<PAGE>

                                                                    EXHIBIT 10.8


                        SEPARATION AGREEMENT AND RELEASE

         This Separation Agreement and Release (this "Agreement") is made and
entered into this 31st day of March, 2000, by Sola International, Inc., a
Delaware corporation (the "Company"), and John Heine (the "Executive").

                                  WITNESSETH:

         WHEREAS, the Executive and the Company are parties to a Confidential
Severance Agreement dated as of November 20, 1996 (the "Severance Agreement");
and

         WHEREAS, the Executive desires to resign his employment with the
Company and the Company is willing to accept the Executive's resignation,
subject to the terms and conditions of this Agreement set forth below;

         NOW THEREFORE, the Company and Executive, in consideration of the
covenants and agreements herein expressed, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
agree as follows:

         1.    Resignation.  The Executive hereby resigns from all of his
               -----------
positions as a director and officer of the Company and all of its subsidiaries
and affiliates effective as of the date hereof (the "Resignation Date").

         2.  Severance Payments.  Subject to Section 2(f) below, for and in
             ------------------
consideration of all of the Executive's acknowledgments, releases and covenants
set forth in this Agreement, the Executive shall be entitled to the following
compensation and benefits:


                    (a) Salary Continuation. In accordance with and in full
                        -------------------
satisfaction of the Company's obligations under Section 3.A. of the Severance
Agreement in respect of salary, the Company shall pay the Executive 1/12 of his
annual base salary at the rate in effect on the Termination Date for each month
from the Termination Date until the expiration of the Severance Period (as
defined below). Such payments shall be made in accordance with the normal
payroll procedures of the Company and be pro-rated for any partial payroll
period. "Severance Period" shall mean the period ending on the earlier of (A)
the second anniversary of the Resignation Date, or (B) the date the Executive
breaches any of his obligations under Section 5, 6, 7 or 8 of the Severance
Agreement.

                    (b) Bonus Severance. In accordance with and in full
                        ---------------
satisfaction of the Company's obligations under Section 3.A. of the Severance
Agreement in respect of the Management Incentive Plan, the Company shall pay to
the Executive $23,861.17 for each month during the Severance Period. Such
payment shall be made in accordance with the normal payroll procedures of the
Company and be pro-rated for any partial payroll period.

                    (c) Options. All options (the "Options") to acquire common
                        -------
stock of the Company which are held by the Executive shall remain outstanding
and exercisable until the expiration of the Severance Period, immediately after
which they shall terminate.

                    (d) Benefits Continuation. In accordance with and in full
                        ---------------------
satisfaction of the Company's obligations under Sections 3.B. and C. of the
Severance Agreement, the Company shall
<PAGE>

make the payments and reimbursements and provide the benefits set forth on Parts
1 and 2 of Schedule A attached hereto; it being understood that the amount of
all payments and reimbursements shall be based on actual costs incurred by the
Company or by the Executive.

                    (e) No 2000 Bonus. The Executive shall not be entitled to
                        -------------
receive an annual cash bonus in respect of the Company's 2000 fiscal year under
the Company's Management Incentive Plan.

                    (f) Forfeiture of the Severance Payments. If the Severance
                        ------------------------------------
Period expires prior to the Second Anniversary of the Resignation Date, the
Company shall be entitled to terminate the payments and benefits under this
Section 2.

                    (g) No Mitigation. The Executive shall not be required to
                        -------------
mitigate the amount of any payment or benefit contemplated by this Section 2.

         3.  Withholding.  The Company shall have the right to deduct from any
             -----------
amounts payable under this Agreement or otherwise any taxes or other amounts
required by law to be withheld.

         4.    Executive Release. In consideration of this Agreement, the
               -----------------
Executive agrees to release and forever discharge the Company, its stockholders,
subsidiaries, directors, officers and employees, and any affiliates, agents,
representatives, successors, and assigns of any of the foregoing (collectively
referred to as the "Releasees"), from and against any and all obligations,
liabilities, damages, costs, claims, complaints, charges, or causes of actions
in law or equity (collectively "Claims") that the Executive or his heirs,
administrators, successors, or assigns may now have or may ever have against any
Releasee, whether accrued, absolute, contingent, unliquidated or otherwise, and
whether known or unknown on the date hereof, and which have or may have arisen
out of any act or omission occurring, or state of facts existing, prior to the
date of execution of this Agreement, in any way related to the Executive's
employment with, and services as a director of, the Company and its affiliates
and the termination thereof, or in connection with the Executive's ownership of
any securities of the Company or any of its affiliates, including, without
limitation, (i) Claims arising under the Severance Agreement and, except as
explicitly provided in this Agreement, any arrangement, plan, program, or policy
for executive benefits, with the exception of any tax qualified plans under
which the Executive has a vested accrued interest, (ii) any other Claims related
to the Executive's employment with the Company or the termination of that
employment and (iii) Claims based on federal, state, or local law or regulation
or the common law, including but not limited to, Claims in any way related to
Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment
Act, the Equal Pay Act, the Fair Labor Standards Act, the Americans with
Disabilities Act, the Employee Retirement Income Security Act of 1974, as
amended, and all other applicable state and local labor and employment laws
(including all laws concerning unlawful and unfair labor and employment
practices), breach of contract, wrongful discharge, defamation or intentional
infliction of emotional distress.  If and to the extent a court of competent
jurisdiction shall determine any part or portion of the foregoing release to be
invalid or unenforceable, the same shall not affect the remainder of the release
which shall be given full effect without regard to the invalid part or portion
of the release.  The Executive acknowledges that by signing below he knowingly,
voluntarily, and expressly waives and relinquishes any and all rights that he
may have under Section 1542 of the California Civil Code, or any similar
provision or law of any jurisdiction or any similar or analogous principle of
common law.  California Civil Code Section 1542 provides:

               "A general release does not extend to claims which the creditor
               does not know or suspect to exist in his favor at the time of
               executing the release, which if known by him must have materially
               affected his settlement with the debtor."

         5.    Executive Acknowledgment.  The Executive acknowledges that he:
               ------------------------
(i)  has been given the opportunity to consider the terms of this Agreement for
more than twenty-one (21) days and has
<PAGE>

determined that it is in his best interest to execute this Agreement on the date
hereof; (ii) is waiving claims under the Age Discrimination in Employment Act;
(iii) has been advised to consult with legal counsel of his own choosing prior
to the execution of this Agreement; (iv) fully understands the terms and
conditions contained herein; (v) has entered into this Agreement of his own free
will and was not under any undue pressure or duress; (vi) is not waiving rights
or claims that may arise after the date this Agreement is executed; (vii) has
received as consideration for the waivers contained herein money and other
benefits in addition to that which he is already entitled; (viii) understands
that for a period of seven (7) days following the execution of this Agreement
that he may revoke his waiver and release of any claims under the Age
Discrimination in Employment Act. In the event the Executive so revokes his
waiver and release of claims under the Age Discrimination in Employment Act, the
Executive shall not be entitled to any of the payments or benefits provided in
Section 2(b) hereof and in all other respects this Agreement shall remain in
full force and effect. The Executive represents that with respect to any act or
omission occurring, or state of facts existing, on or prior to the date of
execution of this Agreement, he has not filed any complaints, charges or
lawsuits against any Releasee with any government agency or any court or other
tribunal.

         6.    Continuing Provisions.  Sections 5, 6, 7 ,8, 9, and 19 of the
               ---------------------
Severance Agreement shall remain in full force and effect and are incorporated
into this Agreement, and the Executive shall continue to be bound thereby.

         7.  No Admissions.  Nothing in this Agreement shall be construed as an
             -------------
admission by any Releasee of any liability on its part under any federal, state,
or local law or regulation or the common law.  The Executive also acknowledges
that he has had the opportunity to consult with an attorney prior to signing
this Agreement, and that he has read and understood all of the provisions of
this Agreement.

         8.    Entire Agreement.  This Agreement and the portions of the
               ----------------
Severance Agreement which remain in full force and effect pursuant to Section 6
hereof constitute the entire agreement between the parties with respect of the
subject matter hereof and supersedes any and all other agreements either oral or
in writing between the parties hereto with respect to the subject matter hereof,
including, but not limited to, the Severance Agreement (except as set forth
above), and contain all of the covenants and agreements between the parties with
respect to said matters.  Each party to this Agreement acknowledges that no
representations, inducements, promises, or agreements, orally or otherwise, have
been made by any Releasee, or anyone acting on behalf of any Releasee, which are
not embodied herein, and that no other agreement, statement or promise not
contained in this Agreement shall be valid or binding.

         9.  Binding Effect.  This Agreement shall be binding upon any and all
             --------------
successors and assigns of the Executive and the Company.

         10.  Governing Law.  Except for issues or matters as to which federal
              -------------
law is applicable, this Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of California without giving
effect to the conflicts of law principles thereof.

         11.  Severability.  If and to the extent that any court of competent
              ------------
jurisdiction holds any provision or part of this Agreement to be invalid or
unenforceable, such holding shall in no way affect the validity of the remainder
of this Agreement.

         12.  Headings.  The headings contained herein are solely for the
              --------
purpose of reference, are not part of this Agreement and shall not in any way
affect the meaning or interpretation of this Agreement.

         13.  Counterparts.  This Agreement may be executed in two counterparts.
              ------------

         14.  Press Release; Confidentiality.  Subject to applicable law, the
              ------------------------------
parties shall mutually agree on the form of any press release relating to the
Executive's resignation from the Company.  Other
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than with respect to information provided in any such press release or required
to be disclosed by court order, the Executive agrees not to disclose the terms
of this Agreement to any person or entity, other than the Executive's immediate
family and financial or legal advisors who agree to be bound by this
confidentiality provision.

         15.  Arbitration.  Except as otherwise provided in Section 9, with
              -----------
respect to any controversy arising out of or relating to this Agreement, or the
subject matter thereof, such controversy shall be settled by final and binding
arbitration in Palo Alto, California in accordance with the then existing rules
("the Rules") of the American Arbitration Association ("AAA") and judgment upon
the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof; provided, however, that the law applicable to any
controversy shall be the law of California, regardless of its or any
jurisdiction's choice of law principle.  Arbitration shall be the sole and
exclusive remedy for the resolution of the disputes described above.  In any
such arbitration, the award or decision shall be rendered by a majority of the
members of a board of arbitration consisting of three (3) members, one of whom
shall be appointed by each party and the third of whom shall be the chairman of
the panel and be appointed by mutual agreement of said two party appointed
arbitrators.  In the event of the failure of said two arbitrators to agree,
within five (5) working days after the commencement of the arbitration, upon
appointment of the third arbitrator, the third arbitrator shall be appointed by
the AAA in accordance with the Rules.  In the event that either party shall fail
to appoint an arbitrator within five (5) days after the commencement of the
arbitration proceeding, such arbitrator and the third arbitrator shall be
appointed  by the AAA in accordance with the Rules.  The arbitrators are
empowered but, not limited, in making an award in favor of the Executive to
require any act or acts which they believe necessary to effectuate the intent of
this Agreement.  The Company agrees that any costs of any arbitration brought
whether by the Executive or the Company including the Executive's reasonable
attorneys' fees and expenses and the costs, fees and expenses of the Executive's
appointed arbitrator, shall be borne in their entirety by the Company.
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and date indicated below.


                              JOHN HEINE




                              _________________________________

                              Dated:___________________________



                              SOLA INTERNATIONAL, INC.



                              By:______________________________

                              Title:___________________________

                              Dated:___________________________


327137
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                                   Schedule A
                                   ----------

1. Continuing Cash Payments:
                                                       Actual Cost for Two Years
                                                       -------------------------
Two Years Housing allowance            $38,461 X 2               $76,922
Two Years Medical supplement           $ 6,750 X 2               $13,500
                                                                 -------
Total over 2 years:                                              $90,422
                                                                 -------
Monthly payment via payroll:           $ 3,767.58



2.  Benefits/Reimbursements:

<TABLE>
 <CAPTION>
                                                                                    Estimated Cost
                                                                                    --------------
                                                                                     for Two Years
                                                                                     -------------
<S>                                                                               <C>
Two years continued participation in medical, dental, vision care,
and insurance  plans                                                                    $ 14,424

Two years continued tax advice and preparation in accordance with
existing  Company policy and past practice                                              $ 10,000

Two years continuation of use of Company car in accordance with
existing Company policy and past practice, including insurance,
maintenance, fuel                                                                       $ 35,521

Two years continued accrual of benefits in accordance with existing
Company  policy and past practice under Australian Superannuation
Fund/individual  retirement contract mirroring the fund                                 $220,926

Two years continued telephone use in accordance with existing Company
policy and  past practice                                                               $  2,500

Two years of annual family leave in accordance with existing Company                    $ 12,000
policy and past practice X 2 years

Reimbursement of repatriation costs in accordance with existing
Company policy  and past practice

     Real estate agents commissions on sale of US property                              $250,000
</TABLE>
<PAGE>

  Closing costs on sale of US property                              $ 10,000

  Tax protection of closing costs                                   $227,505

  Shipping of household goods to Australian home                    $ 30,000

  Air fares and expenses of Heine and spouse travel                 $  8,000

Outplacement in accordance with confidential Severance Agreement
                                                                    $ 25,000

Purchase by you of Company car at end of 2 years at net book value

Transfer of ownership to you by the Company of 2 personal computers