CONFIDENTIAL SEVERANCE AGREEMENT

         This agreement between SOLA INTERNATIONAL, INC., a Delaware corporation
(the "Company") and Stephen J Lee (the "Executive") is dated and entered into as
of January 1, 1997. The Company and the Executive hereby agree as follows:

         WHEREAS, the Executive is a valued employee of the Company; and

         WHEREAS,  the Company  desires to provide the  Executive  with  certain
benefits should his employment be terminated:

         THEREFORE,  in  consideration  of the  foregoing,  the  Company and the
Executive  have agreed to the  following  terms while he is employed  and in the
event of such a Severance:

         1.  Employment  Term.  The Executive  acknowledges  that he is employed
at-will  by the  Company  subject  only  to the  terms  of this  Agreement.  The
Executive agrees to devote substantially all of his productive time, ability and
attention  to the  business of the company  while he is employed by the Company,
and shall not, directly or indirectly, render services of a business, commercial
or  professional  nature  to any  other  person  or  organization,  whether  for
compensation  or  otherwise,  without the prior  consent of the President of the
Company or his designee.

         2.  Severance.  In the  event  that any of the  following  occurs,  the
Executive shall be entitled to the benefits set forth in paragraph 3 below.  For
purposes of this Agreement a Severance shall have taken place only if:

                  A. The  Executive's  employment with the Company is terminated
for any reason  other than cause.  For  purposes of this  Agreement,  "cause" is
defined as the  Executive's  engaging  in: (i)  willful  misconduct,  neglect of
duties,  or any act or omission any or all of which materially  adversely affect
the Company's business, or (ii) conviction of a felony.

                           (i) For  purposes  of  subparagraph  2.A(i),  no such
event or omission shall  constitute cause unless the Executive fails to cure the
underlying  matter within forty-five (45) days after receipt from the Company of
a detailed statement of the cause for termination.

                  B.  The   Executive   is   regularly   assigned   duties   and
responsibilities  that  materially  diminish his position as an Executive of the
Company.  For the purpose of this subparagraph,  the assignment of duties, other
than those Executive  performs as of the date of this Agreement,  whether or not
in lieu of those  previously  assigned duties,  does not by itself  constitute a
material diminishment of the Executive's position with the Company.

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                  C. The Executive's  compensation (including but not limited to
salary  and  benefits)  is  reduced  and that  reduction  is not part of,  or is
disproportionate to a company general reduction of executive compensation.

         The Executive  shall not be entitled to any  Severance  Benefits as set
forth in paragraph 3 of this Agreement if he freely and voluntarily  resigns his
employment with the Company.

         3. Severance  Benefits.  If a Severance takes place,  then  immediately
after the occurrence of that event or events, the Executive shall be entitled to
the following:

                  A. To  continue  to receive  his  compensation  for either the
period of twelve (12) months or one (1) month per completed year of service with
the Company, up to a maximum of (18) months, whichever is longer, commencing the
first of the month following the month in which the Severance  takes place.  For
purposes of this paragraph, the Executive's  "compensation" shall be that annual
salary  in  effect  immediately  prior to the  Severance,  plus the  average  of
Management  Incentive Plan compensation (or successor  thereto) paid to him over
the three years immediately prior to the Severance.

                  B. To  continue  for either a period of twelve  (12) months or
one (1) month per completed  year of service with the Company up to a maximum of
eighteen (18) months whichever is longer to be covered by and participate in, at
the Company's expense,  any and all benefit plans the Company regularly provides
its other executives or employees including, but not limited to, health, dental,
vision, pension or other retirement plans.

                  C.  To  receive   outplacement   assistance  in  the  form  of
professional consultation and administrative assistance, subject to the approval
of the Company,  which shall not be unreasonably withheld. The Company shall pay
up  to  a  maximum  of  twenty-five   thousand  dollars   ($25,000.00)  for  the
aforementioned  outplacement  services during the period the Executive  receives
Severance Benefits as described in A and B above.

         4. Non-Mitigation.  The Executive shall not be required to mitigate the
amount of any payments or other  benefits  provided  under this Agreement at any
time by seeking other  employment or  consultancy;  however the Executive  shall
notify the Company of any employment or consulting  engaged in during the period
covered by Severance  Benefits provided in Section 3 and the amounts payable and
benefits provided shall be reduced or offset by the amount of any salary,  bonus
of any sort, fees, stock,  stock options,  stock dividends,  other securities or
any non-cash  consideration  so paid or payable and benefits to be received with
respect to such period and that offset or reduction  shall be  determined by the
Company in the complete and absolute exercise of its sole discretion.

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         5.  Non-Disparagement.  In the event of a Severance  both the Executive
and the  Company  agree  that  neither of them will  disparage  the other in any
manner.

         6. Covenants-Not to Compete and Not to Solicit.

                  A. Covenant Not to Compete.

                  The  Executive  recognizes  that the  services to be performed
while employed by the Company are special, unique, and extraordinary and that by
reason of the  Executive's  prior and continued  employment with the Company the
Executive  has  acquired  and will acquire  confidential  information  and trade
secrets concerning the Company's operations ("Company Confidential Information")
and  the  operations  of its  parent  and  affiliates  ("Affiliate  Confidential
Information"). Accordingly, it is agreed that during the period of Employment by
the  Company,  and for any period  following  a  Severance  covered by  payments
provided  for  in  Section  3  hereof,  the  Executive  will  not,  directly  or
indirectly, as an officer, director,  stockholder,  partner,  associate,  owner,
employee, consultant or otherwise, become or be interested in or associated with
any other  corporation,  firm or  business  engaged  in the same or a similar or
competitive  business  with  the  Company  or  any  of  its  affiliates  in  any
geographical area in which the Company or any of its affiliates are then engaged
in business, provided that the Executive's ownership, directly or indirectly, of
not more than one percent of the issued and  outstanding  stock of a corporation
the shares of which are regularly traded on a national securities exchange or in
the over-the-counter market shall not, in any event, be deemed to be a violation
of this subsection.

                  B. Covenant Not to Solicit.

                  The Executive agrees not to solicit any person employed by the
Company  or its  affiliates  who  perform  a  scientific,  technical,  sales  or
marketing function.  As used herein,  "solicit" or "soliciting" means any direct
or  indirect  approach  or appeals  to such an  employee  to leave the  Company.
Indirect  solicitation  includes but is not limited to,  acting  through a third
party or parties or characterizing job advertisements or opportunities in such a
fashion so as to entice any employee.  The executive  agrees that, if approached
by a Company employee, the Executive will:

                           (i)      Inform  the  employee  of  the   Executive's
                                    obligations set forth in this subparagraph;

                           (ii)     Refer the employee to the  relevant  Company
                                    Human Resources personnel; and

                           (iii)    Request that the employee confirm in writing
                                    to the Company  that he has  approached  the
                                    Executive  and  confirm  that  request  in a
                                    memorandum    to   such   Human    Resources
                                    organization.

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         7.  Confidentiality.  The Executive  recognizes that the services to be
performed while employed by the Company are special,  unique,  and extraordinary
and that by reason of the  Executive's  prior and continued  employment with the
Company the Executive has acquired and will acquire confidential information and
trade  secrets  concerning  the  Company's  operations  ("Company   Confidential
Information")  and the  operations  of its  parent  and  affiliates  ("Affiliate
Confidential Information"). Accordingly, it is agreed that:

                  A. The  Executive  shall not  divulge to any entity or person,
other than the Company or its  affiliates,  or, in the event of an assignment of
this Agreement  pursuant to Section 10 hereof,  the assignee and its affiliates,
if any,  whether while employed or after a Severance,  any Company  Confidential
Information  concerning the Company's  customer  lists,  research or development
programs or plans, processes,  methods or any other of its trade secrets, except
information  that is then  available to the public in published  literature  and
became publicly available through no fault of the Executive.

                  B. The  Executive  shall not  divulge to any person or entity,
including an assignee of this  Agreement and its  affiliates,  but excepting the
Company and its  affiliates,  whether while  employed or after a Severance,  any
Affiliate  Confidential  Information  acquired by the Executive  concerning  the
customer lists, research or development programs or plans, processes, methods or
any other trade secrets of the parent or any affiliate, except information which
is then  available to the public in  published  literature  and became  publicly
available through no fault of the Executive.

                  C.  The  Executive   acknowledges  that  all  information  the
disclosure of which is prohibited  hereby is of a confidential  and  proprietary
character  and of  great  value  to  the  Company  and  its  affiliates.  Upon a
Severance,  the Executive shall forthwith deliver up to the Company all records,
memoranda,  data and documents of any  description  which refer or relate in any
way to Company Confidential  Information or Affiliate  Confidential  Information
and return to the Company any of its equipment and property which may then be in
the Executive's  possession or under the executive's personal control.  Upon the
assignment  of this  Agreement,  pursuant  to Section  10, the  Executive  shall
forthwith deliver up to the Company all records,  memoranda,  data and documents
of any  description  which refer or relate in any way to Affiliate  Confidential
Information  and return to the Company any of its equipment  and property  which
may then be in the  Executive's  possession  or under the  Executive's  personal
control.

                  D. The Executive agrees that while employed and for a two year
period  after the  occurrence  of a Severance  not to disclose the terms of this
Agreement  to any  person  other  than the  Executive's  immediate  family,  the
executive's  attorneys,   accountants  and  other  professional  advisors  or  a
prospective employer permitted hereby, except as otherwise required by law.

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         8. Invention  Assignment.  The Executive agrees that any invention made
by the Executive  while  employed shall belong to the Company if (i) it was made
in the normal  course of the duties of the  Executive or in the course of duties
falling outside the Executive's  normal duties but specifically  assigned to the
Executive,  and the  circumstances  in either  case were such that an  invention
might reasonably be expected to result from the carrying out of such duties,  or
(ii) the invention was made in the course of the duties of the Executive and, at
the time of making  the  invention,  because  of the  nature of the  Executive's
duties  and the  particular  responsibilities  arising  from the  nature  of the
Executive's  duties,  the  Executive  had a special  obligation  to further  the
interests of the Company. In addition, if (x) the Executive while employed shall
make any improvement or develop any know-how,  copyrightable work or design, (y)
such  improvement,  know-how,  copyrightable  work or design is  relevant to the
business of the Company or any of its  subsidiaries,  and (z) such  improvement,
know-how,  copyrightable  work or design arouse directly out of any work carried
out while employed,  or out of Confidential  Company Information or Confidential
Affiliate  Information  to which the Executive had access while in the employ of
the Company, then such improvement, know-how, copyrightable work or design shall
belong to the  Company  whether or not it was  disclosed  to the  Company  while
employed by the Company.

                  A. In the event  that the  Executive  makes any  invention  or
develops any improvement,  know-how,  copyrightable design or work which belongs
to the Company,  the Executive shall fully,  freely and immediately  communicate
the same to the  Company  and the  Executive  shall,  if and as  desired  by the
Company  execute all documents and do all acts and things at the Company's  cost
which may be necessary or desirable to obtain  letters  patent or other adequate
protection in any part of the world for such invention,  improvement,  know-how,
copyrightable  work or  design  and to vest  the  same  in the  Company  for the
Company's benefit.  The Executive hereby irrevocably appoints the Company as the
Executive's  attorney in the Executive's  name and on the Executive's  behalf to
execute all such deeds and  documents  and to do all such acts and things as may
be necessary to give effect to this  Subsection  in the event that the Executive
fails to comply  within  seven  days with the  written  directions  given by the
Company pursuant to this Subsection.

                  B. The Executive has been  notified and  understands  that the
provisions  of  Subsections  6(g) and 6(h) hereof do not apply to any  invention
that  qualifies  fully under the  provisions  of Section 2870 of the  California
Labor Code, which states as follows:

                           (i) Any  provision in an employment  agreement  which
provides that an employee  shall assign,  or offer to assign,  any of his or her
rights in an invention  to his or her  employer  shall not apply to an invention
that the employee  developed  entirely on his or her own time without  using the
employer's equipment,  supplies,  facilities, or trade secret information except
for those inventions that either:

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                                    (1)  Relate  at the  time of  conception  or
reduction to practice of the invention to the employer's business,  or actual or
demonstrably anticipated research or development of the employer; or

                                    (2) Result  from any work  performed  by the
employee for the employer.

                           (ii)  To the  extent  a  provision  in an  employment
agreement  purports  to require an  employee  to assign an  invention  otherwise
excluded from being required to be assigned under subdivision (a), the provision
is against the public policy of this state and is unenforceable.

         9.  Remedies.  The Company shall be entitled,  in addition to any other
right or remedy that it may have at law or in equity with respect to a breach of
this  Agreement by the  Executive  (including  the right to  terminate  payments
pursuant to Section 3 hereof),  to an injunction,  without the posting of a bond
or other security,  enjoining or restraining the Executive from any violation or
threatened  violation of this section,  and the Executive hereby consents to the
issuance of such an injunction.

         10.  Moral  Rights  Waiver.  "Moral  Rights"  means  any right to claim
authorship  of a  work,  any  right  to  object  to  any  distortion,  or  other
modification  of a work,  and any similar  right,  existing under the law of any
country  in the  world,  or  under  any  treaty.  Executive  hereby  irrevocably
transfers and assigns to the Company any and all Moral Rights that Executive may
have in any services or  materials.  Executive  also hereby  forever  waives and
agrees never to assert against client, its successors or assigns and any and all
Moral  Rights  Executive  may have in any  services  or  materials,  even  after
termination of this Agreement.

         11.  Release.  In  consideration  of the payments and covenants made in
this  Agreement,  the  Executive  hereby  releases the Company,  its  Employees,
officers, directors,  subsidiaries,  affiliates,  successors and assigns and the
Company, its subsidiaries, affiliates, successors and assigns hereby release the
Executive from any and all claims for relief or causes of action relating to any
matters of any kind arising out of his employment (or its termination)  with the
Company  excepting  those claims for relief for causes of action relating to the
Severance Benefit obligations of the Company under Section 3 of this Agreement.

         The Executive  expressly  waives all rights and remedies  under Section
1542 of the Civil Code of the State of California which provides as follows:

         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.

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         The Executive  understands that if the facts with respect to which this
Agreement is executed are found  hereafter to be different  from the facts which
you now believe to be true, the Executive expressly accepts and assumes the risk
of such possible  differences in facts and agrees that this  Agreement  shall be
and remain effective notwithstanding such differences in facts.

         12.  Notices.  All  notices,  consents,  waivers or demands of any kind
which either party to this  Agreement  may be required or may desire to serve on
the other party in connection with this Agreement shall be in writing and may be
delivered  by  personal  service  or  sent  by  telegraph  or  cable  or sent by
registered or certified  mail,  return receipt  requested  with postage  thereon
fully prepaid. All such communications shall be addressed as follows:

THE COMPANY:               Sola International, Inc.
                           Suite 200
                           2420 Sand Hill Road
                           Menlo Park, California 94025

THE EXECUTIVE:

                           Stephen J. Lee
                           1730 Webster Street
                           Palo Alto, California 94301


         If sent by telegraph or cable, a confirmed copy of such  telegraphic or
cable notice shall be promptly  sent by mail (in the manner  provided  above) to
the  addressees.  Service of any such  communication  made only by mail shall be
deemed  complete  on the date of  actual  delivery  as shown by the  addressee's
registry  or  certification  receipt  or at the  expiration  of the third  (3rd)
business day after the date of mailing which ever is later in time. Either party
hereto  may from time to time,  by notice in  writing  served  upon the other as
aforesaid,  designate a different mailing address or a different person to which
such notices or demands are  thereafter  to be addressed or  delivered.  Nothing
contained in this Agreement shall excuse either party from giving oral notice to
the other when prompt  notification  is  appropriate,  but any oral notice given
shall  not  satisfy  the  requirement  of  written  notice as  provided  in this
paragraph.

         13. Choice of Law. This  Agreement  shall be governed and construed and
enforced in accordance  with the laws of the State of California  (regardless of
that jurisdiction or any other jurisdictions choice of law principles).

         14.  Assignment.  This  Agreement may be assigned by the Company to any
affiliate  of the  Company or to any  non-affiliate  of the  Company  that shall
succeed  to the  business  and  assets  of the  Company.  In the  event  of such
assignment,  the Company shall cause such affiliate or non-affiliate as the case
may be, to assume the obligations of the Company  hereunder by written agreement
addressed to the

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Executive  concurrently  with any  assignment  with the same  effect  as if such
assignee were the Company hereunder. This Agreement is personal to the Executive
and the  Executive  may not assign any rights or delegate  any  responsibilities
hereunder without the prior approval of the Company.

         15. Entire  Agreement.  This Agreement is the entire Agreement  between
the Company and the  Executive  with  respect to the subject  matter  hereof and
cancels and supersedes any and all other agreements regarding the subject matter
hereof  between  the  parties.  This  Agreement  may not be  altered,  modified,
changed, or discharged except in writing signed by both of the parties.

         16.  Counterparts.  This  Agreement  may be  executed  in  one or  more
counterparts,  each of  which  shall  be  deemed  an  original  but all of which
together shall constitute one and the same instruments.

         17.  Construction.  If any one or more of the  provisions  (or any part
thereof) of this Agreement shall be held to be invalid, illegal or unenforceable
in any  respect  of  validity,  legality  and  enforceability  of the  remaining
provisions  (or any part  thereof)  shall not in any way be affected or impaired
thereby.

         18.  Arbitration.  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  jurisdictions  choice of law  principles.
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
arbitrator  is 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  attorney's  fees and expenses  and the costs,  fees and
expenses of the Executive's party appointed arbitrator,  shall be borne in their
entirety by the Company.

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         19.  THE  EXECUTIVE  ACKNOWLEDGES  THAT HE HAS HAD THE  OPPORTUNITY  TO
CONSULT  WITH THE  ADVISOR OF HIS CHOICE AND THAT HE HAS FREELY AND  VOLUNTARILY
ENTERED INTO THIS AGREEMENT.

         IN WITNESS WHEREOF,  the parties have executed this Agreement as of the
day and year written below.


                                        Sola International, Inc.

                                        By:

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