SEPARATION AGREEMENT AND RELEASE OF ALL CLAIMS

SEPARATION AGREEMENT AND RELEASE OF ALL CLAIMS

This AGREEMENT (this “Agreement”) is made and entered into by and between Raymond A. Cardonne, Jr. (the “Executive”) and Refac Optical Group (the “Company”) as of February 28, 2007.

WHEREAS, the Executive has been employed by the Company pursuant to an Employment Agreement dated as of April 1, 2005, as amended on March 30, 2006 (the “Employment Agreement”);

WHEREAS, the Company has decided to eliminate the Executive’s position due to a reduction in force and reorganization;

WHEREAS, the Executive shall resign from his employment with the Company effective February 28, 2007;

WHEREAS, the Company and the Executive believe it is in the best interests of the Company to enter into this Agreement and provide for an orderly transition of the Executive from the Company, and the agreements provided herein, in exchange for the benefits to the Executive set forth herein.

WHEREAS, the Company and the Executive, who have received independent legal advice in this matter, wish to resolve all matters between them by providing Executive with the separation benefits agreed upon in this Agreement;

NOW, THEREFORE , in consideration of the separation benefits as outlined below, the parties have reached a full and final resolution of any and all matters in controversy, disputes, causes of action, claims, contentions and differences between them, and hereby agree and understand as follows:

1.1.        The persons released pursuant to Section 1.2 shall be defined as the Company, its successors, assigns, representatives, insurers, parents, subsidiaries, divisions, affiliates and related companies, present and former officers, agents, directors, supervisors, attorneys, employees, and each and every one of them and their heirs, executors, administrators, successors and assigns, and all persons acting by, through, under or in concert with them.

1.2.        Executive does hereby irrevocably and unconditionally release and forever discharge, and by these presents do for himself, his heirs, beneficiaries, executors, administrators, representatives, spouses, children, successors and assigns, release and forever discharge the Company and its successors, assigns, representatives, insurors, parents, subsidiaries, divisions, affiliates and related companies, present and former officers, agents, directors, supervisors, attorneys, employees, insurers, and each and every one of them and their heirs, executors, administrators, successors and assigns, and all persons acting by, through, under or in concert with them of and from any and all manner of action and actions, cause and causes of action, suits, claims, debts, sums of money, accounts, reckonings, bonds, bills, claims for attorneys’ fees, interest, expenses and costs, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, executions, claims and demands of any nature whatsoever known or unknown, suspected or unsuspected, in law or in equity, civil or criminal, vested or contingent, which Executive ever had, now has or asserts or which he or his heirs, executors, successors, assigns or administrators hereafter can, shall or may have or assert against the Company, for, upon, or by reason of any matter, cause or thing whatsoever from the beginning of the world to the date hereof, it being the intention herein to release the Company from any and all claims of any and every nature, whether known or unknown, unrestricted in any way by the nature of the claim, including, though not by way of

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limitation, all matters that were asserted or could have been asserted in all actions or claims identified above or any matter arising out of Executive’s employment with the Company, and any other state or federal statutory, constitutional, contract or common law claims, including, but not limited to, all claims, including those brought under the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. §621, et seq. (“ADEA”), Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §2000e, et seq. , (“Title VII”), the Reconstruction Era Civil Rights Act, as amended, 42 U.S.C §1981, et seq. (“Civil Rights Act”), the Civil Rights Act of 1991, as amended, 42 U.S.C. §1981a, et seq . (“CRA of 1991”), the Americans with Disabilities Act, 42 U.S.C. §12101, et seq. (“ADA”), the Family and Medical Leave Act, 29 U.S.C. §2601, et seq. (“FMLA”), the Fair Labor Standards Act, 29 U.S.C. §201, et seq. (“FLSA”), the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C §1001, et seq. (“ERISA”), the Equal Pay Act, 29 U.S.C. §201, et seq. , (“EPA”), the Rehabilitation Act, 29 U.S.C. §701, et seq. (“RA”), Whistleblower Protection Statutes, 10 U.S.C §2409, 12 U.S.C. §1831j, 31 U.S.C. §5328, 41 U.S.C. §265, (collectively as “WPS”), the New Jersey Law Against Discrimination (“NJLAD”), N.J.S.A. 10:5-1 et seq., The Conscientious Employee Protection Act, N.J.S.A. 34:19-1 et. seq. (“CEPA”), and/or any and all other federal, state or local statutes, laws, rules and regulations pertaining to employment, as well as any and all claims under state contract, common or tort law, including claims for breach of contract, promissory estoppel, detrimental reliance, breach of a covenant of good faith and fair dealing, negligent retention, defamation, loss of consortium, breach of public policy or for benefits (except for vested benefits), except that the Executive specifically reserves the right to enforce the terms and conditions of this Agreement against the Company for any breach of a duty, condition or responsibility outlined herein. Notwithstanding this Agreement, the Company acknowledges that Executive is not releasing (a) his vested 401(k) plan balance, (b) benefits under COBRA and the New Jersey state law

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continuation coverage provisions for health and dental insurance, (c) any claim for indemnification under any federal or state law, or under the Company's Certificate of Incorporation or by-laws, (d) coverage under any insurance policy maintained by the Company now or in the future, or (e) any claim for workers compensation.

1.3.        The Company hereby agrees and acknowledges that by signing this Agreement, it is, to the maximum extent permitted by law, and the Company By-Laws, waiving and releasing its rights to assert any form of legal claim against the Executive whatsoever, for any alleged action, inaction, or circumstance existing or arising from the beginning of time through the execution of this Agreement. The Company’s waiver and release herein is intended to bar any form of legal claim, charge, complaint or any other form of action against the Executive, or his heirs, executors or assigns seeking any form of relief, including, without limitation, equitable relief (whether declaratory, injunctive or otherwise), the recovery of any damages, or any other form of monetary recovery whatsoever, including, without limitation, compensatory damages, punitive damages, attorney’s fees and any other costs against the Executive, for any alleged action, inaction or circumstance existing, or arising, through the date of the execution of this Agreement. Notwithstanding this Agreement, the Executive acknowledges that the Company is not releasing the Executive from any action (i) where he knowingly acted in bad faith and in a manner that was not in the best interests of the Company or (ii) if he had reasonable cause to believe that his conduct was criminally unlawful. Furthermore, and notwithstanding the foregoing, this section does not release the Executive from any obligation expressly set forth in this Agreement.

1.4.        Except as to those provisions dealing with confidentiality (Section 18), the Executive's Employment Agreement is hereby terminated.

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2.1.        Executive understands that, in consideration for the promises and agreements set forth herein, Executive and the Company agree to the following:

2.2.        The Company will pay to Executive as full and complete settlement and final satisfaction of the claims raised and any and all other claims that Executive has or may have against the Company through the date of execution of this Agreement in accordance with the following manner:

2.2.1    The Company will pay to Executive the gross sum of THREE HUNDRED SIXTY FIVE THOUSAND EIGHT HUNDRED EIGHTY-THREE DOLLARS ($365,883.00) minus (a) any portion thereof which Executive may request in writing be paid into his 401(k) account for 2007 and (b) lawful withholding deductions. The Company shall issue an IRS Form W-2 to Executive.

2.2.3     With respect to all outstanding stock options held by the Executive, all outstanding stock options held by the Executive as of the execution date of this Agreement shall become vested and shall be deemed cancelled in exchange for a lump sum payment of ONE HUNDRED SEVENTEEN THOUSAND ONE HUNDRED TEN DOLLARS ($117,110.00). This amount, in addition to the amount set forth in ¶2.2, shall be paid by wire transfer within ten (10) calendar days of execution of this Agreement.

2.2.4.    The Company acknowledges and represents that the Executive is in no way restricted from exercising his Payment Right for any shares he might own regardless of any prior understandings, whether written or oral.

2.3.        Executive’s and his eligible dependents’ health and dental insurance shall remain in effect until the close of business on February 28, 2007 after which Executive and his eligible

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dependents shall be eligible for group health and dental continuation coverage as provided under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) and the continuation coverage provisions under New Jersey state law at the same level of coverage as Executive and his eligible dependents held on February 28, 2007. Such coverage shall be at the Executive’s expense, except that the Company shall pay One Hundred percent (100%) of the Executive’s and his eligible dependents health and dental premiums (i.e. COBRA or New Jersey state continuation costs) through February 29, 2008, subject to any normal employee co-pays and deductibles, which will continue to be paid by Executive at the same level as paid by the Executive on February 28, 2007. Should the Company terminate its current health or dental insurance plan or carrier or Third Party Administrator, in any way, shape or form, it must provide continuation coverage to the Executive and his eligible dependents under any new plan or with any new carrier or with individual policies, if necessary. If Executive is paying for COBRA premiums with one of the above events having taken place, the Company warrants that the premium will be no more than the COBRA premium as of February 28, 2007 and any savings in premium will be passed on to Executive. This is a material provision of this Agreement. Notwithstanding the above, the Company shall cease to pay Executive’s and his eligible dependents’ health and dental premiums upon Executive becoming eligible, at any time before February 29