respect of
     the Pledged Stock or any property shall be distributed upon or with respect
     to the Pledged Stock pursuant to the recapitalization or reclassification
     of the capital of the Company or pursuant to the reorganization of the
     Company, the property so distributed shall be delivered to the Company to
     be held by it as additional collateral security for the payment of the
     principal of and interest on the Promissory Note. All sums of money and
     property so paid or distributed in respect of the Pledged Stock which are
     received by the Pledgor shall, until paid or delivered to the Company, be
     held by the Pledgor in trust as additional collateral security for the
     payment of the principal of and interest on the Promissory Note.

                                       2
   21

     All property at any time pledged with the Company hereunder (whether or not
     described herein) and all income therefrom and proceeds thereof, are herein
     collectively sometimes called the "Collateral."

          (c) Notwithstanding paragraphs 1 and 2(b) hereof, unless an Event of
     Default shall have occurred and be continuing, the Pledgor shall be
     entitled to receive all cash or stock dividends but not stock splits paid
     in respect of the Pledged Stock and, unless the Company shall have given
     notice pursuant to paragraph 3 of its intention to exercise all voting and
     stockholder rights with respect to the Pledged Stock and any stock
     dividends thereof, to vote the Pledged Stock and any stock dividends
     thereof and to give consents, waivers and ratifications in respect of the
     Pledged Stock and any stock dividends thereof; PROVIDED, HOWEVER, that no
     vote shall be cast or consent, waiver or ratification given or action taken
     which would impair the Collateral or be inconsistent with or violate any
     provision of this Agreement, the Promissory Note, or any document or
     instrument delivered or to be delivered pursuant to or in connection with
     the Promissory Note.

          (d) Notwithstanding any payment or payments made by the Pledgor
     hereunder, or the receipt of any amounts by the Company with respect to the
     Collateral, or any set-off or application of funds of the Pledgor by the
     Company, the Pledgor shall not be entitled to be subrogated to any of the
     rights of the Company against any Collateral held by the Company for the
     payment of the principal of and interest on the Promissory Note until the
     principal of and interest on the Promissory Note are paid in full.

          (e) The Pledgor shall immediately upon request by the Company and in
     confirmation of the security interests hereby created, execute and deliver
     to the Company such further instruments, deeds, transfers, assurances and
     agreements, in form and substance satisfactory to the Company, as the
     Company shall request, including any financing statement and amendments
     thereto, or any other documents, as required under Ohio law and any other
     applicable law to protect the security interests created hereunder.

          (f) Subject to any sale by the Company or other disposition by the
     Company of the Pledged Stock or any stock dividends thereon or other
     property pursuant to this Agreement and subject to Section 6 below, the
     Pledged Stock and any other Collateral shall be returned to the Pledgor
     upon full payment of the principal of and interest on the Promissory Note.

     3. RIGHTS OF THE COMPANY. The Company shall not be liable for failure to
collect or realize upon the principal of and interest on the Promissory Note or
any collateral security therefor, or any part thereof, or for any delay in so
doing nor shall the Company be under any obligation to take any action
whatsoever with regard thereto. Any or all shares of the Pledged Stock and any
stock dividends thereon held by the Company hereunder may, if an Event of
Default has occurred and is continuing, provided that the Company shall have
given prior written notice of its intention to do so to the Pledgor, be
registered in the name of the Company



                                       3

   22

or its nominee, and the Company or its nominee may thereafter exercise all
voting and stockholder rights at any meeting of the Company and exercise any
and all rights of conversion, exchange, subscription or any other rights,
privileges or options pertaining to any shares of the Pledged Stock and any
stock dividends thereon as if it were the absolute owner thereof, including
without limitation, the right to exchange at its discretion, any and all of the
Pledged Stock and any stock dividends thereon upon the merger, consolidation,
reorganization, recapitalization or other readjustment of the Company or upon
the exercise by the Company of any right, privilege or option pertaining to any
shares of the Pledged Stock and any stock dividends thereon, and in connection
therewith, to deposit and deliver any and all of the Pledged Stock and any stock
dividends thereon with any committee, depositary, transfer agent, registrar or
other designated agency upon such terms and conditions as it may determine, all
without liability except to account for property actually received by it, but
the Company shall have no duty to exercise any of the aforesaid rights,
privileges or options and shall not be responsible for any failure to do so or
delay in so doing.

     4. REMEDIES IN CASE OF AN EVENT OF DEFAULT.

          (a) In case an Event of Default shall have occurred and be continuing,
     the Company shall have all of the remedies of a secured party under the
     Ohio Uniform Commercial Code, and, without limiting the foregoing, shall
     have the right, subject to any necessary regulatory approvals, to sell,
     assign and deliver the whole or, from time to time, any part of the
     Collateral or any interest in any part thereof, at any private sale or at
     public auction, with or without demand of performance or other demand,
     advertisement or notice of the time or place of sale or adjournment thereof
     or otherwise, each of which demands, advertisements and/or notices are
     hereby expressly waived (except the Company shall give 10 days' notice to
     the Pledgor of the time and place of any sale pursuant to this Section 4),
     for cash, on credit or for other property, for immediate or future
     delivery, and for such price or prices and on such terms as the Company
     shall, in its sole discretion, determine, the Pledgor hereby waiving and
     releasing any and all right or equity of redemption whether before or after
     sale hereunder. At any such sale the Company may bid for and purchase the
     whole or any part of the Collateral so sold free from any such right or
     equity of redemption. The Company shall apply the net proceeds of any such
     sale, after deducting all reasonable costs and expenses of every kind
     incurred therein or incidental to the care, safekeeping or otherwise of any
     and all of the Collateral or in any way relating to its rights hereunder,
     including reasonable attorney's fees and legal expenses, to the payment in
     whole or in part of the principal of and interest on the Promissory Note,
     in such order as the Company may elect, the Pledgor remaining liable for
     any deficiency remaining unpaid after such application, and only after so
     applying such net proceeds and after the payment by the Company of any
     other amount required by any provision of law, including, without
     limitation, Section 9-504(l)(c) of the Uniform Commercial Code, need the
     Company account for the surplus, if any, to the Pledgor The Pledgor agrees
     that the Company need not give more than ten days' notice of the time and
     place of any public sale or of the time after which a private sale or other
     intended disposition is to take place and that such notice is reasonable
     notification of such matters. No notification need


                                       4
   23

     be given to the Pledgor if it has signed after default a statement
     renouncing or modifying any right to notification of sale or other intended
     disposition.

          (b) The Pledgor recognizes that the Company may be unable to effect a
     public sale of all or a part of the Pledged Stock or other securities held
     as part of the Collateral by reason of certain prohibitions contained in
     the Securities Act of 1933 (the "Act"), or in the rules and regulations
     promulgated thereunder, but may be compelled to resort to one or more
     private sales to a restricted group of purchasers who will be obliged to
     agree, among other things, to acquire the Pledged Stock or such other
     securities for their own account, for investment and not with a view to the
     distribution or resale thereof. The Pledgor agrees that private sales so
     made may be at prices and on other terms less favorable to the seller than
     if the Pledged Stock or such other securities were sold at public sale, and
     that the Company has no obligation to delay the sale of the Pledged Stock
     or such other securities for the period of time necessary to permit the
     registration of the Pledged Stock or such other securities for public sale
     under the Act. The Pledgor agrees that a private sale or sales made under
     the foregoing circumstances shall be deemed to have been made in a
     commercially reasonable manner.

          (c) If any consent, approval or authorization of any state, municipal
     or other governmental department, agency or authority should be necessary
     to effectuate any sale or disposition by the Company pursuant to this
     Section 4 of the Pledged Stock or other securities held as part of the
     Collateral, the Pledgor will execute all such applications and other
     instruments as may be required in connection with securing any such
     consent, approval or authorization, and will otherwise use his best effort
     to secure the same.

          (d) Neither failure nor delay on the part of the Company to exercise
     any right, remedy, power or privilege provided for herein or by statute or
     at law or in equity shall operate as a waiver thereof, nor shall any single
     or partial exercise of any such right, remedy, power or privilege preclude
     any other or further exercise thereof or the exercise of any other right,
     remedy, power or privilege.

     5. PLEDGOR'S OBLIGATIONS NOT AFFECTED. The obligations of the Pledgor under
this Agreement shall remain in full force and effect with regard to, and shall
not be impaired or affected by: (a) any subordination, amendment or modification
of or addition or supplement to the Promissory Note, or any assignment or
transfer thereof: (b)any exercise or non-exercise by the Company of any right,
remedy, power or privilege under or in respect of this Agreement, the Promissory
Note, or any waiver of any such right, remedy, power or privilege; (c) any
waiver, consent, extension, indulgence or other action or inaction in respect of
this Agreement or the Promissory Note, or any assignment or transfer of any
thereof; or (d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like, of the Company or its
successors, whether or not the Pledgor shall have notice or knowledge of any of
the foregoing.

     6. TRANSFER BY PLEDGOR. Without the prior written consent of the Company,
the Pledgor agrees that he will not sell, assign, transfer, exchange, or
otherwise dispose of, or



                                       5


   24




grant any option with respect to, the collateral, nor will he create, incur or
permit to exist any pledge, lien, mortgage, hypothecation, security interest,
charge, option or any other encumbrance with respect to any of the collateral,
or any interest therein, or any proceeds thereof, except for the lien and
security interest provided for by this Agreement.

     7. REPRESENTATION, WARRANTIES AND COVENANTS OF THE PLEDGOR. The Pledgor
represents and warrants that (a) he is the legal, record and beneficial owner
of, and has good and marketable title to, the Pledged Stock, subject to no
pledge, lien, mortgage, hypothecation, security interest, charge, option or
other encumbrance whatsoever, except the lien and security interest created by
this Agreement and the terms of the Restricted Stock Agreement; (b)he has the
authority and legal right to pledge all the Pledged Stock pursuant to this
Agreement; and (c) the pledge, assignment and delivery of such Pledged Stock
pursuant to this Agreement creates a valid first lien on and a first perfected
security interest in such shares of the Pledged Stock, and the proceeds thereof,
subject to no prior pledge, lien, mortgage, hypothecation, security interest,
charge, option or encumbrance or to any agreement purporting to grant to any
third party a security interest in the property or assets of the Pledgor which
would include the Pledged Stock. The Pledgor covenants and agrees that he will
defend the Company's right, title and security interest in and to the Pledged
Stock and the proceeds thereof against the claims and demands of all persons
whomsoever; and covenants and agrees that he will have like title to and right
to pledge any other property at any time hereafter pledged to the Company as
Collateral hereunder and will likewise defend the Company's right thereto and
security interest therein.

     8. ATTORNEY-IN-FACT. The Company or its successor is hereby appointed the
attorney-in-fact of the Pledgor for the purpose of carrying out the provisions
of this Agreement and taking any action and executing any instrument which the
Company reasonably may deem necessary or advisable to accomplish the purposes
hereof, including without limitation, the execution of the applications and
other instruments described in Section 4(c), which appointment as
attorney-in-fact is irrevocable as one coupled with an interest.

     9 TERMINATION. Upon payment in full of the principal of and interest on the
Promissory Note and upon the due performance of and compliance with all the
provisions of the Promissory Note, this Agreement shall terminate and the
Pledgor shall be entitled to the return of such of the Collateral as has not
theretofore been sold, released from this Agreement pursuant to Section 6 or
otherwise applied pursuant to the provisions of this Agreement.

     10. NOTICES. All notices or other communications required or permitted to
be given hereunder shall be in writing and will be deemed to have been duly
given if delivered in person or mailed by certified mail or guaranteed overnight
delivery service to the Company at its principal executive offices and to the
Pledgor at the last address reflected in the Company's records.

     11. MISCELLANEOUS. The Company and its assigns shall have no obligation in
respect of the Collateral, except to hold and dispose of the same in accordance
with the terms of this Agreement. Neither this Agreement nor any provisions
hereof may be amended, modified, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against which enforcement
of the amendment, modification, waiver, discharge or termination is sought. The
provisions of this Agreement shall be binding upon the successors and assigns of

                                       6
   25

the Pledgor. The captions in this Agreement are for convenience of reference
only and shall not define or limit the provisions hereof. This Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of Delaware, without regard to the rules of conflicts of laws thereof.
This Agreement may be executed in multiple counterparts, each of which shall be
an original, but all of which taken together shall constitute one instrument.

     12. OBLIGATION TO PROVIDE SUBSTITUTE COLLATERAL. In the event that the
number of Shares that may become nonforfeitable is reduced pursuant to Section
4(b)(i) of the Restricted Stock Agreement, and the Company's Board of Directors,
in its sole discretion, determines that the pledge of Shares under this
Agreement is inadequate collateral for the obligations of the Pledgor under the
Promissory Note, the Company may request, and Pledgor shall promptly deliver, as
security, such additional shares of Common Stock or other collateral as the
Board of Directors may reasonably determine is sufficient to secure the
Pledgor's obligations under the Promissory Note.

  IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of January ___, 2000.

                                        COLE NATIONAL CORPORATION



                                        By:_____________________________
                                             Its:


                                        PLEDGOR

                                        ________________________________
                                        Name: Larry Pollock



Number of Shares pledged:               525,000

Principal amount of Promissory Note:    $___________





                                       7

EX-10.53

   1
                                                                   Exhibit 10.53


                                    EXHIBIT A


                            COLE NATIONAL CORPORATION

                           RESTRICTED STOCK AGREEMENT

                  THIS RESTRICTED STOCK AGREEMENT (as amended, modified or
supplemented from time to time, this "AGREEMENT") dated January 18, 2000 is
made by and between Cole National Corporation, a Delaware corporation (the
"COMPANY"), and Larry Pollock, an individual residing in the State of Ohio (the
"GRANTEE").

                  WHEREAS, the Compensation Committee (the "COMMITTEE") of the
Board of Directors of the Company (the "BOARD") has authorized by resolution the
execution of a restricted stock agreement in the form hereof; and

                  WHEREAS, the Grantee and the Company entered into an
Employment Agreement (the "EMPLOYMENT AGREEMENT") on January 18, 2000 (the
"EFFECTIVE DATE");

                  NOW, THEREFORE, in consideration of the Grantee's acceptance
of the terms and conditions of this Agreement, and subject to the terms of this
Agreement, the Company hereby awards to the Grantee 525,000 shares (together
with all other shares of Common Stock that become subject to this Agreement,
collectively, the "RESTRICTED SHARES") of the Company's common stock, par value
$.001 per share ("COMMON STOCK"):

                  1. ISSUANCE OF COMMON STOCK. The Restricted Shares covered by
this Agreement shall be represented by certificates registered in the name of
the Grantee and bearing a legend referring to the restrictions set forth in this
Agreement.

                  2. RESTRICTION ON TRANSFER OF COMMON STOCK. The Restricted
Shares may not be transferred, sold, pledged, exchanged, assigned or otherwise
encumbered or disposed of by the Grantee, except to the Company, until they have
become nonforfeitable in accordance with Section 3 of this Agreement. Any
purported transfer, encumbrance or other disposition of the Restricted Shares
that is in violation of this Section 2 will be null and void, and the other
party to any such purported transaction will not obtain any rights to or
interest in the Restricted Shares. The Committee or the Board may, in their sole
and absolute discretion, waive the restrictions set forth in this Section 2 with
respect to all or any portion of the Restricted Shares granted under this
Agreement. At the reasonable request of Grantee, the Company shall cooperate
with Grantee to permit transfers to family members or trusts controlled by
Grantee or members of his immediate family to facilitate estate planning. Any
transferee must agree to be bound by the terms and conditions of this Agreement
in a writing in form and substance reasonably acceptable to the Company.

                  3. PURCHASE OF COMMON STOCK. On or before the date that is
one-hundred eighty (180) days after the Effective Date (the "LAST PURCHASE
DATE") the Grantee shall purchase


   2

for his account not less than 262,500 shares of Common Stock or such lesser
number as are acquired by the Maximum Purchase Amount (the "PURCHASED SHARES").
The Company shall grant such reasonable extensions, in light of the
circumstances, as may be requested by the Executive. In no event will Executive
be required to expend more than Two Million Six Hundred Thirty-Five Thousand
Dollars ($2,635,000; the "Maximum Purchase Amount") for the Purchased Shares.

                  4. VESTING OF COMMON STOCK. (a) Except as otherwise set forth
in this Section 4 and in Section 5, the Restricted Shares will become
nonforfeitable as follows:

                           (i)      fifty percent (50%) of the Restricted Shares
                                    will become nonforfeitable on the second
                                    anniversary of the Effective Date; and

                           (ii)     twenty-five percent (25%) of the original
                                    number of Restricted Shares awarded will
                                    become nonforfeitable on each of the third
                                    and fourth anniversaries of the Effective
                                    Date; and

                           (iii)    notwithstanding the provisions of Section
                                    4(a)(ii), if, for any period of 20
                                    consecutive trading days commencing on or
                                    after the second anniversary of the
                                    Effective Date and ending on or prior to the
                                    fourth anniversary of the Effective Date,
                                    the closing stock trading price of the
                                    Common Stock on the New York Stock Exchange
                                    equals or exceeds $25.00 per share, and
                                    Grantee's employment has not terminated, all
                                    Restricted Shares not then nonforfeitable
                                    will become nonforfeitable as of the close
                                    of business of the last trading day in such
                                    20 day period.

                  (b)      Anything in this Agreement to the contrary
                           notwithstanding:

                           (i)      in the event the Grantee has not purchased
                                    for his account the minimum number of
                                    262,500 Purchased Shares or expended the
                                    Maximum Purchase Amount as required by
                                    Section 3 by the Last Purchase Date
                                    (including any extensions thereof), or, if
                                    earlier, the date on which any Restricted
                                    Shares become nonforfeitable, for each share
                                    of Common Stock less than the minimum
                                    262,500 Purchased Shares that have not been
                                    purchased by Grantee, two (2) Restricted
                                    Shares shall be forfeited; such forfeiture
                                    to affect, first, those shares that would
                                    otherwise become nonforfeitable at the next
                                    earliest date, so as to reduce the number of
                                    shares that will otherwise become
                                    nonforfeitable at that date, before having
                                    any effect on subsequent tranches, and
                                    second, those shares in subsequent tranches
                                    in a like serial fashion.

                           (ii)     Purchased Shares shall include shares
                                    acquired by Grantee upon exercise of all or
                                    part of an option to acquire shares of
                                    Common Stock granted on the Effective Date
                                    to the Grantee pursuant to



                                       2
   3

                                    Nonqualified Stock Option Agreement No. 2
                                    between the Company and the Grantee but not
                                    shares inquired pursuant to Nonqualified
                                    Stock Option Agreement No. 1 between the
                                    Company and the Grantee; and

                           (iii)    no additional Restricted Shares shall become
                                    nonforfeitable if at the time they would
                                    otherwise become nonforfeitable the Grantee
                                    does not own a number of unrestricted shares
                                    of Common Stock at least equal to the lesser
                                    of the aggregate number of Restricted Shares
                                    which have not yet become nonforfeitable or
                                    the Purchased Shares.

                  (c) If prior to a change in control the Grantee's employment
is terminated by the Company without Cause or by Grantee for Good Reason and:

                           (i)      the termination occurs on or before the
                                    first anniversary of the Effective Date, an
                                    aggregate of twenty-five percent (25%) of
                                    the original number of shares of Restricted
                                    Shares awarded (as may be reduced by Section
                                    4(b)(i)) will immediately become
                                    nonforfeitable; or

                           (ii)     the termination occurs after the first
                                    anniversary and on or before the second
                                    anniversary of the Effective Date, an
                                    aggregate of seventy-five percent (75%) of
                                    the original number of Restricted Shares (as
                                    reduced by Section 4(b)(i)) will immediately
                                    become nonforfeitable; or

                           (iii)    the termination occurs after the second
                                    anniversary of the Effective Date, all
                                    Restricted Shares awarded will immediately
                                    become nonforfeitable; or

                           (iv)     notwithstanding the provisions of Section
                                    4(c)(i), (ii) and (iii), if, for the period
                                    of 20 consecutive trading days ending
                                    immediately prior to the date of termination
                                    of employment the closing stock trading
                                    price of the Common Stock on the New York
                                    Stock Exchange equals or exceeds $25.00 per
                                    share, all Restricted Shares not then
                                    nonforfeitable will become nonforfeitable as
                                    of the close of business of the last trading
                                    day in such 20 day period.

                  (d) In the event of the occurrence of a Change in Control, and
the Grantee's employment is terminated without Cause or by Grantee for Good
Reason and:

                           (i)      the termination occurs on or before the
                                    first anniversary of the Effective Date, an
                                    aggregate of fifty percent (50%) of the
                                    original number of the Restricted Shares (as
                                    reduced by Section 4(b)(i)) awarded will
                                    immediately become nonforfeitable;



                                       3
   4

                           (ii)     the termination occurs after the first
                                    anniversary and on or before the second
                                    anniversary of the Effective Date, an
                                    aggregate of seventy-five percent (75%) of
                                    the original number of the Restricted Shares
                                    (as reduced by Section 4(b)(i)) awarded will
                                    immediately become nonforfeitable;

                           (iii)    the termination occurs after the second
                                    anniversary of the Effective Date, all
                                    Restricted Shares awarded will immediately
                                    become nonforfeitable; and

                           (iv)     notwithstanding the provisions of Section
                                    4(c)(i), (ii) and (iii), if, for the period
                                    of 20 consecutive trading days ending
                                    immediately prior to the date of termination
                                    of employment the closing stock trading
                                    price of the Common Stock on the New York
                                    Stock Exchange equals or exceeds $25.00 per
                                    share, all Restricted Shares not then
                                    nonforfeitable will become nonforfeitable as
                                    of the close of business of the last trading
                                    day in such 20 day period.

                  (e)      If the Grantee's employment terminates as a result of
                           his death or Disability:

                           (i)      on or before the first anniversary of the
                                    Effective Date, an aggregate of twenty-five
                                    percent (25%) of the original number of
                                    Restricted Shares awarded (as may be reduced
                                    by Section 4(b)(i)) will immediately become
                                    nonforfeitable;

                           (ii)     after the first anniversary and on or before
                                    the second anniversary of the Effective
                                    Date, an aggregate of fifty percent (50%) of
                                    the original number of Restricted Shares
                                    awarded (as may be reduced by Section
                                    4(b)(i)) will immediately become
                                    nonforfeitable;

                           (iii)    after the second anniversary and on or
                                    before the third anniversary of the
                                    Effective Date, an aggregate of seventy-five
                                    percent (75%) of the Restricted Shares
                                    awarded (as may be reduced by Section
                                    4(b)(i)) will immediately become
                                    nonforfeitable;

                           (iv)     after the third anniversary of the Effective
                                    Date, all Restricted Shares (as may be
                                    reduced by Section 4(b)(i)) awarded will
                                    immediately become nonforfeitable.

                  5 TERMINATION OF RIGHTS AND FORFEITURE OF COMMON STOCK. Except
for Restricted Shares that have become nonforfeitable in accordance with Section
4, all of the Restricted Shares will be forfeited if the Grantee ceases to be
employed by the Company or a Subsidiary. In the event of a forfeiture, any
certificate(s) representing the Restricted Shares will be canceled.


                                       4
   5

                  6 DIVIDEND, VOTING AND OTHER RIGHTS. (a) Except as otherwise
provided in this Agreement, the Grantee will have all of the rights of a
stockholder with respect to the Restricted Shares, including the right to vote
the Restricted Shares and receive any dividends that may be paid thereon;
PROVIDED, HOWEVER, that any additional shares of Common Stock or other
securities that the Grantee may become entitled to receive pursuant to a stock
dividend, stock split, combination of shares, recapitalization, merger,
consolidation, separation or reorganization or any other change in the capital
structure of the Company will be subject to the same restrictions as the
Restricted Shares.

                  (b) Cash dividends, if any, and any other distributions paid
on the Restricted Shares will be sequestered by the Company until such time as
such Restricted Shares become nonforfeitable in accordance with Section 4 and
will, to the extent practicable, be deemed to be reinvested (at the Stock Price
on the dividend payment date) on an immediate basis in additional shares of
Common Stock from the Company's treasury, which will be subject to the same
restrictions as the underlying Restricted Shares granted under this Agreement.
If Restricted Shares are forfeited pursuant to Section 5, all dividends and
other distributions, together with the earnings thereon, with respect to such
Restricted Shares will likewise be forfeited.

                  7 RETENTION OF STOCK CERTIFICATE(S) BY COMPANY. Any
certificates representing Restricted Shares will be held in custody by the
Company together with a stock power endorsed in blank by the Grantee with
respect thereto, until those shares have become nonforfeitable in accordance
with Section 4.

                  8 HOLDING PERIOD. Any sale of shares by the Grantee is subject
to the provisions of the Employment Agreement.

                  9 COMPLIANCE WITH LAW. Grantee acknowledges that Grantee is an
accredited investor as defined in Regulation D promulgated under the Securities
Act of 1933, has complete access to the Company's financial and other
information, is fully capable of making an investment decision concerning the
Company's Common Stock without assistance of third parties, and has no intention
to distribute any of the Restricted Shares to third parties. Grantee is
receiving the grant of Restricted Shares in connection with and as an inducement
to Grantee's accepting employment as an executive officer of the Company.

                  10. ADJUSTMENTS: (a) The Board of Directors of the Company or
the Compensation Committee shall make any adjustments in the number or kind of
shares of Common Stock or other securities covered by this Agreement as such
Board or Committee may in good faith determine is equitably required to prevent
dilution or enlargement of the rights of the Grantee that otherwise would result
from (i) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company, or
(ii) any merger, consolidation, spin-off, split-off, spin-out, split up,
reorganization, partial or complete liquidation or other distribution of assets,
issuance of rights to purchase securities, or (iii) any distribution to the
holders of the Common Stock of rights or warrants to purchase equity interests
of the Company, or (iv) any other corporate transaction or event having an
effect similar to any of the foregoing. Moreover, in the event of any such
transaction or event, the Board of Directors


                                       5
   6

or the Compensation Committee, in its discretion, may provide in substitution
for any or all outstanding awards under this Agreement such alternative
consideration as it, in good faith, may determine to be equitable in the
circumstances and may require in connection therewith the surrender of all
awards so replaced.

                  (b) In the event that any provision of this Agreement would
result in a calculation of a number of shares in amounts other than a whole
number, the number of shares so calculated will be reduced or increased to the
nearest whole number (rounding 0.50 up), with the effect of any such rounding
deemed to attached to the last group of shares to be so calculated (with the
calculations to be conducted in alphabetical or numerical order, as applicable).

                  11. WITHHOLDING TAXES. If the Company is required to withhold
any federal, state, local or foreign tax in connection with any issuance of
restricted or nonrestricted shares of Common Stock or other securities pursuant
to this Agreement, it will be a condition to such issuance that the Grantee make
provisions satisfactory to the Company for payment of all such taxes. In the
event that the Grantee desires to have an amount greater than the Withholding
Amount withheld, the excess over the Withholding Amount must be paid to the
Company in cash.

                  12. RIGHT TO TERMINATE EMPLOYMENT. No provision of this
Agreement will limit in any way whatsoever any right that the Company or a
Subsidiary may otherwise have to terminate the employment of the Grantee at any
time.

                  13. RELATION TO OTHER BENEFITS. Any economic or other benefit
to the Grantee under this Agreement shall not be taken into account in
determining any benefits to which the Grantee may be entitled under any
profit-sharing, retirement or other benefit or compensation plan maintained by
the Company or a Subsidiary and shall not affect the amount of any insurance
coverage available to any beneficiary under any insurance plan covering
employees of the Company or a Subsidiary.

                  14. AMENDMENTS. No amendment or variation of the terms of this
Agreement will be valid unless the same are in writing signed by all parties.

                  15. SEVERABILITY. In the event that one or more of the
provisions of this Agreement are invalidated for any reason by a court of
competent jurisdiction, any provision so invalidated will be deemed to be
separable from the other provisions hereof, and the remaining provisions hereof
will continue to be valid and fully enforceable.

                  16. GOVERNING LAW. This Agreement is made under, and will be
construed in accordance with, the laws of the State of Ohio without regard to
conflict of law principles of such state.

                  17. TAXES. Grantee will make a proper election under Section
83(b) of the Internal Revenue Code of 1986, as amended, no later than 30 days
after the date of this Agreement with respect to all of the Restricted Shares.


                                       6
   7

                  18. DEFINITIONS. As used in this Agreement, the terms "CAUSE,"
"CHANGE IN CONTROL," "GOOD REASON" and "SUBSIDIARY" shall have the meanings set
forth in the Employment Agreement, and the term "STOCK Price" means the closing
price of the Common Stock on the New York Stock Exchange on which the Common
Stock is traded.

                  This Restricted Stock Agreement has been executed by the
parties at Cleveland, Ohio.


                                          COLE NATIONAL CORPORATION



                                          By: /s/ Jeffrey A. Cole
                                              -----------------------------
                                              Name:  Jeffrey A. Cole
                                              Title: Chairman, CEO


                                          /s/ Larry Pollock
                                          ---------------------------------
                                          Larry Pollock




                                       7

EX-10.54

   1
                                                                   Exhibit 10.54

                                    EXHIBIT B


                            COLE NATIONAL CORPORATION

                    Nonqualified Stock Option Agreement No. 1
                    -----------------------------------------



                  This Nonqualified Stock Option Agreement No. 1 (this
"AGREEMENT") is entered into between the individual optionee named on the
signature page hereof (the "OPTIONEE") and Cole National Corporation, a Delaware
corporation (the "COMPANY"), as of the Grant Date. Certain capitalized terms
used herein are defined in Paragraph 8.

                  WHEREAS, the Compensation Committee of the Board of Directors
of the Company (the "BOARD") has authorized a grant of stock options on the
terms hereof to the Optionee;

                  WHEREAS, the Optionee and the Company have entered into an
employment agreement (the "EMPLOYMENT AGREEMENT") as of January 18, 2000 (the
"EFFECTIVE DATE"); and

                  NOW, THEREFORE, the Company hereby grants to the Optionee
options (the "OPTIONS") to purchase the number of shares of common stock
("COMMON STOCK"), par value $.001 per share, of the Company's Common Stock shown
as the Original Award on Attachment I hereto; and agrees to cause certificates
for any shares purchased hereunder to be delivered to the Optionee upon payment
of the purchase price in full, all subject, however, to the terms and conditions
hereinafter set forth.

                  1.       EXERCISE.

                           (a) Except as otherwise provided herein, fifty
percent (50%) of the Options will become exercisable (until terminated as
hereinafter provided) on the first anniversary of the Effective Date, and the
remaining fifty percent (50%) of the Options will become exercisable (until
terminated as hereinafter provided) on the second anniversary of the Effective
Date.

                           (b) If, on or prior to the first anniversary of the
Effective Date, a Change in Control occurs and Grantee's employment is
terminated by the Company without cause or by the Grantee with Good Reason,
fifty percent (50%) of the Options will become exercisable (until terminated as
hereinafter provided) on the date Grantee's employment terminates, and all
remaining Unvested Options will be forfeited and cancelled.

                           (c) If, after the first anniversary of the Effective
Date and prior to the second anniversary of the Effective Date, either (i)
Grantee's employment is terminated by the Company without cause or (ii) a Change
in Control occurs, and Grantee terminates employment with Good Reason, all
Options not then exercisable will become exercisable (until terminated as
hereinafter provided) on the date Grantee's employment terminates.

   2


                           (d) If, for any period of 20 consecutive trading days
commencing after the first anniversary of the Effective Date and ending on or
prior to the second anniversary of the Effective Date, the closing stock trading
price of the Common Stock on the New York Stock Exchange equals or exceeds
$25.00 per share, and Optionee's employment has not terminated, all Options not
then exercisable will become exercisable (until terminated as hereinafter
provided) as of the close of business of the last trading day in such 20 day
period.

                           (e) To the extent exercisable, the Options may be
exercised in whole or in part from time to time.

                           (f) If the Optionee's employment is terminated for
Cause, all remaining Unvested Options will be forfeited and cancelled.

                           (g) Any exercise of the Options must be made in
writing by the Optionee delivered to the Secretary of the Company.

                  2. EXERCISE PRICE AND PAYMENT.

                           (a) The Options will be exercisable for Vested Shares
at the Exercise Price shown on Attachment I hereto.

                           (b) The Exercise Price for any shares may be paid in
cash or by check.

                  3. TERMINATION. The Options will terminate and all Unvested
and Vested Options then outstanding will be forfeited on the earliest of the
following dates:

                           (a) Immediately if the Executive voluntarily resigns
(other than with Good Reason as provided below); or

                           (b) one year after the date on which the Optionee
ceases to be an employee of the Company or a Subsidiary by reason of death or
Disability; or

                           (c) one year after termination of employment by the
Company for any reason other than Cause, or after termination of employment by
the Optionee with Good Reason ; or

                           (d) Immediately (i) upon the Optionee accepting
employment with a Competitor without the prior written approval of the Company's
Chief Executive Officer or (ii) upon a material breach by the Optionee of any
applicable agreement with the Company relating to non-competition,
non-solicitation or maintaining of Company confidences;

                           (e) thirty days after the Optionee is terminated by
the Company for Cause; or

                           (f) Ten years from the Grant Date.


                                       2
   3

                  4. TRANSFERABILITY. Unless otherwise approved by the
Compensation Committee in its sole and absolute discretion following a request
from the Optionee or the Optionee's guardian or legal representative, the
Options are not transferable by the Optionee otherwise than by will or the laws
of descent and distribution. If another type of transfer is approved by the
Compensation Committee, a transfer will only be effective when the transferee of
the Options enters into an agreement with the Company (in form and substance
acceptable to the Company) agreeing to be bound by the provisions of this
Agreement as if such transferee were the Optionee. If exercised during the
lifetime of the Optionee, the Options are exercisable only by the Optionee or by
the Optionee's guardian or legal representative, or by an transferee authorized
as provided in this Paragraph. At the reasonable request of Grantee, the Company
shall cooperate with Grantee to permit transfers to family members or trusts
controlled by Grantee or members of his immediate family to facilitate estate
planning. Any transferee must agree to be bound by the terms and conditions of
this Agreement in a writing in form and substance reasonably acceptable to the
Company.

                  5. SECURITIES LAWS. The Options are not exercisable if such
exercise would involve a violation of any applicable federal, state or other
securities law, and the Company hereby agrees to make reasonable efforts to
comply with such securities laws. The Options are not exercisable unless under
said laws at the time of exercise the shares of Common Stock or other securities
purchasable hereunder are exempt, are the subject matter of an exempt
transaction, or are registered in accordance with such laws.

                  6. ADJUSTMENTS.

                           (a) The Board of Directors or the Compensation
Committee shall make such adjustment in the option price and in the number or
kind of shares of Common Stock or other securities covered by the Options as
such Board or Committee may in good faith determine is equitably required to
prevent dilution or enlargement of the rights of the Optionee that otherwise
would result from (i) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company, or
(ii) any merger, consolidation, spin-off, split-off, spin-out, split up,
reorganization, partial or complete liquidation or other distribution of assets,
issuance of rights to purchase securities, or (iii) any distribution to the
holders of the Common Stock of rights or warrant to purchase equity interests of
the Company, or (iv) any other corporate transaction or event having an effect
similar to any of the foregoing. Moreover, in the event of any such transaction
or event, the Board of Directors or the Compensation Committee, in its
discretion, may provide in substitution for any or all outstanding awards under
the Options such alternative consideration as it, in good faith, may determine
to be equitable in the circumstances and may require in connection therewith the
surrender of all awards so replaced.

                           (b) In the event that any provision of this Agreement
would result in a calculation of a number of shares in amounts other than a
whole number, the number of shares so calculated will be reduced or increased to
the nearest whole number (rounding 0.50 up), with the effect of any such
rounding deemed to attach to the last group of shares to be so calculated (with
calculations to be conducted in alphabetical or numerical order, as applicable).


                                       3
   4

                  7. WITHHOLDING. If the Company is required to withhold any
federal, state, local or foreign tax in connection with the exercise of the
Options, it will be a condition to such exercise that the Optionee make
provision satisfactory to the Company for payment of all such taxes.

                  8. DEFINITIONS. The terms "CAUSE," "CHANGE IN CONTROL," "GOOD
REASON" and "SUBSIDIARY" shall have the meaning provided in the Employment
Agreement and the following capitalized terms have meanings as set forth below.

                           (a) "COMPETITOR" means any Person that competes with
any then-existing business of the Company or any Subsidiary.

                           (b) "EXERCISE PRICE" means the exercise price per
share indicated as the Exercise Price per share on Attachment I hereto.

                           (c) "GRANT DATE" means the date so indicated on
Attachment I hereto.

                           (d) "ORIGINAL AWARD" means the number of shares of
Common Stock indicated as the Original Award on Attachment I hereto.

                           (e) "PERSON" means any corporation, partnership,
limited liability company, association, firm, other entity or individual(s).

                           (f) "UNVESTED SHARES" means, as of any given time,
those shares of Common Stock relating to the Options that are not, at the time
in question, otherwise permitted, under the terms of this Agreement, to be
acquired pursuant to the exercise of the Options.

                           (g) "VESTED SHARES" means, as of any given time,
those shares of Common Stock relating to the Options that are, at the time in
question, otherwise permitted, under the terms of this Agreement, to be acquired
pursuant to the exercise of the Options.



                                       4
   5


         9. ACKNOWLEDGMENT. The undersigned Optionee hereby acknowledges receipt
of an executed original of this Agreement and accepts the Options granted
hereunder.

         EXECUTED at Cleveland, Ohio as of the date first set forth above.



                                       COLE NATIONAL CORPORATION

                                       By: /s/ Jeffrey A. Cole
                                           -----------------------------------
                                           Name:  Jeffrey A. Cole
                                           Title: Chairman, CEO
                                           -----------------------------------


                                       /s/ Larry Pollock
                                       --------------------------------------
                                       OPTIONEE - Larry Pollock



                                        5
   6


            Attachment I to Nonqualified Stock Option Agreement No. 1





         Name of Optionee:          Larry Pollock

         Name of Employer:          Cole National Corporation

         Position:                  President, Chief Operating Officer and
                                    Member Board of Directors

         Number of Shares
         in the Original Award:     262,500

         Grant Date:                January  18, 2000

         Exercise Price per Share:  $10.00



                                        6

EX-10.55

   1
                                                                   Exhibit 10.55

                                    EXHIBIT C


                            COLE NATIONAL CORPORATION

                    NONQUALIFIED STOCK OPTION AGREEMENT NO. 2



                  This Nonqualified Stock Option Agreement No. 2 (this
"Agreement") is entered into between Larry Pollock (the "Optionee") and Cole
National Corporation, a Delaware corporation (the "Company"), as of January 18,
2000. Certain capitalized terms used herein are defined in Paragraph 8.

                  WHEREAS, the Compensation Committee of the Board of Directors
of the Company has authorized a grant of stock options on the terms hereof to
the Optionee;

                  WHEREAS, the Optionee and the Company have entered into an
employment agreement (the "Employment Agreement") as of January 18, 2000 (the
"Effective Date"); and

                  NOW, THEREFORE, the Company hereby grants to the Optionee
options (the "Options") to purchase the number of shares of common stock
("Common Stock"), par value $.001 per share, of the Company's Common Stock shown
as the Original Award on Attachment I hereto; and agrees to cause certificates
for any shares purchased hereunder to be delivered to the Optionee upon payment
of the purchase price in full, all subject, however, to the terms and conditions
hereinafter set forth.

                  1. EXERCISE. (a) The Options (until terminated as hereinafter
provided) are vested and exercisable immediately.

                           (b) The Options may be exercised in whole or in part
from time to time.

                           (c) Any exercise of the Options must be made in
writing by the Optionee delivered to the Secretary of the Company.

                  2. EXERCISE PRICE AND PAYMENT. (a) The Options will be
exercisable for Shares at the Exercise Price shown on Attachment I hereto.

                           (b) The Exercise Price for any shares may be paid in
cash or by check.

                  3. TERMINATION. The Options will terminate and all Options
then outstanding will be forfeited on the earliest of the following dates:

                           (a) Immediately if the Optionee terminates employment
with the Company for any reason; or

   2


                           (b) Ninety (90) days from the Grant Date.

                  4. TRANSFERABILITY. The Options are not transferable by the
Optionee.

                  5. SECURITIES LAWS. The Options are not exercisable if such
exercise would involve a violation of any applicable federal, state or other
securities law, and the Company hereby agrees to make reasonable efforts to
comply with such securities laws. The Options are not exercisable unless under
said laws at the time of exercise the shares of Common Stock or other securities
purchasable hereunder are exempt, are the subject matter of an exempt
transaction, or are registered in accordance with such laws.

                  6. ADJUSTMENTS. (a) The Board of Directors or the Compensation
Committee shall make such adjustment in the option price and in the number or
kind of shares of Common Stock or other securities covered by the Options as
such Board or Committee may in good faith determine is equitably required to
prevent dilution or enlargement of the rights of the Optionee that otherwise
would result from (i) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company, or
(ii) any merger, consolidation, spin-off, split-off, spin-out, split up,
reorganization, partial or complete liquidation or other distribution of assets,
issuance of rights to purchase securities, or (iii) any distribution to the
holders of the Common Stock of rights or warrant to purchase equity interests of
the Company, or (iv) any other corporate transaction or event having an effect
similar to any of the foregoing. Moreover, in the event of any such transaction
or event, the Board of Directors or the Compensation Committee, in its
discretion, may provide in substitution for any or all outstanding awards under
the Options such alternative consideration as it, in good faith, may determine
to be equitable in the circumstances and may require in connection therewith the
surrender of all awards so replaced.

                           (b) In the event that any provision of this Agreement
would result in a calculation of a number of shares in amounts other than a
whole number, the number of shares so calculated will be reduced or increased to
the nearest whole number (rounding 0.50 up), with the effect of any such
rounding deemed to attach to the last group of shares to be so calculated (with
calculations to be conducted in alphabetical or numerical order, as applicable).

                  7. WITHHOLDING. If the Company is required to withhold any
federal, state, local or foreign tax in connection with the exercise of the
Options, it will be a condition to such exercise that the Optionee make
provision satisfactory to the Company for payment of all such taxes.

                  8. DEFINITIONS. The term "Subsidiary" shall have the meaning
provided in the Employment Agreement, and the following capitalized terms have
meanings as set forth below.

                           (a) "Exercise Price" means the exercise price per
share indicated as the Exercise Price per share on Attachment I hereto.

                           (b) "Grant Date" means the date so indicated on
Attachment I hereto.


                                       2
   3

                           (c) "Original Award" means the number of shares of
Common Stock indicated as the Original Award on Attachment I hereto.

                           (d) "Person" means any corporation, partnership,
limited liability company, association, firm, other entity or individual(s).

                  9. ACKNOWLEDGMENT. The undersigned Optionee hereby
acknowledges receipt of an executed original of this Agreement and accepts the
Options granted hereunder.

         EXECUTED at Cleveland, Ohio as of the date first set forth above.



                                           COLE NATIONAL CORPORATION


                                           By: /s/ Jeffrey A. Cole
                                               --------------------------------
                                               Name:  Jeffrey A. Cole
                                               Title: Chairman, CEO


                                           /s/ Larry Pollock
                                           -----------------------------------
                                           OPTIONEE - Larry Pollock


                                       3
   4

            ATTACHMENT I to Nonqualified Stock Option Agreement No. 2





         Name of Optionee:          Larry Pollock

         Name of Employer:          Cole National Corporation

         Position:                  President, Chief Operating Officer and
                                    Member Board of Directors

         Number of Shares
         in the Original Award:     100,000

         Grant Date:                January  18, 2000

         Exercise Price per Share:  The average of the closing prices
                                    of the Common Stock traded on the New
                                    York Stock Exchange for the twenty (20)
                                    trading day period ending on the tenth
                                    trading day after the Grant Date.



                                       4

EX-10.56

   1
                                                                   Exhibit 10.56

                              STANDSTILL AGREEMENT


                  Standstill Agreement (this "AGREEMENT"), dated as of November
22, 1999, by and between COLE NATIONAL CORPORATION, a Delaware corporation (the
"COMPANY"), and HAL INTERNATIONAL N.V., a Netherlands Antilles Company, for
itself and its Affiliates (as defined below; collectively, HAL International
N.V. and its Affiliates are "STOCKHOLDER").

                                    RECITALS

                  A. As of the date of this Agreement, Stockholder beneficially
owns approximately 14.2% of the outstanding shares of common stock, $.001 par
value per share (the "COMMON SHARES"), of the Company. Stockholder has expressed
its desire to increase its ownership above the 15.0% threshold through
open-market purchases. This increase would trigger the rights granted to the
Company's stockholders under the Rights Agreement, dated as of August 22, 1995,
by and between the Company and National City Bank, as rights agent, as amended
(the "EXISTING RIGHTS AGREEMENT"), and would also trigger the provisions of
ss.203 of the Delaware General Corporation Law ("SS.203") and Article Tenth of
the Company's amended and restated Certificate of Incorporation ("ARTICLE
TENTH").

                  B. The Company is willing, contemporaneously with the
effectiveness of this Agreement, to cause the rights under the Existing Rights
Agreement to be redeemed and adopt a new rights agreement (the "NEW RIGHTS
AGREEMENT") that permits Stockholder to increase its ownership above the 15.0%
threshold to 25.0% of the Common Shares outstanding at any time, and the
Company's Directors will also approve Stockholder's increased ownership for
purposes of ss.203 and Article Tenth.

                  C. As a result of the anticipated increase in Stockholder's
ownership of the Common Shares, the parties desire to provide for certain
agreements with respect to the ownership and voting by Stockholder of the Common
Shares and other matters.


                                    AGREEMENT

                  NOW, THEREFORE, in consideration of the agreements, rights,
obligations and covenants contained herein and other good and valuable
consideration, the sufficiency and receipt of which is hereby acknowledged, the
Company and Stockholder hereby agree as follows:


                             SECTION 1. DEFINITIONS

                  1.1 CERTAIN DEFINITIONS. In addition to the other terms
defined in this Agreement, for purposes of this Agreement, the following terms
have the following meanings:

   2


                           (a) A Person is deemed to be an "AFFILIATE" of
another Person in accordance with the term "Affiliate" as defined in Rule 12d-2
under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), as
in effect on the date of this Agreement.

                           (b) A Person is deemed a "BENEFICIAL OWNER" of or to
"BENEFICIALLY OWN" any Common Shares in accordance with the term "beneficial
ownership" as defined in Rule 13d-3 under the Exchange Act as in effect on the
date of this Agreement, and also includes Common Shares that such Person or any
Affiliate of such Person has the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise.

                           (c) "CLAIM" means any action, claim, complaint, cause
of action, debt, demand or suit.

                           (d) "DEMAND REGISTRATION RIGHTS" means the right of
Stockholder to have a registration statement filed by the Company and declared
effective with respect to the Common Shares held by Stockholder in accordance
with the provisions of Section 3.1.

                           (e) "PERCENTAGE LIMITATION" means 25.0% of the Total
Voting Power outstanding as of the date of measurement. If, on June 30, 2001,
Stockholder is the beneficial owner of less than 20.0% of the Total Voting Power
outstanding at that date, the Percentage Limitation for the period following
that date will be reduced to the greater of (i) the Total Voting Power
Beneficially Owned by Stockholder or (ii) 15.0%; provided, however, that if the
percentage ownership limitations (i) that would trigger the effects of the
rights issued under the New Rights Agreement (or any successor rights agreement)
with respect to any third party and (ii) that are contained in the definitions
of "interested stockholder" in ss.203 and Article Tenth, are hereafter modified
to a number that is higher than 15.0%, the Percentage Limitation will be equal
to such higher limit.

                           (f) "REGISTRATION PERIOD" means the period commencing
on the 270th day following the date of this Agreement and ending on the earlier
of the termination of the Standstill Period or such time as Stockholder owns
less than 10.0% of the Restricted Securities.

                           (g) "SEC" means the Securities and Exchange
Commission.

                           (h) "SECURITIES ACT" means the Securities Act of
1933, as amended.

                           (i) "SPECIFIED MATTERS" means:

                                    (i)     mergers and consolidations in which
                                            the holders of Common Shares do not
                                            retain a majority of the outstanding
                                            voting power of the surviving
                                            corporation;

                                    (ii)    any proposed liquidation of the
                                            Company or sale of all or
                                            substantially all of its assets
                                            (other than to an entity or entities
                                            in which the holders of Common
                                            Shares own the majority of votes
                                            that the holders of the surviving


                                       2
   3


                                            corporation are entitled to vote
                                            generally in the election of
                                            directors);

                                    (iii)   any amendment of the Company's
                                            certificate of incorporation that
                                            would increase the authorized number
                                            of Common Shares or shares senior to
                                            common stock, unless the amendment
                                            is solely to permit or to reflect a
                                            stock split or increase in Common
                                            Shares through a stock dividend; or

                                    (iv)    any amendment of the Company's
                                            certificate of incorporation that
                                            would impose limitations on the
                                            rights of Stockholder in its
                                            capacity as a stockholder, other
                                            than those (x) agreed to by
                                            Stockholder in this Agreement or
                                            otherwise or (y) that are applicable
                                            to all stockholders equally.

                           (j) "STANDSTILL PERIOD" means the period commencing
on the date of this Agreement and ending on the fifth anniversary of the date of
this Agreement.

                           (k) "UNDERWRITER(S)" means any one or more investment
banking or brokerage firms to or through whom Stockholder may offer and sell
Common Shares pursuant to a transaction requiring the filing of a registration
statement under the Securities Act, including one or more of such firms who
manage such public offering through such Underwriters.

                           (l) "TOTAL VOTING POWER" means the maximum number of
votes that the holders of the Company's capital stock are entitled to vote
generally in the election of directors.

                           (m) "TRANSFER" means offer, sale, disposition,
transfer or hypothecation of Common Shares.

                       SECTION 2. STANDSTILL ARRANGEMENTS

                  2.1 ACQUISITION OF SECURITIES. (a) During the Standstill
Period, Stockholder shall not, directly or indirectly, acquire any Common Shares
or securities convertible, exchangeable or otherwise exercisable for Common
Shares or other securities that are entitled to vote generally in the election
of Directors of the Company, in each case now or hereafter outstanding
(collectively, "SECURITIES," and all Securities Beneficially Owned by
Stockholder being referred to herein as "RESTRICTED SECURITIES"), if the effect
of the acquisition would be to increase Stockholder's aggregate Beneficial
Ownership of Restricted Securities to greater than the Percentage Limitation,
unless the acquisition of shares in excess of the Percentage Limitation has been
approved in advance by a majority of the Company's Directors excluding any
designee of the Stockholder pursuant to Section 2.11 of this Agreement.


                                       3
   4

                           (b) Following the Standstill Period, Stockholder
shall not, directly or indirectly, acquire any Securities, if the effect of the
acquisition would be to increase Stockholder's aggregate Beneficial Ownership of
Restricted Securities to greater than the Percentage Limitation, unless the
acquisition of shares in excess of the Percentage Limitation has been approved
in advance by a majority of the Company's Directors excluding any designee of
the Stockholder pursuant to Section 2.11 of this Agreement.

                           (c) Notwithstanding the foregoing, if Stockholder
inadvertently acquires a non-material amount of Securities in excess of the
limitations set forth in this Section 2.1, and disposes of the excess amount of
Securities within 10 days after the Stockholder becomes aware of such breach (it
being deemed to have notice of the number of Securities reported by the Company
as outstanding in any periodic report filed with the SEC), then no breach of
this Section 2.1 will be deemed to have occurred. If any action of the Company
or any of its Affiliates, including a buy back of capital stock of the Company,
increases the Total Voting Power Beneficially Owned by Stockholder above 25.0%
of the Total Voting Power outstanding at the time of measurement, Stockholder
shall be deemed to own no more than the Percentage Limitation applicable at such
time and shall not be required to dispose of any of its Restricted Securities.

                  2.2 VOTING. Commencing on the date of this Agreement and
through the Company's annual meeting of stockholders for and during 2001,
Stockholder shall take such action as may be required so that all Common Shares
that Stockholder Beneficially Owns and that are entitled to vote are voted (or
in the case of action by written consent, consents are given with respect to
such shares):

                           (a) FOR the election of the slate of nominees for
election to the Board of Directors of the Company (the "BOARD") selected by a
majority of the members of the Board (the "DIRECTORS"); and

                           (b) except with respect to Specified Matters, FOR the
approval of all matters recommended by a majority of the Directors, if any
recommendation is made.

Notwithstanding the foregoing, Stockholder shall not be under any limitation
regarding the voting of the Common Shares that Stockholder Beneficially Owns if
the Company fails to fulfill its obligations under this Agreement.

                  2.3 VOTING TRUST OR ARRANGEMENT. During the Standstill Period,
Stockholder shall not deposit any Restricted Securities in a voting trust or
subject any Restricted Securities to any arrangement or agreement with respect
to the voting of such Restricted Securities.

                  2.4 QUORUM. During the Standstill Period, Stockholder, as
holder of Restricted Securities, shall be present, in person or by proxy, at any
meeting of stockholders of the Company so that all Restricted Securities may be
counted for the purpose of determining the existence of a quorum at such
meeting.

                  2.5 PROXY SOLICITATIONS. During the Standstill Period, without
the express prior written approval of the Company, Stockholder shall not:



                                       4
   5

                           (a) solicit proxies or initiate, propose or become a
"participant" in a "solicitation" (as such terms are defined in Regulation 14A
under the Exchange Act), in opposition to any matter that has been recommended
by a majority of the Directors or seek to advise, encourage or influence any
individual, firm, corporation, partnership or other entity (a "PERSON") with
respect to the voting of or giving of consent with respect to Securities in such
manner, or induce or attempt to induce any Person to initiate any stockholder
proposal. Notwithstanding the foregoing, and except for any matter governed by
Section 2.2 of this Agreement, Stockholder has the right to solicit proxies,
propose or become a "participant" in a "solicitation" (as such terms are defined
in Regulation 14A under the Exchange Act) in opposition to the solicitation by
any third party on any matter (an "OPPOSITION SOLICITATION");

                           (b) execute any written consent in lieu of a meeting
of holders of the Common Shares except a written consent solicited by or on
behalf of the Board; or

                           (c) induce any other Person to initiate, propose or
become a "participant" in a "solicitation" in opposition to any matter that has
been recommended by a majority of the Directors or in support of any stockholder
proposal relating to the Company, as described in Rule 14a-8 under the Exchange
Act.

                  2.6 STOCKHOLDER MEETINGS. During the Standstill Period,
without the express prior written approval of the Company, Stockholder shall not
call or seek to have called, or assist, directly or indirectly, any other Person
in calling or seeking to call, any special meeting of Stockholders of the
Company for any reason.

                  2.7 STOCKHOLDER LISTS. During the Standstill Period, without
the express prior written approval of the Company or in connection with an
Opposition Solicitation, Stockholder shall not seek, request to obtain, or
assist, directly or indirectly, any other Person in seeking, requesting or
obtaining, any list of security holders of the Company.

                  2.8 GROUP PARTICIPATION. During the Standstill Period, without
the express prior written approval of the Company, Stockholder shall not join a
partnership, limited partnership, syndicate or other group, or otherwise act in
concert with any Person (other than an Affiliate of Stockholder), for the
purpose of acquiring, holding, voting or, except as contemplated pursuant to
this Agreement, disposing of Restricted Securities.

                  2.9 SOLICITATIONS OF OFFERS. During the Standstill Period,
without the express prior written approval of the Company, Stockholder shall
not, and shall cause its directors, officers, employees, agents (including
investment bankers), partners and Affiliates not to, directly or indirectly,
engage in negotiations with, provide any information to, induce or attempt to
induce or give encouragement to, any Person (other than to the Company's chief
executive officer or, with respect to the Director designated by Stockholder
pursuant to Section 2.11 of this Agreement, pursuant to that Director's
fiduciary duties to the Company), in furtherance of any change in control of the
Company (whether pursuant to a tender or exchange offer, a stock or asset sale
or a merger, consolidation, amalgamation, plan of arrangement or any other form
of transaction) or for any sale of any assets of the Company (other than where
there is a shared ownership by Stockholder and the Company or its subsidiaries
of the assets or of the entity, other than the Company or any of its
subsidiaries, that owns the assets), or any other transaction that would be
inconsistent with or frustrate the purpose of this Agreement.


                                       5
   6

                  2.10     LEGENDS AND STOP TRANSFER ORDERS.

                           (a) Stockholder shall cause the certificate or other
instrument representing Restricted Securities to have the following legend:

                  The securities represented by this certificate are subject to
                  the provisions of the Standstill Agreement, dated as of
                  November 22, 1999, a copy of which is on file at the office of
                  the Secretary of Cole National Corporation.

                           (b) Stockholder agrees to the entry of stop transfer
orders with the transfer agent (or agents) and the registrar (or registrars) of
the Company against the Transfer other than in compliance with the requirements
of this Agreement or legended securities of which Stockholder from time to time
is the Beneficial Owner.

                           (c) The Company agrees to the removal of the legend
required by Section 2.10(a) and the stop transfer orders in Section 2.10(b) on
expiration of the Standstill Period or upon notice of a Transfer permitted
pursuant to this Agreement to a Person that is not an Affiliate of Stockholder.

                  2.11 DIRECTOR NOMINEES. (a) If, prior to June 30, 2001,
Stockholder acquires 20.0% or more of the Total Voting Power outstanding at the
date of acquisition, then, until the earlier of (i) the expiration of the
Standstill Period, and (ii) the date on which Stockholder owns less than 10.0%
of the Total Voting Power, Stockholder may deliver to Company a notice stating
that it desires to implement this Section 2.11 and designating one person (who
either will be (x) Iain Watson or (y) any other person designated by Stockholder
and approved by a majority of the Directors, which approval may not be
unreasonably withheld) as a nominee for election to the Board. Promptly after
receiving the foregoing notice from Stockholder, the Company shall cause (A) the
total number of members of the Board to be increased by one member over the
number authorized as of the date of such notice, and (B) the vacancy so created
to be filled with the Stockholder's designee. Thereafter, with respect to each
annual meeting of stockholders of the Company until the earlier of (i) the
expiration of the Standstill Period, and (ii) the date on which Stockholder owns
less than 10.0% of the Total Voting Power, Company shall use its best efforts to
cause its Directors to solicit proxies for, and recommend that the Company's
stockholders vote in favor of, the Stockholder's designee.

                           (b) If during the Standstill Period a designee of
Stockholder ceases to be a Director for any reason other than expiration of the
designee's term, the Company shall promptly, upon the request of Stockholder,
use its reasonable best efforts to cause the election or appointment of a person
selected by Stockholder (who will be any person approved by a majority of the
Directors, which approval may not be unreasonably withheld) to replace such
designee. The right to designate a Director pursuant to this Section 2.11 is
personal to Stockholder and may not be transferred in any manner except to a
wholly owned Affiliate of Stockholder.

                           (c) Prior to the Company's Annual General Meeting of
Stockholders in 2000, the Company shall cause the size of the Board to be
increased as necessary to give effect to the rights of Stockholder under Section
2.11(a), and decreased, at the Company's discretion, at



                                       6
   7

such time(s) as Stockholder's Beneficial Ownership falls below 10.0% of the
Total Voting Power.

                           (d) Upon expiration of the Standstill Period or the
date on which Stockholder Beneficially Owns less than 10.0% of the Total Voting
Power, Stockholder shall cause its designee as Director immediately to resign
from the Board.

                  2.12 REPORTS. Stockholder shall promptly provide to the
Company copies of any reports or schedules filed by Stockholder with the SEC
pursuant to Regulation 13D-G (or any successor provision) promulgated under the
Exchange Act within one business day of filing.

                  2.13     [INTENTIONALLY OMITTED]

                  2.14 CONTROL. Except as otherwise required by law, during the
Standstill Period Stockholder shall not, without the prior written consent of
the chief executive officer or majority of independent Directors of the Company,
(a) make any public announcement with respect to, or submit any proposal for,
the acquisition of Beneficial Ownership of any Securities if the effect of such
acquisition would be to cause the Beneficial Ownership of Stockholder to exceed
the Percentage Limitation, or for or with respect to any extraordinary
transaction or merger, consolidation, sale of substantial assets or business
combination involving the Company or any of its Affiliates, whether or not any
Persons other than Stockholder are involved and whether or not such proposal
might require the making of a public announcement by the Company, (b) propose
any individual for election to the Board other than as permitted by Section
2.11, (c) seek the removal of any Director other than the Director designated by
Stockholder pursuant to Section 2.11, or (d) otherwise seek to control the
management or policies of the Company or any of its Affiliates, including,
without limitation, taking any action to seek to obtain representation on the
Board or the board of directors of any Affiliate of the Company other than as
permitted by Section 2.11.

                  2.15 COMMUNICATIONS. (a) Regardless of any dispute that may
arise in the future between Stockholder and the Company, Stockholder shall not,
and shall cause its Affiliates not to, during the Standstill Period, (i)
disparage or criticize the Company or its Affiliates, or their respective
current or former officers, directors or employees, to competitors, current
employees, vendors, customers or any other Person or (ii) make or solicit any
comments, statements or the like to the media or to others that may be
considered derogatory or detrimental to the good name or business reputation of
the Company or any of the aforementioned individuals; provided, however, that
the foregoing does not limit Stockholder from responding to legal process or
governmental inquiry or otherwise complying with applicable laws or regulations.

                           (b) Regardless of any dispute that may arise in the
future between Stockholder and the Company, Company shall not, and shall cause
its Affiliates not to, during the Standstill Period, (i) disparage or criticize
the Stockholder or its Affiliates, or their respective current or former
officers, directors or employees, to competitors, current employees, vendors,
customers or any other Person or (ii) make or solicit any comments, statements
or the like to the media or to others that may be considered derogatory or
detrimental to the good name or business reputation of Stockholder or any of the
aforementioned individuals; provided, however, that the foregoing does not limit
the Company from responding to legal process or governmental inquiry or
otherwise complying with applicable laws or regulations.


                                       7
   8

                  2.16 LITIGATION. During the Standstill Period, Stockholder
shall not institute, prosecute or pursue against the Company (or any of its
officers, Directors, representatives, trustees, employees, attorneys, advisors,
agents, Affiliates or associates) (a) any Claim with respect to any action
hereafter approved by a majority of the Directors that is only properly
assertable derivatively in the right of the Company or (b) any Claim on behalf
of a class of the Company's security holders; provided, however, that the
foregoing does not limit the Company or Stockholder from enforcing this
Agreement or from pursuing Claims not relating to or arising under this
Agreement.

                  2.17     [INTENTIONALLY OMITTED]

                  2.18 RIGHT OF FIRST OFFER. During the Standstill Period
Stockholder shall not Transfer, whether in one or in more than one transaction,
Restricted Securities that constitute 10.0% or more of the Company's Total
Voting Power to a single purchaser or to purchasers who are Affiliates of one
another or who are part of a group (a "THIRD PARTY PURCHASER"), unless it first
follows the practice set forth in this Section 2.18:

                           (a) Prior to making any offer to Transfer to a Third
Party Purchaser, Restricted Securities that constitute 10.0% or more of the
Company's Total Voting Power, Stockholder shall first offer such Restricted
Securities to the Company by sending written notice (a "BID REQUEST NOTICE") to
the Company that states the number of Restricted Securities proposed to be sold
(the OFFERED SECURITIES").

                           (b) For a period of 30 business days following the
delivery of the Bid Request Notice, the Company will have the right to offer to
purchase the Offered Securities at a price per share that the Company
communicates to Stockholder in a written notice (the "OFFER NOTICE"). The
Company's offer will be irrevocable for 10 business days after its delivery to
Stockholder. The failure of the Company to respond to a Bid Request Notice
within the 30 business day period will be deemed to be a waiver by the Company
of any right to purchase the Offered Securities.

                           (c) For a period of 10 business days after the
delivery of the Offer Notice, Stockholder may accept the Company's offer and
sell the Offered Securities to the Company. Stockholder's acceptance of the
offer must be in writing and delivered to the Company on or before the tenth
business day following receipt of the Offer Notice.

                           (d) Stockholder's acceptance of the Company's offer
will be irrevocable. The closing of the sale will take place no later than 10
business days following Stockholder's acceptance. The Company shall pay for the
Restricted Securities in cash by wire transfer to an account specified by
Stockholder in writing and Stockholder shall deliver certificates representing
the Offered Securities. Stockholder shall make representations and warranties to
the Company that Stockholder owns the Offered Securities, free and clear of any
liens, encumbrances or restrictions, and that Stockholder has full power and
authority to deliver the Offered Securities to the Company.

                           (e) If the Company delivers an Offer Notice to
Stockholder within the period specified in Section 2.18(b), and Stockholder does
not accept the Company's offer, then



                                       8
   9

for a period of 120 days following the date of the Offer Notice, Stockholder may
sell all, but not less than all, of the Offered Securities to a Third Party
Purchaser at a price that is at least 105% of the price set forth in the
Company's Offer Notice. If the Company does not deliver an Offer Notice within
the period specified in Section 2.18(b), then for a period of 150 days following
the date of the Bid Request Notice, Stockholder may sell all, but not less than
all, of the Offered Securities to a Third Party Purchaser. If the Offered
Securities have not been sold within such 120-day period (as extended, if
necessary, pursuant to the preceding sentence), then Stockholder has no right to
sell any Offered Securities unless it provides the Company with a new Offer
pursuant to clause (a) of this Section 2.18.

                           (f) Unless Stockholder has accepted the Company's
offer to purchase the Offered Securities, Stockholder may Transfer the Offered
Securities at any price to any Third Party Purchaser so long as the aggregate
amount of Restricted Securities Transferred to the Third Party Purchaser is less
than 10.0% of the Total Voting Power outstanding at the time of each Transfer.

                           (g) The Company may assign its rights under this
Section 2.18 to other persons who will then be entitled to purchase such
securities.


                         SECTION 3. REGISTRATION RIGHTS

                  3.1 DEMAND REGISTRATION RIGHTS. (a) At any time during the
Registration Period, Stockholder may deliver to the Company a written request (a
"DEMAND REGISTRATION REQUEST") that the Company register any or all of the
Restricted Securities. The Company shall, as soon as practicable following the
Demand Registration Request, prepare and file a registration statement (on a
then appropriate form) with the SEC under the Securities Act, covering such
number of the Restricted Securities as Stockholder requests to be included in
such registration statement and to take all necessary steps to have such
Restricted Securities qualified for sale under state securities or blue sky
laws. The Company shall use its commercially reasonable efforts to have such
registration statement declared effective by the SEC (within the meaning of the
Securities Act) as soon as practicable thereafter and shall take all necessary
action (including, if required, the filing of any supplements or post-effective
amendments to such registration statement) to keep such registration statement
effective to permit the lawful sale of such Restricted Securities included
thereunder for a period of 90 days, subject, however, to the further terms and
conditions set forth in Sections 3.1(b) through (e) and Section 3.2 through 3.7.

                           (b) If the Company is eligible to register the
Stockholder's Restricted Securities for resale on a Form S-3 Registration, or
any successor short-form registration statement, Stockholder may exercise the
Demand Registration Rights more than one time, but cannot request registration
for less than 5% of the Total Voting Power outstanding at the time the request
is made. If the Company is not eligible to register the Stockholder's Restricted
Securities for resale on a Form S-3 Registration Statement, or any successor
short-form registration statement, Stockholder may exercise the Demand
Registration Rights only one time on a Form S-1 Registration Statement (or
successor form), and cannot request registration for less than 5% of the Total
Voting Power outstanding at the time the request is made.


                                       9
   10

                           (c) If preparation of a registration statement is
commenced by the Company in response to the exercise by Stockholder of the
Demand Registration Right, but that registration statement is not filed with the
SEC at the instance or request of the Company for any reason, Stockholder will
not be deemed to have exercised the Demand Registration Right.

                           (d) If any registration statement filed by the
Company with the SEC pursuant to the provisions of this Section 3.1 is withdrawn
prior to the completion of the sale or other disposition of the Restricted
Securities included thereunder, then the following provisions, whichever
applicable, will govern:

                                    (i) If the withdrawal is effected at the
instance or upon the request of the Company for any reason other than the
failure of Stockholder to comply with its obligations hereunder with respect to
such registration, then the filing thereof by the Company will be excluded in
determining whether Stockholder has exercised any of its Demand Registration
Rights hereunder with respect to the filing of such registration statement.

                                    (ii) If the withdrawal is effected at the
instance or upon the request of Stockholder, then the filing thereof by the
Company will be deemed an exercise of the Demand Registration Right with respect
to the filing of such registration statement.

                           (e) The Company may delay the filing of any
registration statement, delay the effectiveness of any registration statement
once filed, or suspend the use of a prospectus forming a part of a registration
statement, for up to 90 days if the Company determines that it is in possession
of material non-public information the disclosure of which would, in the
reasonable judgment of the Company, have a material adverse effect on a pending
acquisition, disposition or financing transaction that is material to the
Company or would provide premature disclosure of information not otherwise
required to have been disclosed. The Company will not be required to maintain
the effectiveness of any Registration Statement on Form S-1 (or any successor
form) for more than 180 days. The Company shall provide notice to the
Stockholder of any delay or suspension, or termination of effectiveness under
this Section 3.1(e).

                  3.2 EXPENSES. Unless otherwise required by law, rule or
regulations, Stockholder shall bear and pay all fees, costs and expenses
incident to registration statements filed pursuant to Section 3.1 and incident
to keeping them effective and in compliance with all federal and state
securities laws, rules and regulations (including, without limitation,
registration fees, blue sky qualification fees and expenses, exchange listing
fees and expenses, reasonable legal fees and expenses (including the reasonable
legal fees and expenses of one law firm selected by Company and for all fees and
expenses of counsel to Stockholder), printing costs, costs of any special audits
or accounting fees), as well as underwriting discounts and commissions with
respect to its Restricted Securities included therein. Notwithstanding the
foregoing, the Company shall be responsible for its own legal fees and expenses,
the cost of obtaining its independent accountant's consent, and the costs of
preparing and filing the first two registration statements pursuant to Demand
Registration Rights, if the prospectus contained in the registration statements
are "non-marketing prospectuses;" that is, containing information required by
SEC rules but not lengthy business descriptions. A prospectus will be deemed to
be a "non-marketing prospectus" if it is of fewer than 10 pages in length. In
addition, if the Company is not eligible to register the Stockholder's
Restricted Securities for resale on a Form S-3 Registration Statement because
the Company, through its own actions or omissions, fails to


                                       10
   11


meet the "Registrant Requirements" set forth in General Instructions I.A of
current Form S-3 (or equivalent provisions of any successor form, but excluding
limitations based on market capitalization or similar concepts), the Company
shall be responsible for its own legal fees and expenses, the cost of obtaining
its independent accountant's consent, and the costs of preparing and filing one
registration statements on Form S-1 or any successor form, regardless of the
length of the prospectus. Stockholder has the right to select the Underwriter
and selling agents, subject to the Company's approval (which may not be
unreasonably withheld), in connection with registration relating to the exercise
of its Demand Registration Rights.

                  3.3 INFORMATION TO BE FURNISHED. If any of the Restricted
Securities are to be included in a registration statement under Section 3.1,
Stockholder and the Company shall furnish the following information and
documents:

                           (a) Stockholder shall furnish to the Company all
information required by the Securities Act to be furnished by sellers of
securities for inclusion in the registration statement, together with all such
information that Stockholder has or can reasonably obtain and that may
reasonably be required by the Company in order to have such registration
statement become effective and such Restricted Securities qualified for sale
under applicable state securities laws.

                           (b) The Company shall make reasonably available for
inspection by Stockholder or by any Underwriter, attorney or other agent of any
Stockholder or Underwriter all information reasonably requested by such Persons.

                           (c) The Company shall use its reasonable best efforts
to obtain, at Stockholder's expense except as provided in Section 3.2, all legal
opinions, auditors' consents, comfort letters and expert cooperation necessary
or deemed desirable by Stockholder to complete the registration process.

                  3.4 REGISTRATION TO BE KEPT EFFECTIVE. In connection with any
registration of the Restricted Securities pursuant to this Agreement, the
Company shall, at Stockholder's expense, (a) keep effective and maintain such
registration and any related qualifications of the Restricted Securities under
state securities laws for such period as may be necessary for Stockholder, the
Underwriters and selling agents to dispose of such shares, from time to time to
amend or supplement the prospectus used in connection therewith to the extent
necessary to comply with applicable laws, and (b) furnish to Stockholder such
number of copies of the registration statement, the prospectus constituting a
part thereof, and any amendment or supplement thereto as Stockholder requests in
order to facilitate the disposition of the registered Restricted Securities.

                  3.5 CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligations
of the Company to cause the Restricted Securities owned by Stockholder to be
registered under the Securities Act are subject to each of the following
limitations, conditions and qualifications:

                           (a) The Company may require, as a condition to
fulfilling its obligations to register the Restricted Securities under Section
3.1, that Stockholder execute reasonable and customary indemnification
agreements for the benefit of the Underwriters of the registration; PROVIDED,
HOWEVER, that a Stockholder may not be required as such a condition to indemnify
the


                                       11
   12


Underwriters except with respect to information furnished by Stockholder for use
in such registration statement.

                           (b) The Company will not be required to fulfill any
registration obligations under this Agreement if the Company provides
Stockholder with an opinion of counsel reasonably acceptable to Stockholder
stating that Stockholder is free to sell in the manner proposed by it the
Restricted Securities that Stockholder desires to register without registering
such Restricted Securities.

                  3.6 REGISTRATION UNDER STATE SECURITIES LAWS. The Company
shall use its best efforts, at Stockholder's expense, to register or qualify any
Restricted Securities included in a registration statement pursuant to Section
3.1 under state "blue sky" or similar securities laws in such jurisdictions as
Stockholder reasonably requests and to take such other action as may be
reasonably necessary to enable Stockholder to sell its Restricted Securities in
the jurisdiction where such registration or qualification was made, PROVIDED,
however, that the Company will not be required to qualify to do business in any
jurisdiction in which it is not so qualified or to execute a general consent to
service of process in any jurisdiction in which it has not executed such a
consent.

                  3.7 RULE 144. The Company shall file any and all reports
required to be filed by it under the Exchange Act and the rules and regulations
adopted by the SEC thereunder, and shall take such further action as Stockholder
may request, all to the extent required from time to time to enable Stockholder
to sell the Restricted Securities without registration under the Securities Act
within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the SEC.



                                       12
   13

         SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         The Company represents and warrants to Stockholder as follows:

                  4.1 CORPORATE EXISTENCE, DUE AUTHORIZATION AND EXECUTION OF
THE COMPANY. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, with full corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder, and to consummate the transactions contemplated hereby.
This Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action of the Company. This
Agreement has been duly executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.

                  4.2 NO CONFLICTS. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby does not conflict
with, or result in any violation of or default under, any provision of the
Certificate of Incorporation or Bylaws of the Company.


         SECTION 5.  REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER

         Stockholder represents and warrants to the Company as follows:

                  5.1 CORPORATE EXISTENCE, DUE AUTHORIZATION AND EXECUTION OF
STOCKHOLDER. Stockholder is a company duly formed, validly existing, and in good
standing under the laws of The Netherlands, with full power and authority to
execute and deliver this Agreement, to perform its obligations hereunder, and to
consummate the transactions contemplated hereby. This Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary action of Stockholder. This Agreement has been duly executed
and delivered by Stockholder and constitutes a legal, valid and binding
obligation of Stockholder, enforceable against Stockholder in accordance with
its terms.

                  5.2 NO CONFLICTS. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby does not conflict
with, or result in any violation of or default under, any provision of the
charter documents of Stockholder or of any agreement or instrument binding upon
Stockholder.

                  5.3 OWNERSHIP OF COMMON SHARES. As of the date of this
Agreement (a) Stockholder Beneficially Owns 2,102,100 Common Shares and (b)
neither Stockholder nor any Affiliate of Stockholder Beneficially Owns any other
Securities.



                                       13
   14

                           SECTION 6. OPTICAL INDUSTRY

                  6.1 NON-COMPETITION BY STOCKHOLDER. Commencing November 15,
2001, if and for so long as Stockholder has a right to designate a person to be
a Director of the Company pursuant to Section 2.11 of this Agreement,
Stockholder shall not, directly or indirectly through franchisees or otherwise,
engage in the ownership, operation or management of retail stores offering eye
care products in North America or the Carribean other than through the
participation by Stockholder in the Company or the Company's Affiliates.

                  6.2 NO CHANGE TO EXISTING NON-COMPETITION AGREEMENTS. Nothing
in this Agreement modifies or otherwise affects the existing covenants
not-to-compete contained in Article 6 of the Purchase Agreement dated as of 24
September, 1996 between the Company and HAL Investments B.V.

                            SECTION 7. MISCELLANEOUS

                  7.1 SPECIFIC ENFORCEMENT. The parties acknowledge and agree
that the Company or Stockholder would be irreparably damaged in the event any
provision of this Agreement were not performed in accordance with its specific
terms or were otherwise breached. It is accordingly agreed that the Company or
Stockholder will be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to specifically enforce this Agreement and the terms and
provisions thereof in any action instituted in any court of the United States or
any state thereof having subject matter jurisdiction, in addition to any other
remedy to which the Company or Stockholder may be entitled, at law or in equity.

                  7.2 MODIFICATION; WAIVER. (a) This Agreement may be modified
in any manner and at any time by written instrument executed by Stockholder and
the Company and (b) any of the terms, covenants, and conditions of this
Agreement may be waived at any time by the party entitled to the benefit of such
term, covenant or condition.

                  7.3 NOTICES. All notices, requests, demands, claims, and other
communications hereunder must be in writing and be delivered by certified or
registered mail (first class postage pre-paid), guaranteed overnight delivery or
facsimile transmission:

                           (a)      if to the Company to:

                                    Cole National Corporation
                                    5915 Landerbrook Drive
                                    Mayfield Heights, Ohio 44124
                                    ATTENTION:  Chief Executive Officer
                                    facsimile:       440-461-3489



                                       14
   15

                                    with a copy to:

                                    Jones, Day, Reavis & Pogue
                                    901 Lakeside Avenue
                                    Cleveland, Ohio 44114
                                    ATTENTION:  David P. Porter
                                    facsimile:       216-579-0212

                           (b)      if to Stockholder to:

                                    HAL International N.V.
                                    5 Avenue des Citronniers
                                    MC 98000 Monaco
                                    ATTENTION:  Arie van't Hof
                                    facsimile:       011-377-93255434

                                    with a copy to:

                                    HAL Investments Inc.
                                    535 Cowper  Street
                                    Suite 300
                                    Palo Alto, California 94301
                                    ATTENTION: Iain Watson
                                    facsimile:       650-326-5064

                                    and a copy to:

                                    Paul, Weiss, Rifkind, Wharton & Garrison
                                    1285 Avenue of the Americas
                                    New York, New York 10019
                                    ATTENTION:  Matthew Nimetz
                                    facsimile:       212-757-3990

                           (c) or, in each case, at such other address or to
such other Person as may be specified in writing to the other party.

Any notice given by mail or guaranteed overnight delivery will be deemed
delivered, if sent in accordance with this Section 7.3, five business days after
the date of mailing, one business day after the date sent by guaranteed
overnight delivery, and immediately after a notice is given by facsimile if an
appropriate confirming receipt is received.

                  7.4 PARTIES IN INTEREST; ASSIGNMENT. This Agreement and all
the provisions hereof are binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but, except as
otherwise provided for in this Agreement, neither this Agreement nor any of the
rights, interests and obligations hereunder may be assigned by any party hereto
without the prior written consent of the other parties hereto. Nothing in this


                                       15
   16

Agreement, whether expressed or implied, is to be construed to give any Person
other than the parties hereto any legal or equitable right, remedy or claim
under or in respect of this Agreement.

                  7.5 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which constitute one and the same instrument.

                  7.6 HEADINGS; REFERENCES. The article and section headings of
this Agreement are for convenience of reference only and are not to be deemed to
alter or affect the meaning or interpretation of any provisions hereof. Unless
otherwise specified, references to "Articles", "Sections" and "Schedules" are to
Articles and Sections of, and Schedules to, this Agreement.

                  7.7 GOVERNING LAW; JURISDICTION; VENUE. This Agreement is to
be governed by and construed in accordance with the internal laws of the State
of Delaware applicable to contracts made and to be performed therein, without
regard to the conflicts of laws rules of such state. The parties agree that the
state and federal courts located in Cuyahoga County, Ohio, being the county in
which the Company currently has its principal headquarters, will have exclusive
jurisdiction in any action, suit or proceeding based on or arising out of this
Agreement and the parties hereby: (a) submit to the personal jurisdiction of
such courts; (b) consent to service of process in connection with any action,
suit or proceeding based on or arising out of this Agreement; and (c) waive any
requirement (whether imposed by statute, rule of court or otherwise) with
respect to personal jurisdiction, venue or service of process.

                  7.8 SEVERABILITY. If one or more of the provisions of this
Agreement are held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the provisions of this Agreement will remain in
full force and effect.

                  7.9 TERMINATION. If at June 30, 2001, Stockholder Beneficially
Owns less than 20.0% of the Total Voting Power and thereafter Stockholder's
Beneficial Ownership drops to less than 15.0% of the Total Voting Power,
Sections 2, 3 and 6 of this Agreement will terminate and cease to be of any
further force or effect. Thereafter, Stockholder shall not purchase Securities
in excess of 15.0% of the Total Voting Power; provided, however, that if the
percentage ownership limitations (i) that would trigger the effects of the
rights issued under the New Rights Agreement (or any successor rights agreement)
with respect to any third party and (ii) that are contained in the definitions
of "interested stockholder" in ss.203 and Article Tenth, are hereafter modified
to a number that is higher than 15.0%, the 15.0% limitation will increase to
such higher limit.


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                       16
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         IN WITNESS WHEREOF, the Company and Stockholder have caused their duly
authorized representatives to execute this Agreement as of the date first above
written.

                                          COLE NATIONAL CORPORATION



                                          By: /s/ Jeffrey A. Cole
                                              ---------------------------------
                                              Name:  Jeffrey A. Cole
                                              Title: Chairman



                                          HAL INTERNATIONAL N.V.



                                          By: /s/ M. Van Der Vorm
                                              ---------------------------------
                                              Name:  M. Van Der Vorm
                                              Title: Managing Director

EX-10.57

   1
                                                                   Exhibit 10.57



                                December 22, 1999

Cole National Corporation
5915 Landerbrook Drive, Suite 300
Mayfield Heights, Ohio 44124

Gentlemen:

         In consideration of my employment as Vice President/Controller for Cole
National Corporation and the benefits I derive from Paragraph L hereof (but
without thereby creating any fixed or contractual employment term, understanding
that my employment can be terminated, with or without cause and with or without
notice, at any time at the option of either the Company or me), I hereby agree
with the Company (for purposes of this letter agreement, the "Company" shall
mean Cole Vision Corporation or any of its present or future parent, subsidiary
or indirect subsidiary or affiliated entities by which I am employed or on
behalf of which I provide services) as follows:

         A. During the term of my employment I will not compete, directly or
indirectly, with the Company. In accordance with this restriction, but without
limiting its terms, I will not:

                  (1)      enter into or engage in any business which competes
                           with the business of the Company; or

                  (2)      solicit customers, business, patronage, or orders
                           for, or sell, any product or products in competition
                           with, or for any business that competes with, the
                           business of the Company; or

                  (3)      divert, entice, or take away any customers, business,
                           patronage or orders of the Company or attempt to do
                           so; or

                  (4)      promote or assist, financially or otherwise, any
                           person, firm, association or corporation or any other
                           entity engaged in any business which competes with
                           the business of the Company.

         B. For a period of twelve (12) months following termination of my
employment with the Company, I will not enter into or engage in any business
that competes with the Company's business.

         C. For a period of twelve (12) months following termination of my
employment with the Company, I will not solicit customers, business, patronage,
or orders for, or sell any product(s) in competition with the Company's
business.

         D. For a period of twelve (12) months following termination of my
employment with the Company, I will not divert, entice, or otherwise take away
any customers, business, patronage, or orders of the Company, or attempt to do
so.

         E. For a period of twelve (12) months following termination of my
employment with the Company, I will not promote or assist financially or
otherwise, any person, firm, association, partnership, corporation, or any other
entity engaged in any business which competes with the Company's business.

         F. For the purposes of Paragraphs A through E, inclusive, I understand
that I will be competing if I engage in any or all of the activities set forth
therein directly as an individual on my own account, or indirectly as a partner,
joint venturer, employee, agent, salesman, consultant, officer and/or

   2

Cole National Corporation
Page 2
December 22, 1999


director of any firm, association, corporation, or other entity, or as a
stockholder of any corporation in which I own, directly or indirectly,
individually or in the aggregate, more than one percent (1%) of the outstanding
stock.

         G. For the purposes of Paragraphs B through E, inclusive, the Company's
business is defined as the manufacture, production, sale, marketing and/or
distribution of any product(s) and/or the rendering of any service(s) that are
the same as or similar to those manufactured, produced, sold, marketed,
distributed and/or rendered, as of the date of my termination, by the Company.

         H. I understand that the activities set forth in Paragraphs B through
E, inclusive, shall be prohibited only within the United States, Canada and
Puerto Rico or such lesser geographic area as to which or for which I was
assigned or had responsibility at the time of my termination or at any time
during the twelve (12) month period immediately preceding my termination.

         I. If it shall be judicially determined that I have violated any of my
obligations under Paragraphs B through E, inclusive, then the period applicable
to the obligation which I shall have been determined to have violated shall
automatically be extended by a period of time equal in length to the period
during which said violation(s) occurred.

         J. I also agree that I will not directly or indirectly at any time
solicit or induce or attempt to solicit or induce any employee(s) or any sales
representative(s), agent(s) or consultant(s) of the Company or any of its
parent, subsidiary or affiliate entities to terminate their employment,
representation or other association with the Company or such entity.

         K. During the period of my employment and at any time thereafter, I
will not disclose, furnish, disseminate, make available or, except in the
ordinary course of performing my duties on behalf of the Company, use any trade
secrets or confidential business and technical information of the Company, or
its parent, subsidiaries or affiliated entities or its customers, without
limitation as to when it was acquired by me or whether it was compiled or
obtained by, or furnished to me while I was employed by the Company. Such trade
secrets and confidential business and technical information are considered to
include, without limitation, the vision care plans, vendor lists, vendor terms
and programs, merchandise costs, financial statistics, research data, or any
other statistics and plans contained in monthly and annual review books, profit
plans, capital plans, critical issues plans, strategic plans, or merchandising,
marketing, real estate, or store operations plans. I specifically acknowledge
that all such information, whether reduced to writing or maintained in my mind
or memory and whether compiled by the Company and/or me derives independent
economic value from not being readily known to or ascertainable by proper means
by others who can obtain economic value from its disclosure or use, that
reasonable efforts have been put forth by the Company to maintain the secrecy of
such information, that such information is and will remain the sole property of
the Company and that any retention and use of such information during or after
the termination of my relationship with the Company (except in the course of
performing my duties) shall constitute a misappropriation of the Company's trade
secrets; provided, however, that this restriction shall not apply to information
which is in the public domain or otherwise made public by others through no
fault of mine.

         L. It is further understood and agreed that in the event my employment
with the Company should be terminated by the Company without cause ("cause" for
this purpose means gross neglect of duty, material breach of this Agreement,
dishonesty, disloyalty, the inability to discharge my duties due to alcohol or
drug addiction, or other misconduct inimicable to the best interests of the
Company), I will receive, in full and complete settlement of any claims for
compensation which I may have, a continuation of my annual base salary, in
effect at the time of the termination of my employment, for a period of up to
twelve (12) months immediately following such termination, payable in accordance
with the Company's payroll schedule; provided, however, that in the event I
obtain employment, any consulting assignments or any self-employment during said
twelve (12) month period (and upon obtaining such employment or assignments I
will promptly notify the Company of same), the payment of any unpaid balance
hereunder, effective as of the date of such new employment, shall be:


   3

Cole National Corporation
Page 3
December 22, 1999


                  (1)      canceled if the annual base salary of my new
                           employment equals or exceeds my annual base salary at
                           the Company at the time of my termination; or

                  (2)      reduced to the amount by which my annual base salary
                           at the Company at the time of my termination exceeds
                           the annual base salary of my new employment prorated
                           on the basis of the time remaining in said twelve
                           (12) month period; or

                  (3)      reduced by any amounts otherwise payable pursuant to
                           subparagraphs (i) or (ii) above by any consulting and
                           self-employment income earned or paid to me during
                           such periods.

         As used herein, "annual base salary of my new employment" shall equal
the greater of (x) the actual annual base salary of my new employment or (y) the
average annual base salary payable to persons holding comparable positions as I
then do with my new employer with businesses comparable to my then-new employer.

         It is the intent of this Paragraph L that I will be assured of the
payment of an amount at least equal to my annual base salary at the time of my
termination at the Company for a period of twelve (12) months following such
termination, whether through payments from the Company, my new employer, or as
consulting or self-employment income or a combination of payments from the
Company, my new employer and consulting and self-employment income. I further
agree to use my best efforts to obtain suitable employment following such
termination.

         In no event, however, upon the termination of my employment by the
Company, without cause, shall I receive less than the amount of money which is
payable, if any, in accordance with the Company's severance pay policy in effect
at the time of my termination.

         M. I expressly agree and understand that the remedy at law for any
breach by me of this Agreement will be inadequate and that the damages flowing
from such breach are not readily susceptible to being measured in monetary
terms. Accordingly, it is acknowledged that upon my violation of any provision
of this Agreement, the Company shall be entitled to immediate injunctive relief
and may obtain a temporary order restraining any threatened or further breach
without the necessity of proof of actual damage. Nothing in this Agreement shall
be deemed to limit the Company's remedies at law or in equity for any breach by
me of any of the provisions of this Agreement which may be pursued or availed of
by the Company.

         N. This Agreement is not assignable by either party without the prior
written consent of the other except that the Company may assign it without such
consent to any parent, subsidiary or affiliated entity, and upon such entity's
assumption of the Company's duties and obligations hereunder, such entity shall
succeed to each of the Company's rights hereunder. Upon such assignment and
assumption, I agree to and will become an employee of such entity, and all
references to the Company in this Agreement shall, as the context requires, be
deemed to be to the entity to which such assignment, assumption and employment
relate.

         O. No modification, waiver, amendment or addition to any of the terms
of this Agreement shall be effective, except as set forth in a writing signed by
me and the Company. The failure of the Company to enforce any provision of this
Agreement shall not be construed to be a waiver of such provision or of the
right of the Company thereafter to enforce each and every provision.

         P. This Agreement and any amendments thereto shall become effective on
the date of acceptance by the Company and shall be governed by, and construed in
accordance with, the internal, substantive laws of the State of Ohio. I agree
that the state and federal courts located in the State of Ohio shall have
jurisdiction in any action, suit or proceeding against me arising out of this
Agreement and I hereby: (a) submit to the personal jurisdiction of such courts;
(b) consent to service of process in connection with


   4

Cole National Corporation
Page 4
December 22, 1999


any action, suit or proceeding against me; and (c) waive any other requirement
(whether imposed by statute, rule of court or otherwise) with respect to
personal jurisdiction, venue or service of process.

         Q. This Agreement supersedes the provisions of each and every other
agreement or understanding, whether oral or written, between the undersigned and
the Company relating to the subject matter contained herein, and any such
agreement or understanding shall be of no further force and effect. The
provisions of this Agreement are severable and if any one or more provisions may
be determined to be illegal or otherwise unenforceable, in whole or in part, the
remaining provisions and any partially unenforceable provision, to the extent
enforceable in any jurisdiction, shall, nevertheless, be binding and
enforceable. The parties hereto agree that when fully executed, the foregoing
shall constitute a legally enforceable Agreement between us, which also shall
inure to the benefit of the Company's successors and assigns.

         Finally, I represent that prior to signing this Agreement, I have read,
fully understand and voluntarily agree to the terms and conditions as stated
above, that I was not coerced to sign this Agreement, that I was not under
duress at the time I signed this Agreement and that, prior to signing this
Agreement, I had adequate time to consider entering into this Agreement,
including without limitation, the opportunity to discuss the terms and
conditions of this Agreement, as well as its legal consequences, with an
attorney of my choice.

                                             Very truly yours,



                                             By: /s/ William P. Lahiff, Jr.
                                                -------------------------------
                                                William P. Lahiff, Jr.

Acknowledged and agreed to
as of this 3 day of January, 2000

COLE NATIONAL CORPORATION


By: /s/ Leslie D. Dunn
    ------------------------------------
         Leslie D. Dunn
         Senior Vice President

EX-10.58

   1

                                                                   Exhibit 10.58

December 15, 1999


Mr. William P. Lahiff, Jr.
9973 Royal Valley Drive
North Royalton, OH 44133

Dear Bill:

We are pleased to offer you the opportunity to become VICE PRESIDENT, CONTROLLER
for Cole National Corporation, reporting to the CFO.

The following highlights the terms and conditions of our offer. Full details of
the benefit programs are provided in a separate mailing.

1.   EFFECTIVE DATE: December 30, 1999.

2.   SALARY: Your initial salary will be $150,000 payable in accordance with the
     bi-weekly payroll schedule.

3.   OPERATING BONUS: You will participate in a Management Incentive Plan for
     Fiscal Year 2000 that could pay a bonus of up to fifty (50%) percent of
     your annualized salary, the last 10% of such bonus being paid in restricted
     Cole National Corporation stock, if pre-set Cole Optical and Cole National
     profit contribution goals are achieved. For the 2000 fiscal year, you will
     be eligible for a full year bonus and guaranteed a minimum bonus of
     $50,000, payable in April, 2001.

4.   STOCK OPTIONS: We will request that the Board of Directors of Cole National
     Corporation grant you an option to purchase 5,000 shares of Cole National
     Corporation stock, at a per share price equal to the closing stock price on
     the date of grant. The options granted to you will vest at 25% per year
     from the date of the grant.

5.   AUTOMOBILE: You may choose a company automobile with a value of up to
     $34,500 or a cash allowance in place of a company provided automobile. The
     cash allowance will be based on an average monthly lease for an automobile
     costing $34,500.

6.   MERIT INCREASE: Your salary will be reviewed annually, and adjustments,
     when they occur, will be effective in April, beginning with April 1, 2001.


   2




7.   GROUP MEDICAL PLAN: If you elect, you and your eligible dependents will be
     eligible for group coverage provided by the Prudential Insurance Company of
     America or Cigna after completion of ninety (90) days of continuous
     service. In the meantime, we will offer to pay your COBRA health insurance
     premiums during the 90-day waiting period.

8.   TERM LIFE INSURANCE/ACCIDENTAL DEATH AND DISMEMBERMENT INSURANCE (AD&D):
     You would be eligible to participate in Cole Vision's Life Insurance
     Program, which provides a coverage at no cost to you in an amount equal to
     two (2) times your annual base salary. You may elect to purchase additional
     amounts of term insurance equal to one (1) or (2) times your base salary
     for a nominal cost to you.

9.   SHORT-TERM DISABILITY PLAN: After a six (6) month waiting period, you would
     be eligible for benefits up to a maximum of thirteen (13) weeks beginning
     with the first day of absence.

10.  EXECUTIVE LONG-TERM DISABILITY PLAN: In accordance with the terms of this
     plan, you would be eligible for a monthly benefit of up to sixty (60%)
     percent of your monthly base salary, up to a maximum of fifteen thousand
     dollars ($15,000) per month. You will be eligible to participate in this
     plan following ninety (90) days of continuous employment. Benefits are
     payable after a waiting period of ninety (90) days after the onset of
     disability.

11.  DENTAL: Cole Vision offers a Dental Plan to eligible full-time employees,
     after ninety (90) days of employment. CIGNA Insurance Company features
     cleaning and examinations at no charge and other procedures at very low
     rates when using CIGNA dentists provide the plan.

12.  TRAVEL ACCIDENT PLAN: You would be eligible for this benefit upon the
     commencement of your employment.

13.  401(K) SAVINGS PLAN: You would be eligible for participation after one year
     of service. Pre-tax contributions to the pay are at the employee's expense;
     however, Cole National has made a discretionary matching contribution to
     the plan for each of the last four years equaling 15% of the employee's
     contribution since 1996. Merrill Lynch administers the plan and Cole
     National pays all administrative expenses.

14.  PENSION PLAN: You would be eligible for participation after one (1) year of
     employment and vested in the plan after five (5) years of service.

15.  VACATION: You will be eligible for three (3) weeks vacation in 2000.


   3


16.  TERMINATION/NON-COMPETE AGREEMENT: A letter to be signed upon your
     acceptance of employment has been provided. Please note the terms with
     respect to the activities you would be prohibited from participating in for
     a period of twelve (12) months after the termination of your employment. In
     return, should the Company without cause terminate your employment, you
     will be entitled to receive a continuation of your then annual base salary
     for a period of 12 months following such termination. Any salary received
     from new employment will offset this payment. In addition, you would be
     eligible to receive outplacement benefits.

17.  EMPLOYMENT AT WILL: NOTHING contained in this offer letter is intended to
     create a fixed or contractual employment term between you and the Company
     and you understand and acknowledge that if you accept this offer, you are
     and will continue to be an employee at will, that your employment with the
     Company can be terminated with or without cause and with or without notice,
     at any time at the option of either you or the Company.

Bill, we believe you have the talent, leadership and style to make an immediate
contribution to our company. I would be happy to discuss any details of this
offer with you personally. I look forward to hearing from you soon. If you
accept this offer, please sign the enclosed copy of this letter, as well as,
both signed copies of the Termination/Non-Compete Agreement, and return them to
me in the enclosed envelope.

Sincerely,


Patricia M. Luzier
Sr. VP, Human Resources
& Process Improvement

Enclosures

Agreed to and acknowledged the  20th day of December, 1999.

/s/ William P. Lahiff, Jr.
- ---------------------------------------------------
Signature

/jls

EX-10.59

   1

                                                                   Exhibit 10.59

                                October 14, 1999




Cole National Corporation
5915 Landerbrook Drive
Mayfield Heights, OH   44124

Gentlemen:

         This letter agreement (the "1999 Letter Agreement") supplements and
amends in part the letter agreement of April 9, 1993 between me and Cole
National Corporation (the "Company"), a copy of which is attached ("Salary
Continuation Agreement"). I have discussed with Jeffrey Cole my desire to step
down as Vice President and Controller of the Company. After discussion, we have
mutually agreed to the following:

         1.       I agree to remain as an employee of the Company through
                  January 14, 2000 and will not commence employment with any
                  future employer until after that date. Between the date hereof
                  and the close of business on January 14, 2000, I will continue
                  to serve at the discretion of the Board of Directors of the
                  Company as the Vice President, Controller and Chief Accounting
                  Officer of the Company and in such positions with the direct
                  and indirect subsidiaries of the Company as I have on the date
                  hereof. I agree to perform the responsibilities of such
                  positions until such time as the Board of Directors of the
                  Company or an authorized officer of the Company otherwise
                  directs, but in no event later than January 14, 2000. My
                  employment with the Company shall terminate at the close of
                  business on January 14, 2000 and I hereby resign all positions
                  with the Company and each of its subsidiaries effective as of
                  the close of business on January 14, 2000 or such earlier date
                  as may be requested by the Company notwithstanding that I will
                  remain an employee of the Company until the close of business
                  on January 14, 2000.

         2.       In consideration of my performance of my agreement to remain
                  an employee of the Company through the close of business on
                  January 14, 2000 on the terms set forth in Section 1 above,
                  you have agreed as follows:

                  a.       Paragraph L of the Salary Continuation Agreement is
                           amended and restated in its entirety to read as
                           follows:

   2

                  "L. It is further understood and agreed that in the event my
                  employment with the Company should be terminated (i) by the
                  Company without cause prior to January 14, 2000 ("cause" for
                  this purpose means gross neglect of duty, material breach of
                  this Letter Agreement dated October 13, 1999 or of the Salary
                  Continuation Agreement dated April 9, 1993, dishonesty,
                  disloyalty, the inability to discharge my duties due to
                  alcohol or drug addiction, or other misconduct inimitable to
                  the best interests of the Company) or (ii) I have remained
                  employed by the Company pursuant to and subject to the terms
                  of Section 1 of the Letter Agreement dated October 13, 1999
                  until the close of business on January 14, 2000, I will
                  receive, in full and complete settlement of any claims for
                  compensation which I may have, a continuation of my annual
                  base salary, in effect at the time of the termination of
                  employment, for a period of up to twelve (12) months
                  immediately following such termination, payable in accordance
                  with the Company's payroll schedule; provided, however, that
                  in the event I obtain employment during said twelve (12) month
                  period (and upon obtaining such employment I will promptly
                  notify the Company of same), the payment of any unpaid balance
                  hereunder, effective as of the date of such new employment,
                  shall be:

                  (x)      cancelled if the annual base salary of my new
                           employment equals or exceeds my annual base salary at
                           the Company at the time of my termination; or

                  (y)      reduced to the amount by which my annual base salary
                           at the Company at the time of my termination exceeds
                           the annual base salary of my new employment prorated
                           on the basis of the time remaining in said twelve
                           (12) month period; or

                  (z)      reduced by the amounts of any consulting or
                           self-employment income earned or paid to me during
                           such period.

                  I understand that I will not be entitled to any payments under
                  this Agreement unless (i) my employment is terminated by the
                  Company without cause prior to January 14, 2000 or (ii) I
                  remain employed by the Company pursuant to and subject to the
                  terms of Section 1 of the Letter Agreement dated October 13,
                  1999 until the close of business on January 14, 2000.

                  As used herein, "annual base salary of my new employment"
                  shall equal the greater of (x) the actual annual base salary
                  of my new employment or (y) the average annual base salary
                  payable to persons holding comparable positions as I then do
                  with my new employer with businesses comparable to my then-new
                  employer.

                  It is the intent of this Paragraph L that I will be assured of
                  the payment of an amount at least equal to my annual base
                  salary at the time of my termination at the Company for a
                  period of twelve (12) months following such termination as set
                  forth in subparagraph (i) and (ii) above as applicable,
                  whether through payments from the Company, my new employer, or
                  consulting or self-employment income


                                                                               2
   3


                  or a combination of payments from the Company and my new
                  employer and consulting and self-employment income. Promptly
                  upon obtaining my new employment or consulting or
                  self-employment, I will notify the Company of that fact and
                  provide details concerning my new position and compensation or
                  income. I further agree to use my best efforts to obtain
                  suitable employment following such termination. I will not be
                  entitled to any payments under any severance pay policy or
                  practice of the Company in effect at any time and this
                  Paragraph L shall be in lieu thereof."

                  b.       The Company agrees to provide me with executive
                           outplacement services from the vendor of my choice
                           among the vendors made available by the Company until
                           I first obtain employment after the term of my
                           employment ends with the Company at the close of
                           business on January 14, 2000 but in no event longer
                           than twelve (12) months following such date.
                           Preliminary consultations may begin earlier.

                  c.       If I am receiving monies pursuant to Paragraph L of
                           the Salary Continuation Agreement, the Company agrees
                           that until April 1, 2000, I may continue to use the
                           car the Company currently provides to me. I agree I
                           will pay for the gas and routine maintenance. The
                           Company will provide insurance as currently provided.
                           It will be at the Company's discretion whether or not
                           to make any major expenditures with respect to such
                           car.

         3.       In consideration of the Company's agreeing to the provisions
                  of Section 2 of this Letter Agreement, I hereby agree as
                  follows:

                  a.       I agree to the provisions of Section 1 of this Letter
                           Agreement.

                  b.       I will keep confidential the terms of this Letter
                           Agreement until it is made public by the Company in
                           its SEC filings.

                  c.       Unless required by law, I will not publicly comment
                           in a manner adverse to the Company concerning the
                           status, plans or prospects of the business of the
                           Company or any matter involving the Company.

                  d.       I will cooperate fully with the Company and the
                           Company's counsel in connection with any present and
                           future actual or threatened litigation or
                           administrative proceeding involving the Company that
                           relates to events, occurrences or matters related to
                           the period of my employment with the Company. This
                           cooperation will include but not be limited to (i)
                           making myself reasonably available for interviews and
                           discussions with the Company's counsel as well as for
                           depositions and trial testimony; (ii) if depositions
                           or trial testimony are to occur, making myself
                           reasonably available and cooperating in the
                           preparation therefore as and to the extent that the
                           Company or its counsel reasonably requests; and (iii)
                           refraining from impeding the Company's prosecution or
                           defense of such litigation or administrative
                           proceeding. Further, at the request of the Chairman
                           or

                                                                               3
   4


                           President of the Company I will make myself
                           reasonably available for consultation and advice to
                           employees of the Company and its subsidiaries at
                           times and for periods that are mutually agreeable; it
                           is understood that under normal circumstances the
                           obligation under this sentence will be substantially
                           performed within the first 18 months after
                           termination. I understand that I will be reimbursed
                           by the Company for my reasonable travel, lodging,
                           long distance telephone and similar expenses,
                           incurred in connection with such cooperation.

                  e.       At the request of the Company, I will assist in the
                           preparation of a job description for use in the
                           Company's search for my successor and in the
                           transition of my responsibilities to such person.

                  f.       I will not receive any bonus with respect to the 1999
                           fiscal year of the Company.

                  g.       In recognition of my voluntary resignation of my
                           employment, all of my stock option grants from the
                           Company will terminate on the last day of my
                           employment.

                  h.       My participation in the Executive Medical Expense
                           Reimbursement Plan (MERP) and long-term disability
                           plan will cease as to expenses incurred or events
                           after January 14, 2000 or such earlier date as my
                           employment should terminate. Any future crediting
                           under any Supplemental Retirement Plan (SERP) of the
                           Company will cease on January 14, 2000 or such
                           earlier date as my employment should terminate. My
                           participation in health, dental and life insurance
                           programs, as well as the Company's 401(K) Plan, the
                           1999 Employee Stock Purchase Plan and the Deferred
                           Compensation Plan for Executives and Other Senior
                           Management shall continue through the end of the
                           period in which I am receiving payments under
                           Paragraph L of the Salary Continuation Agreement at
                           the same cost to me as available to other employees
                           generally. My participation in the Cole National
                           Group Retirement Plan shall be governed by the terms
                           of such plan.

                  i.       I may use the name of the chief executive officer of
                           the Company or his delegate as a reference in my
                           employment search.

         4.       In entering into this Letter Agreement, I acknowledge the
                  confidentiality, non-solicitation and non-competition and
                  other restrictions imposed on me by the remaining provisions
                  of the Salary Continuation Agreement, and confirm that I
                  understand that these restrictions and all other provisions of
                  the Salary Continuation Agreement, except as specifically
                  amended by this Letter Agreement, remain in full force and
                  effect, without alteration. I represent that prior to signing
                  this Letter Agreement, I have read, fully understand and
                  voluntarily agree to the terms and conditions stated above,
                  that I was not coerced to sign this Letter Agreement, that I
                  was not under duress at the time I signed this Letter
                  Agreement, and that, prior to signing this Letter Agreement, I
                  had adequate


                                                                               4
   5

                  time to consider its terms, including the opportunity should I
                  have chosen to discuss this Letter Agreement and its legal
                  consequences with an attorney of my choice.

         5.       This Letter Agreement shall be binding upon and inure to the
                  benefit of the Company and any successor of or to the Company.

                                    Very truly yours,

                                    /s/ Wayne L. Mosley

                                    Wayne L. Mosley



Agreed to and acknowledged as of the 14th
day of October, 1999 in Mayfield Heights, Ohio.


COLE NATIONAL CORPORATION


By: /s/ Leslie D. Dunn
    -----------------------------------------
    Leslie D. Dunn,
    Sr. Vice President, General Counsel


                                                                               5

EX-10.60

   1
                                                                   Exhibit 10.60

                              [COLE NATIONAL LOGO]

EXECUTIVE OFFICES

                                 March 23, 2000



Mr. Thomas Kaung
12 Pepper Ridge Road
Pepper Pike, OH   44124

Dear Tom:

         We are pleased to offer you the opportunity to become Executive Vice
President and Chief Financial Officer. You will report to me and play a
leadership role in working with Larry and me to reinvigorate our growth.

         The following highlights the terms of our offer:

         1.       EFFECTIVE DATE: Upon election as an officer by Board of
Directors.

         2.       SALARY: Your base salary will be $375,000 per year, payable in
accordance with the bi-weekly executive payroll schedule, starting with the
effective date.

         3.       OPERATING BONUS: You will participate in a Management
Incentive Plan as such program is in effect from time to time for senior
officers of Cole National Corporation. Your bonus, if any, for Fiscal Year 2000
will be based on the full $375,000.

         4.       STOCK OPTIONS: We will request that the Board of Directors of
Cole National Corporation grant you an option for 50,000 shares of Cole National
Corporation stock, at a per share price equal to the closing stock price on the
date of grant and another option for 50,000 shares at a per share exercise price
of $10.00. These options will have a two year vesting period with half of each
grant vesting at the end of the first year and the remainder at the end of the
second year. These options would be granted as of the date you are elected as an
officer by the Board.

         5.       MERIT INCREASE: Your salary will be reviewed and adjustments,
if any, will be made in the discretion of the CEO and Board.

         6.       AUTOMOBILE: You may choose a company automobile with a value
of up to $45,850.

   2

         7.       GROUP MEDICAL PLAN: If you elect, you and your eligible
dependents will be eligible to participate in the Cole Group coverage.
Additionally, if you do elect coverage, you will also be eligible to participate
in our MERP Executive Supplemental Plan while you are employed, details of which
we can provide at a later date. If you remain employed by the Company until the
Retirement Date (as defined below) and thereafter upon termination of your
employment for any reason (other than for Cause) or if prior to the Retirement
Date your employment is terminated by the Company without Cause or by you
following a change in control or for Good Reason (all as defined in the Stock
Option Agreement dated this date between you and the Company), the Company shall
provide you and your spouse to the extent reasonably possible with such group
medical benefits under its group medical plan as it then currently provides to
its employees generally at the same cost to you as it then charges to the
Company's employees until November 1, 2005. You will not then be entitled to
MERP.

         8.       SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS (SERP): You will not
participate in any of the Supplemental executive retirement plans of the Company
except for such benefits as you may have from your previous employment with the
Company.

         9.       TERM LIFE INSURANCE/ACCIDENTAL DEATH & DISMEMBERED INSURANCE
(AD&D): You will be eligible to participate in Cole National's life insurance
program, which provides a coverage at no cost to you in an amount equal to two
times your base salary. You may elect to purchase additional amounts of Term
Insurance equal to one or two times your base salary at your cost.

         10.      SHORT-TERM DISABILITY PLAN: After a six (6) month waiting
period, you would be eligible for benefits up to a maximum of thirteen (13)
weeks beginning with the first day of absence.

         11.      EXECUTIVE LONG-TERM DISABILITY PLAN: In accordance with the
terms of this plan, you would be eligible for a monthly benefit of up to sixty
(60%) percent of your monthly base salary, up to a maximum of fifteen thousand
dollars ($15,000) per month. You will be eligible to participate in this plan
following ninety (90) days of continuous employment. Benefits are payable after
a waiting period of ninety (90) days after the onset of disability.

         12.      DEFERRED COMPENSATION PLAN: You would be eligible to
participate in the Deferred Compensation Plan (DCP) after 90 days of continuous
service. This is a non-qualified compensation deferral plan that allows you to
defer up to 100% of your salary and/or bonus. The Company will match 10% of the
first 10% of your compensation contributed to the plan in Cole National Common
Stock after the end of each Plan year. Plan details will be sent to you upon
hire.

         13.      PENSION PLAN: Your participation in the Cole National Group
Retirement Plan will be governed by the terms of such plan..

         14.      VACATION: You will be eligible for four (4) weeks of vacation,
beginning in fiscal 2000.


   3

         15. RECRUITMENT RESPONSIBILITY: It is currently anticipated that you
will retire on February 1, 2003 or such other date as we shall mutually agree
("Retirement Date"). You acknowledge that one of your responsibilities shall be
to commence active recruitment for your successor not later than twelve (12)
months prior to your Retirement Date with the objective that the person so
selected will commence his/her employment six months prior to your Retirement
Date.

         16. TERMINATION/NON-COMPETE AGREEMENT: A letter to be signed in
connection with your acceptance of employment setting forth certain
noncompetition and termination provisions has been provided as a condition of
your employment.

                                   Sincerely,


                                   /s/Jeffrey A. Cole
                                   ------------------------------------
                                   Jeffrey A. Cole
                                   Chairman and Chief Executive Officer



Agreed to and acknowledged this  23  day of March, 2000.
                                ----


/s/Thomas T. S. Kaung
- ---------------------------------
Thomas T. S. Kaung


Enclosure:        Non-Compete Agreement

EX-10.61

   1
                                                                   Exhibit 10.61



                                 March 23, 2000


Cole National Corporation
5915 Landerbrook Drive
Mayfield Heights, OH   44124

Gentlemen:

         In consideration of my employment as Executive Vice President of Cole
National Corporation (the "Company") and the benefits I derive from Paragraph L
hereof (but without thereby creating any fixed or contractual employment term,
understanding that my employment can be terminated, with or without cause and
with or without notice, at any time at the option of either the Company or me),
I hereby agree with the Company as follows:

         A. During the term of my employment I will not compete, directly or
indirectly, with the Company (which hereafter shall include the Company and its
direct and indirect subsidiaries). In accordance with this restriction, but
without limiting its terms, I will not:

         (a)    enter into or engage in any business which competes with the
                business of the Company; or

         (b)    solicit customers, business, patronage, or orders for, or sell,
                any product or products in competition with, or for any business
                that competes with, the business of the Company; or

         (c)    divert, entice, or take away any customers, business, patronage
                or orders of the Company or attempt to do so; or

         (d)    promote or assist, financially or otherwise, any person, firm,
                association or corporation or any other entity engaged in any
                business which competes with the business of the Company.

         B. For a period of eighteen (18) months following termination of my
employment with the Company, I will not enter into or engage in any business
that competes with the Company's business.

         C. For a period of eighteen (18) months following termination of my
employment with the Company, I will not solicit customers, business, patronage,
or orders for, or sell any product(s) in competition with the Company's
business.

         D. For a period of eighteen (18) months following termination of my
employment with the Company, I will not divert, entice, or otherwise take away
any customers, business, patronage, or orders of the Company, or attempt to do
so.

         E. For a period of eighteen (18) months following termination of my
employment with the Company, I will not promote or assist financially or
otherwise, any person, firm, association, partnership, corporation, or any other
entity engaged in any business which competes with the Company's business.

         F. For the purposes of Paragraphs A through E, inclusive, I understand
that I will be competing if I engage in any or all of the activities set forth
therein directly as an individual on my own account, or indirectly as a partner,
joint venturer, employee, agent, salesman, consultant, officer and/or director
of any


   2

firm, association, corporation, or other entity, or as a stockholder of any
corporation in which I own, directly or indirectly, individually or in the
aggregate, more than one percent (1%) of the outstanding stock.

         G. For the purposes of Paragraphs B through E, inclusive, the Company's
business is defined as the manufacture, production, sale, marketing and/or
distribution of any product(s) and/or the rendering of any service(s) that are
the same as or similar to those manufactured, produced, sold, marketed,
distributed and/or rendered, as of the date of my termination, by the Company.

          H. I understand that the activities set forth in Paragraphs B through
E, inclusive, shall be prohibited only within the United States, Canada and
Puerto Rico or such lesser geographic area as to which or for which I was
assigned or had responsibility at the time of my termination or at any time
during the twelve (12) month period immediately preceding my termination.

         I. If it shall be judicially determined that I have violated any of my
obligations under Paragraphs B through E, inclusive, then the period applicable
to the obligation which I shall have been determined to have violated shall
automatically be extended by a period of time equal in length to the period
during which said violation(s) occurred.

         J. I also agree that I will not directly or indirectly at any time
solicit or induce or attempt to solicit or induce any employee(s) or any sales
representative(s), agent(s) or consultant(s) of the Company or any of its
parent, subsidiary or affiliate entities to terminate their employment,
representation or other association with the Company or such entity.

         K. During the period of my employment and at any time thereafter, I
will not disclose, furnish, disseminate, make available or, except in the
ordinary course of performing my duties on behalf of the Company, use any trade
secrets or confidential business and technical information of the Company, or
its parent, subsidiaries or affiliated entities or its customers, without
limitation as to when it was acquired by me or whether it was compiled or
obtained by, or furnished to me while I was employed by the Company. Such trade
secrets and confidential business and technical information are considered to
include, without limitation, the vision care plans, vendor lists, vendor terms
and programs, merchandise costs, financial statistics, research data, or any
other statistics and plans contained in monthly and annual review books, profit
plans, capital plans, critical issues plans, strategic plans, or merchandising,
marketing, real estate, or store operations plans. I specifically acknowledge
that all such information, whether reduced to writing or maintained in my mind
or memory and whether compiled by the Company and/or me derives independent
economic value from not being readily known to or ascertainable by proper means
by others who can obtain economic value from its disclosure or use, that
reasonable efforts have been put forth by the Company to maintain the secrecy of
such information, that such information is and will remain the sole property of
the Company and that any retention and use of such information during or after
the termination of my relationship with the Company (except in the course of
performing my duties) shall constitute a misappropriation of the Company's trade
secrets; provided, however, that this restriction shall not apply to information
which is in the public domain or otherwise made public by others through no
fault of mine or as may be required by Law.

         L. It is further understood and agreed that in the event my employment
with the Company should be terminated by the Company without "Cause" or by me
for "Good Reason" or after a change in control (i) any time prior to February 1,
2002, I will receive, in full and complete settlement of any claims for
compensation which I may have, a continuation of my annual base salary, in
effect at the time of the termination of my employment, for a period of up to
eighteen (18) months immediately following such termination or (ii) any time on
or after February 1, 2002 until February 1, 2003, I will receive as full and
complete settlement for any claims for compensation I may have, a continuation
of my annual base salary in effect at the time of termination of employment, for
a period ending on January 31, 2003, such amounts to be payable in accordance
with the Company's payroll schedule; (the relevant period of such salary
continuation shall be referred to as the "Salary Continuation Period").
Notwithstanding the foregoing, in the event I obtain employment any consulting
assignments or any self-employment during the relevant Salary Continuation
Period (and upon obtaining such employment or assignments I will promptly notify
the Company of same), the payment of any unpaid balance hereunder, effective as
of the date upon which I obtain new employment or assignment, shall be:

   3

         (i)    canceled if the annual base salary of my new employment equals
                or exceeds my annual base salary at the Company at the time of
                my termination; or

         (ii)   reduced to the amount by which my monthly base salary at the
                Company at the time of my termination exceeds the monthly base
                salary of my new employment prorated on the basis of the time
                remaining in the relevant Salary Continuation Period; or

         (iii)  reduced by amounts of any consulting or self-employment income
                earned or paid to me during the relevant Salary Continuation
                Period.

         For purposes of this Agreement, monthly base salary shall be defined as
my annual base salary divided by twelve (12).

         As used herein, "annual base salary of my new employment" shall equal
the greater of (x) the actual monthly base salary of my new employment or (y) if
(x) is not reasonable, the average monthly base salary payable to persons
holding comparable positions as I then do with my new employer with businesses
comparable to my then-new employer.

         As used herein, "Good Reason", "Change of Control" and "Cause" shall
have the same meanings a set forth in those two certain Non-Qualified Stock
Option Agreements between me and Cole National Corporation dated March 23, 2000.

         M. I expressly agree and understand that the remedy at law for any
breach by me of this Agreement will be inadequate and that the damages flowing
from such breach are not readily susceptible to being measured in monetary
terms. Accordingly, it is acknowledged that upon my violation of any provision
of this Agreement, the Company shall be entitled to immediate injunctive relief
and may obtain a temporary order restraining any threatened or further breach
without the necessity of proof of actual damage. Nothing in this Agreement shall
be deemed to limit the Company's remedies at law or in equity for any breach by
me of any of the provisions of this Agreement which may be pursued or availed of
by the Company.

         N. This Agreement is not assignable by either party without the prior
written consent of the other; provided, however, the Company may assign this
Agreement to its parent, any subsidiary or affiliated entity and such entity
shall succeed to each of the Company's rights hereunder. Upon such assignment,
all references to the Company in this Agreement shall, as the context requires,
be deemed to be to the entity to which such assignment, assumption and
employment relate.

         O. No modification, waiver, amendment or addition to any of the terms
of this Agreement shall be effective, except as set forth in a writing signed by
me and the Company. The failure of the Company to enforce any provision of this
Agreement shall not be construed to be a waiver of such provision or of the
right of the Company thereafter to enforce each and every provision.

         P. This Agreement and any amendments thereto shall become effective on
the date of acceptance by the Company and shall be governed by, and construed in
accordance with, the internal, substantive laws of the State of Ohio. I agree
that the state and federal courts located in the State of Ohio shall have
jurisdiction in any action, suit or proceeding against me arising out of this
Agreement and I hereby: (a) submit to the personal jurisdiction of such courts;
(b) consent to service of process in connection with any action, suit or
proceeding against me; and (c) waive any other requirement (whether imposed by
statute, rule of court or otherwise) with respect to personal jurisdiction,
venue or service of process.

         Q. Except for that certain letter dated March 23, 2000, this Agreement
supersedes the provisions of each and every other agreement or understanding,
whether oral or written, between the undersigned and the Company relating to the
subject matter contained herein, and any such agreement or understanding shall
be of no further force and effect. The provisions of this Agreement are
severable and if any one or more provisions may be determined to be illegal or
otherwise unenforceable, in whole or in part, the remaining provisions and any
partially unenforceable provision, to the extent enforceable in any

   4


jurisdiction, shall, nevertheless, be binding and enforceable. The parties
hereto agree that when fully executed, the foregoing shall constitute a legally
enforceable Agreement between us, which also shall inure to the benefit of the
Company's successors and assigns.

         Finally, I represent that prior to signing this Agreement, I have read,
fully understand and voluntarily agree to the terms and conditions as stated
above, that I was not coerced to sign this Agreement, that I was not under
duress at the time I signed this Agreement and that, prior to signing this
Agreement, I had adequate time to consider entering into this Agreement,
including without limitation, the opportunity to discuss the terms and
conditions of this Agreement, as well as its legal consequences, with an
attorney of my choice.

                                          Very truly yours,



                                          By: /s/ Thomas T. S. Kaung
                                              --------------------------------
                                              Thomas T. S. Kaung


Acknowledged and agreed to
as of this 23 day of March, 2000.

COLE NATIONAL CORPORATION


By:  /s/ Jeffrey A. Cole
     -------------------------------------
         Jeffrey A. Cole
         Chairman and CEO

EX-10.62

   1
                                                                   Exhibit 10.62

                                                             Type 2 -A- Non Plan
                                                             -------------------
                                                                     New Officer
                                                                     -----------
                                                                 Kaung - Grant 1
                                                                 ---------------

                            COLE NATIONAL CORPORATION

                       Nonqualified Stock Option Agreement


                  This Nonqualified Stock Option Agreement (this "Agreement") is
entered into between the individual optionee named on the signature page hereof
(the "Optionee") and Cole National Corporation, a Delaware corporation (the
"Company"), as of the Grant Date. Certain capitalized terms used herein are
defined in Paragraph 8.
                  WHEREAS, Optionee has made the grant of options hereunder a
condition of his acceptance of the Company's offer of employment as Executive
Vice President and Chief Financial Officer of the Company;
                  WHEREAS, the Compensation Committee of the Board of Directors
of the Company has authorized a grant of stock options on the terms hereof to
the Optionee in order to induce him to accept such employment; and
                  NOW, THEREFORE, the Company hereby grants to the Optionee
options (the "Options") pursuant to the Company's 1999 Broad Based Employee
Stock Option Plan (the "Plan") to purchase the number of shares of common stock
("Common Stock"), par value $.001 per share, of the Company's Common Stock shown
as the Original Award on the signature page hereof; and agrees to cause
certificates for any shares purchased hereunder to be delivered to the Optionee
upon payment of the purchase price in full, all subject, however, to the terms
and conditions of the Plan and as hereinafter set forth.

                  1. EXERCISE. (a) Except as otherwise provided herein, the
Options (until terminated as hereinafter provided) will become vested and
exercisable as follows:


   2



                                               Type 2-A - Non Plan - New Officer
                                               ---------------------------------
                                                                               2


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

     ---------------------------------------------------------------------------
     1/2 of the Original Award      The first anniversary of the Grant Date; and
     ---------------------------------------------------------------------------
     1/2 of the Original Award      The second anniversary of the Grant Date.
     ---------------------------------------------------------------------------


To the extent exercisable, the Options may be exercised in whole or in part from
time to time.
                           (b) If prior to the second anniversary of the date of
this Agreement, a Change in Control occurs, all the Options, in addition to any
vesting pursuant to the provisions of Paragraph 1(a) above, will become
exercisable in full as to any then Unvested Shares.
                           (c) If, prior to the second anniversary of the Grant
Date, a Termination Event occurs or Optionee terminates his employment for Good
Reason, the Options will, in addition to any prior vesting pursuant to Paragraph
1(a) above, immediately become exercisable with respect to those Unvested Shares
that would have vested on the next succeeding anniversary of the Grant Date (if
the Termination Event occurs on an anniversary of the Grant Date, no additional
Options will become vested and exercisable besides those that became vested and
exercisable as of that anniversary). Thereupon, all remaining unvested Options
will be forfeited and cancelled.
                           (d) If the Optionee dies or becomes permanently
disabled while in the employ of the Company or any Subsidiary, the Options will,
in addition to any vesting pursuant to Paragraph 1(a) above, immediately become
exercisable with respect to those Unvested Shares that would have vested on or
before the end of twelve months from the date of death. Thereupon, all remaining
Unvested Options will be forfeited and cancelled.

                           (e) If Optionee's employment is terminated for Cause,
all unvested Options will be forfeited and cancelled.

   3

                                               Type 2-A - Non Plan - New Officer
                                               ---------------------------------
                                                                               3

                           (f) Any exercise of the Options must be made in
writing by the Optionee delivered to the Secretary of the Company. To the extent
exercisable, the Options may be exercised in whole or in part from time to time.

                  2. EXERCISE PRICE AND PAYMENT; RELOAD OPTIONS.

                           (a) The Options will be exercisable for Vested Shares
(whether such vesting occurs pursuant to Paragraph 1(a), 1(b), 1(c) or 1(d)) at
the Exercise Price shown on the signature page hereof.

                           (b) The Exercise Price for any shares may be paid in
cash or by check.

                  3. TERMINATION. The Options will terminate and all Unvested
and Vested Options then outstanding will be forfeited on the earliest of the
following dates:

                           (a) On the date on which the Optionee voluntarily
resigns (other than for Good Reason or after a Change of Control) if prior to
the Retirement Date without the consent of the Chairman of the Board (unless
otherwise provided in an agreement relating to employment) or ceases to be an
employee of the Company or a Subsidiary by reason of termination of employment
for Cause;

                           (b) Subject to possible extension pursuant to
Paragraph 3(c) below and subject to the provisions of Paragraph 3(d) below, five
years after either (i) the date on which the Optionee ceases to be an employee
of the Company or a Subsidiary if Optionee remains employed until the Retirement
Date or earlier resigns with the consent of the Chairman of the Board or (ii)
the date of permanent disability of the Optionee if the Optionee becomes
permanently disabled while an employee of the Company or a Subsidiary;

   4

                                               Type 2-A - Non Plan - New Officer
                                               ---------------------------------
                                                                               4

                           (c) One year after the date of the death of the
Optionee if the Optionee dies while an employee of the Company or a Subsidiary
or one year after the date of death of the Optionee if the Optionee dies during
the fifth year of the five year period referred to in Paragraph 3(b) above;

                           (d) One year after the date of a Termination Event or
Optionee terminates his employment with Good Reason or after a Change in
Control, both prior to the Retirement Date;

                           (e) Immediately (x) upon the Optionee accepting
employment with a Competitor without the prior written approval of the Company's
Chief Executive Officer or (y) upon a material breach by the Optionee of any
applicable agreement with the Company or a Subsidiary relating to
non-competition, non-solicitation or maintaining of Company confidences; or

                           (f) Ten years from the Grant Date.

                  4. TRANSFERABILITY. Unless otherwise approved by the
Compensation Committee following a request from the Optionee or the Optionee's
guardian or legal representative, the Options are not transferable by the
Optionee otherwise than by will or the laws of descent and distribution. If
another type of transfer is approved by the Compensation Committee, a transfer
will only be effective when the transferee of the Options enters into an
agreement with the Company (in form and substance acceptable to the Company)
agreeing to be bound by the provisions of this Agreement as if such transferee
were the Optionee. If exercised during the lifetime of the Optionee, the Options
are exercisable only by the Optionee or by the

   5

                                               Type 2-A - Non Plan - New Officer
                                               ---------------------------------
                                                                               5


Optionee's guardian or legal representative, or by an transferee authorized as
provided in this Paragraph.

                  5. SECURITIES LAWS. The Options are not exercisable if such
exercise would involve a violation of any applicable federal, state or other
securities law, and the Company hereby agrees to make reasonable efforts to
comply with such securities laws. The Options are not exercisable unless under
said laws at the time of exercise the shares of Common Stock or other securities
purchasable hereunder are exempt, are the subject matter of an exempt
transaction, or are registered in accordance with such laws.

                  6. ADJUSTMENTS. (a)The Board of Directors or the Compensation
Committee shall make such adjustment in the option price and in the number or
kind of shares of Common Stock or other securities covered by the Options as
such Board or Committee may in good faith determine is equitably required to
prevent dilution or enlargement of the rights of the Optionee that otherwise
would result from (i) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company, or
(ii) any merger, consolidation, spin-off, split-off, spin-out, split up,
reorganization, partial or complete liquidation or other distribution of assets,
issuance of rights to purchase securities, or (iii) any distribution to the
holders of the Common Stock of rights or warrant to purchase equity interests of
the Company, or (iv) any other corporate transaction or event having an effect
similar to any of the foregoing. Moreover, in the event of any such transaction
or event, the Board of Directors or the Compensation Committee, in its
discretion, may provide in substitution for any or all outstanding awards under
the Options such alternative consideration as it, in good faith, may

   6

                                               Type 2-A - Non Plan - New Officer
                                               ---------------------------------
                                                                               6


determine to be equitable in the circumstances and may require in connection
therewith the surrender of all awards so replaced.

                  (b) In the event that any provision of this Agreement would
result in a calculation of a number of shares in amounts other than a whole
number, the number of shares so calculated will be reduced or increased to the
nearest whole number (rounding 0.50 up), with the effect of any such rounding
deemed to attach to the last group of shares to be so calculated (with
calculations to be conducted in alphabetical or numerical order, as applicable).

                  7. WITHHOLDING. If the Company is required to withhold any
federal, state, local or foreign tax in connection with the exercise of the
Options, it will be a condition to such exercise that the Optionee make
provision satisfactory to the Company for payment of all such taxes.

                  8. DEFINITIONS. The following capitalized terms have meanings
as set forth below.

                  "Cause" means Optionee's gross neglect of duty, material
dishonesty in the performance of Optionee's duties or his failure to discharge
his duties due to alcohol or drug addiction.

                  "Change in Control" means if at any time any of the following
events shall have occurred:

                  (a) the Company merges into itself, or is merged or
consolidated with, another corporation and as a result of such merger or
consolidation less than 51% of the voting power of the then-outstanding voting
securities of the surviving or resulting corporation

   7

                                               Type 2-A - Non Plan - New Officer
                                               ---------------------------------
                                                                               7

immediately after such transaction are directly or indirectly beneficially owned
in the aggregate by the former stockholders of the Company immediately prior to
such transaction;

                  (b) all or substantially all the assets accounted for on the
consolidated balance sheet of the Company are sold or transferred to one or more
corporations or persons, and as a result of such sale or transfer less than 51%
of the voting power of the then-outstanding voting securities of such
corporation or person immediately after such sale or transfer is directly or
indirectly beneficially held in the aggregate by the former stockholders of the
Company immediately prior to such transaction or series of transactions;

                  (c) A person, within the meaning of Section 3(a)(9) or
13(d)(3) (as in effect on the date hereof) of the Securities Exchange Act of
1934, becomes the beneficial owner (as defined in Rule 13d-3 of the Securities
and Exchange Commission pursuant to the Securities Exchange Act of 1934) of (i)
15% or more but less than 35% of the voting power of the then- outstanding
voting securities of the Company without the prior approval by the Board, or
(ii) 35% or more of the voting power of the then-outstanding voting securities
of the Company; PROVIDED, HOWEVER, that the foregoing does not apply to any such
acquisition that is made by (w) any subsidiary of the Company; (x) any employee
benefit plan of the Company or of any Subsidiary or (y) any person or group of
which employees of the Company or of any Subsidiary control a greater than 25%
interest unless the Board of Directors of the Company determines that such
person or group is making a "hostile acquisition;"

                  (d) A majority of the members of the Board of Directors of the
Company or of any Subsidiary are not Continuing Directors, where a "Continuing
Director" is any member of the Board of Directors of the Company or, with
respect to a Subsidiary, of such

   8

                                               Type 2-A - Non Plan - New Officer
                                               ---------------------------------
                                                                               8

Subsidiary who (x) was a member of the Board of Directors of the Company or,
with respect to a Subsidiary, of such Subsidiary on the date hereof or (y) was
nominated for election or elected to such Board of Directors with the
affirmative vote of a majority of the Continuing Directors who were members of
such Board at the time of such nomination or election.

                  "Competitor" means any Person that competes with any
then-existing business of the Company or any Subsidiary.

                  "Exercise Price" means the exercise price per share indicated
as the Exercise Price per share on the signature page hereof.

                  "Full-time Employee" means a person having the status of a
full-time employee of the Company or a Subsidiary working at least 20 hours a
week, including a person who is on a short-term disability, parental or other
leave under an applicable benefit plan or other approved leave.

                  "Good Reason" means (i) Jeffrey A. Cole is terminated by the
Company other than for cause or (ii) Jeffrey A. Cole voluntarily terminates his
employment other than for disability or death as Chairman of the Board of the
Company.

                  "Grant Date" means the date indicated on the signature page
hereof as the Grant Date.

                  "Original Award" means the number of shares of Common Stock
indicated as the Original Award on the signature page hereof.

                  "Person" means any corporation, partnership, limited liability
company, association, firm, other entity or individual(s).


   9

                                               Type 2-A - Non Plan - New Officer
                                               ---------------------------------
                                                                               9

                  "Retirement Date" means February 1, 2003 or such other date as
the Company and Optionee shall agree.

                  "Stock Price" means the closing price of the Common Stock on
the principal exchange on which the Common Stock is traded.

                  "Subsidiary" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if each of the
corporations (or a group of corporations that themselves are Subsidiaries) other
than the last corporation in the unbroken chain owns stock possessing fifty
percent or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain. For purposes of this Agreement, the
continuous employment of the Optionee with the Company or a Subsidiary will not
be deemed interrupted, and the Optionee will not be deemed to have ceased to be
an employee of the Company or any Subsidiary, by reason of the transfer of his
employment among the Company and its Subsidiaries.

                  "Termination Event" means the Optionee's ceasing to be an
employee of the Company or its Subsidiaries by reason of termination by the
employer of the Optionee's employment without Cause.

                  "Trading Days" means days on which the principal exchange on
which the Common Stock is traded is open for trading, regardless whether actual
trading in the Common Stock occurs.

                  "Unvested Shares" means, as of any given time, those shares of
Common Stock relating to the Options that are not, at the time in question,
otherwise permitted, under the terms of this Agreement, to be acquired pursuant
to the exercise of the Options.

   10

                                               Type 2-A - Non Plan - New Officer
                                               ---------------------------------
                                                                              10

                  "Vested Shares" means, as of any given time, those shares of
Common Stock relating to the Options that are, at the time in question,
otherwise permitted, under the terms of this Agreement, to be acquired pursuant
to the exercise of the Options.

                  9. ACKNOWLEDGMENT. The undersigned Optionee hereby
acknowledges receipt of an executed original of this Agreement and accepts the
Options granted hereunder.

   11

                                               Type 2-A - Non Plan - New Officer
                                               ---------------------------------
                                                                              11



                                             Nonqualified Stock Option Agreement
                                             -----------------------------------



                           EXECUTED at Cleveland, Ohio as of the date first set
forth above.


                                           COLE NATIONAL CORPORATION



                                           By: /s/ Leslie D. Dunn
                                              ---------------------------------
                                               Title: Senior Vice President


                                               /s/ Thomas T. S. Kaung
                                           ------------------------------------
                                           OPTIONEE - Thomas T. S. Kaung




         Name of Optionee:                  Thomas T. S. Kaung

         Name of Employer:                  Cole National Corporation

         Position:                          Executive Vice President and Chief
                                            Financial Officer

         Number of Shares
         in the Original Award:             50,000

         Grant Date:                        March 23, 2000

         Exercise Price per Share:          $10.00

EX-10.63

   1
                                                                   Exhibit 10.63

                                                             Type 2 -A- Non Plan
                                                             -------------------
                                                                     New Officer
                                                                     -----------
                                                                 Kaung - Grant 2
                                                                 ---------------


                            COLE NATIONAL CORPORATION

                       Nonqualified Stock Option Agreement


                  This Nonqualified Stock Option Agreement (this "Agreement") is
entered into between the individual optionee named on the signature page hereof
(the "Optionee") and Cole National Corporation, a Delaware corporation (the
"Company"), as of the Grant Date. Certain capitalized terms used herein are
defined in Paragraph 8.
                  WHEREAS, Optionee has made the grant of options hereunder a
condition of his acceptance of the Company's offer of employment as Executive
Vice President and Chief Financial Officer of the Company;
                  WHEREAS, the Compensation Committee of the Board of Directors
of the Company has authorized a grant of stock options on the terms hereof to
the Optionee in order to induce him to accept such employment; and
                  NOW, THEREFORE, the Company hereby grants to the Optionee
options (the "Options") pursuant to the Company's 1999 Broad Based Employee
Stock Option Plan (the "Plan") to purchase the number of shares of common stock
("Common Stock"), par value $.001 per share, of the Company's Common Stock shown
as the Original Award on the signature page hereof; and agrees to cause
certificates for any shares purchased hereunder to be delivered to the Optionee
upon payment of the purchase price in full, all subject, however, to the terms
and conditions of the Plan and as hereinafter set forth.

                  1. EXERCISE. (a) Except as otherwise provided herein, the
Options (until terminated as hereinafter provided) will become vested and
exercisable as follows:

   2

                                               Type 2-A - Non Plan - New Officer
                                               ---------------------------------
                                                                               2





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

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

    1/2 of the Original Award       The first anniversary of the Grant Date; and
    ----------------------------------------------------------------------------
    1/2 of the Original Award       The second anniversary of the Grant Date.
    ----------------------------------------------------------------------------


To the extent exercisable, the Options may be exercised in whole or in part from
time to time.

                           (b) If prior to the second anniversary of the date of
this Agreement, a Change in Control occurs, all the Options, in addition to any
vesting pursuant to the provisions of Paragraph 1(a) above, will become
exercisable in full as to any then Unvested Shares.

                           (c) If, prior to the second anniversary of the Grant
Date, a Termination Event occurs or Optionee terminates his employment for Good
Reason, the Options will, in addition to any prior vesting pursuant to Paragraph
1(a) above, immediately become exercisable with respect to those Unvested Shares
that would have vested on the next succeeding anniversary of the Grant Date (if
the Termination Event occurs on an anniversary of the Grant Date, no additional
Options will become vested and exercisable besides those that became vested and
exercisable as of that anniversary). Thereupon, all remaining unvested Options
will be forfeited and cancelled.

                           (d) If the Optionee dies or becomes permanently
disabled while in the employ of the Company or any Subsidiary, the Options will,
in addition to any vesting pursuant to Paragraph 1(a) above, immediately become
exercisable with respect to those Unvested Shares that would have vested on or
before the end of twelve months from the date of death. Thereupon, all remaining
Unvested Options will be forfeited and cancelled.

                           (e) If Optionee's employment is terminated for Cause,
all unvested Options will be forfeited and cancelled.

   3

                                               Type 2-A - Non Plan - New Officer
                                               ---------------------------------
                                                                               3

                           (f) Any exercise of the Options must be made in
writing by the Optionee delivered to the Secretary of the Company. To the extent
exercisable, the Options may be exercised in whole or in part from time to time.

                           2. EXERCISE PRICE AND PAYMENT; RELOAD OPTIONS. (a)
The Options will be exercisable for Vested Shares (whether such vesting occurs
pursuant to Paragraph 1(a), 1(b), 1(c) or 1(d)) at the Exercise Price shown on
the signature page hereof.

                           (b) The Exercise Price for any shares may be paid in
cash or by check.

                           3. TERMINATION. The Options will terminate and all
Unvested and Vested Options then outstanding will be forfeited on the earliest
of the following dates:

                           (a) On the date on which the Optionee voluntarily
resigns (other than for Good Reason or after a Change of Control) if prior to
the Retirement Date without the consent of the Chairman of the Board (unless
otherwise provided in an agreement relating to employment) or ceases to be an
employee of the Company or a Subsidiary by reason of termination of employment
for Cause;

                           (b) Subject to possible extension pursuant to
Paragraph 3(c) below and subject to the provisions of Paragraph 3(d) below, five
years after either (i) the date on which the Optionee ceases to be an employee
of the Company or a Subsidiary if Optionee remains employed until the Retirement
Date or earlier resigns with the consent of the Chairman of the Board or (ii)
the date of permanent disability of the Optionee if the Optionee becomes
permanently disabled while an employee of the Company or a Subsidiary;

   4

                                               Type 2-A - Non Plan - New Officer
                                               ---------------------------------
                                                                               4

                           (c) One year after the date of the death of the
Optionee if the Optionee dies while an employee of the Company or a Subsidiary
or one year after the date of death of the Optionee if the Optionee dies during
the fifth year of the five year period referred to in Paragraph 3(b) above;

                           (d) One year after the date of a Termination Event or
Optionee terminates his employment with Good Reason or after a Change in
Control, both prior to the Retirement Date;

                           (e) Immediately (x) upon the Optionee accepting
employment with a Competitor without the prior written approval of the Company's
Chief Executive Officer or (y) upon a material breach by the Optionee of any
applicable agreement with the Company or a Subsidiary relating to
non-competition, non-solicitation or maintaining of Company confidences; or

                           (f) Ten years from the Grant Date.

                  4. TRANSFERABILITY. Unless otherwise approved by the
Compensation Committee following a request from the Optionee or the Optionee's
guardian or legal representative, the Options are not transferable by the
Optionee otherwise than by will or the laws of descent and distribution. If
another type of transfer is approved by the Compensation Committee, a transfer
will only be effective when the transferee of the Options enters into an
agreement with the Company (in form and substance acceptable to the Company)
agreeing to be bound by the provisions of this Agreement as if such transferee
were the Optionee. If exercised during the lifetime of the Optionee, the Options
are exercisable only by the Optionee or by the

   5

                                               Type 2-A - Non Plan - New Officer
                                               ---------------------------------
                                                                               5

Optionee's guardian or legal representative, or by an transferee authorized as
provided in this Paragraph.

                  5. SECURITIES LAWS. The Options are not exercisable if such
exercise would involve a violation of any applicable federal, state or other
securities law, and the Company hereby agrees to make reasonable efforts to
comply with such securities laws. The Options are not exercisable unless under
said laws at the time of exercise the shares of Common Stock or other securities
purchasable hereunder are exempt, are the subject matter of an exempt
transaction, or are registered in accordance with such laws.

                  6. ADJUSTMENTS. (a)The Board of Directors or the Compensation
Committee shall make such adjustment in the option price and in the number or
kind of shares of Common Stock or other securities covered by the Options as
such Board or Committee may in good faith determine is equitably required to
prevent dilution or enlargement of the rights of the Optionee that otherwise
would result from (i) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company, or
(ii) any merger, consolidation, spin-off, split-off, spin-out, split up,
reorganization, partial or complete liquidation or other distribution of assets,
issuance of rights to purchase securities, or (iii) any distribution to the
holders of the Common Stock of rights or warrant to purchase equity interests of
the Company, or (iv) any other corporate transaction or event having an effect
similar to any of the foregoing. Moreover, in the event of any such transaction
or event, the Board of Directors or the Compensation Committee, in its
discretion, may provide in substitution for any or all outstanding awards under
the Options such alternative consideration as it, in good faith, may

   6

                                               Type 2-A - Non Plan - New Officer
                                               ---------------------------------
                                                                               6

determine to be equitable in the circumstances and may require in connection
therewith the surrender of all awards so replaced.

                           (b) In the event that any provision of this Agreement
would result in a calculation of a number of shares in amounts other than a
whole number, the number of shares so calculated will be reduced or increased to
the nearest whole number (rounding 0.50 up), with the effect of any such
rounding deemed to attach to the last group of shares to be so calculated (with
calculations to be conducted in alphabetical or numerical order, as applicable).

                  7. WITHHOLDING. If the Company is required to withhold any
federal, state, local or foreign tax in connection with the exercise of the
Options, it will be a condition to such exercise that the Optionee make
provision satisfactory to the Company for payment of all such taxes.

                  8. DEFINITIONS. The following capitalized terms have meanings
as set forth below.

                  "Cause" means Optionee's gross neglect of duty, material
dishonesty in the performance of Optionee's duties or his failure to discharge
his duties due to alcohol or drug addiction.

                  "Change in Control" means if at any time any of the following
events shall have occurred:

                           (a) the Company merges into itself, or is merged or
consolidated with, another corporation and as a result of such merger or
consolidation less than 51% of the voting power of the then-outstanding voting
securities of the surviving or resulting corporation

   7

                                               Type 2-A - Non Plan - New Officer
                                               ---------------------------------
                                                                               7


immediately after such transaction are directly or indirectly beneficially owned
in the aggregate by the former stockholders of the Company immediately prior to
such transaction;

                           (b) all or substantially all the assets accounted for
on the consolidated balance sheet of the Company are sold or transferred to one
or more corporations or persons, and as a result of such sale or transfer less
than 51% of the voting power of the then-outstanding voting securities of such
corporation or person immediately after such sale or transfer is directly or
indirectly beneficially held in the aggregate by the former stockholders of the
Company immediately prior to such transaction or series of transactions;

                           (c) A person, within the meaning of Section 3(a)(9)
or 13(d)(3) (as in effect on the date hereof) of the Securities Exchange Act of
1934, becomes the beneficial owner (as defined in Rule 13d-3 of the Securities
and Exchange Commission pursuant to the Securities Exchange Act of 1934) of (i)
15% or more but less than 35% of the voting power of the then- outstanding
voting securities of the Company without the prior approval by the Board, or
(ii) 35% or more of the voting power of the then-outstanding voting securities
of the Company; PROVIDED, HOWEVER, that the foregoing does not apply to any such
acquisition that is made by (w) any subsidiary of the Company; (x) any employee
benefit plan of the Company or of any Subsidiary or (y) any person or group of
which employees of the Company or of any Subsidiary control a greater than 25%
interest unless the Board of Directors of the Company determines that such
person or group is making a "hostile acquisition;"

                           (d) A majority of the members of the Board of
Directors of the Company or of any Subsidiary are not Continuing Directors,
where a "Continuing Director" is any member of the Board of Directors of the
Company or, with respect to a Subsidiary, of such

   8

                                               Type 2-A - Non Plan - New Officer
                                               ---------------------------------
                                                                               8


Subsidiary who (x) was a member of the Board of Directors of the Company or,
with respect to a Subsidiary, of such Subsidiary on the date hereof or (y) was
nominated for election or elected to such Board of Directors with the
affirmative vote of a majority of the Continuing Directors who were members of
such Board at the time of such nomination or election.

                  "Competitor" means any Person that competes with any
then-existing business of the Company or any Subsidiary.

                  "Exercise Price" means the exercise price per share indicated
as the Exercise Price per share on the signature page hereof.

                  "Full-time Employee" means a person having the status of a
full-time employee of the Company or a Subsidiary working at least 20 hours a
week, including a person who is on a short-term disability, parental or other
leave under an applicable benefit plan or other approved leave.

                  "Good Reason" means (i) Jeffrey A. Cole is terminated by the
Company other than for cause or (ii) Jeffrey A. Cole voluntarily terminates his
employment other than for disability or death as Chairman of the Board of the
Company.

                  "Grant Date" means the date indicated on the signature page
hereof as the Grant Date.

                  "Original Award" means the number of shares of Common Stock
indicated as the Original Award on the signature page hereof.

                  "Person" means any corporation, partnership, limited liability
company, association, firm, other entity or individual(s).

   9

                                               Type 2-A - Non Plan - New Officer
                                               ---------------------------------
                                                                               9

                  "Retirement Date" means February 1, 2003 or such other date as
the Company and Optionee shall agree.

                  "Stock Price" means the closing price of the Common Stock on
the principal exchange on which the Common Stock is traded.

                  "Subsidiary" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if each of the
corporations (or a group of corporations that themselves are Subsidiaries) other
than the last corporation in the unbroken chain owns stock possessing fifty
percent or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain. For purposes of this Agreement, the
continuous employment of the Optionee with the Company or a Subsidiary will not
be deemed interrupted, and the Optionee will not be deemed to have ceased to be
an employee of the Company or any Subsidiary, by reason of the transfer of his
employment among the Company and its Subsidiaries.

                  "Termination Event" means the Optionee's ceasing to be an
employee of the Company or its Subsidiaries by reason of termination by the
employer of the Optionee's employment without Cause.

                  "Trading Days" means days on which the principal exchange on
which the Common Stock is traded is open for trading, regardless whether actual
trading in the Common Stock occurs.

                  "Unvested Shares" means, as of any given time, those shares of
Common Stock relating to the Options that are not, at the time in question,
otherwise permitted, under the terms of this Agreement, to be acquired pursuant
to the exercise of the Options.

   10

                                               Type 2-A - Non Plan - New Officer
                                               ---------------------------------
                                                                              10

                  "Vested Shares" means, as of any given time, those shares of
Common Stock relating to the Options that are, at the time in question,
otherwise permitted, under the terms of this Agreement, to be acquired pursuant
to the exercise of the Options.

                  9. ACKNOWLEDGMENT. The undersigned Optionee hereby
acknowledges receipt of an executed original of this Agreement and accepts the
Options granted hereunder.

   11

                                               Type 2-A - Non Plan - New Officer
                                               ---------------------------------
                                                                              11


                                             Nonqualified Stock Option Agreement
                                             -----------------------------------



                           EXECUTED at Cleveland, Ohio as of the date first set
forth above.


                                        COLE NATIONAL CORPORATION



                                        By: /s/ Leslie D. Dunn
                                           -----------------------------------
                                              Title:


                                            /s/ Thomas T. S. Kaung
                                        --------------------------------------
                                        OPTIONEE - Thomas T. S. Kaung



         Name of Optionee:                  Thomas T. S. Kaung

         Name of Employer:                  Cole National Corporation

         Position:                          Executive Vice President and Chief
                                            Financial Officer

         Number of Shares
         in the Original Award:             50,000

         Grant Date:                        March 23, 2000

         Exercise Price per Share:          $6.500

EX-10.66

   1
                                                                   Exhibit 10.66

                       INSTRUMENT DESIGNATING PARTICIPANT
                                     OF THE
                            COLE NATIONAL GROUP, INC.
                    1999 SUPPLEMENTAL RETIREMENT BENEFIT PLAN



                  1. PARTICIPANT. Cole National Group, Inc. (the "Company")
hereby adopts the Cole National Group, Inc. 1999 Supplemental Retirement Benefit
Plan (the "Plan") effective as of January 1, 2000, for the benefit of the
following employee: Leslie D. Dunn.

                  2. SPECIAL PROVISIONS. (a) For purposes of calculating the
benefit payable to Leslie D. Dunn in accordance with the Plan, the definitions
and actuarial assumptions used shall be the same as those used for purposes of
calculating benefits under the Cole National Group, Inc. Retirement Plan (the
"Pension Plan").

                  (b) For purposes of calculating the benefit payable to Leslie
D. Dunn in accordance with the Plan and the Cole National Group, Inc.
Supplemental Pension Plan, Leslie D. Dunn shall be credited with years of
service for benefit accrual equal to (i) the number of years of service she is
credited with under the Pension Plan, plus (ii) ten.

                  (c) For purposes of calculating the benefit payable to Leslie
D. Dunn in accordance with the Plan, the minimum annual benefit payable to
Leslie D. Dunn commencing after Leslie D. Dunn's retirement on or after her
attainment of age 65 shall be the amount determined by the formula "A-B," where:

                  A=       40% of twelve times Average Monthly Compensation, and

                  B=       the sum of (i) the annualized amounts, if any,
                           payable to Leslie D. Dunn in accordance with the
                           Pension Plan and the Cole National Group, Inc.
                           Supplemental Pension Plan, assuming, in each case
                           that she elected a single life annuity, and (ii) the
                           installment payment deemed under (e) below to be paid
                           to Leslie D. Dunn from the Cole National Group, Inc.
                           Supplemental Retirement Benefit Plan.

                  (d) For purposes of calculating the benefit payable to Leslie
D. Dunn in accordance with the Plan, the minimum annual benefit payable to
Leslie D. Dunn commencing after Leslie D. Dunn's retirement prior to her
attainment of age 65 shall be the amount determined by the formula "(A-B) x C,"
where:

                  A=       twelve times Average Monthly Compensation times the
                           percentage of Annualized Average Monthly Compensation
                           set forth in Attachment A to this Instrument,

   2


                  B=       the sum of (i) the annualized amounts, if any,
                           payable to Leslie D. Dunn in accordance with the
                           Pension Plan and the Cole National Group, Inc.
                           Supplemental Pension Plan, assuming, in each case
                           that she elected a single life annuity, and (ii) the
                           installment payment deemed under (e) below to be paid
                           to Leslie D. Dunn from the Cole National Group, Inc.
                           Supplemental Retirement Benefit Plan,

                  C=       the early retirement reduction factor set forth in
                           Attachment A to this Instrument for her age at the
                           time of the commencement of benefits.

                  (e) In computing benefits under (c) and (d) above, Leslie D.
Dunn's benefits under the Cole National Group, Inc. Supplemental Retirement
Benefit Plan shall be adjusted so that such benefits will equal, on an actuarial
present value basis, the payments that otherwise would have been due her if she
had elected an annual installment payment of the Cole National Group, Inc.
Supplemental Retirement Benefit Plan over her life expectancy.

                  (f) The benefit accrued under (c) and (d) above shall be
nonforfeitable on and after the date Leslie D. Dunn attains age 55.

                  3. CONTRIBUTIONS TO SUPPLEMENTAL RETIREMENT BENEFIT PLAN. The
Company shall credit to Leslie D. Dunn's account in the Supplemental Retirement
Benefit Plan at not less than the following rates, provided Leslie D. Dunn is
then employed by the Company:

                                                            Annual
            YEAR ENDED                                CONTRIBUTION RATE

December 31, 1997 through December 31, 2001                   10%
December 31, 2002 and subsequent years                        15%



Dated as of _____________, 2000                      COLE NATIONAL GROUP, INC.

                                                     By:
                                                        -----------------------

                                                     Title:
                                                           --------------------



                                       2
   3
                         ATTACHMENT A TO THE INSTRUMENT
                         DESIGNATING PARTICIPANT OF THE
                         COLE NATIONAL GROUP, INC. 1999
                             SUPPLEMENTAL RETIREMENT
                         BENEFIT PLAN FOR LESLIE D. DUNN
                         -------------------------------


If Leslie D. Dunn retires before age 65, the following percentage of Annual
Average Monthly Compensation and early retirement reduction factors apply:

- --------------------------------------------------------------------------------
                                                     Early Retirement Reduction
                        Percentage of Annualized         Factors for Benefit
      Age at               Average Monthly              Commencement prior to
    Retirement              Compensation                        Age 65*

- --------------------------------------------------------------------------------
       55                       10.0                              0.50
- --------------------------------------------------------------------------------
       56                       15.0                              0.55
- --------------------------------------------------------------------------------
       57                       20.0                              0.60
- --------------------------------------------------------------------------------
       58                       22.5                              0.65
- --------------------------------------------------------------------------------
       59                       25.0                              0.70
- --------------------------------------------------------------------------------
       60                       27.5                              0.75
- --------------------------------------------------------------------------------
       61                       30.0                              0.80
- --------------------------------------------------------------------------------
       62                       32.5                              0.85
- --------------------------------------------------------------------------------
       63                       35.0                              0.90
- --------------------------------------------------------------------------------
       64                       37.5                              0.95
- --------------------------------------------------------------------------------
       65                       40.0                       1.00 (no reduction)
- --------------------------------------------------------------------------------


                                *.004167 monthly

EX-10.67

   1

                                                                   Exhibit 10.67

                        ADDENDUM TO EMPLOYMENT AGREEMENT
                        --------------------------------


         This Addendum amends the Employment Agreement (the "Agreement") entered
into as of December 17, 1998 among Cole National Corporation, a Delaware
corporation ("Parent"), Cole National Group, Inc., a Delaware corporation, Cole
Vision Corporation, a Delaware corporation, Pearle, Inc., a Delaware corporation
and Things Remembered, Inc., a Delaware corporation, and Jeffrey A. Cole, an
individual residing in the State of Ohio ("Cole").

         For purposes of Section 4(e) of the Agreement, the provision by Parent
of $4,000,000 of insurance through a Split-Dollar Agreement entered into by
Parent on June 4, 1999 with Jo Merrill, as Trustee of the Jeffrey A. Cole
Insurance Trust, shall satisfy the Parent's obligations under such Section. The
Split-Dollar Agreement provides for payment of premiums by the Parent, including
acceleration of such premiums upon termination of Cole under the Agreement
without cause, or upon a "change of control" as that term is defined in Section
6(c) of the Agreement, and that Parent shall protect Cole and the Trustee
against income taxes and gift taxes arising from the foregoing events, as well
as any action taken by Parent to cause the policy issued to the Trustee to be
treated as a modified endowment contract under the Internal Revenue Code. Any of
the foregoing events or actions shall constitute a "Payment" under the
provisions of Section 7 of the Agreement. In addition, Parent shall create a
grantor trust which, upon the occurrence of a threatened change of control or
upon the termination of Cole under the Agreement without cause, shall be funded
with an amount sufficient to enable the Trustee of such Trust to pay such amount
to the Jeffrey A. Cole Insurance Trust and thus enable such Insurance

   2

Trust to provide the Trust with fully paid up life insurance coverage to Cole's
age 95, plus any additional payments to protect Cole and the Trust as provided
in the preceding sentence.

         This Addendum has been executed by the parties on June 4, 1999.


                                             COLE NATIONAL CORPORATION



                                             By:/s/ Leslie D. Dunn
                                                -------------------------------
                                                 Title: Senior Vice President



                                             COLE NATIONAL GROUP, LNC.


                                             By:/s/ Leslie D. Dunn
                                                -------------------------------
                                                 Title: Senior Vice President



                                             PEARLE, INC.


                                             By:/s/ Leslie D. Dunn
                                                -------------------------------
                                                 Title: Senior Vice President




                                             COLE VISION CORPORATION


                                             By:/s/ Leslie D. Dunn
                                                -------------------------------
                                                 Title: Senior Vice President




                                             THINGS REMEMBERED LLNU.


                                             By:/s/ Leslie D. Dunn
                                                -------------------------------
                                                 Title: Senior Vice President




                                             /s/ JEFFREY A. COLE
                                             ----------------------------------
                                             JEFFREY A. COLE

EX-10.68

   1

                                                                   EXHIBIT 10.68


                             SPLIT-DOLLAR AGREEMENT


         THIS AGREEMENT is made and entered into as of the 4th day of June,
1999, by and between Cole National Corporation., a Delaware corporation, with
principal offices and place of business in the State of Ohio (the
"Corporation"), and Jo Merrill, as Trustee of the Jeffrey A.
Cole Insurance Trust (the "Trust") dated June 2, 1999 (said Trustee and its
successors are hereinafter referred to as the "Trustee").


                                  WITNESSETH:
                                  -----------

         WHEREAS, Jeffrey A. Cole (the "Insured Employee"), as the Chairman and
Chief Executive Officer of the Corporation, is a valued officer, director and
employee of the Corporation, and the Corporation desires to retain him in such
capacity;

         WHEREAS, the Insured Employee has established the Trust to provide for
the distribution to the beneficiaries of the Trust of the proceeds of certain
life insurance protection;

         WHEREAS, such life insurance protection, payable upon the death of the
Insured Employee (the "Insured"), will be provided under a policy of life
insurance insuring the life of the Insured (the "Policy"), which is described in
Exhibit A attached hereto and by this reference is made a part hereof, and which
was issued by The Nationwide Life Insurance Company (the "Insurer");

         WHEREAS, as an inducement to the continued employment of the Insured
Employee with the Corporation, the Corporation desires to assist the Insured
Employee with his personal life insurance program by entering into this
Agreement with the Trustee;

         WHEREAS, the Corporation desires to pay the entire amount of the
premium or premiums due on the Policy as an additional employment benefit for
the Insured Employee, on the terms and conditions hereinafter set forth;

         WHEREAS, the Corporation wishes to have the Policy collaterally
assigned to it by the Trustee, in order to secure the repayment to the
Corporation of the amounts which it will pay toward the premiums on the Policy
in the form of Collateral Assignment attached hereto as Exhibit 13 and by this
reference is made a part hereof (the "Collateral Assignment`); and

         WHEREAS, the Trustee possesses all incidents of ownership in and to the
Policy.

         NOW, THEREFORE, in consideration of the premises and of the mutual
promises contained herein, the parties hereto agree as follows:
   2
         1.       PURCHASE OF POLICY. The Trustee has purchased the Policy from
the Insurer in the total face amount of $4,000,000. The parties hereto have
taken all necessary actions to cause the Insurer to issue the Policy, and shall
take any further actions which may be necessary to cause the Policy to conform
to the provisions of this Agreement. The parties hereto agree that the Policy
shall be subject to the terms and conditions of this Agreement and of the
Collateral Assignment filed with the Insurer pursuant to Section 4 hereof.

         2.       OWNERSHIP OF POLICY. The Trustee shall be the sole and
absolute owner of the Policy, and may exercise all ownership rights granted to
the owners thereof by the terms of the Policy, except as may otherwise be
provided herein.

         3.       PAYMENT OF PREMIUMS.

                  a. Whether or not the Insured Employee is employed by the
Corporation, on or before the due date of each premium due under the Policy, or
within the grace period provided therein, the Corporation shall pay the full
amount of the premium to the Insurer, and shall, upon request, promptly furnish
the Insured Employee and the Trustee evidence of timely payment of such premium.
The Corporation shall annually furnish the Insured Employee a statement of the
amount of income reportable by the Insured Employee for federal and state income
tax purposes, if any, as a result of the insurance protection provided under the
Policy or for any other reason with respect to the Policy.

                  b. The financial obligations of the Corporation under this
Agreement shall be limited to the payment of the premium or premiums described
in this Section, and the Corporation does not have or assume any liability or
responsibility with respect to the obligations of the Insurer under the Policy
or otherwise. Without limiting the generality of the foregoing, it is
specifically provided that in the event of the insolvency or other default of
payment by either the Insurer or the Trustee, the Corporation shall have no
responsibility to make any payment to the Trust, the Trustees, the Insured
Employee or any other person or entity to whom either the Insurer or the Trustee
has an obligation, and any person or entity claiming entitlement to payments
under the Policy may look only to the assets of the Insurer and any person or
entity claiming entitlement to payments under the Trust may look only to the
assets of the Trust.

                  c. Dividends payable under the Policy shall be used to
purchase paid-up additional insurance protection.

         4. REPAYMENT OF PREMIUM PAYMENTS TO CORPORATION: COLLATERAL ASSIGNMENT.
The Corporation is entitled, in accordance with the provisions of this
Agreement, to the repayment to it of all of the premium or premiums it pays on
the Policy pursuant to Section 3 hereof. To secure the repayment to the
Corporation of the amount of the premium or premiums on the Policy paid by it
hereunder, the Trustee shall assign the Policy to the Corporation as collateral
under the Collateral Assignment. The Collateral Assignment shall not be
terminated, altered or amended by the Trustee, without the express written
consent of the Corporation.


                                       2
   3

         5.       CORPORATION'S INTEREST IN THE POLICY.

                  a. The Corporation shall have an interest in the Policy equal
to the amount of all of the premium or premiums it has paid under Section 3
hereof.

                  b. The Corporation may pledge or assign its interest in the
Policy, subject to the terms and conditions of this Agreement, for the sole
purpose of securing a loan from a third party other than the Insurer or any
affiliate of the Insurer. The amount of such loan, including accumulated
interest thereon, shall not exceed the lesser of(i) the amount of the premium or
premiums on the Policy paid by the Corporation hereunder or (ii) the cash
surrender value of the Policy as of the date of the loan. Interest charges on
such loan shall be paid by the Corporation. If the Corporation so encumbers the
Policy then, upon the death of the Insured or upon termination of this
Agreement, the Corporation shall promptly take all action necessary to secure
the release or discharge of such encumbrance.

                  c. The Trustee shall name the Corporation as a beneficiary
under the Policy to the extent of the total amount of the premiums paid by the
Corporation hereunder.

         6.       LIMITATIONS ON TRUSTEE'S RIGHTS IN POLICY.

                  a. Except as otherwise provided herein, the Trustee shall not
sell, assign, transfer, borrow against, surrender or cancel the Policy, nor
change the beneficiary designation provision thereof as such beneficiary
designation relates to the Corporation's interest in the Policy described in
Section 5 hereof; without, in any such case, the express written consent of the
Corporation.

                  b. Notwithstanding any provision hereof to the contrary, the
Trustee shall have the right to pledge or assign all of its right, title and
interest in the Policy, subject to the Collateral Assignment. The Trustee may
exercise this right by executing a written assignment delivered to the Insurer
on a form acceptable to the Insurer, and delivering a copy of this form to the
Corporation. Upon receipt of such form, executed by the Trustee and duly
accepted by the assignee thereof, the Corporation shall consent thereto in
writing, and shall thereafter treat such assignee as the sole owner of all of
the Trustee's right, title and interest in and to the Policy, subject to this
Agreement and the Collateral Assignment, all such rights being vested in and
exercisable only by such assignee.

         7.       COLLECTION OF DEATH PROCEEDS.

                  a. Upon the death of the Insured, the Corporation shall
cooperate with the Trustee and any other beneficiary or beneficiaries designated
by the Trustee to take whatever action is necessary to collect the death benefit
provided under the Policy; when such benefit has been collected and paid as
provided herein, this Agreement shall thereupon Terminate.

                  b. Upon the death of the Insured, the Corporation shall have
the unqualified right to receive a portion of such death benefit equal to the
total amount of the premiums paid by it hereunder. The balance of the death
benefit provided under the Policy, if any, shall be paid to


                                       3
   4


the Trust or directly to any other beneficiary or beneficiaries designated by
the Trustee, in the manner and in the amount or amounts provided in the
beneficiary designation provision of the Policy. In no event shall the amount
payable to the Corporation hereunder exceed the Policy proceeds payable at the
death of the Insured. No amount shall be paid from such death benefit to the
Trust or to any other beneficiary or beneficiaries designated by the Trustee
until the full amount due the Corporation hereunder has been paid. The parties
hereto agree that the beneficiary designation provision of the Policy shall
conform to the provisions hereof.

                  c. Notwithstanding any provision hereof to the contrary, in
the event that, for any reason whatsoever, no death benefit is payable under the
Policy upon the death of the Insured and in lieu thereof the Insurer refunds all
or any part of the premium or premiums paid for the Policy, the Corporation
shall have the unqualified right to receive a portion of such refund equal to
the total amount of the premiums paid by the Corporation hereunder, but not in
excess of the amount of such refund. .

         8.       TERMINATION OF THE AGREEMENT PRIOR TO DEATH OF INSURANCE

                  a. If the Policy is fully paid up sufficient to maintain
coverage to the Insured's age 95 (using the Insurer's then current mortality and
expense charges and lowest crediting rate for participating policies), and
remains so following termination of this Agreement, then this Agreement shall
terminate during the Insured's lifetime without notice upon the occurrence of
the earliest of the following events: (i) total cessation of the Corporation's
business; (ii) bankruptcy, receivership or dissolution of the Corporation; or
(iii) June 2, 2014, or such other date thereafter on which the Corporation
recovers its entire cost under the Policy.

                  b. In addition, provided that no premium under the Policy is
overdue, the Trustee may terminate this Agreement by written notice to the
Corporation signed by the Trustee. Such termination shall be effective as of the
date of such notice.

                  c. Notwithstanding any other provision of this Agreement, (i)
in the event of a "change of control" as that term is defined in Section 6(c) of
the Employment Agreement dated as of December 17, 1998 among the Corporation,
four of its subsidiaries and the Insured Employee as such agreement may be
amended from time to time (the "Employment Agreement") or (ii) upon the
termination of the Insured's employment with such subsidiaries for any reason
not enumerated in Section 6(a)(i), (ii), (iii) or (iv) of the Employment
Agreement (a "termination event"), then:

         (A) No later than 5 business days after a change of control of the
         Corporation or a termination event, the Corporation shall pay an
         additional amount to the Trustee sufficient to enable the Trustee to
         pay all additional premiums necessary to provide life insurance
         coverage to Insured's age 95 in the amount provided under Section 1 as
         of the date of the change of control or a termination event, as the
         case may be.


                                       4
   5

                           (B) For purposes of determining the amount of such
                  additional payment or release necessary to fund the death
                  benefits described in this Section 8(c), the Insurer's then
                  current mortality and expense charges and lowest guaranteed
                  crediting rate for participating policies shall be used.


                           (C) In the event any payment under (A) causes or is
                  deemed to cause the Policy to become a "modified endowment
                  contract" as such term is defined in Section 7702A of the
                  Internal Revenue Code of 1986, as amended, then upon any
                  payment of income or excise tax by the Insured Employee or the
                  Trustee with respect to such Policy, no later than 5 business
                  days after any such payment the Corporation shall pay an
                  additional payment to the Insured Employee or the Trustee
                  sufficient to reimburse the Insured Employee or The Trustee
                  for such taxes, including any penalties and interest.

                           (D) In the event any payment under (A) or (C) is
                  deemed to be taxable income and/or gifts to the Insured
                  Employee or the Trust pursuant to applicable tax law or
                  regulation, the Corporation shall furnish the Insured Employee
                  and the Trustee with written notice of the amount of taxable
                  income. The Corporation shall further pay additional
                  compensation to the Insured Employee or the Trustee, as the
                  case may be, in an amount sufficient to pay any applicable
                  income taxes, and/or gift taxes, interest and penalties
                  relating to the payments under (A) and/or (C) and the
                  additional compensation. In addition, each payment of premium
                  and payment to the Insured Employee and/or the Trustee under
                  this Section 8(c) shall constitute a "Payment" under the
                  provisions of Section 7 of the Employment Agreement.

                         d. (i) Notwithstanding any other provision of this
Agreement, in the event the Corporation takes any action which causes or is
deemed to cause the Policy to become a "modified endowment contract" as defined
in Section 8(c)(C), then upon payment of income or excise tax by the Trustee
with respect to such Policy, no later than 5 business days after any such action
the Corporation shall pay an additional payment to the Trustee sufficient to
reimburse the Trustee for such taxes, including any penalties and interest.

                            (ii) In the event any payment by the Corporation
pursuant to Subsection (d)(i) is deemed to be taxable income and/or gifts to the
Insured Employee or the Trust pursuant to applicable tax law or regulation, the
Corporation shall furnish the Insured Employee and the Trustee with written
notice of the amount of taxable income. The Corporation shall further pay
additional compensation to the Insured Employee or the Trustee, as the case may
be, in an amount sufficient to pay any applicable income taxes, and/or gift
taxes, interest and penalties relating to the payment and the additional
compensation. In addition, each payment to the Insured Employee and/or the
Trustee under this Section 8(d) shall constitute a "Payment" under the
provisions of Section 7 of the Employment Agreement.

                  e. The Corporation and the Trustee each agree not to take any
action without the consent of the other that causes the Policy to become a
"modified endowment contract," as defined in Section 8(c)(C).


                                       5
   6

         9. DISPOSITION OF THE POLICY ON TERMINATION OF THE AGREEMENT DURING THE
INSURED EMPLOYEE'S LIFETIME.

            a. For 60 days after the date of the termination of this Agreement
during the Insured Employee's lifetime, the Trustee shall have the option of
obtaining the release of the Collateral Assignment. To obtain such release, the
Trustee shall repay to the Corporation the total amount of the premium payments
made by the Corporation hereunder. Upon receipt of such amount, the Corporation
shall release the Collateral Assignment, by the execution and delivery of an
appropriate instrument of release.

            b. If the Trustee fails to exercise such option within such 60 day
period, then, at the request of the Corporation, the Trustee shall execute any
document or documents required by the Insurer to transfer the interest of the
Trustee in the Policy to the Corporation. Thereafter, the Trustee and the Trust
shall have no further interest in and to the Policy, either under the terms
thereof or under this Agreement, except as specifically provided herein.
Alternatively, the Corporation may enforce its right to be repaid the amount of
the premiums on the Policy paid by it from the cash surrender value of the
Policy under the Collateral Assignment; provided that in the event the cash
surrender value of the Policy exceeds the amount due the Corporation, such
excess shall be paid to the Trustee. Any payments to the Corporation from the
Policy pursuant to the preceding sentence shall first be made from the Policy's
cash value attributable to the paid-up additional life insurance purchased by
the Policy's dividends.

         10. INSURER NOT A PARTY. The Insurer shall be fully discharged from its
obligations under the Policy by payment of the Policy death benefit to the
beneficiary or beneficiaries named in the Policy, subject to the terms and
conditions of the Policy. In no event shall the Insurer be considered a party to
this Agreement, or any modification or amendment hereof. No provision of this
Agreement, nor of any modification or amendment hereof, shall in any way be
construed as enlarging, changing, varying, or in any other way affecting the
obligations of the Insurer as expressly provided in the Policy, except so far as
the provisions hereof are made a part of the Policy by the Collateral
Assignment executed by the Trustee and filed with the Insurer in connection
herewith.

         11. ERISA PROVISIONS; DETERMINATION OF BENEFITS. CLAIMS PROCEDURE:
ADMINISTRATION. The following provisions of this Agreement are intended to meet
the requirements of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"),

            a. The Corporation is hereby designated as the administrator under
this Agreement. The administrator shall have the authority to control and manage
the operation and administration of this Agreement, shall have the sole and
absolute discretion to interpret the provisions of this Agreement including,
without limitation, by supplying omissions from, correcting deficiencies in, or
resolving inconsistencies or ambiguities in, the language of this Agreement) and
shall make any determinations and findings (including factual determinations and
findings) with respect to the rights of the parties hereunder as may be required
for the purposes of this Agreement.


                                       6
   7

                  b. (1) CLAIM. A person who believes that he, she or it is
being denied a benefit to which he, she or it is entitled under this Agreement
(a "Claimant") may file a written request for such benefit with the
Corporation, setting forth his, her or its claim. The request may be addressed
to the Secretary of the Corporation at its then principal place of business.

                  (2) CLAIM DECISION. Upon receipt of a claim, the Compensation
         Committee of the Board of Directors of the Corporation shall provide
         the Claimant with a written determination within 90 days. The
         Compensation Committee may, however, extend the reply period for an
         additional 90 days for reasonable cause. If the claim is denied in
         whole or in part, the Compensation Committee shall provide a written
         determination setting forth: (a) the specific reason or reasons for
         such denial; (b) the specific reference to pertinent provisions of this
         Agreement on which such denial is based; (c) a description of any
         additional material or information necessary for the Claimant to
         perfect his, her or its claim and an explanation why such material or
         such information is necessary; (d) appropriate information as to the
         steps to be taken if the Claimant wishes to submit the claim for
         review; and (e) the time limits for requesting a review under
         subsection (3) and for review under subsection (4) hereof.

                  (3) REQUEST FOR REVIEW. Within 60 days after the receipt by
         the Claimant of the written determination described above, the Claimant
         may request in writing that the Board of Directors of the Corporation
         (the "Board"') review the determination of the Compensation Committee.
         Such request must be addressed to the Secretary of the Corporation, at
         his then principal place of business. The Claimant or his, her or its
         duly authorized representative may, but need not, review the pertinent
         documents and submit issues and comments in writing for consideration
         by the Board. If the Claimant does not request a review of the
         Compensation Committee's determination within such 60-day period, the
         Claimant shall be barred and estopped from challenging such
         determination.

                  (4) REVIEW OF DECISION. Within 60 days after the Secretary's
         receipt of a request for review, the Board will review the Compensation
         Committee's determination. After considering all materials presented by
         the Claimant, the Board will provide a written determination setting
         forth the specific reasons for the decision and containing specific
         references to the pertinent provisions of this Agreement on which the
         decision is based. If special circumstances require that the 60-day
         period be extended, the Board will so notify the Claimant and will
         render the decision as soon as possible, but no later than 120 days
         after receipt of the request for review.

                  c. The Corporation is the named fiduciary under the Agreement.

                  d. The funding procedure under the Agreement is that all
         premiums on the Policy be remitted to the Insurer from the Corporation
         when due, as provided in Section 3 of this Agreement.

                  e. The basis of payment of benefits under the Agreement is the
         direct payment of benefits by the Insurer, with such benefits to be
         based on the payment of premiums as provided in Section 3 of this
         Agreement.


                                       7
   8


         12. AMENDMENT. This Agreement may not be amended, altered or modified,
except by a written instrument signed by the parties hereto, or their respective
successors or assigns, and may not be otherwise terminated except as provided
herein.

         13. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the Corporation and its successors and permitted assigns, and the
Trustee, its successors, permitted assigns, heirs, executors, administrators and
beneficiaries.

         14. NOTICES. Any notice required or permitted to the given under this
Agreement is to be in writing and either given by personal delivery or deemed to
be delivered three (3) days after deposit, postage pre-paid, in the U.S.
certified or registered mail, return receipt requested, addressed as follows:

         If to the Corporation:     Cole National Corporation
                                    5915 Landerbrook Drive
                                    Mayfield Hts., Ohio 44124
                                    Attention: General Counsel

                with a copy to:     Jeffrey A. Cole
                                    5200 Three Village Drive
                                    Lyndhurst, Ohio 44124

         If to the Trustee:         Jo Merrill
                                    5915 Landerbrook Drive
                                    Mayfield Heights, Ohio 44124


or at such other address as is specified in written notice given in the manner
required in this Agreement.

         15. NO EMPLOYMENT AGREEMENT. This Agreement shall not be deemed to
constitute a contract of employment between the Corporation and the Insured
Employee, nor shall any provision of this Agreement restrict the right of the
Corporation to discharge the Insured Employee, or restrict the right of the
Employee to terminate employment.

         16. GOVERNING LAW. This Agreement, and the rights of the parties
hereunder, shall be governed by and construed in accordance with the laws of the
State of Ohio without regard to conflicts of laws.


                                       8
   9

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in
counterparts, as of the day and year first above written.

                                                /s/ Jo Merrill
Date: June 4, 1999                              --------------------------------
                                                Trustee of the Jeffrey A. Cole
                                                 Insurance Trust





                                                COLE NATIONAL CORPORATION


                                                By: /s/ Leslie D. Dunn
                                                   -----------------------------
                                                Title: Senior Vice President
                                                       -------------------------



                                       9
   10

                                                                       Exhibit A
                                                                       ---------


                                  POLICY TERMS


         The following life insurance policy is subject to the attached
Split-Dollar Agreement:


Insurer:                 The Nationwide Life Insurance Company

Insured:                 Jeffrey A. Cole

Policy Number:           N056058910

Face Amount:             $4,000,000

Date of Issue:           June 2, 1999

   11


                                                                       EXHIBIT B
                                                                       ---------


                             COLLATERAL ASSIGNMENT


         For value received, Jo Merrill, as Trustee of the Jeffrey A. Cole
Insurance Trust under the Trust Agreement dated June 2, 1999 (the "Assignor"),
hereby assigns and transfers to Cole National Corporation, a Delaware
corporation (the "Assignee"), Policy Number N056058910 issued by The Nationwide
Life Insurance Company (the "Insurer") and any supplementary contracts issued
in connection therewith (collectively, the "Policy") upon the life of Jeffrey A.
Cole (the "Insured"), solely to the extent of the lesser of (i) the total of any
and all amounts heretofore or hereafter paid or advanced by the Assignee for the
payment of premiums or a portion of the premiums thereon; or (ii) upon surrender
of the Policy other than upon the death of the Insured, the cash surrender value
of the Policy increased by any outstanding Policy loans to the Trustee (i) or
(ii) shall hereafter be referred to as the "Assignee's Interest"), subject.
to all the terms and conditions of the Policy and to all superior liens, if any,
which the Insurer may have against the Policy. The Assignor by this instrument,
and Assignee by the acceptance of the assignment, hereby agree to the conditions
and provisions herein set forth.


         1. The Assignor is the owner of the Policy and may exercise any and all
rights of ownership with respect thereto, except as otherwise specifically
provided herein. It is expressly agreed that only the following specific rights
are included in this assignment and pass by virtue hereof to the Assignee and
may be exercised solely by the Assignee:

         (a) The right to collect the net proceeds of the Policy when it becomes
     a claim, by the death the Insured, up to the amount of the Assignee's
     Interest.

         (b) The right to obtain, upon surrender of the Policy by the Assignor,
     the amount of the cash surrender proceeds up to the amount of the
     Assignee's Interest.

         (c) The right to pledge or assign the Policy as security for a loan
     from a third party.

         2. The Insurer is hereby authorized to recognize the Assignee's claims
to rights hereunder without investigating the reason for any action taken by the
Assignee, or the giving of any notice, or the application to be made by the
Assignee of any amounts to be paid to the Assignee. The receipt of the Assignee
for any sums received shall be a full discharge and release therefor to the
Insurer.


   12

                   Executed as of this 4th day of June, 1999.


                                  ----------------------------------------------
                                  Trustee of the Jeffrey A. Cole Insurance Trust




                                  COLE NATIONAL CORPORATION


                                  By
                                    --------------------------------------------
                                         Title:





                                       2

EX-10.69

   1
                                                                   Exhibit 10.69


                                SEVENTH AMENDMENT

     SEVENTH AMENDMENT, dated as of April 21, 2000 (this "AMENDMENT"), to the
Credit Agreement, dated as of November 15, 1996 (as amended, supplemented or
otherwise modified from time to time, the "CREDIT AGREEMENT"), among COLE VISION
CORPORATION, a Delaware corporation ("COLE VISION"), THINGS REMEMBERED, INC., a
Delaware corporation ("THINGS REMEMBERED") and PEARLE, INC., a Delaware
corporation ("PEARLE"; Cole Vision, Things Remembered and Pearle each being
referred to as a "BORROWER" and collectively as the "BORROWERS"), the several
banks and other financial institutions from time to time parties thereto
(collectively, the "LENDERS") and CANADIAN IMPERIAL BANK OF COMMERCE, a
Canadian-chartered bank acting through its New York Agency, as administrative
agent for the Lenders thereunder (in such capacity, the "ADMINISTRATIVE AGENT").

                               W I T N E S S E T H:
                               - - - - - - - - - -

     WHEREAS, the Borrowers, the Lenders and the Administrative Agent are
parties to the Credit Agreement;

     WHEREAS, the Borrowers have requested that the Administrative Agent and the
Lenders amend certain provisions of the Credit Agreement as set forth herein;
and

     WHEREAS, the Administrative Agent and the Lenders are willing to effect
such amendment, but only upon the terms and subject to the conditions set forth
herein;

     NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, and for other good and valuable consideration, the sufficiency
of which is hereby acknowledged, the Borrowers, the Lenders and the
Administrative Agent hereby agree as follows:

     1.   DEFINED TERMS. Unless otherwise defined herein, terms defined in the
Credit Agreement shall have such meanings when used herein.

     2.   AMENDMENT TO SUBSECTION 1.1. Subsection 1.1 of the Credit Agreement is
hereby amended by:

          (a)  inserting the following new definition in its proper alphabetical
     order:

               "SEVENTH AMENDMENT EFFECTIVE DATE": April 29, 2000.

          (b)  "COVENANT MODIFICATION PERIOD": the period from and including
     January 30, 2000 to and including June 29, 2000.


   2
     3.   AMENDMENT TO SUBSECTION 7.2(c). Subsection 7.2(c) of the Credit
Agreement is hereby amended by deleting "(90 days in the case of the fiscal year
ending January 29, 2000)" where it appears therein and substituting in lieu
thereof "(May 19, 2000, in the case of the fiscal year ending January 29,
2000)".

     4.   REPRESENTATIONS AND WARRANTIES. Each Borrower hereby confirms,
reaffirms and restates the representations and warranties made by it in Section
5 of the Credit Agreement, PROVIDED that each reference to the Credit Agreement
therein shall be deemed to be a reference to the Credit Agreement after giving
effect to this Amendment. Each Borrower represents and warrants that, after
giving effect to this Amendment, no Default or Event of Default has occurred and
is continuing.

     5.   CONDITIONS TO EFFECTIVENESS. This Amendment shall become effective on
the date (the "AMENDMENT EFFECTIVE DATE") on which the Borrowers, the Lenders,
and the Administrative Agent shall have executed and delivered to the
Administrative Agent this Amendment, and the Guarantors and Cole National
Corporation shall have executed and delivered to the Administrative Agent the
Acknowledgment and Consent attached hereto.

     6.   CONTINUING EFFECT OF CREDIT AGREEMENT. This Amendment shall not
constitute a waiver, amendment or modification of any other provision of the
Credit Agreement not expressly referred to herein and shall not be construed as
a waiver or consent to any further or future action on the part of the Borrowers
that would require a waiver or consent of the Lenders or the Administrative
Agent. Except as expressly amended or modified herein, the provisions of the
Credit Agreement are and shall remain in full force and effect.

     7.   COUNTERPARTS. This Amendment may be executed by one or more of the
parties to this Amendment on any number of separate counterparts (including by
facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of copies of this
Amendment signed by all the parties shall be lodged with the Borrowers and the
Administrative Agent.

     8.   PAYMENT OF EXPENSES. The Borrowers agree, jointly and severally, to
pay or reimburse the Administrative Agent for all of its out-of-pocket costs
and expenses incurred in connection with the development, preparation and
execution of this Amendment and any other documents prepared in connection
herewith, and the consummation and administration of the transactions
contemplated hereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Administrative Agent.

     9.   GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

   3

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their proper and duly authorized officers
as of the day and year first above written.

                                        COLE VISION CORPORATION


                                        By: /s/ Joseph Gaglioti
                                            ----------------------------------
                                            Name:  Joseph Gaglioti
                                            Title: Vice President & Treasurer

                                        THINGS REMEMBERED, INC.


                                        By: /s/ Joseph Gaglioti
                                            ----------------------------------
                                            Name:  Joseph Gaglioti
                                            Title: Vice President & Treasurer

                                        PEARLE, INC.


                                        By: /s/ Joseph Gaglioti
                                            ----------------------------------
                                            Name:  Joseph Gaglioti
                                            Title: Vice President & Treasurer

                                        CANADIAN IMPERIAL BANK OF
                                        COMMERCE, NEW YORK AGENCY,
                                        as Administrative Agent


                                        By:
                                            ----------------------------------
                                            Name:
                                            Title:

                                        CIBC INC.


                                        By:
                                            Name:
                                            ----------------------------------
                                            Title:

   4
                                        CREDIT SUISSE FIRST BOSTON


                                        By: ___________________________________
                                            Name:
                                            Title:


                                        By: ___________________________________
                                            Name:
                                            Title:

                                        FIRST UNION NATIONAL BANK


                                        By: ___________________________________
                                            Name:
                                            Title:

                                        NATIONAL CITY BANK


                                        By: ___________________________________
                                            Name:
                                            Title:

                                        KEYBANK NATIONAL ASSOCIATION


                                        By: ___________________________________
                                            Name:
                                            Title:

                                        FIFTH THIRD BANK, NORTHEASTERN OHIO


                                        By: ___________________________________
                                            Name:
                                            Title:




   5

                          ACKNOWLEDGMENT AND CONSENT

     (i) Cole National Corporation ("CNC"), as Guarantor under the Guarantee,
dated as of March 7, 2000 (as amended, supplemented or otherwise modified from
time to time, the "CNC GUARANTEE"), made by CNC in favor of the Administrative
Agent, for the benefit of the Lenders, and (ii) each of the other undersigned
corporations, as Guarantors under the Guarantee and Collateral Agreement, dated
as of November 15, 1996 (as amended, supplemented or otherwise modified from
time to time, the "GUARANTEE AND COLLATERAL AGREEMENT"), made by the undersigned
corporations in favor of the Administrative Agent, for the benefit of the
Lenders, hereby (a) consents to the transactions contemplated by this Amendment,
and (b) acknowledges and agrees that the guarantees (and grants of collateral
security therefor) contained in such CNC Guarantee and Guarantee and Collateral
Agreement, as applicable, are, and shall remain, in full force and effect after
giving effect to this Amendment, and all prior modifications to the Credit
Agreement.

                                        COLE NATIONAL CORPORATION


                                        By: /s/ Joseph Gaglioti
                                            ------------------------------------
                                            Name:  Joseph Gaglioti
                                            Title: Vice President & Treasurer

                                        BAY CITIES OPTICAL COMPANY


                                        By: /s/ Joseph Gaglioti
                                            ------------------------------------
                                            Name:  Joseph Gaglioti
                                            Title: Vice President & Treasurer

                                        WESTERN STATES OPTICAL, INC.


                                        By: /s/ Joseph Gaglioti
                                            ------------------------------------
                                            Name:  Joseph Gaglioti
                                            Title: Vice President & Treasurer

                                        COLE VISION SERVICES, INC.


                                        By: /s/ Joseph Gaglioti
                                            ------------------------------------
                                            Name:  Joseph Gaglioti
                                            Title: Vice President & Treasurer
   6
                                        COLE MANAGEMENT SERVICES, INC.


                                        By: /s/ Joseph Gaglioti
                                            ----------------------------------
                                            Name:  Joseph Gaglioti
                                            Title: Vice President & Treasurer

                                        PEARLE VISIONCARE, INC.


                                        By: /s/ Joseph Gaglioti
                                            ----------------------------------
                                            Name:  Joseph Gaglioti
                                            Title: Vice President & Treasurer

                                        PEARLE VISION MANAGED CARE -- HMO OF
                                        TEXAS, INC.


                                        By: /s/ Joseph Gaglioti
                                            ----------------------------------
                                            Name:  Joseph Gaglioti
                                            Title: Vice President & Treasurer

EX-21

   1
                                                                      EXHIBIT 21
                                                                      ----------

                LIST OF SUBSIDIARIES OF COLE NATIONAL CORPORATION



                                          State of                              Names Subsidiaries
Corporation Name                        Incorporation                           Do Business Under
- ----------------                        -------------                           -----------------
                                                                          
Cole National Group, Inc.                 Delaware

Cole Managed Vision, Inc.                 Delaware

Cole Lens Supply, Inc.                    Delaware                              Contact Lens Supply
                                                                                Contact Lens Supply Co.

Cole Vision Corporation                   Delaware                              Sears Optical
                                                                                BJ's Optical Department
                                                                                Target Optical
                                                                                Optical Factory Outlet

Cole Vision Canada, Inc.                  New Brunswick, Canada                 Sears Optical
                                                                                Vision Club
                                                                                Pearle Vision Center

Cole Vision Services, Inc.                Delaware

Western States Optical, Inc.              Washington                            Sears Optical

Things Remembered, Inc.                   Delaware                              Things Remembered
                                                                                Things Remembered Engraved Gifts
                                                                                Things Engraved
                                                                                HQ Gifts
                                                                                Gifts Remembered

Pearle, Inc.                              Delaware

Pearle VisionCare, Inc.                   California                            Pearle Vision (HMO)

Pearle Vision Center of                   Commonwealth of Puerto Rico           Pearle Vision Center
  Puerto Rico, Inc.                                                             Pearle Vision Express
                                                                                Pearle Express

Pearle Vision, Inc.                       Delaware                              Pearle Vision
                                                                                Pearle Vision Center
                                                                                Pearle Vision Express
                                                                                Pearle Eyelab Express
                                                                                Pearle Eye-Tech Express
                                                                                Pearle Express

Pearle Vision Managed Care
  HMO of Texas, Inc.                      Texas

American Vision Centers, Inc.             Delaware                              American Vision Centers
                                                                                Eyes First

NuVision, Inc.                            Michigan                              Pearle Vision

Vision Maintenance Organization, Inc.     Michigan

EX-24

   1
                                                                      EXHIBIT 24


                                POWER OF ATTORNEY

                            COLE NATIONAL CORPORATION

         KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of Cole National Corporation, a Delaware corporation, hereby constitutes
and appoints Jeffrey A. Cole, William P. Lahiff, Jr., and Joseph Gaglioti, and
each of them, as the true and lawful attorney or attorneys-in-fact, with full
power of substitution and revocation, for the undersigned and in the name, place
and stead of the undersigned, to sign on behalf of the undersigned an Annual
Report on Form 10-K for the fiscal year ended January 29, 2000, pursuant to
Section 13 of the Securities Exchange Act of 1934 and to sign any and all
amendments to such Annual Report, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting to said attorney or attorneys-in-fact, and each of
them, full power and authority to do so and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorney or attorneys-in-fact or any of
them or their substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

         Executed as of the 23rd day of March, 2000.



/s/  Thomas T.s. Kaung                          /s/  Larry Pollock
- ------------------------------------            -------------------------------
Thomas T.S. Kaung                               Larry Pollock
Executive Vice President                        President and Director
and Chief Financial Officer
(Principal Financial Officer)

                                                /s/  Charles A. Ratner
                                                -------------------------------
                                                Charles A. Ratner
/s/  Timothy F. Finley                          Director
- ------------------------------------
Timothy F. Finley
Director

                                                /s/  Walter J. Salmon
                                                -------------------------------
/s/  Irwin N. Gold                              Walter J. Salmon
- ------------------------------------
Irwin N. Gold                                   Director
Director


/s/  Peter V. Handal                            /s/  Jeffrey A. Cole
- ------------------------------------            -------------------------------
Peter V. Handal                                 Jeffrey A. Cole
Director                                        Chairman and Chief Executive
                                                Officer and Director
                                                (Principal Executive Officer)

EX-27

 




<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENTS OF OPERATIONS FILED
AS PART OF THE ANNUAL REPORT ON FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH ANNUAL REPORT ON FORM 10-K.

<MULTIPLIER> 1,000

                             
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          JAN-29-2000
<PERIOD-START>                             JAN-31-1999
<PERIOD-END>                               JAN-29-2000
<CASH>                                          28,953
<SECURITIES>                                         0
<RECEIVABLES>                                   54,156
<ALLOWANCES>                                     7,557
<INVENTORY>                                    116,514
<CURRENT-ASSETS>                               204,460
<PP&E>                                         267,633
<DEPRECIATION>                                 144,249
<TOTAL-ASSETS>                                 588,271
<CURRENT-LIABILITIES>                          140,561
<BONDS>                                        284,584
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                            16
<OTHER-SE>                                     146,500
<TOTAL-LIABILITY-AND-EQUITY>                   588,271
<SALES>                                      1,066,422
<TOTAL-REVENUES>                             1,066,422
<CGS>                                          359,704
<TOTAL-COSTS>                                1,037,309
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                              24,448
<INCOME-PRETAX>                                  4,655
<INCOME-TAX>                                     2,657
<INCOME-CONTINUING>                              2,008
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     2,008
<EPS-BASIC>                                       0.13
<EPS-DILUTED>                                     0.13


 

10-K405

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