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:

 

 

 

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1.

RELEASE

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.

PAYMENT

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.

 

2.2.2.

All accrued but unpaid salary and 3.5 accrued vacation days.

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, 2008,
for health and/or dental insurance from another employer. Executive shall
promptly notify the Company when he becomes so eligible.

2.4.        The Company hereby agrees to keep Executive on its life, accidental
death and disability, and disability insurance policies and to pay One Hundred
percent (100%) of the premiums through February 29, 2008. Notwithstanding the
above, the Company shall cease to pay the premiums for any particular insurance
upon Executive becoming eligible, at any time

 

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before February 29, 2008, for such insurance from another employer. Executive
shall promptly notify the Company when he becomes so eligible.

2.5.        The Company shall pay for outplacement services for Executive at a
level and through a provider designated by the Company.

2.6.        The Company shall reimburse the Executive for any outstanding
business expenses for which he is entitled to be reimbursed within ten (10)
calendar days of Executive's execution of this Agreement.

2.7.        All payments under this Agreement must be paid within ten (10)
calendar days of Executive's execution of this Agreement. The Company shall
issue the required tax documentation to the Executive.

2.8.         Notwithstanding any other provision of this Agreement, the Company
may withhold from any amounts payable under this Agreement, or any other
benefits received pursuant hereto, such minimum federal, state and/or local
taxes as shall be required to be withheld under any applicable law or
regulation. Each of the Executive and the Company shall bear their respective
tax liabilities, if any, resulting from this Agreement. The Executive
acknowledges that the Company has made no representations about the tax
consequences of any amount received by him pursuant to the terms of this
Agreement.

2.9.        Executive acknowledges that the payment of the monies set forth
above represent any and all monies to be paid by or for Company.

 

3.

INDEMNIFICATION

3.1.        The Company shall indemnify and hold the Executive harmless from and
against all claims and liabilities, whether they proceed to judgment, or are
settled, and to which the Executive may become subject by reason of his being,
or having been an officer and shareholder

 

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of the Company, or by reason of any action alleged to have been taken or omitted
by him as an officer and shareholder of the Company.

Should the Executive be sued for any alleged actions related to his employment
with the Company, or should he become a target of any investigation by any
local, state, or federal government agency for any alleged actions related to
his employment with the Company, or should the Executive be indicted, or
otherwise be subjected to criminal prosecution for any alleged actions related
to his employment with the Company, the Company agrees to indemnify Executive
for all damages assessed, settlement monies paid, attorney’s fees and costs,
including, but not limited to court costs, expert witnesses, and any and all
other costs incurred in connection with the alleged action. Notwithstanding this
Section 3.1, the Executive shall not be indemnified or reimbursed under the
foregoing provisions in any matter if it shall be determined that the
Executive’s actions or omissions, constituted willful misconduct, or bad faith
in the conduct of his duties on behalf of the Company, or such action or
omission was for personal, economic gain.

The rights accruing to the Executive under this section shall supplement any
other right of indemnity to which he may be entitled at law or equity, or under
the Certificate of Incorporation of the Company and the Company’s By-Laws as the
same were constituted on February 28, 2007.

It is further understood that any further changes that may be made to the
Company’s Certificate of Incorporation, or By-Laws, will not adversely affect
any right of protection or indemnification of the Executive. It is further
agreed that if enhanced indemnification coverage is provided to any officer of
the Company, the Executive will be provided with the same enhanced coverage.

 

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3.2.        The Company warranties and represents that it will provide coverage
to Executive with Directors’ and Officers’ Liability Insurance policy to the
same extent as the Company’s officers.

 

4.

RESIGNATION

4.1.        Executive resigns from employment with Company effective February
28, 2007. As of such date Executive resigns from all director, officer, resident
agent or committee positions with Company and any of its subsidiaries and
affiliates. Executive agrees to execute any separate resignation notices for
such purpose as requested by Company.

 

5.

CONSIDERATION

5.1.        Executive further acknowledges that the only consideration for
signing this Agreement is as set forth in this Agreement; that the consideration
received for executing this Agreement is greater than that ordinarily provided
by Company under any contract, severance plan, policy or practice; that no other
promise or agreements of any kind have been made to him or with him by any
person or entity whatsoever to cause him to sign this Agreement; that he is
competent to execute this Agreement; and that he has been advised and given the
opportunity to consult advisors, legal and otherwise, of his own choosing; that
he has had up to twenty-one (21) days to consider and review this Agreement; and
that he fully understands the meaning and intent of this Agreement.

5.2.        Both the Company and the Executive acknowledge and represent that
they have relied on independent legal advise as to all matters included in this
Agreement, and have not relied upon any representation of the other party,
outside of this written Agreement.

 

6.

CONFIDENTIALITY

6.1.        The Executive understands and agrees that he shall keep confidential
and shall make no disclosure of, nor reference to, the existence or the terms of
this Agreement to any

 

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person, firm, corporation, association, partnership or any entity of any kind,
or individual whatsoever, including, but not limited to, current, former or
future employees, officers, or directors of the Company, or any of their related
or commonly controlled entities. This confidentiality requirement shall not
prohibit the Executive or his attorney from disclosure to Executive's spouse,
his children, his accountants, health care providers, outplacement firms,
financial advisors and/or attorneys, taxing authorities, or in compliance with
valid court process.

6.2.        If the Company files the Agreement with any governmental agency, or
otherwise discloses the terms of this Agreement to anyone other than an officer,
director, attorney, or employee of the Company, the Company shall notify the
Executive within two (2) calendar days of disclosure.

6.3.        The Executive shall hold confidential all information, knowledge or
data (whether written; electronic or oral) relating to the Company or any of its
affiliates that he has obtained during his employment by the Company or any of
its affiliates that is not public knowledge as defined in Section 18 of his
Employment Agreement (“Confidential Information”). The Executive shall not
communicate, divulge or disseminate Confidential Information at any time, except
with the prior written consent of the Company or as otherwise required by law or
legal process. This ¶ 6.3 shall not apply to any such Confidential Information
which is or becomes in the public domain, or is generally disclosed to third
parties by the Company without restrictions on such third parties. The Executive
shall return to Company, if he has not already done so, without retaining any
copies, all Confidential Information, including, but not limited to, documents
and memoranda, and all other property belonging to the Company which is in the
Executive's possession or control and of which he is aware. If he subsequently
discovers that he has any additional Confidential Information, he shall promptly
turn same over to the Company.

 

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6.4.       Nothing contained in the foregoing shall be deemed to prohibit or
restrict testimony or statements in any legal or administrative proceeding,
action, deposition, affidavit, certification, investigation or inquiry regarding
the Company or the Executive's employment.

 

7.

NON-DISPARAGEMENT

7.1.        The Executive shall not make, participate in the making of, or
encourage any other person to make, any statements, written or oral, that
criticize, disparage, or defame the goodwill or reputation of, or which is
intended to embarrass or adversely affect the morale of, the Company, or any of
its present, former or future directors, officers, executives, employees and/or
affiliates.

7.2.        The Company shall not make, participate in the making of, or
encourage any other person to make, any statements, written or oral, that
criticize, disparage, or defame the goodwill or reputation of, or which is
intended to embarrass or adversely affect the morale of, the Executive. In
addition, the Company shall use reasonable efforts consistent with prudent
business practices to discourage its present, former or future directors,
officers, executives, employees and/or affiliates from making any such
disparaging remarks about the Executive.

7.3.        Each of the Company and the Executive shall not make any negative
statements, written or oral, relating to Executive's employment or the
termination of his employment, or any aspect of the business of the Company or
any of its affiliates.

7.4.         Nothing contained in the foregoing shall be deemed to prohibit or
restrict testimony or statements in any legal or administrative proceeding,
action, deposition, affidavit, certification, investigation or inquiry regarding
the Company or the Executive's employment.

 

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8.

CHOICE OF LAW AND FORUM

8.1.        This Agreement shall in all respects be interpreted, enforced, and
governed under the substantive and procedural laws of the State of New Jersey.
The parties hereby agree that any and all disputes regarding this Agreement
shall be submitted to the Superior Court for the State of New Jersey, or if
subject matter jurisdiction exists, the United States District Court for the
District of New Jersey.

 

9.

NOTICES

9.1.        All notices and other communications hereunder shall be in writing;
shall be delivered by hand delivery to the other party or mailed by registered
or certified mail, return receipt requested, postage prepaid; shall be deemed
delivered upon actual receipt; and shall be addressed as follows:

If to the Executive:

Raymond A. Cardonne, Jr.

81 Katydid Drive

Branchburg, New Jersey 08876

Tel: (908) 203-9328

 

 

Edward F. Broderick, Jr.

Broderick, Newmark & Grather, P.C.

20 South Street

Morristown, New Jersey 07960

Tel: (973) 538-0084

If to the Company:

Refac Optical Group

5 Harmon Drive, Building D

Blackwood, New Jersey 08012

Attn: Chief Executive Officer

Tel: (856) 228-0077, ext. 2881

 

John C. Cashen

Bodman LLP

201 W. Big Beaver Road, Suite 500

Troy, Michigan 48084

Tel: (248) 743-6077

or to such other address as either party shall have furnished to the other in
writing in accordance herewith.

 

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10.

CONSTRUCTION

10.1.      The language of all parts of this Agreement shall in all cases be
construed as a whole, according to its fair meaning and not strictly for or
against any of the parties. There shall be no presumption or construction
against the party who caused this Agreement to be drafted.

 

11.

ENTIRE AGREEMENT

11.1.     This Agreement sets forth the entire Agreement between the parties
hereto and supersedes any and all prior agreements or understandings, written or
oral, between the parties hereto pertaining to the subject matter hereof, except
that the provisions of Section 18 of the Employment Agreement on confidential
information shall continue in force. This Agreement cannot be modified orally
but only in a written document signed by Executive and the President and CEO of
the Company.

 

12.

WHO IS BOUND

12.1.      All signatories to this Agreement are hereby bound by its terms. All
who succeed to the rights and responsibilities of all signatories, including
heirs, executors, assigns and successors in interest, are also bound by this
Agreement.

 

13.

REVOCATION

13.1.      It is understood and agreed that Executive may revoke this Agreement
for any reason for a period of seven (7) days following the execution of this
Agreement. Any such revocation must be in writing, signed by Executive and
delivered or mailed so as to arrive within such seven (7) days to J. David
Pierson, President and CEO, at the Company address in Section 9.1.

 

14.

NON-ADMISSIONS

14.1.      This Agreement is not an admission of liability or wrongdoing by any
party. Each party agrees that it will not characterize the actions of any other
party as an admission of

 

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liability or wrongdoing on the part of the other party.

 

15.

RESTRICTIONS ON BUSINESS ACTIONS

a.            Non-Solicitation. Executive agrees that for one (1) year after the
execution of this Agreement, Executive shall not directly or indirectly or
through another entity or person, induce or attempt to induce any customer,
i.e., any prior or current customer of Company or its subsidiaries, potential
customer, i.e., any entity identified in documents of the Company or its
subsidiaries within the last one (1) year as a target for potential business,
supplier, or other business relation of Company to (i) cease doing business with
Company or its subsidiaries, (ii) do business with an entity or person other
than Company or its subsidiaries with respect to business which is competitive
with the business of Company or its subsidiaries or (iii) in any way interfere
with the relationship between any such customer, potential customer, supplier,
or business relation and Company or it subsidiaries.

b.            Non-hiring of Company Employees. For two (2) years after the
execution of this Agreement, Executive shall not directly or indirectly or
through another entity or person (i) induce or attempt to induce any Restricted
Employee to leave the employ of Company or its subsidiaries or in any way
interfere with the relationship between Company or its subsidiaries and any
Restricted Employee or (ii) hire any Restricted Employee. A “Restricted
Employee” is a person who was an employee of Company or its subsidiaries at any
time during Executive’s employment with Company or the foregoing two (2) year
period; provided that such person shall not be considered a Restricted Employee
one (1) year after such person is no longer an employee of Company or its
subsidiaries.

 

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16.

NO SUPPORT FOR CLAIMS AGAINST COMPANY

16.1.      Unless compelled by law, Executive will not provide, directly or
indirectly, any information, encouragement or assistance to any person or entity
considering or pursuing a claim or lawsuit against Company or its subsidiaries.

 

17.

RETURN OF PROPERTY

17.1.      Executive shall promptly return all property of Company in his
possession including, but not limited to: laptop, docking station, blackberry,
keys or access cards, software, equipment and Company records, whether
electronic or printed, without retaining any copies thereof. Executive
represents that he has destroyed, and after February 28, 2007 will never use,
the Company American Express card in his name.

 

18.

CONTINUED ASSISTANCE

18.1.      Executive agrees to be reasonably available to Company from time to
time for the purpose of providing input, consultation or advice on matters which
were pending as of, or preceded, his last date of employment. These contacts
will usually be telephonic in nature and will not unreasonably interfere with
Executive’s ability to engage in other pursuits. Executive shall not be eligible
for any compensation for this assistance.

 

19.

COOPERATION IN FUTURE PROCEEDINGS

19.1.      Executive agrees to cooperate fully with Company in its defense of or
other participation in any administrative, judicial, arbitral, investigative or
other proceeding arising from any charge, complaint or other action that has
been or may be filed, or with respect to which the Company may become involved,
relating to any matter occurring during Executive’s employment with Company.
Executive shall not be eligible for any compensation for this cooperation other
than regular witness fees and reimbursement for his reasonable out-of-pocket
costs, except that Executive shall be reimbursed for any actual loss of salary
(per diem) incurred

 

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by him for any absence from work caused by the need to testify before any court,
committee, regulatory body, agency or tribunal.

 

20.1

VIOLATION OF AGREEMENT

20.1.      In any action for violation of this Agreement, the prevailing party
shall be entitled to recover its/his reasonable costs and attorney fees.

 

21.

COUNTERPARTS, FACSIMILES AND COPIES

21.1.      The parties agree that this Agreement may be executed in
counterparts. The parties further agree that a facsimile or copy of a signature
shall have the same force and effect as an original.

IN WITNESS WHEREOF, each of the parties hereto has duly executed this Agreement
effective as of the date first set forth above.

Executive:

 

RAYMOND A. CARDONNE, JR.

 

 

/s/ Raymond A. Cardonne                              

 

 

Dated: March 30, 2007

 

The Company:

 

REFAC OPTICAL GROUP

 

 

By:    /s/ J. David Pierson                                

 

Its: President and CEO

Dated: March 30, 2007

 

 

 

 

 

 

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