COLE NATIONAL CORP /DE/
EX 10.8 NONQUALIFIED STOCK OPTION AGREEMENT
<DOCUMENT>
<TYPE>EX-10.8
<SEQUENCE>10
<FILENAME>l96272aexv10w8.txt
<DESCRIPTION>EX 10.8 NONQUALIFIED STOCK OPTION AGREEMENT
<TEXT>
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                                                                    Exhibit 10.8

                           COLE NATIONAL CORPORATION

                      Nonqualified Stock Option Agreement

                   (1998 Plan/Time Vesting/Senior Executive)

     This Nonqualified Stock Option Agreement (this "AGREEMENT") is entered
into between Jeffrey A. Cole (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 Board of Directors of the Company has authorized a grant of
stock options on the terms hereof to the Optionee, who is employed in the
capacity shown on the signature page; and

     NOW, THEREFORE, the Company hereby grants to the Optionee options (the
"OPTIONS") pursuant to the Company's 1998 Equity Performance and Incentive
Plan, amended and restated effective June 10, 1999 (the "PLAN") to purchase the
number of shares of Common Stock, par value $.001 per share, of the Company
("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 the terms and conditions
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:

          Amount Vested                           Date Exercisable
     -------------------------     ---------------------------------------------
     1/5 of the Original Award     The first anniversary of the Grand Date; and

     1/5 of the Original Award     The second anniversary of the Grand Date; and

     1/5 of the Original Award     The third anniversary of the Grand Date; and

     1/5 of the Original Award     The fourth anniversary of the Grand Date; and

     All Unvested Shares           The fifth anniversary of the Grand Date; and

for so long as the Optionee remains in the continued employment of the Company,
except as provided below.

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     To the extent exercisable, the Options may be exercised in whole or in
part from time to time.

               (b)  If, prior to the fifth anniversary of the Grant Date, any
of the following occurs: (i) a Change in Control, (ii) a Termination Event,
(iii) a Constructive Termination, (iv) the Optionee voluntarily ceases to be an
employee of the Company or a Subsidiary or retires under a retirement plan of
the Company or any Subsidiary, in either case with the consent of the
Compensation Committee, or (v) 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 in full.

               (c)  If, prior to the fifth anniversary of the Grant Date, the
Optionee voluntarily ceases to be an employee of the Company or a Subsidiary or
retires under a retirement plan of the Company or any Subsidiary, in either
case without the consent of the Compensation Committee, the Options will,
in addition to any vesting pursuant to Paragraph 1(a) above, immediately become
exercisable in full with respect to those Unvested Shares that would have
vested on the next succeeding anniversary of the Grant Date (if the event
occurs on an anniversary of the Grant Date, no additional Options will become
exercisable besides those that became exercisable as of that anniversary).
Thereupon, all remaining Unvested Options will be forfeited and cancelled.

               (d)  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; Reload Options.

               (a)  The Options will be exercisable for Vested Shares (whether
such vesting occurs pursuant to Paragraph 1(a), 1(b), or 1(c)) at the Exercise
Price shown on the signature page hereof.

               (b)  The Exercise Price for any shares may be paid (i) in cash
or by check, (ii) if approved by the Compensation Committee prior to such
exercise, by delivery to the Company of a promissory note or notes of the
Optionee; PROVIDED, HOWEVER, that the principal amount of such notes for all
optionees outstanding at any one time pursuant to the Plan, the Company's 1996
Management Stock Option Plan, the Company's 1993 Management Stock Option Plan
and the Company's 1992 Management Stock Option Plan shall not in the aggregate
exceed $3,000,000, (iii) by actual or constructive transfer to the Company of
Mature Shares, or (iv) by a combination of such methods of payment.

               (c)  If, at the date of exercise the Optionee is an employee of
the Company, and the Optionee pays the Exercise Price of shares by delivery of
Mature Shares, additional option rights ("Reload Option Rights") shall, subject
to the provisions hereinafter set forth, be automatically granted to the
Optionee equal to the sum of (i) the number of Mature Shares transferred to the
Company with respect to such Exercise Price and (ii) the number of shares of
Common Stock surrendered to the Company in payment of the Withholding Amount
associated with the Options exercised through the delivery of Mature Shares.
Reload Option

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Rights shall be granted as set forth in this Paragraph 2(c) with respect to
Optionee's exercise of Options prior to their termination pursuant to Paragraph
3. In no event, however, shall Reload Option Rights be granted unless the
remainder of the original ten (10) year term of the option being exercised is
greater than six (6) months at the time of such exercise. Reload Option Rights
will not be granted with respect to any Options that have been transferred by
the original Optionee. Reload Option Rights shall not be exercisable during the
six (6) month period immediately following the date of grant of such Reload
Option Rights. The Exercise Price of such Reload Option Rights shall be one
hundred percent (100%) of the Stock Price per share on the day of the exercise
of the Options to which such Reload Option Rights relate. Such Reload Option
Rights shall terminate at such time as the Options being exercised would have
terminated had they not been exercised. Such Reload Option Rights will be
evidenced by an agreement in form substantially the same as this Agreement,
with appropriate changes.

     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 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,
five (5) years after either (i) the date on which the Optionee ceases to be an
employee of the Company or a Subsidiary with eligibility for retirement under a
retirement plan of the Company or a Subsidiary 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;

          (c)  Five (5) years after the date of the death of the Optionee if
the Optionee dies while an employee of the Company or a Subsidiary or one (1)
year after the date of death of the Optionee if the Optionee dies during the
fifth year of the five (5) year period referred to in Paragraph 3(b) above;

          (d)  Five (5) years after the date of a Termination Event or
Constructive Termination;

          (e)  Immediately (x) upon the Optionee accepting employment with a
Competitor without the prior written approval of the Company's Board 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 (10) 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


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Optionee's guardian or legal representative, or by a 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 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. Upon exercise of any Options,
Optionee shall surrender to the Company, by the Company withholding from the
shares of Common Stock to be issued upon such exercise to the Optionee, in
satisfaction of the Withholding Amount, shares of Common Stock that have value
in the aggregate that is equal to such Withholding Amount. In the event that
the Optionee 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.

     8. Definitions. The following capitalized terms have meanings as set forth
below.

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     "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 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 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.

     "CONSTRUCTIVE TERMINATION" means either (i) a substantial, nonconsensual
adverse change in the Optionee's employment duties (which will, however, not
include the relinquishment of the Optionee's status as Chief Executive Officer
if he remains the Chairman of



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the Board of the Company), or (ii) the moving of the Company's executive
headquarters more than 50 miles from its present location without the Optionee's
consent.

     "EXERCISE PRICE" means the exercise price per share indicated as the
Exercise Price per share on the signature page hereof.

     "FOR CAUSE" means that there is a final, non-appealable order in a
proceeding before a court of competent jurisdiction or a final order in an
administrative proceeding before the Securities and Exchange Commission finding
that the Optionee (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 any of the Subsidiaries or the
Company, whether for his personal benefit or in connection with his duties for
the Company or the Subsidiaries or (ii) intentionally or knowingly violated any
antifraud provision of the federal or state securities laws.

     "GRANT DATE" means the date of the Board or Compensation Committee action
awarding the Options to the Optionee as indicated on the signature page hereof.

     "MATURE SHARES" means (x) nonforfeitable, unrestricted shares of Common
Stock that have been owned by the Optionee for more than six (6) months prior to
the date of exercise, or (y) shares of restricted stock or other shares of
Common Stock that are forfeitable or subject to restrictions on transfer,
including, without limitation, shares of Common Stock issued pursuant to the
earn out of performance shares or performance units, which shares have been
owned by the Optionee for more than six (6) months and that the Company agrees
to accept as consideration, or (z) such other Company securities as the
Company's chief accounting officer, upon consultation with the Company's
independent accountants, determines will not adversely affect the Company's tax
or accounting position by accepting.

     "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).

     "STOCK PRICE" means the closing price of the Common Stock on the principal
exchange on which the Common Stock is traded.

     "SUBSIDIARY" means Cole National Group, Inc., Cole Vision Corporation,
Pearle, Inc., and Things Remembered, Inc.

     "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.

     "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.


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     "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.

     "WITHHOLDING AMOUNT" means the minimum amount of withholding taxes
including Federal, state and local income taxes and social security and
Medicare taxes required to be withheld by the Company by the applicable taxing
authorities, as the result of the exercise of an Option.

     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/ Leslie D. Dunn
                                            ------------------------------------
                                        Title: Senior Vice President
                                               ---------------------------------


                                        /s/ Jeffrey A. Cole
                                        ----------------------------------------
                                        OPTIONEE


Name of Optionee:                       Jeffrey A. Cole

Name of Employer:                       Cole National Corporation

Position:                               Chairman and Chief Executive Officer of
                                        the Company and Chairman of the Board of
                                        the Company and each of the Subsidiaries

Number of Shares
  in the Original Award:                250,000

Date of Board Resolution
  authorizing this Option
  (Grant Date):                         January 25, 2002

Exercise Price per Share:               $15.15


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