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                                   EXHIBIT 10
                    SEPARATION AGREEMENT, DATED MAY 1, 2001,
                     BETWEEN HMG AND ROBERT V. CUDDIHY, JR.



                                                                     May 1, 2001

BY HAND

Robert V. Cuddihy, Jr.
50 Shannon Hill Road
Basking Ridge, NJ 07920-2920

                              RE: Separation Letter


Dear Robert:

         This letter confirms our discussion today with respect to your
separation from employment with HMG Worldwide Corporation and each of its
Subsidiaries (the "Company") and the terms and conditions thereof.

         1. Effective May 1, 2001(the "Separation Date"), your employment with
the Company shall terminate and you shall have no further job responsibilities
with the Company as the Chief Financial Officer and Chief Information Officer.
You will continue, however, to remain on the payroll, as described in paragraph
3(a) below, for the period commencing May 1, 2001 and ending May 1, 2003
("Severance Period").

         2. You acknowledge that you have never had, and as of the Separation
Date, did not have, any written contract of employment with the Company. All
oral agreements and understandings are incorporated within this document.

         3. In consideration for your execution of the General Release (annexed
hereto as Exhibit A) of all claims, except as specified therein, which you may
have against the Company and for your seventeen years of service with the
Company:

                  (a) The Company shall pay the sum of $500,000 in evenly
monthly installments of $20,833 per month during the Severance Period. At your
election, you may remain on the Company's payroll payable bi-monthly subject
only to deductions of state and federal tax withholding and 401-K elective
contributions in accordance with past practice, or you may elect to invoice the
Company as an independent consultant in the amount of $20,833 per month, payable
by the 5th calendar date of each month. Your direct compensation during this
period, an aggregate of $500,000, represents the full extent of your severance
pay from the Company. In the event that payment is not made timely, the Company
has 7 calendar days to cure or all amounts, at the sole election of you, may
become immediately due and payable.

                  (b) During the Severance Period, or until the date on which
you are enrolled in another medical plan, whichever is sooner, the Company shall
continue to make premium payments on your behalf at no cost to you for your
existing medical and dental coverage and any other employment benefits currently
offered by the Company, including but not limited to life insurance, short-term
disability, long-term disability, and HMG's Capital Accumulation Plan. At the
end of such period, you shall have the right and option under COBRA to elect to
continue such coverage for a period of twenty-four months. In that event, you
shall be solely responsible for applicable payments in respect of the premiums
for such coverage, and shall forward such premiums to the Company prior to the
first day of every month. You, at your sole option, may continue to participate
in the 401-K and the Company will continue to make its corresponding quarterly
and annual matching contributions.

                  (c) In the role of an Independent Financial Consultant, HMG
may seek to use your services during the Consulting Period. HMG and you shall
agree upon rates and terms mutually agreeable on an engagement-by- engagement
basis.

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         4. You acknowledge that you have no entitlement to receive the payments
set forth in paragraph 3 hereof, other than in consideration for your General
Release of all claims against the Company. You confirm that no other monies,
other than un-reimbursed expenses yet to be processed by the Company, are due to
you other than as provided in paragraph 3 of this Agreement.

         5. (a) You agree that you will not, directly or indirectly, for
yourself or on behalf of any other person, firm, association or agency, engage
in any of the following acts or conduct unless the Company gives its prior
written consent thereto:

                      (i)           Disclose any confidential, proprietary
                                    or secret information about the Company,
                                    including but not limited to, information
                                    about the Company's business, business
                                    plans, magazines, properties, development
                                    plans, activities or marketing methods or
                                    plans, or personnel ("Confidential
                                    Information") to any person, firm,
                                    association, corporation or agency;

                      (ii)          Make or publish any comment that is
                                    defamatory, disparaging or otherwise
                                    critical of the Company, its products,
                                    management, employees or operations, or that
                                    would otherwise tend to have an adverse
                                    effect upon the reputation or business of
                                    the Company.

                      (iii)         The Company agrees that it will not,
                                    directly or indirectly, for it or on behalf
                                    of any other person, firm, association or
                                    agency, engage in making or publishing any
                                    comment that is defamatory, disparaging or
                                    otherwise critical of you, your conduct,
                                    contributions or services rendered to the
                                    Company, or that would otherwise tend to
                                    have an adverse effect upon the reputation
                                    or business of you or your firm.

                  (b) We mutually acknowledge that a breach by either party to
this Agreement of any portion or paragraph 5(a)(i), (ii) or (iii) of this
Agreement could cause irreparable harm and damage. Because it would not be
possible to determine the true and complete extent of the injury or damage in
the event of such a breach, we mutually agree that in the event of a breach, the
aggrieved party shall be entitled to the following relief:

                      (i)           Temporary and permanent injunctive relief
                                    against the party and/or any person, firm,
                                    association or agency to which the party
                                    disclosed such Confidential Information
                                    and/or which caused or assisted the party
                                    in publishing any defamatory or disparaging
                                    statements and/or which misappropriated any
                                    of the Confidential Information;

                      (ii)          Reimbursement of any costs incurred by the
                                    aggrieved party in the assertion of its
                                    rights hereunder, including but not limited
                                    to, reasonable attorneys' fees.

                  (c) Unless otherwise agreed in writing, upon your separation
from employment with the Company, any Confidential Information or information
and material, including keys or other possessions belonging to the Company, in
whatever form, shall immediately be returned to the Company. You shall be
entitled to permanently retain the Company's laptop computer and related
equipment in order to serve the Company has a Financial Consultant. You shall
continue to remain on the Company's email, voice mail and financial systems
during the Severance Period.

                  (d) If you are requested or required (by oral questions,
interrogatories, requests for information or documents, subpoena or similar
process) to disclose any Confidential Information about the Company, you agree
to provide the Company with prompt notice of such request(s) (i.e., within five
days of receipt by you) so that the Company may seek an appropriate protective
order and/or waive your compliance with the provisions of this Agreement. If,
failing the entry of a protective order or receipt of a waiver, you are, in the
opinion of your counsel, compelled to disclose Confidential Information of the
Company under pain of liability for contempt or other censure or penalty, you
may disclose such information to such tribunal(s) without liability under this
Agreement. You agree, however, to provide the Company with prompt notice of such
disclosure.



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         6. You affirm that you have not caused or permitted to be filed on your
behalf nor will you cause or permit to be filed or asserted, any charge,
complaint, grievance, or proceeding before any federal, state or local
administrative agency or court, or any other forum, against the Company, its
affiliates, parents, subsidiaries, officers, directors, employees, successors or
assigns. In the event that any charge, complaint, grievance, arbitration, action
or other proceeding was or is filed by you, or on your behalf (other than to
receive the consideration promised to you in paragraph 3 of this Agreement), you
agree that you will not obtain or accept any recovery or relief there from or
provide any testimony unless required to do so by subpoena. You further agree to
perform and authorize the Company to perform all acts necessary to obtain the
immediate withdrawal and/or dismissal with prejudice, at your own cost and
expense, of each such claim and to pay the legal fees and costs incurred by the
Company for actions taken to defend against and to seek to obtain the dismissal
of any action or claim that is filed or asserted.

         7. This Agreement shall be legally binding upon you and the Company,
our respective heirs, executors, administrators, successors and assigns, and
shall be construed under the laws of the State of New York to preserve its
enforceability and the General Release, settlement and waiver of all claims of
each and every kind. A court may modify any otherwise unenforceable clause to
render this Agreement enforceable.

         8. You and the Company agree that this Agreement can be modified only
by a written memorandum signed by both you and the Company, which recites the
specific intent to modify this Agreement.

         9. The terms of this Agreement and General Release are the product of
mutual negotiation and compromise between you and the Company. The meaning,
effect and terms of this Agreement and General Release have been fully explained
to you, and you understand that this Agreement and General Release settles, bars
and waives any and all claims that you have or could possibly have against the
Company or the Company may have or could possibly have against you, unless
prohibited from releasing such claim by law. You acknowledge that you have been
advised that you have twenty-one (21) days to consider the meaning and effect of
the Agreement and General Release. You also understand that you may revoke your
execution of this Agreement and General Release within seven (7) days following
the day you execute this Agreement and General Release, but that this Agreement
and General Release shall not become effective or enforceable until that
seven-day period has expired. You also understand that no payments need be made
during that time. If you choose to revoke you acceptance of this Agreement and
General Release during that seven-day period, any revocation must be submitted
in writing to the Company and state, "I hereby revoke my acceptance of our
Agreement and General Release." Said revocation must be personally delivered to
the Company, in care of Andrew Wahl, Chief Executive Officer or to his designee,
or mailed to the Company, in care of Anne Doyle and postmarked within seven (7)
days of the execution of this Agreement and General Release.

         10. You acknowledge that you have been advised by the Company to
consult with an attorney prior to executing this Agreement and General Release.
You understand that you will have ample time to consult further with your
counsel during the revocation period described in paragraph 10 hereof.

         11. You acknowledge that you have carefully read and fully understand
the terms of this Agreement and General Release and that your acceptance of this
Agreement in accordance with the terms hereof releases the Company from any and
all claims arising out of your employment relationship with the Company of the
termination thereof. You acknowledge that you have signed this Agreement and
General Release of your own free will, in exchange for the benefits to be
provided to you as set forth in paragraph 3 hereof.

         12. No representative of the Company has made any representations or
promises to you concerning the terms and effects of this Agreement and General
Release other than those contained in this Agreement and General Release, and in
executing this Agreement and General Release, you do not rely, and have not
relied, upon any representations or statements not set forth herein with regard
to the subject matter, basis or effect of this Agreement and General Release or
otherwise.

         13. This Agreement and General Release constitute the entire agreement
between you and the Company with respect to its subject matter and may not be
modified or amended except as provided in paragraph 9 hereof. This Agreement and
General Release supersede all prior agreements and understandings concerning its
subject matter, including but not limited to, your employment with the Company.
In the event of a dispute as to its meaning, this Agreement and General Release
shall be governed by and construed in accordance with the laws of the State of
New York.


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         14. You current hold stock options in HMG Worldwide Corporation as
disclosed in the Company's Annual Report. These options shall continue to be
yours after your separation (see Exhibit B). You shall continue to have the
right to hold and exercise such options, as if you were an employee or Director
of HMG, until either you (i) exercise the stock option(s) or (ii) natural
expiration of the term of the options. In the event that the Company cancels and
reissues or re-prices options to its executive officers during the Consulting
Period, you shall be entitled to receive the same re-pricing terms and
conditions.

         15. The Company agrees that you shall be entitled to indemnification to
the fullest extent permitted under the Company's Charter, Bylaws and applicable
law and the benefits of the Directors and Officers Liability Insurance.

         16. This Agreement is between you, HMG Worldwide Corporation, HMG
Worldwide In-Store Marketing, Inc., HMG Schutz International, Inc., Display
Depot, HMG Griffith, Inc. Creative Displays, Inc. Zeff Consulting Group Inc. and
HMG Intermark Worldwide Manufacturing, Inc. Each of HMG Worldwide Corporation,
HMG Worldwide In-Store Marketing, Inc., HMG Schutz International, Inc., Display
Depot, HMG Griffith, Inc. Creative Displays, Inc. Zeff Consulting Group Inc. and
HMG Intermark Worldwide Manufacturing, Inc. shall be jointly and severally
liable for the obligations that arise from this agreement.

         17. In connection herewith, both you and the Company consent to
personal jurisdiction in the Federal and State court of New York County, for any
action brought pursuant to this agreement.


         Your signature on the copy of this Agreement in the space provided
below, as well as your execution of the General Release, annexed hereto as
Exhibit A, shall constitute your acceptance of the terms and conditions hereof.

                                                   Very truly yours,

                                                   HMG WORLDWIDE CORPORATION

                                                   By:_______________________
                                                              Michael Wahl


                                                   By:_______________________
                                                              Randy Riley




AGREED TO AND ACCEPTED:
this      day of         2001



-------------------------
Robert V. Cuddihy, Jr.




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