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                                                                    Exhibit 10.1

                    RESIGNATION AND NON-COMPETITION AGREEMENT
                    -----------------------------------------


                  THIS RESIGNATION AND NON-COMPETITION AGREEMENT (this
"Agreement") is made and entered into as of the 18th day of October, 1999, by
and between COLE NATIONAL CORPORATION, a Delaware corporation (the "Company," a
term which in this Agreement includes its predecessors, parents, subsidiaries,
divisions, related or affiliated companies, officers, directors, stockholders,
members, employees, heirs, successors, assigns, representatives, agents and
counsel, unless the context otherwise clearly requires), and BRIAN B. SMITH
("Executive"),

                                   WITNESSETH:
                                   -----------

                  WHEREAS, Executive is an employee and director of the Company
and currently serves as President and Chief Operating Officer of the Company;

                  WHEREAS, the Company and Executive have determined that
Executive will resign the Executive's positions as President and Chief Operating
Officer and as a director of the Company effective October 18, 1999; and will
resign as an employee of the Company at that same time;

                  WHEREAS, the Company wants to ensure that Executive will
protect Confidential Information (as hereinafter defined) and will not use the
Executive's knowledge and experience during the Non-Compete Period (as
hereinafter defined) to compete in or assist a competitor of the Company's
business (as set forth herein); and

                  WHEREAS, the Company and Executive desire to make provision
for the payments and benefits that Executive will be entitled to receive from
the Company in consideration for Executive's obligations and actions under this
Agreement and in connection with such retirement;

                  NOW, THEREFORE, in consideration of the premises and the
promises and agreements contained herein and other good and valuable
consideration, the sufficiency and receipt of which are hereby acknowledged, and
intending to be legally bound, the Company and Executive agree as follows:

                  1. EFFECTIVE DATE OF AGREEMENT. This Agreement is effective on
October 18, 1999 (the "Effective Date") and will continue in effect as provided
herein.

                  2. RESIGNATIONS. Executive hereby, effective on the Effective
Date,

                    (a) resigns as an employee of the Company and of its
                        subsidiaries,
                    (b) resigns as a member of the Company's Board of Directors
                        and as President and Chief Operating Officer of the
                        Company,


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                    (c) resigns from all boards and offices of any entity that
                        is a subsidiary of or is otherwise related to or
                        affiliated with the Company,
                    (d) resigns from all administrative, fiduciary or other
                        positions Executive may hold or have held with respect
                        to arrangements or plans for, of or relating to the
                        Company, and
                    (e) agrees to resign from any nonprofit positions related to
                        Executive's services to the Company as the Company may
                        request. However, so long as Executive continues to
                        foster a good relationship between Prevent Blindness and
                        the Company, Executive may retain his position as
                        Chairman and trustee of Prevent Blindness until the end
                        of Executive's current term and may serve as a trustee
                        and past officer after the end of his current term.
                        Executive shall, subject to his fiduciary duties to
                        Prevent Blindness, use Executive's reasonable best
                        efforts to assist a designee of the Company to join the
                        trustees of Prevent Blindness and to achieve officer
                        status with that organization. The Company shall
                        reimburse Executive for Executive's reasonable
                        out-of-pocket expenses relating to his services with
                        Prevent Blindness during the first year following the
                        Effective Date. Executive shall notify Prevent Blindness
                        of the change in Executive's employment status and shall
                        use Executive's reasonable best efforts to eliminate any
                        references to the Company in the materials or promotions
                        used by Prevent Blindness unless hereafter approved by
                        the Company.

The Company hereby consents to and accepts said resignations, and the Company
records will so reflect.

                  3. CERTAIN BENEFITS. In consideration of the promises of
Executive in this Agreement, including without limitation Paragraph 4 and
Paragraph 5 hereof:

                  (a) CASH SEVERANCE PAYMENTS. Company shall pay Executive the
sum of $200,000 ten days after the Effective Date and shall pay Executive the
additional sum of $2,000,000 on January 3, 2000. Except for the payments
required by this Paragraph 3(a), Executive will have no rights to severance
payments under a plan or otherwise.

                  (b) STOCK OPTIONS. (i) Ten days after the Effective Date,
Executive shall transfer to the Company the stock options for 150,000 shares of
Company common stock granted to Executive on December 17, 1998 for cancellation
in exchange for the payment by the Company of $150,000, payable on January 3,
2000; and (ii) Executive's remaining stock options (meaning the options for
34,000 shares of Company common stock granted to Executive on July 31, 1993, the
options for 79,322 shares of Company common stock granted to Executive on
November 17, 1994, the options for 7,500 shares of Company common stock granted
to Executive on March 16, 1995, the options for 10,000 shares of Company common
stock granted to Executive on August 17, 1995, and the options for 180,000
shares of Company common stock granted to Executive on June 6, 1996), will
remain in effect in accordance with their respective

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terms with the same effect as though Executive had been terminated without cause
as of the Effective Date, except that the exercisability of the remaining stock
options will not terminate until the second anniversary of the Effective Date.

                  (c) RESTRICTED SHARES. The restrictions on the 55,000 shares
of Company Common Stock issued to Executive pursuant to the Restricted Stock
Agreement dated as of December 17, 1998 between the Company and Executive will
lapse on the Effective Date and cease to be subject to risk of forfeiture

                  (d) HEALTH AND LIFE INSURANCE BENEFITS. For the period from
the Effective Date through Executive's 65th birthday, the Company shall (i)
continue to provide Executive and the Executive's eligible dependants with
eligibility for health insurance benefits, on the same basis, costs and terms as
those provided, from time to time, to senior executives of the Company and their
eligible dependents, and (ii) continue to provide coverage to the Executive and
the Executive's eligible dependents under the Company's Medical Expense
Reimbursement Plan at a maximum annual benefit of $20,000, and (iii) continue to
provide coverage under those employee plans that provide life insurance at
levels as provided to Executive immediately prior to the Effective Date. The
Company's obligations under this Paragraph 3(d) will be reduced to the extent of
any similar health benefits that Executive is entitled to receive from any other
employer.

                  (e) PROMISSORY NOTE. The Amended and Restated Secured
Promissory Note from Executive to the Company dated March 15, 1998 (the
"Promissory Note") will become due and payable on January 3, 2000. The
Promissory Note will not bear interest for the period between the Effective Date
and January 3, 2000. Unless Executive otherwise repays the Promissory Note, the
Company may deduct the outstanding balance owed from its obligations to pay
Executive $2,000,000 on January 3, 2000 under Paragraph 3(a).

                  (f) VACATION PAY. The Company shall pay Executive $44,000 ten
days after the Effective Date in full satisfaction of any rights Executive has
with respect to unused "vacation" or "paid time off."

                  (g) RETIREMENT PLANS. The Company shall cause Executive to
receive benefits under the 1994 Supplemental Retirement Benefit Plan and
Supplemental Pension Plan as though Executive remained an employee of the
Company through December 31, 1999 and received an annual base salary of
$555,000. Executive's benefits under the Cole National Group Retirement Plan,
the defined contribution plan established in accordance with Section 401(k) of
the Internal Revenue Code, the Cole National Group, Inc. Deferred Compensation
Plan for Executives and Other Senior Management, and the 1999 Employee Stock
Purchase Plan will be those established by such plans.

                  (h) AUTOMOBILE. Ten days after the Effective Date, Executive
shall purchase Executive's current Company-owned car for $39,000. The Company
will withhold this amount from the $200,000 cash payment by the Company
otherwise required under Paragraph 3(a).

                  (i) OUTPLACEMENT SERVICES. The Company shall provide Executive
at the Company's expense with executive level outplacement services, and shall
use its best efforts to
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assist Executive in finding suitable executive level employment at another
enterprise; provided, however, that in no event is Company obligated to spend
more than $15,000 with respect to its obligations under this Paragraph 3(i).

                  (j) EXECUTIVE'S EXPENSES. Upon submission of invoices in form
and substance reasonably acceptable to the Company, the Company shall pay up to
$7,500 of the costs of legal, tax accounting and tax planning services rendered
to Executive by counsel and advisors of Executive's choice in connection with
the preparation and negotiation of this Agreement and the terms of Executive's
resignation.

                  4. NON-COMPETITION; CERTAIN ACTIONS; NON-COMPETE PAYMENT.

                  (a) Executive agrees that for a period commencing on the
Effective Date through the third anniversary of the Effective Date (the
"Non-Compete Period"), within the Territory (as described in subparagraph (c)(i)
of this Paragraph 4), the Executive shall not, directly or indirectly, own,
manage, control or participate in the ownership, management, or control of, or
be employed or engaged by or otherwise affiliated or associated as a consultant,
independent contractor, director, or otherwise, with any other person,
corporation, partnership, limited liability company, proprietorship, firm,
association, or other business entity (collectively, an "Enterprise") that
engages in, or otherwise engage in a Competing Business, (as described in
subparagraph (c)(ii) of this Paragraph 4); PROVIDED, HOWEVER, that Executive
may:

                      (i)   own not more than five percent (5%) of any class of
                            publicly-traded securities of any Enterprise, or

                      (ii)  be employed, engaged, affiliated or associated as a
                            consultant, independent contractor, director, or
                            otherwise with any Enterprise that derives less than
                            10% of its consolidated revenues from a Competing
                            Business, except in the Competing Business or in a
                            capacity that places Executive in a direct or
                            indirect management or oversight role in or over
                            that Enterprise's Competing Business.

                  (b) Executive agrees that during the Non-Compete Period, the
Executive shall not, directly or indirectly, solicit the employment or assist in
employing any person who at the Effective Date is an employee, officer or agent
of the Company, or any of its affiliated, related or subsidiary entities.

                  (c) For purposes of this Agreement:

                      (i) "Territory" means (x) with respect to any Competing
                  Business, either:

                          (A) any county, parish or equivalent political
                          subdivision in any state of the United States or in
                          any province of Canada or in Puerto Rico, in which the
                          Company or any of its subsidiaries or any of their
                          respective franchisees has a retail optical location
                          or

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                          optical manufacturing location as of the Effective
                          Date (these counties being the "Active Location
                          Counties"), or

                          (B) any county, parish or equivalent political
                          jurisdiction in any state or province (or in Puerto
                          Rico) adjacent to any Active Location County if the
                          Company or any of its subsidiaries or any of their
                          respective franchisees has a retail optical location
                          within 2.0 miles of the county line of the adjacent
                          county,

                  or (y) with respect to the Managed Vision Care Business, in
                  addition to the foregoing, in any jurisdiction to the extent
                  that the Competing Business involves

                          (A) any of the Company's Managed Vision Care Business
                          customers as of the date of this Agreement, including,
                          without limitation, any insurance company, union,
                          welfare plan, employer or other organization that is a
                          plan provider in contract as of the date of this
                          Agreement with the Company or any of its subsidiaries
                          to provide managed vision care services to employees,
                          plan members or others under the Company's managed
                          vision care plans; or

                          (B) any service provider as of the date of this
                          Agreement in the Company's Managed Vision Care
                          Business networks, including, without limitation,
                          doctors of optometry, opticians and other optical
                          professionals, and operators of retail optical
                          locations if that service provider is in contract as
                          of the date of this Agreement with the Company or any
                          of its subsidiaries to provide optical care services
                          under the Company's managed vision care plans.

                          (ii) Competing Business means either (a) the business
                  of manufacturing and selling prescription eyeglasses or
                  contact lenses directly to optical retailers or retail
                  customers, whether through in-store sales at a retail location
                  or by telephone, mail, Internet, or other means or (b) the
                  business of distributing, marketing and managing managed
                  vision care plans, networks or services (the "Managed Vision
                  Care Business"), or (c) the business of distributing,
                  marketing and managing laser vision correction services.

                  (d) 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, 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
subparagraph 4(d) of this Agreement, nor except as aforesaid during such period
will

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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 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. Provided Executive
acts in a manner consistent with the foregoing provisions of this Paragraph
4(d), Executive may sell or otherwise dispose of Voting Securities so long as
the Executive complies with the laws regarding trading by insiders.

                  (e) Executive agrees that the Executive will not, directly or
indirectly, induce any person who is an employee, officer or agent of the
Company, or any of its affiliated, related, or subsidiary entities, to terminate
such relationship.

                  (f) In consideration of the promises of Executive in this
Agreement, including without limitation this Paragraph and Paragraph 5, the
Company shall pay Executive on each of January 2, 2001, and the second and third
anniversaries of the Effective Date, a non-compete fee of $200,000.

                  (g) In the event Executive violates any provision of this
Paragraph 4 as to which there is a specific time period during which the
Executive is prohibited from taking certain actions or from engaging in certain
activities, as set forth in such provision, then, in such event, such violation
will toll the running of such time period from the date of such violation until
such violation ceases.

                  (h) Executive has carefully considered the nature and extent
of the restrictions upon him and the rights and remedies conferred upon the
Company under this Paragraph 4 and this Agreement, and hereby acknowledges and
agrees that the same are reasonable in time and territory, are designed to
eliminate competition which otherwise would be unfair to the Company, do not
stifle the inherent skill and experience of Executive, would not operate as a
bar to Executive's sole means of support, are fully required to protect the
legitimate interests of the Company and do not confer a benefit upon the Company
disproportionate to the detriment to Executive. Executive acknowledges that
Executive has experience as a senior executive in retailing situations not
involving optical retailing.

                  5. RELEASE BY EXECUTIVE.

                  (a) In consideration of the payments made and to be made and
the benefits to be received by Executive pursuant to Paragraphs 3 and 4 of this
Agreement, Executive, for himself and the Executive's dependents, successors,
assigns, heirs, executors and administrators (and the Executive's and their
legal representatives of every kind), hereby releases, dismisses,

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remises and forever discharges the Company from any and all arbitrations,
claims, including claims for attorney's fees, demands, damages, suits,
proceedings, actions and/or causes of action of any kind and every description,
whether known or unknown ("claims"), which Executive now has or may have had
for, upon, or by reason of Executive's employment by or service with the Company
on or prior to the Effective Date, including but not limited to:

                           (i) discrimination, including but not limited to
                  claims of discrimination on the basis of sex, race, age,
                  national origin, marital status, religion or handicap,
                  including, specifically, but without limiting the generality
                  of the foregoing, any claims under the Age Discrimination in
                  Employment Act, as amended, Title VII of the Civil Rights Act
                  of 1964, as amended, the Americans with Disabilities Act, Ohio
                  Revised Code Section 4101.17 and Ohio Revised Code Chapter
                  4112, including Sections 4112.02 and 4112.99 thereof;

                           (ii) breach of any contract or promise, express or
                  implied; and

                           (iii) any and all tort claims.

                  (b) Executive further agrees and acknowledges that:

                           (i) Executive has been advised by the Company to
                  consult with legal counsel prior to executing and delivering
                  this Agreement and the release provided for in this Paragraph
                  5, has had an opportunity to consult with and to be advised by
                  legal counsel of the Executive's choice, fully understands the
                  terms of this Agreement, and enters into this Agreement
                  freely, voluntarily and intending to be bound;

                           (ii) Executive has been given a period of twenty-one
                  (21) days to review and consider the terms of this Agreement,
                  and the release contained herein, prior to its execution and
                  that the Executive may use as much of the twenty-one (21) day
                  period as the Executive desires; and

                           (iii) Executive may, within seven (7) days after
                  execution and delivery, revoke this release. Revocation will
                  be made by delivering a written notice of revocation to the
                  General Counsel at the Company. For such revocation to be
                  effective, written notice must be received by the General
                  Counsel at the Company no later than the close of business on
                  the seventh (7th) day after Executive executes this Agreement.
                  If Executive does exercise the Executive's right to revoke
                  this release, the Executive will forfeit the Executive's right
                  to receive any of the benefits provided for herein, without
                  affecting the effectiveness of Executive's resignations under
                  Paragraph 2.

                  (c) Executive agrees that the Executive will never file a
lawsuit or other complaint asserting any claim that is released in this
Paragraph 5.

                  (d) Executive's resignation is by mutual agreement between the
Company and Executive and Executive waives and releases any claim that the
Executive has or may have to

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reemployment. Executive agrees that Executive will not seek employment with the
Company at any time in the future.

                  6. CONFIDENTIAL INFORMATION; STATEMENTS TO THIRD PARTIES

                  (a) Executive acknowledges and agrees that, in the performance
of the Executive's duties as an officer and employee of the Company, the
Executive was and may be brought into frequent contact with, had or may have had
access to, and/or became or may become informed of confidential and proprietary
information of the Company and/or information which is a trade secret of the
Company (collectively, "Confidential Information"), as more fully described in
subparagraph (b) of this Paragraph 6. Executive acknowledges and agrees that the
Confidential Information of the Company gained by Executive during the
Executive's association with the Company was or will be developed by and/or for
the Company through substantial expenditure of time, effort and money and
constitutes valuable and unique property of the Company.

                  (b) Executive agrees that commencing on the Effective Date the
Executive will keep in strict confidence, and will not, directly or indirectly,
at any time, disclose, furnish, disseminate, make available, use or suffer to be
used in any manner any Confidential Information of the Company without
limitation as to when or how Executive may have acquired such Confidential
Information. Executive specifically acknowledges that Confidential Information
includes any and all information, whether reduced to writing (or in a form from
which information can be obtained, translated, or derived into reasonably usable
form), or maintained in the mind or memory of Executive and whether compiled or
created by the Company, which derives independent economic value from not being
readily known to or ascertainable by proper means by others who can obtain
economic value from the disclosure or use of such information, that reasonable
efforts have been put forth by the Company to maintain the secrecy of
Confidential Information, that such Confidential Information is and will remain
the sole property of the Company, and that any retention or use by Executive of
Confidential Information after the termination of Executive's services for the
Company will constitute a misappropriation of the Company's Confidential
Information.

                  (c) Executive further agrees that the Executive will return
(to the extent the Executive has not already returned), within ten (10) days of
the Effective Date, in good condition, all property of the Company, including,
without limitation, (i) property, documents and/or all other materials
(including copies, reproductions, summaries and/or analyses) which constitute,
refer or relate to Confidential Information of the Company, (ii) keys to the
Company property, (iii) files, (iv) computer programs and files, and (v)
blueprints or other drawings.

                  (d) Executive further acknowledges and agrees that the
Executive's obligation of confidentiality will survive, regardless of any other
breach of this Agreement or any other agreement, by any party hereto, until and
unless such Confidential Information of the Company has become, through no fault
of Executive, generally known to the public or Executive is required by law
(after providing the Company with notice and opportunity to contest such
requirement) to make disclosure. Executive's obligations under this Paragraph 6
are in addition to, and not in limitation or preemption of, all other
obligations of confidentiality which Executive

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may have to the Company under the Company's policies, general legal or equitable
principles or statutes and which will remain in full force and effect following
the Resignation Date.

                  (e) (i) Executive shall not, directly or indirectly, make or
cause to be made any statements to any third parties criticizing or disparaging
the Company or commenting on the character or business reputation of the
Company. Executive further hereby agrees that, without the prior written consent
of the Chief Executive officer of the Company, unless otherwise required by law,
the Executive will not (x) publicly comment in a manner adverse to the Company
concerning the status, plans or prospects of the business of the Company, (y)
publicly comment in a manner adverse to the Company concerning the status, plans
or prospects of any existing, threatened or potential claims or litigation
involving the Company, or (z) engage in any act or omission that would subject
the Company to public disrespect, scandal or ridicule; and (ii) the elected
officers of the Company shall not, and the Company shall use its reasonable best
efforts to not, directly make or cause to be made any statements to any third
parties that criticize or disparage Executive.

                  7. DISCLOSURE. Executive, for a period commencing on the date
of this Agreement through the end of the Non-Compete Period, agrees to
communicate the contents of Paragraphs 4, 6, 9 and 12 of this Agreement to any
Enterprise which the Executive intends to be employed by, associated in business
with, or represent.

                  8. BREACH.

                  (a) Executive acknowledges and agrees that the remedy at law
available to the Company for breach by Executive of any of the Executive's
obligations under Paragraphs 4 and 6 of this Agreement would be inadequate and
that damages flowing from such a breach would not readily be susceptible to
being measured in monetary terms. Accordingly, Executive acknowledges, consents
and agrees that, in addition to any other rights or remedies which the Company
may have at law, in equity or under this Agreement, upon adequate proof of
Executive's violation of any provision of Paragraph 4 or 6 of this Agreement,
the Company will

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<PAGE>   10



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.

                  (b) Without limiting the applicability of Paragraph 8(a), or
in any way affecting the right of the Company to seek equitable remedies
thereunder, the Company's obligation to make the payments under Paragraph 4(f)
shall terminate and be of not further force and effect in the event that
Executive breaches any of the provisions of Paragraph 4 or Paragraph 6 prior to
the third anniversary of the Effective Date, or engages in any activity that
would constitute a breach save for Executive's action being in a state where
Paragraph 4 is not enforceable as a matter of law.

                  (c) Without limiting the applicability of Paragraph 8(a) or in
any way affecting the right of the Company to seek equitable remedies
thereunder, in the event that Executive breaches any of the provisions of
Paragraph 4 or Paragraph 6 prior to the second anniversary of the Effective
Date, or engages in any activity that would constitute a breach save for
Executive's action being in a state where Paragraph 4 is not enforceable as a
matter of law, then (i) any remaining stock options described in Paragraph
3(b)(ii) will not be exercisable and shall be canceled, and (ii) any prior
exercise of options described in Paragraph 3(b)(ii) shall be rescinded. Upon
rescission, Executive shall pay, within ten days after notice of the rescission
has been given to Executive by the Company's chief executive officer or chief
legal officer, in cash, to the Company the difference between (i) the fair
market value of the shares of Company common stock underlying such options on
the date of exercise and (ii) the price paid by Executive to the Company on the
exercise of such options .

                  9. CONTINUED AVAILABILITY AND COOPERATION.

                  (a) Executive shall cooperate fully with the Company and with
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 conduct occurring (or claimed to have
occurred) during the period of Executive's employment by the Company. This
cooperation by Executive will include, but not be limited to:

                           (i) making himself 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 himself reasonably available and cooperating in the
                  preparation therefor as and to the extent that the Company or
                  the Company's counsel reasonably requests;

                           (iii) refraining from impeding in any way the
                  Company's prosecution or defense of such litigation or
                  administrative proceeding; and

                           (iv) cooperating fully in the development and
                  presentation of the Company's prosecution or defense of such
                  litigation or administrative proceeding.

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<PAGE>   11

                  (b) In addition to Executive's obligations under Paragraph
9(a), during the Non-Compete Period, at the request of the Board of Directors of
the Company, Executive shall make himself reasonably available for consultation
with and advice to the Board at times and for periods of time which are mutually
agreeable to the Board and Executive.

                  (c) Executive will be reimbursed by the Company for reasonable
travel, lodging, telephone and similar expenses, as well as reasonable
attorneys' fees (if independent legal counsel is necessary), incurred in
connection with any cooperation, consultation and advice rendered under this
Agreement. Executive shall not unreasonably withhold the Executive's
availability for such cooperation, consultation and advice.

                  (d) The Company shall pay Executive at a per diem rate of
$2,500 for each full day spent by Executive following the third anniversary of
the Effective Date in connection with any cooperation, consultation and advice
rendered under this Agreement.

                  10. RELEASE BY COMPANY; NO ADMISSION.

                  (a) The Company hereby releases, remises and acquits Executive
and the Executive's successors, heirs and advisers, jointly and severally, from
any and all claims, known or unknown, which the Company or its affiliates,
successors or assigns have or may have against any of such parties arising on or
prior to the date of this Agreement and any and all liability which any of such
parties may have to the Company, whether denominated claims, demands, causes of
action, obligations, damages or liabilities arising from any and all bases,
however denominated, including but not limited to all contractual claims and any
claims under law, excluding any claim relating to wilful misconduct, fraud or
criminal activity by Executive. The Company further agrees that the Company will
not file or permit to be filed any released claim. This release is for any
relief, no matter how denominated, including, but not limited to, injunctive
relief, compensatory damages or punitive damages. This release will not apply to
any obligation of Executive pursuant to this Agreement or any rights that the
Company or its affiliates may have to obtain contribution in the event of the
entry of judgment against the Company or any such affiliate as a result of any
act or failure to act for which both Executive and the Company or such affiliate
are jointly responsible.

                  (b) This Agreement does not constitute an admission of
liability or wrongdoing of any kind by the Company or its affiliates or
Executive.

                  11. SUCCESSORS AND BINDING AGREEMENT.

                  (a) This Agreement will be binding upon and inure to the
benefit of the Company and any successor of or to the Company, including,
without limitation, any persons acquiring directly or indirectly all or
substantially all of the business and/or assets of the Company whether by
purchase, merger, consolidation, reorganization or otherwise (and such successor
will thereafter be deemed included in the definition of "the Company" for
purposes of this Agreement), but will not otherwise be assignable or delegable
by the Company.

                  (b) This Agreement will inure to the benefit of and be
enforceable by Executive's personal or legal representatives, executors,
administrators, successors, heirs,

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<PAGE>   12

distributees and/or legatees. The death or disability (temporary or permanent)
of Executive following the execution and delivery of this Agreement will not
affect or revoke this Agreement or excuse any of the obligations of the parties
hereto.

                  (c) This Agreement is personal in nature and none of the
parties hereto shall, without the consent of the other parties, assign, transfer
or delegate this Agreement or any rights or obligations hereunder except as
expressly provided in subparagraphs (a) and (b) of this Paragraph 11.

                  (d) This Agreement is intended to be for the exclusive benefit
of the parties hereto, and except as provided in subparagraphs (a) and (b) of
this Paragraph 11, no third party will have any rights hereunder.

                  (e) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, operation of law or otherwise) to
all or substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform this Agreement.

                  12. NON-DISCLOSURE. Except to the extent that this Agreement
or the terms hereof become publicly known or available because of legally
mandated disclosure and filing requirements of the Securities and Exchange
Commission, or because of any other legal requirement that this Agreement or the
terms hereof be disclosed, all provisions of this Agreement and the
circumstances giving rise hereto are and will remain confidential and will not
be disclosed to any person not a party hereto (other than (i) Executive's
spouse, (ii) each party's attorney, financial advisor and/or tax advisor to the
extent necessary for such advisor to render appropriate legal, financial and tax
advice, and (iii) persons or entities referred to in Paragraph 7 of this
Agreement, but only to the extent required thereby).

                  13. NOTICES. For all purposes of this Agreement, all
communications provided for herein will be in writing and will be deemed to have
been duly given when delivered, addressed to the Company (to the attention of
the General Counsel) at its principal executive offices and to Executive at the
Executive's principal residence at 469 Fox Run Trail, Aurora, Ohio 44202 or to
such other address as any party may have furnished to the other in writing and
in accordance herewith. Notices of change of address will be effective only upon
receipt.

                  14. TAXES, PAYMENTS, CERTAIN ADDITIONAL PAYMENTS BY THE
COMPANY.

                  (a) Executive shall be responsible for Executive's share of
any and all federal, state and/or local taxes applicable to the payments made,
and benefits provided or made available, to Executive pursuant to this
Agreement.

                  (b) The payments to Executive pursuant to Paragraphs 3 and 4
of this Agreement will be made by check or direct deposit to an account
designated by Executive, and will be reduced by any applicable federal, state
and local tax or other required withholding, except to the extent the amount to
be withheld may be reduced by appropriate waiver or other action by Executive,
and Executive provides the Company with such waiver or other appropriate

                                      -12-
<PAGE>   13

instrument in form and substance reasonably satisfactory to the Company. The
Company acknowledges that from and after the Effective Date, the tax residence
of Executive will be in Aurora, Ohio, and that he will not be employed in or
paid in Twinsburg, Ohio..

                  (c) The provisions of EXHIBIT A are hereby incorporated herein
and made a part hereof.

                  15. AMENDMENT AND WAIVER. No provision of this Agreement may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing signed by Executive and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto or compliance
with any condition or provision of this Agreement to be performed by such other
party will be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.

                  16. ENTIRE AGREEMENT; CONTINUING INDEMNIFICATION RIGHTS;
CANCELLATION OF EMPLOYMENT AGREEMENT.

                  (a) Except as expressly provided in this Agreement, this
Agreement will constitute the entire agreement among the parties hereto with
respect to the subject matters covered by this Agreement and will supersede all
prior verbal or written agreements, covenants, communications, understandings,
commitments, policies, representations or warranties, whether oral or written,
by any party hereto or any of its representatives pertaining to such subject
matter.

                  (b) This Agreement will not affect any indemnification or
other rights under any indemnification agreement between Executive and the
Company or the Company's regulations. The Company shall continue Executive's
coverage under the directors' and officers' liability coverage maintained by
Company, as in effect from time to time, to the same extent as other current and
former senior executive officers and directors of the Company.

                  (c) The Employment Agreement dated as of April 1, 1996 and the
letter agreement dated May 11, 1993 between the Company and Executive are each
hereby canceled and are of no further force and effect.

                  (d) The parties hereto acknowledge and agree that each party
has reviewed and negotiated the terms and provisions of this Agreement and has
had the opportunity to contribute to its revision. Accordingly, the rule of
construction to the effect that ambiguities are resolved against the drafting
party will not be employed in the interpretation of this Agreement. Rather, the
terms of this Agreement will be construed fairly as to both parties hereto and
not in favor or against either party.

                  17. GOVERNING LAW; JURISDICTION; VENUE. The validity,
interpretation, construction and performance of this Agreement will be governed
by and construed in accordance with the substantive laws of the State of Ohio,
without giving effect to the principles of conflict of laws of such State. The
parties agree that the state and federal courts located in the State of Ohio
will have exclusive jurisdiction in any action, suit or proceeding against
Executive 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

                                      -13-
<PAGE>   14

proceeding against Executive; 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.

                  18. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement will not affect the validity or enforceability of
any other provision of this Agreement which will nevertheless remain in full
force and effect.

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

                [the remainder of this page intentionally blank]


                                      -14-

<PAGE>   15





                  20. CAPTIONS AND PARAGRAPH HEADINGS. Captions and paragraph
headings used herein are for convenience and are not part of this Agreement and
will not be used in construing it.

                  21. FURTHER ASSURANCES. Each party hereto shall execute such
additional documents, and do such additional things, as may reasonably be
requested by the other party to effectuate the purposes and provisions of this
Agreement.

                  IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement on the date set forth above.


                                           COLE NATIONAL CORPORATION



Witness:_____________________          By:_____________________________

                                          Its:



Witness:_____________________             _____________________________
                                                 Brian B. Smith


                                      -15-

<PAGE>   16



                                    EXHIBIT A
                                    ---------




                  CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. (a) In the event
that it is determined (as hereafter provided) that any payment (other than the
Gross-Up payments provided for in this Exhibit A) or distribution by the Company
or any of its affiliates to or for the benefit of the Executive, whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise pursuant to or by reason of any other agreement, policy, plan,
program or arrangement, including without limitation any stock option,
performance share, performance unit, stock appreciation right or similar right,
or the lapse or termination of any restriction on or the vesting or
exercisability of any of the foregoing (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") (or any successor provision thereto) by reason of being
considered "contingent on a change in ownership or control" of the Company,
within the meaning of Section 280G of the Code (or any successor provision
thereto) or to any similar tax imposed by state or local law, or any interest or
penalties with respect to such tax (such tax or taxes, together with any such
interest and penalties, being hereafter collectively referred to as the "Excise
Tax"), then the Executive will be entitled to receive an additional payment or
payments (collectively, a "Gross-Up Payment"); PROVIDED, HOWEVER, that no
Gross-up Payment will be made with respect to the Excise Tax, if any,
attributable to (i) any incentive stock option, as defined by Section 422 of the
Code ("ISO") granted prior to the execution of this Agreement, or (ii) any stock
appreciation or similar right, whether or not limited, granted in tandem with
any ISO described in clause (i). The Gross-Up Payment will be in an amount such
that, after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payment.

                  (b) Subject to the provisions of Paragraph (f), all
determinations required to be made under this Exhibit A, including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required to be paid by the Company to the
Executive and the amount of such Gross-Up Payment, if any, will be made by a
nationally recognized accounting firm (the "Accounting Firm") selected by the
Company in its sole discretion. The Company shall direct the Accounting Firm to
submit its determination and detailed supporting calculations to both the
Company and the Executive at such time or times as may be requested by the
Company or the Executive. If the Accounting Firm determines that any Excise Tax
is payable by the Executive, the Company shall pay the required Gross-Up Payment
to the Executive within five business days after receipt of such determination
and calculations with respect to any Payment to the Executive. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it is, at the
same time as it makes such determination, to furnish the Company and the
Executive an opinion that the Executive has substantial authority not to report
any Excise Tax on the Executive's federal, state or local income or other tax
return. As a result of the uncertainty in the application of Section 4999 of the
Code (or any successor provision thereto) and the possibility of similar
uncertainty regarding applicable state or local tax law at the time of any
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (an

                                       1
<PAGE>   17

"Underpayment"), consistent with the calculations required to be made hereunder.
In the event that the Company exhausts or fails to pursue its remedies pursuant
to Paragraph (f) and the Executive thereafter is required to make a payment of
any Excise Tax, the Executive shall direct the Accounting Firm to determine the
amount of the Underpayment that has occurred and to submit its determination and
detailed supporting calculations to both the Company and the Executive as
promptly as possible. Any such Underpayment will be promptly paid by the Company
to, or for the benefit of, the Executive within five business days after receipt
of such determination and calculations.

                  (c) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determinations and
calculations contemplated by Paragraph (b). Any determination by the Accounting
Firm as to the amount of the Gross-Up Payment will be binding upon the Company
and the Executive.

                  (d) The federal, state and local income or other tax returns
filed by the Executive are to be prepared and filed on a consistent basis with
the determination of the Accounting Firm with respect to the Excise Tax payable
by the Executive. The Executive shall make proper payment of the amount of any
Excise Payment, and at the request of the Company, provide to the Company true
and correct copies (with any amendments) of the Executive's federal income tax
return as filed with the Internal Revenue Service and corresponding state and
local tax returns, if relevant, as filed with the applicable taxing authority,
and such other documents reasonably requested by the Company, evidencing such
payment. If prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the
Executive shall within five business days pay to the Company the amount of such
reduction.

                  (e) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated by
Paragraph (b) will be borne by the Company. If such fees and expenses are
initially paid by the Executive, the Company shall reimburse the Executive the
full amount of such fees and expenses within five business days after receipt
from the Executive of a statement therefor and reasonable evidence of the
Executive's payment thereof.

                  (f) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by the Company of a Gross-Up Payment. Such
notification will be given as promptly as practicable but no later than 10
business days after the Executive actually receives notice of such claim and the
Executive shall further apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid (in each case, to the extent
known by the Executive). The Executive shall not pay such claim prior to the
earlier of (i) the expiration of the 30-calendar-day period following the date
on which the Executive gives such notice to the Company and (ii) the date that
any payment of amount with respect to such claim is due. If the Company notifies
the Executive in writing prior to the expiration of such period that it desires
to contest such claim, the Executive shall:


                                       2

<PAGE>   18

                           (iii) provide the Company with any written records or
                  documents in the Executive's possession relating to such claim
                  reasonably requested by the Company;

                           (iv) take such action in connection with contesting
                  such claim as the Company may reasonably request in writing
                  from time to time, including without limitation accepting
                  legal representation with respect to such claim by an attorney
                  competent in respect of the subject matter and reasonably
                  selected by the Company;

                           (v) cooperate with the Company in good faith in order
                  effectively to contest such claim; and

                           (vi) permit the Company to participate in any
                  proceedings relating to such claim;

PROVIDED, HOWEVER, that the Company will bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Paragraph (f), the Company will control all proceedings taken in connection with
the contest of any claim contemplated by this Paragraph (f) and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
(provided, however, that the Executive may participate therein at the
Executive's own cost and expense) and may, at its option, either direct the
Executive to pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company may determine;
PROVIDED, HOWEVER, that if the Company directs the Executive to pay the tax
claimed and sue for a refund, the Company shall advance the amount of such
payment to the Executive on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income or
other tax, including interest or penalties with respect thereto, imposed with
respect to such advance; and PROVIDED FURTHER, HOWEVER, that any extension of
the statute of limitations relating to payment of taxes for the taxable year of
the Executive with respect to which the contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control of
any such contested claim will be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive will be entitled
to settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.

                  (g) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Paragraph (f), the Executive receives any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Paragraph (f)) promptly pay to the Company
the amount of such refund (together with any interest paid or credited thereon
after any taxes applicable thereto). If, after the receipt by the Executive of
an amount advanced by the Company pursuant to Paragraph (f), a determination is

                                       3
<PAGE>   19

made that the Executive will not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to
contest such denial or refund prior to the expiration of 30 calendar days after
such determination, then such advance will be forgiven and will not be required
to be repaid and the amount of any such advance will offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid by the Company to
the Executive pursuant to this Exhibit A.


                                        4