<PAGE>

                                                                    EXHIBIT 10.2

                     SEPARATION AGREEMENT AND MUTUAL RELEASE

         THIS SEPARATION AGREEMENT AND MUTUAL RELEASE (this "Agreement"), made
and entered into as of this 16th day of July, 2003 (the "Effective Date"), by
and between Cole National Corporation, a Delaware corporation ("Parent"), Cole
National Group, Inc., a Delaware Corporation ("CNG"), Cole Vision Corporation, a
Delaware corporation ("Cole Vision"), Pearle, Inc. a Delaware corporation
("Pearle"), Things Remembered, Inc., a Delaware corporation ("Things
Remembered", collectively with CNG, Cole Vision and Pearle, the "Subsidiaries"),
and Jeffrey A. Cole ("Executive"), an individual residing in the State of
Florida.

                              W I T N E S S E T H:

         WHEREAS, until June 25, 2003 Executive served as the Chairman of the
Board of Directors of each of the Subsidiaries and Parent ("Chairman") and as
Chief Executive Officer of Parent and CNG ("CEO") pursuant to an employment
agreement entered into as of December 17, 1998 (the "Employment Agreement"); and

         WHEREAS, the Company made various decisions and taken various actions
regarding Executive's future role at the Company; and

         WHEREAS, the Executive determined that the Company's decisions and
actions constitute Constructive Termination within the meaning of Section 6(e)
of the Employment Agreement; and

         WHEREAS, by mutual agreement between Executive and the Parent and each
of the Subsidiaries (collectively, the "Company"), except as otherwise provided
in Article I hereof, Executive resigned from all of his positions with the
Company, including, without limitation, as Chairman and CEO effective as of June
25, 2003 (the "Termination Date"); and

         WHEREAS, the Company and Executive have mutually agreed to treat the
Executive as if he were Constructively Terminated from the Company for purposes
of settling their respective obligations under the Employment Agreement.

         NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein and in satisfaction of the Company's
obligations under the Executive's Employment Agreement, the Company and
Executive agree as follows:

ARTICLE I: SEPARATION

         Executive hereby acknowledges his resignation and termination as an
employee and officer of each of the Parent and the Subsidiaries effective as of
the close of business on the Termination Date. Notwithstanding the foregoing,
Executive shall continue to serve on the

<PAGE>

Board of Directors of the Parent and, in connection therewith, shall be entitled
to the same fees and benefits as provided to other non-employee directors
thereof.

ARTICLE II: SEVERANCE PAYMENTS AND BENEFITS

         Section 2.1 Severance Payments. On the Effective Date, in satisfaction
of its obligations under Section 6(a) and (b) the Employment Agreement (and as
set forth on Appendix A hereto), the Parent shall cause Executive to be paid a
lump-sum cash payment equal to $5,230,000, such payment to be paid by Parent
into the Escrow Fund established pursuant to the Escrow Agreement dated the
effective Date between Parent, Executive and Key Bank National Association
("Escrow Agreement").

         Section 2.2 Equity Awards.

                  (a) Stock Options. On the Effective Date, all outstanding
stock options granted to Executive by the Parent ("Options") shall vest and
remain exercisable in accordance with the terms of the relevant option agreement
with the Company (the "Option Agreements") based on Executive's termination from
the Company being treated as a "Termination Event" under the relevant Option
Agreement with the Company and as set forth in Appendix B (attached hereto).

                  (b) Restricted Stock. On the Effective Date, all restrictions
and forfeiture provisions applicable to any restricted stock award granted to
Executive by the Company (or similar type of awards) shall lapse and Executive
shall immediately vest into such awards in accordance with the terms of the
restricted stock grant agreement.

         Section 2.3 Split-Dollar Life. The Parent and Executive mutually agree
that on the Effective Date, their respective obligations under the Amended and
Restated Split-Dollar Agreement, dated January 25, 2002, between Parent and Jo
Merrill, as Trustee ("Trustee") of the Jeffrey A. Cole Insurance Trust ("Trust")
and all subsequent amendments thereto (the "Split-Dollar Agreement") shall
cease. In satisfaction of its obligations under the Split-Dollar Agreement, on
the Effective Date the Parent shall cause to be paid to Executive a lump-sum
cash payment equal to $2,100,000 (inclusive of any tax liability that may result
from termination of the "Split-Dollar Agreement"). Executive shall take all
action necessary to cause the transfer the Cole National Corporation Future
Corporate Variable Universal Life Policy to the Company. Parent shall make the
payment required under this section 2.3 into the Escrow Fund established
pursuant to the Escrow Agreement. Executive shall cause the Parent to be
released from its obligations under the Split-Dollar Agreement by the Trustee
and by the beneficiaries of the Trust, and shall furnish evidence to the Parent
of the approval by the Trustee and the beneficiaries of the Trust to the payment
to be made to Executive pursuant to this section 2.3. Executive will hold Parent
harmless against any claim by the Trustee or beneficiaries of the Trust in
connection with the Split-Dollar Agreement.

         Section 2.4 Supplemental Executive Retirement Plan. On the Effective
Date, CNG shall pay Executive a lump-sum cash payment equal to $4,600,000 (plus
interest at one percent (1%) per annum accrued from the Termination Date,
calculated on the basis of a 365 day year) which amount equals the actuarially
equivalent value of Executive's retirement benefit under

                                       2

<PAGE>

CNG's 1999 Supplemental Retirement Benefit Plan (including all amendments
thereto) (the "SERP Plan") and is inclusive of any amounts set aside by the
Company to satisfy it obligations under the SERP Plan.

         Section 2.5 Deferred Compensation Plan. On the Effective Date Date, CNG
shall pay Executive a lump-sum cash payment equal to his accrued benefit under
the CNG Deferred Compensation Plan for Executives and Other Senior Management
(whether or not currently vested). Such amount shall include applicable earnings
from the Termination Date through the Effective Date.

         Section 2.6 Company Benefits. The Company shall continue to provide
Executive's mother, at the same cost to her, with the same welfare benefits as
it provided her prior to the Termination Date for the remainder of her life.

         Section 2.7 Withholding of Taxes. The Company may withhold from any
benefits or compensation payable under this Agreement all federal, state, city
or other taxes as may be required pursuant to any law or governmental regulation
or ruling, provided, however, that the Company agrees to not withhold any
amounts with respect to the income taxes of the State of Ohio that may be
imposed on the payments under this Agreement, and provided further, that
Executive shall indemnify and hold harmless the Company against penalties,
interest or other amounts that may be levied against the Company in connection
with the Company not withholding any amounts with respect to the income taxes of
the State of Ohio that may be imposed on the payments under this Agreement.

         Section 2.8 Company Loans. For purposes of the Secured Promissory Note,
dated November 17, 2000, in the face amount of $666,666.00 (the "Note"),
Executive's employment terminated as set forth in Section 2(b) and as such, the
Unpaid Amounts (as defined in the Note) shall, upon demand of the Parent given
in writing to Executive, become due and payable one year from the date of such
notice. As such, Executive agrees that this Agreement shall serve as the notice
contemplated under Section 2(b) of the Note and Executive intends to satisfy his
obligations under the Note on or about October 1, 2003 in the manner
contemplated under Section 1 of the Note. It is anticipated that Executive shall
satisfy his obligations in whole or in part as provided for in Section 1(d) of
the Note and the Company agrees that upon his satisfaction to release the
Pledged Stock (as defined in the Stock Pledge and Security Agreement, between
Executive and Parent, dated November 17, 2000 (the "Pledge Agreement")) in
accordance with the terms of the Pledge Agreement.

ARTICLE III: SURVIVAL OF CERTAIN PROVISIONS OF THE EMPLOYMENT AGREEMENT

         Section 3.1 Excise Tax Gross-Up. To the extent applicable at any time
following the Termination Date, Section 7 of the Employment Agreement shall
survive the termination of the Employment Agreement to carry-out its intended
effect.

         Section 3.2 Restrictive Covenants. Sections 8(a), (c), (d) and (e) of
the Employment Agreement shall continue to apply following the termination of
the Employment Agreement.

                                       3

<PAGE>

         Section 3.3 Charter Provisions. Section 12 of the Employment Agreement
shall continue to apply following the termination of the Employment Agreement;
provided, however, that the Company may, at its option, make a lump-sum cash
payment to Executive of $1,000,000 in exchange for which Executive shall
relinquish his right under Section 12(b) to prevent Parent from changing its
corporate name. For purposes of Section 12 and any other provision of the
Employment Agreement, Executive shall not be deemed to have been terminated for
cause (as defined in the Employment Agreement).

ARTICLE IV: RELEASE

         Section 4.1 Release of Claims by Executive.

                  (a)      Executive, for himself and for his representatives,
heirs, attorneys, and agents, in consideration of the payments and benefits
described in this Agreement, hereby agrees to and does hereby irrevocably and
unconditionally release, acquit, and forever discharge the Company, its
respective current and former officers, directors, shareholders, employees,
representatives, heirs, attorneys and agents, as well as its respective
predecessors, parent companies, subsidiaries, affiliates, divisions, successors
and assigns and their respective current and former officers, directors,
shareholders, employees, representatives, attorneys and agents with respect to
and from any and all causes of action, claims, actions, rights, judgments,
obligations, damages, demands, accountings or liabilities of whatever kind or
character, which Executive may have against the Company by reason of or arising
out of, touching upon or concerning Executive's employment with the Company and
the separation of his employment, or any statutory claims, or any and all other
matters of whatever kind, nature or description, whether known or unknown,
occurring from the beginning of the world and until and including the
Termination Date, including, but not limited to, claims for wrongful or unlawful
discharge; violations of Title VII of the Civil Rights Act of l964, the Civil
Rights Act of 1991, the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C.
Section 621, et. seq., the Older Workers Benefit Protection Act ("OWBPA"), 29
U.S.C. Section 626(f); violation of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA"); the Equal Pay Act, the Americans with
Disabilities Act of 1991, the Worker Adjustment and Retraining Notification Act,
and/or the Family and Medical Leave Act, including all amendments to any of the
aforementioned Acts; violations of any other federal, state and/or municipal
fair employment statutes or laws; or violations of any other law, rule,
regulation, or ordinance pertaining to employment wages, compensation, hours
worked, or any other aspect of his employment relationship with the Company.
Notwithstanding the foregoing, nothing in this Agreement shall be construed as a
waiver by Executive of his right to enforce the provisions of this Agreement,
the Option Agreements, any restricted stock award agreements, any loan
agreements, any indemnification agreements he is party to with the Company, that
relates to any provisions of the Employment Agreement which survive its
termination or to receive any benefit or compensation under any "employee
benefit plan" as such term is defined in Section 3(3) of ERISA or limit the
right of Executive to seek to enforce the provisions of this Agreement or
challenge the validity of this release under ADEA.

                  (b)      By executing this Agreement, Executive acknowledges
that:

                                       4

<PAGE>

                           (i)      The Company, by this Agreement, has advised
Executive to consult with an attorney prior to executing this Agreement;

                           (ii)     Executive has had the opportunity to consult
with his own attorney concerning this Agreement, and Executive's attorney
actively has negotiated the terms of this Agreement on Executive's behalf;

                           (iii)    This release does not include claims arising
after the Termination Date;

                           (iv)     The Company has provided Executive the
opportunity to review and consider this Agreement for twenty-one (21) days from
the date Executive receives this Agreement. At Executive's option and sole
discretion, Executive may waive the twenty-one (21) day review period and
execute this Agreement before the expiration of twenty-one (21) days. In
electing to waive the twenty-one (21) day review period, Executive acknowledges
and admits that he was given a reasonable period of time within which to
consider this Agreement and his waiver is made freely and voluntarily, without
duress or any coercion by any other person; and

                           (v)      Executive understands that this Agreement
and the release contained herein waive claims and rights Executive may have
under ADEA. For a period of seven (7) days after execution of this Agreement,
Executive may revoke the terms of this Agreement relating to ADEA claims.
Executive agrees that any such revocation is not effective unless it is made in
writing and delivered to the Company by the end of the seventh (7th) calendar
day.

         Section 4.2 Release of Claims by the Company. In consideration of the
mutual promises and covenants contained in this Agreement, and after
consultation with counsel, each of the Parent and each Subsidiary for itself and
for its respective current and former officers, directors, shareholders,
employees, representatives, heirs, attorneys and agents, as well as its
respective predecessors, parent companies, subsidiaries, affiliates, divisions,
successors and assigns and their respective current and former officers,
directors, shareholders, employees, representatives, attorneys and agents
("Releasors"), agrees to and does hereby irrevocably and unconditionally
release, acquit and forever discharge Executive, and each of his respective
heirs, representatives, agents, successors and assigns ("Releasees") with
respect to and from any and all causes of action, claims, actions, rights,
judgments, obligations, damages, demands, accountings or liabilities of whatever
kind or character, which Releasors may have against Releasees by reason of or
arising out of, touching upon or concerning Executive's employment or service
with the Company and the separation of his employment and service, or any
statutory claims, or any and all other matters of whatever kind, nature or
description, whether known or unknown, occurring from the beginning of the world
and until and including the Termination Date. Notwithstanding the foregoing,
nothing in this Agreement shall be construed as a waiver by the Company of its
right to enforce the provisions of this Agreement.

                                       5

<PAGE>

ARTICLE V: INDEMNIFICATION

         Following the Termination Date, Executive shall continue to be
indemnified by the Parent and each of the Subsidiaries to the same extent as
currently provided under Executive's indemnification agreement and/or Employment
Agreement with the Parent and/or the Subsidiaries and in any event, to the
maximum extent permitted by law.

ARTICLE VI: NON-DISPARAGEMENT.

         The parties hereto acknowledge and agree that they will not defame or
publicly criticize the services, business, integrity, veracity or personal or
professional reputation of the other party (and in the case of the Company, its
officers, directors, partners, executives, affiliates, or agents thereof) in
either a professional or personal manner.

ARTICLE VII: MISCELLANEOUS

         Section 7.1 Notices. For purposes of this Agreement, notices and all
other communications provided for herein shall be in writing and shall be deemed
to have been duly given when personally delivered, sent by facsimile or when
mailed by United States registered or certified mail, return receipt requested,
postage prepaid, addressed to such address as provided in the signature pages
hereto or sent to such other address or facsimile number as each party may
furnish to the other in writing from time to time in accordance with this
Section 7.1.

         Section 7.2 Applicable Law. This Agreement is entered into under, and
shall be governed for all purposes by, the laws of the State of Ohio without
giving effect to any choice of law principles.

         Section 7.3 No Waiver. No failure by either party hereto at any time to
give notice of any breach by the other party of, or to require compliance with,
any condition or provision of this Agreement shall (a) be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time or (b) preclude insistence upon strict compliance in the future.

         Section 7.4 Severability. If a court of competent jurisdiction
determines that any provision of this Agreement is invalid or unenforceable,
then the invalidity or unenforceability of that provision shall not affect the
validity or enforceability of any other provision of this Agreement, and all
other provisions shall remain in full force and effect and such invalid or
unenforceable provision shall be reformulated by such court to preserve the
intent of the parties hereto.

         Section 7.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.

                                       6

<PAGE>

         Section 7.6 Headings. The paragraph headings have been inserted for
purposes of convenience and shall not be used for interpretive purposes.

         Section 7.7 Gender and Plurals. Wherever the context so requires, the
masculine gender includes the feminine or neuter, and the singular number
includes the plural and conversely.

         Section 7.8 Affiliate. As used in this Agreement, unless otherwise
indicated, "affiliate" shall mean any person or entity which directly or
indirectly through any one or more intermediaries owns or controls, is owned or
controlled by, or is under common ownership or control with the Company.

         Section 7.9 Successors; Binding Agreement.

                  (a) Company's Successors. No rights or obligations of the
Parent and each of the Subsidiaries under this Agreement may be assigned or
transferred except that the Parent or any Subsidiary, as the case may be, may
assign its respective obligations under this Agreement to any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Parent or Subsidiary, as
the case may be, if such successor expressly assumes and agrees to perform this
Agreement in the same manner and to the same extent that the Parent or the
Subsidiary, as the case may be, would be required to perform it if no such
succession had taken place. No such assignment shall relieve the assigning party
of any of its obligations hereunder.

                  (b) Executive's Successors. No rights or obligations of
Executive under this Agreement may be assigned or transferred by Executive other
than his rights to payments or benefits hereunder, which may be transferred only
by will or the laws of descent and distribution. Upon Executive's death, this
Agreement and all rights of Executive hereunder shall inure to the benefit of
and be enforceable by Executive's beneficiary or beneficiaries, personal or
legal representatives, or estate, to the extent any such person succeeds to
Executive's interests under this Agreement. Executive shall be entitled to
select and change a beneficiary or beneficiaries to receive any benefit or
compensation payable hereunder following Executive's death by giving the Company
written notice thereof. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary(ies), estate or
other legal representative(s). If Executive should die while any amounts would
still be payable to him hereunder if he had continued to live, all such amounts
shall be paid in accordance with the terms of this Agreement to such person or
persons so appointed in writing by Executive, or otherwise to his legal
representatives or estate.

         Section 7.10 Entire Agreement. Except as otherwise specifically
provided herein, this Agreement constitutes the entire agreement of the parties
with regard to the subject matter hereof, contains all the covenants, promises,
representations, warranties and agreements between the parties with respect to
Executive's resignation and termination from the Company and supersedes all
prior employment or severance agreements between Executive and the Company

                                       7

<PAGE>

or any of its predecessors or affiliates, including, but not limited to, the
Employment Agreement. Except as otherwise provided herein, each party to this
Agreement acknowledges that no representation, inducement, promise or agreement,
oral or written, has been made by either party, or by anyone acting on behalf of
either party, which is not embodied herein, and that no agreement, statement, or
promise relating to Executive's resignation from the Company, that is not
contained in this Agreement, shall be valid or binding. Any modification of this
Agreement will be effective only if it is in writing and signed by the party to
be charged.

         Section 7.11 Arbitration; Legal Fees. If any contest or dispute arises
between the parties with respect to this Agreement, such contest or dispute
shall be submitted to binding arbitration for resolution in Cleveland, Ohio in
accordance with the rules and procedures of the Employment Dispute Resolution
Rules of the American Arbitration Association then in effect. The decision of
the arbitrator shall be final and binding on both parties, and any court of
competent jurisdiction may enter judgment upon the award. All costs of the
arbitration (including the fee paid to the arbitrator) are to be shared equally
by the parties. Each party shall pay its own attorney's fees relating to such
dispute and/or arbitration. On the Effective Date, the Company shall reimburse
Executive (or at the direction of Executive, shall pay directly to his legal and
financial advisors) for all legal and professional fees and other expenses
reasonably incurred by Executive in the negotiation and preparation of this
Agreement in an amount not to exceed $200,000.

         Section 7.12 Noncontravention. Each of the Parent and the Subsidiaries
separately represent that it is not prevented from entering into or performing
this Agreement by the terms of any law, order, rule or regulation, its by-laws
or otherwise, or any agreement to which it is a party. In addition, each of the
Parent and the Subsidiaries separately represent and warrant that it has the
legal authority to enter into this Agreement and has taken all necessary action
relating thereto, and that this Agreement has been duly executed and delivered
by it.

                                       8

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.

                                           COLE NATIONAL CORPORATION
                                           1925 Enterprise Parkway
                                           Twinsburg, Ohio 44087
                                           Attention: General Counsel

                                           By: /s/Leslie D. Dunn
                                              ----------------------------------
                                              Senior Vice President

                                           COLE NATIONAL GROUP, INC.
                                           1925 Enterprise Parkway
                                           Twinsburg, Ohio 44087
                                           Attention: General Counsel

                                           By: /s/Leslie D. Dunn
                                              ----------------------------------
                                              Senior Vice President

                                           COLE VISION CORPORATION
                                           1925 Enterprise Parkway
                                           Twinsburg, Ohio 44087
                                           Attention: General Counsel

                                           By: /s/Leslie D. Dunn
                                              ----------------------------------

                                           PEARLE, INC.
                                           1925 Enterprise Parkway
                                           Twinsburg, Ohio 44087
                                           Attention: General Counsel

                                           By: /s/Leslie D. Dunn
                                              ----------------------------------
                                              Senior Vice President

                                           THINGS REMEMBERED, INC.
                                           1925 Enterprise Parkway
                                           Twinsburg, Ohio 44087
                                           Attention: General Counsel

                                           By: /s/Leslie D. Dunn
                                              ----------------------------------
                                              Senior Vice President

                                           /s/Jeffrey A. Cole
                                           -------------------------------------
                                           Jeffrey A. Cole
                                           211 Esplanade Way
                                           Palm Beach , Florida 33480

                                       9

<PAGE>

                 Appendix A to the Separation and Mutual Release

                           Itemization of Section 2.1

In satisfaction of the obligations under Sections 6(a) and (b) of the Employment
Agreement the Company shall pay Executive a lump-sum cash payment equal to
$5,330,000 which represents the following amounts:

<TABLE>
<S>      <C>                                                                    <C>
1.       Severance (Section 6(a) of the Employment Agreement............        $2,500,000

2.       Cash out of welfare benefits and perquisites pursuant
         to Sections 6(b) of the Employment Agreement as follows:

                       Office and secretarial services..................        $2,000,000

                       Retiree medical benefits.........................        $  500,000

                       Automobile.......................................        $   30,000

                       Personal financial planning......................        $  200,000

                       Total............................................        $5,230,000
</TABLE>

                                       10

<PAGE>

                 Appendix B to the Separation and Mutual Release
                 Stock Option Summary Pursuant to Section 2.2(a)

<TABLE>
<CAPTION>
GRANT DATE         NUMBER OF OPTIONS         EXERCISE PRICE         EXPIRATION DATE
------------------------------------------------------------------------------------
<S>                <C>                       <C>                    <C>
  7/31/93                65,907                  12.25              7/30/03
------------------------------------------------------------------------------------
  3/16/95                 5,000                   9.75              1 year from
                                                                    Termination Date
------------------------------------------------------------------------------------
  8/17/95                 7,500                  12.50              1 year from
                                                                    Termination Date
------------------------------------------------------------------------------------
  2/22/96               210,000                  10.81              1 year from
                                                                    Termination Date
------------------------------------------------------------------------------------
 12/17/98               250,000                  15.45              1 year from
                                                                    Termination Date
------------------------------------------------------------------------------------
  3/23/00                25,000                   6.50              1 year from
                                                                    Termination Date
------------------------------------------------------------------------------------
  1/25/02               250,000                  15.15              5 years from
                                                                    Termination Date
------------------------------------------------------------------------------------
  5/22/02                15,156                  15.75              1 year from
                                                                    Termination Date
------------------------------------------------------------------------------------
</TABLE>

                                       11

<PAGE>

                                ESCROW AGREEMENT

         This ESCROW AGREEMENT (this "AGREEMENT") is entered into on this 16th
day of July, 2003 by and between Cole National Corporation, a Delaware
corporation (the "COMPANY"), Jeffrey A. Cole, an individual residing at 211
Esplanade Way, Palm Beach Florida ("COLE"), and Key Bank, N.A. (the "ESCROW
AGENT"), as escrow agent.

         WHEREAS, pursuant to the terms of the Separation Agreement between the
Company and the Executive dated July 16, 2003, the Company shall cause Cole to
be paid a lump-sum settlement of $12,130,000, less amounts required to be
withheld for taxes, representing various entitlements under the terms of his
Employment Agreement (the "SETTLEMENT AMOUNT");

         WHEREAS, Section 1103 of the Sarbanes-Oxley Act of 2002 (hereinafter
referred to as the "ACT") generally provides that whenever during the course of
a lawful investigation involving possible violations of Federal Securities laws
by an issuer of publicly traded securities or any of its officers or directors,
it appears to the Securities and Exchange Commission (the "SEC") that it is
likely that the issuer will make extraordinary payments (whether compensation or
otherwise) to any of the foregoing persons, the SEC may petition a Federal
district court for a temporary order requiring the issuer to escrow, subject to
court supervision, those payments in an interest-bearing account for 45 days;
and

         WHEREAS, the SEC and Cole have entered into an agreement (the "LETTER
AGREEMENT") (a copy of which is attached hereto as Exhibit A) whereby in lieu of
the SEC seeking an order under Section 1103 of the Act, the Company and Cole
have agreed to cause the deposit of an aggregate of $7,330,000, less amounts
withheld for taxes, of the Settlement Amount on the date hereof with the Escrow
Agent in accordance with and subject to the terms of this Escrow Agreement.

         NOW, THEREFORE, Cole, Company and the Escrow Agent hereby agree as
follows:

         Cole and Company do hereby appoint and designate the Escrow Agent as
escrow agent for the purposes set forth herein and the Escrow Agent does hereby
accept such appointment under the terms and conditions set forth herein.

1.   ESTABLISHMENT OF ESCROW FUND

     Simultaneous with the execution of this Escrow Agreement, the Company shall
     cause there to be deposited with the Escrow Agent the sum of SEVEN MILLION
     THREE HUNDRED HUNDRED THIRTY THOUSAND DOLLARS ($7,330,000), less amounts
     withheld for taxes, (such amount, as such amount may be increased from time
     to time by earnings thereon, the ("ESCROW FUND")). The Escrow Agent shall
     hold, administer and disburse the Escrow Fund pursuant to the terms and
     conditions hereof. The Escrow Agent shall initially invest or reinvest the
     Escrow Fund, without distinction between principal and income, in
     accordance with the provisions of Section 2 hereof.

                                       1

<PAGE>

2.   INVESTMENT OF ESCROW FUND

     During the term of this Escrow Agreement, Escrow Agent shall cause the
     Escrow Fund to be invested in liquid and fixed income investments that meet
     or exceed the following criteria: For fixed income the par value of the
     issue shall be at least $100 million and of a quality rated BBB by Standard
     & Poors of Baa by Moody's; For liquid investments U.S. Treasury Issues,
     Negotiate Certificate of Deposit at commercial banks rated A-1 by Stand &
     Poors, Jumbo Certificates of Deposit limited to $100,000 per institution
     and a total value of $1,000,000, A-1/P-1 rated Commercial Paper, Repurchase
     Agreements collateralized by U.S. Treasury and Agency Securities, Bankers
     Acceptances of banks rated at least "A" or better, Federal Agency Issues,
     and Money Market Mutual or bank STIF funds or similar liquid funds where
     the quality is consistent with the above instruments.

     The Escrow Agent shall have the right to liquidate any investments held, in
     order to provide funds necessary to make required payments under this
     Escrow Agreement. The Escrow Agent in its capacity as escrow agent
     hereunder shall not have any liability for any loss sustained as a result
     of any investment made pursuant to the instructions of the parties hereto
     or as a result of any liquidation of any investment prior to its maturity
     or for the failure of the parties to give the Escrow Agent instructions to
     invest or reinvest the Escrow Fund or any earnings thereon.

     Any returns or gains on investment will be for Cole's account, and Cole
     will bear the risk of loss on any investment of the Escrow Fund. Under no
     circumstances will the Company be required to pay Cole any additional
     monies as a result of the loss or other restriction on the disbursement of
     funds from the Escrow Fund.

3.   DISPOSITION AND TERMINATION.

         (a)      The Escrow Agent shall deliver the Escrow Fund upon, and in
     accordance with, the following:

                  (i)      Unless the Escrow Agent shall receive a written
     notice from the SEC (the "SEC Notice") prior to the close of business on
     (90 days from the date hereof) (the "Primary Release Date"), which notice
     sets forth that the conditions set forth in Section 21C(c)(3)(B)(i) of the
     Securities Exchange Act of 1934 have been satisfied and a federal district
     court has determined that the escrow should remain in effect beyond the
     Primary Release Date, the Escrow Fund shall, without any further notice or
     statement to the Escrow Agent, be delivered to Cole on the Primary Release
     Date; and

                  (ii)     If the Escrow Agent receives the SEC Notice prior to
     the close of business on the Primary Release Date it shall retain the
     Escrow Fund until it receives joint written instructions, executed by both
     Cole and the SEC, authorizing the release of the Escrow Fund

                                       2

<PAGE>

     (the "JOINT INSTRUCTION"). Upon receipt of a Joint Instruction, the Escrow
     Fund shall be released in accordance with the terms of the Joint
     Instruction.

         (b)      Notwithstanding any of the foregoing, the Escrow Fund shall be
     released, at any point in time, as directed by a Joint Instruction.

         (c)      Upon receipt of a SEC Notice, the Escrow Agent shall promptly
     give written notice and a copy thereof to Cole and the Company. The Escrow
     Agreement shall promptly give written notice to the company of any release
     of the Escrow Fund.

         (d)      If at any time Escrow Agent is served with any judicial or
     administrative order, judgment, decree, writ or other form of judicial or
     administrative process which in any way affects the Escrow Fund (including
     but not limited to orders of attachment or garnishment or other forms of
     levies or injunctions or stays relating to the transfer of Escrow Fund),
     Escrow Agent is authorized to comply therewith in any manner as it or its
     legal counsel of its own choosing deems appropriate.

         (e)      Upon the release from escrow of all of the Escrow Fund in
     accordance with this Agreement, this Agreement and the duties and
     obligations of the Escrow Agent hereunder shall be terminated.

4.   The Escrow Agent undertakes to perform only such duties as are expressly
     set forth herein.

5.   The Escrow Agent may rely and shall be protected in acting or refraining
     from acting upon any written notice, instruction or request furnished to it
     hereunder and believed by it to be genuine and to have been signed or
     presented by the proper party or parties. The Escrow Agent shall be under
     no duty to inquire into or investigate the validity, accuracy or content of
     any such document. The Escrow Agent shall have no duty to solicit any
     payments which may be due it hereunder.

6.   The Escrow Agent shall not be liable for any action taken or omitted by it
     in good faith unless a court of competent jurisdiction determines that the
     Escrow Agent's willful misconduct or gross negligence was the primary cause
     of any loss to Cole or the Company. In the administration of the escrow
     account hereunder, the Escrow Agent may execute any of its powers and
     perform its duties hereunder directly or through agents or attorneys and
     may, consult with counsel, accountants and other skilled persons to be
     selected and retained by it. The Escrow Agent shall not be liable for
     anything done, suffered or omitted in good faith by it in accordance with
     the advice or opinion of any such counsel, accountants or other skilled
     persons.

7.   The Escrow Agent may resign and be discharged from its duties or
     obligations hereunder by giving notice to Cole and the Company in writing
     of such resignation specifying a date when such resignation shall take
     effect. The Escrow Agent shall have the right to withhold an amount equal
     to the amount due and owing to the Escrow Agent, plus any costs and
     expenses

                                       3

<PAGE>

     the  Escrow Agent shall reasonably believe may be incurred by the Escrow
     Agent in connection with the termination of the Escrow Agreement.

8.   The Company hereby agrees to (a) pay the Escrow Agent upon execution of
     this Escrow Agreement reasonable compensation for the services to be
     rendered hereunder, as described in Schedule 1 attached hereto, and (b) pay
     or reimburse the Escrow Agent upon request for all out-of-pocket expenses,
     disbursement and advances, including reasonable attorney's fees, incurred
     or made by it in connection with the execution, performance, delivery
     modification and termination of this Escrow Agreement.

9.   The Company and Cole shall jointly and not severally indemnify, defend and
     save harmless the Escrow Agent from all loss, liability or expense
     (including the reasonable fees and expenses of counsel) arising out of or
     in connection with (a) its execution and performance of this Agreement,
     except to the extent that such loss, liability or expense is due to the
     gross negligence or willful misconduct of the Escrow Agent, or (b) its
     following any instructions or other directions from the Cole or Company
     believed by it to be genuine and to have been signed by the proper party or
     parties, except to the extent that its following any such instruction or
     direction is expressly forbidden by the terms hereof. Anything in this
     agreement to the contrary notwithstanding, in no event shall the Escrow
     Agent be liable for special, indirect or consequential loss or damage of
     any kind whatsoever (including, but not limited to, lost profits), even if
     the Escrow Agent has been advised of the likelihood of such loss or damage
     and regardless of the form of action.

10.  The parties hereto that are U.S. legal entities, except the Escrow Agent,
     shall, in the notice section of this agreement, provide the Escrow Agent
     with their Tax Identification Number (TIN) as assigned by the Internal
     Revenue Service. All interest or other income earned under the Escrow
     Agreement shall be allocated and paid as provided herein and reported by
     the recipient to the Internal Revenue Service as having been so allocated
     and paid.

11.  The duties and responsibilities of the Escrow Agent hereunder shall be
     determined solely by the express provisions of this Escrow Agreement and no
     other or further duties or responsibilities shall be implied other than the
     duty of good faith. The Escrow Agent shall not have any liability under,
     nor duty to inquire into the terms and provisions of any agreement or
     instructions, other than outlined in this Escrow Agreement.

12.  All notices and communications hereunder shall be in writing and shall be
     deemed to be duly given upon receipt if delivered personally, sent by
     facsimile transmission (provided written receipt of which is confirmed), by
     certified mail, return receipt requested, or by a nationally recognized
     overnight courier, as follows:

                        If to the Escrow Agent, to:

                        Key Bank, N.A.
                        2101 Richmond Road

                                        4

<PAGE>

                        Beachwood, Ohio 44122
                        Attention: Gregory D. Gatto
                        FAX:
                        If to Cole to:

                        Jeffrey A. Cole
                        211 Esplanade Way
                        Palm Beach, Florida 33480

                        with copies to (which copy shall not constitute notice):

                        Akin Gump Strauss Hauer & Feld LLP
                        590 Madison Avenue
                        New York, New York 10022
                        Attn: Andrew L. Gaines
                        Fax: 212-872-1002

                        and

                        Akin Gump Strauss Hauer & Feld LLP
                        1333 New Hampshire Avenue, N.W.
                        Washington, D.C. 20036
                        Attn: Michael J. Madigan
                        Fax: 202-887-4288

                        If to the Company to:

                        Cole National Corporation
                        1925 Enterprise Parkway
                        Twinsburg, Ohio 44087
                        Attn: General Counsel
                        Fax: 330-486-4903
                        TIN: 34-1453189

     or at such other address as any of the above may have furnished to the
     other parties in writing. In the event that the Escrow Agent, in its sole
     discretion, shall determine that an

                                       5

<PAGE>

     emergency exists, the Escrow Agent may use such other means of
     communications as the Escrow Agent deems advisable.

13.      (a)      In the event funds transfer instructions are given (other than
     in writing at the time of execution of the Agreement), whether in writing,
     by telecopier or otherwise, the Escrow Agent is authorized to seek
     confirmation of such instructions by telephone call-back to the [person or
     persons designated on Schedule 2 hereto], and the Escrow Agent may rely
     upon the confirmations of anyone purporting to be the person or persons so
     designated. The persons and telephone numbers for call-backs may be changed
     only in a writing actually received and acknowledged by the Escrow Agent.
     The parties to this Agreement acknowledge that such security procedure is
     commercially reasonable.

         (b)      It is understood that the Escrow Agent and the beneficiary's
     bank in any funds transfer may rely solely upon any account numbers or
     similar identifying number provided by either of the other parties hereto
     to identify (i) the beneficiary, (ii) the beneficiary's bank, or (iii) an
     intermediary bank. The Escrow Agent may apply any of the escrowed funds for
     any payment order it executes using any such identifying number, even where
     its use may result in a person other than the beneficiary being paid, or
     the transfer of funds to a bank other than the beneficiary's bank, or an
     intermediary bank designated.

14.  The provisions of this Escrow Agreement may be waived, altered, amended or
     supplemented, in whole or in part, only by a writing signed by all of the
     parties hereto.

15.  Neither this Escrow Agreement nor any right or interest hereunder may be
     assigned in whole or in part by any party without the prior written consent
     of the other parties.

16.  This Escrow Agreement may be executed in one or more counterparts, each of
     which shall be deemed an original, but all of which together shall
     constitute one and the same instrument.

17.  The Escrow Agent shall not incur any liability for following the
     instructions herein contained or expressly provided for, or written
     instructions given by the parties hereto in accordance with this Escrow
     Agreement.

18.  In the event that the Escrow Agent shall be uncertain as to its duties or
     rights hereunder or shall receive instructions, claims or demands from any
     party hereto which, in its opinion, conflict with any of the provisions of
     this Agreement, it shall be entitled to refrain from taking any action and
     its sole obligation shall be to keep safely all property held in escrow
     until it shall be directed otherwise in writing by all of the other parties
     hereto or by a final order or judgment of a court of competent
     jurisdiction.

19.  Any corporation into which the Escrow Agent in its individual capacity may
     be merged or converted or with which it may be consolidated, or any
     corporation resulting from any merger, conversion or consolidation to which
     the Escrow Agent in its individual capacity shall be a party, or any
     corporation to which substantially all the corporate trust business of

                                       6

<PAGE>

     the Escrow Agent in its individual capacity may be transferred, shall be
     the Escrow Agent under this Escrow Agreement without further act.

20.  This Agreement shall be governed by and construed in accordance with the
     laws of the State of Ohio without regard to its principles of conflicts of
     laws and any action brought hereunder shall be brought in the courts of the
     State of Ohio. Each party hereto irrevocably waives any objection on the
     grounds of venue, forum non-conveniens or any similar grounds and
     irrevocably consents to service of process by mail or in any other manner
     permitted by applicable law and consents to the jurisdiction of said
     courts.

21.  In the event that any party to this Escrow Agreement is unable to perform
     its obligations under the terms of this Escrow Agreement because of acts of
     God, strikes, equipment or transmission failure or damage reasonably beyond
     its control, or other cause reasonably beyond its control, such party shall
     not be liable for damages to the other parties for any unforeseeable
     damages resulting from such failure to perform. Performance under this
     Escrow Agreement shall resume when the affected party is able to perform
     substantially that party's duties.

22.  Each party to this Agreement has an affirmative obligation to maintain the
     confidentiality of the terms and conditions of this Agreement and all
     attachments thereto, except where disclosure is necessary on a "need to
     know" basis to a party's attorney and/or tax or financial advisor, or
     others with a need to know, who, in turn, shall be advised by such party
     that they may not disclose or communicate the terms and conditions of the
     Agreement. Notwithstanding anything to the contrary herein or in any other
     written or oral understanding or agreement to which any party is subject or
     by which it is bound, each party (and its representatives, agents and
     employees) may consult any tax advisor regarding the tax treatment and tax
     structure of the transaction contemplated by this Agreement and may at any
     time disclose to any person, without limitation of any kind, the tax
     treatment and tax structure of such transaction and all materials
     (including opinions or other tax analyses) that are provided relating to
     such treatment or structure. The preceding sentence is intended to satisfy
     the requirements for the transaction contemplated herein to avoid
     classification as a confidential transaction in accordance with Treasury
     Regulations Section 1.6011-4(b)(3) and shall be interpreted consistent with
     such intent.

                            [SIGNATURE PAGE FOLLOWS]

                                       7

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed as of the date first above written.

                                           COLE NATIONAL CORPORATION

                                           By: /s/Leslie D. Dunn
                                               ----------------------------
                                           Name:  Leslie D. Dunn
                                           Title: Senior Vice President

                                           /s/Jeffrey Cole
                                           --------------------------------
                                           JEFFREY COLE

                                           ESCROW AGENT:
                                           KEY BANK, N.A.

                                           By: /s/ Gregory D. Gatto
                                               ----------------------------
                                           Name:  Gregory D. Gatto
                                           Title: Senior Vice President

                                       8