Document:

Ex-10.2 Second Lien Credit Agreement

 

EXHIBIT 10.2

 

$50,000,000

SECOND LIEN CREDIT AGREEMENT

among

FGX INTERNATIONAL INC.,

as US Borrower,

FGX INTERNATIONAL LIMITED,

as BVI Borrower,

The Several Lenders

from Time to Time Parties Hereto,

GENERAL ELECTRIC CAPITAL CORPORATION,

as Syndication Agent,

and

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

Dated as of December 9, 2005

 

J.P. MORGAN SECURITIES INC., as Co-Lead Arranger and Lead Bookrunner

and

GE CAPITAL MARKETS, INC., as Co-Lead Arranger

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	Section
	 	 	1.	 	 	DEFINITIONS

	 	 	1	 
	 	 	 	1.1.	 	 	Defined Terms

	 	 	1	 
	 	 	 	1.2.	 	 	Other Definitional Provisions

	 	 	17	 
	 
	 	 	 	 	 	 
	 	 	 	 
	Section
	 	 	2.	 	 	AMOUNT AND TERMS OF COMMITMENTS

	 	 	18	 
	 	 	 	2.1.	 	 	Commitments

	 	 	18	 
	 	 	 	2.2.	 	 	Procedure for Second Lien Term Loan Borrowing

	 	 	18	 
	 	 	 	2.3.	 	 	Repayment of Second Lien Term Loans

	 	 	18	 
	 	 	 	2.4.	 	 	Fees

	 	 	18	 
	 
	 	 	 	 	 	 
	 	 	 	 
	Section
	 	 	3.	 	 	[RESERVED]

	 	 	19	 
	 
	 	 	 	 	 	 
	 	 	 	 
	Section
	 	 	4.	 	 	GENERAL PROVISIONS APPLICABLE TO SECOND LIEN TERM LOANS

	 	 	19	 
	 	 	 	4.1.	 	 	Optional Prepayments

	 	 	19	 
	 	 	 	4.2.	 	 	Mandatory Prepayments

	 	 	19	 
	 	 	 	4.3.	 	 	Conversion and Continuation Options

	 	 	20	 
	 	 	 	4.4.	 	 	Limitations on Eurodollar Tranches

	 	 	20	 
	 	 	 	4.5.	 	 	Interest Rates and Payment Dates

	 	 	21	 
	 	 	 	4.6.	 	 	Computation of Interest and Fees

	 	 	21	 
	 	 	 	4.7.	 	 	Inability to Determine Interest Rate

	 	 	21	 
	 	 	 	4.8.	 	 	Pro Rata Treatment and Payments

	 	 	22	 
	 	 	 	4.9.	 	 	Requirements of Law

	 	 	23	 
	 	 	 	4.10.	 	 	Taxes

	 	 	24	 
	 	 	 	4.11.	 	 	Indemnity

	 	 	25	 
	 	 	 	4.12.	 	 	Change of Lending Office

	 	 	26	 
	 	 	 	4.13.	 	 	Replacement of Lenders

	 	 	26	 
	 	 	 	4.14.	 	 	Evidence of Debt

	 	 	26	 
	 	 	 	4.15.	 	 	Illegality

	 	 	27	 
	 
	 	 	 	 	 	 
	 	 	 	 
	Section
	 	 	5.	 	 	REPRESENTATIONS AND WARRANTIES

	 	 	27	 
	 	 	 	5.1.	 	 	Financial Condition

	 	 	27	 
	 	 	 	5.2.	 	 	No Change

	 	 	28	 
	 	 	 	5.3.	 	 	Corporate Existence; Compliance with Law

	 	 	28	 
	 	 	 	5.4.	 	 	Power; Authorization; Enforceable Obligations

	 	 	28	 
	 	 	 	5.5.	 	 	No Legal Bar

	 	 	28	 
	 	 	 	5.6.	 	 	Litigation

	 	 	28	 
	 	 	 	5.7.	 	 	No Default

	 	 	29	 
	 	 	 	5.8.	 	 	Ownership of Property; Liens

	 	 	29	 
	 	 	 	5.9.	 	 	Intellectual Property

	 	 	29	 
	 	 	 	5.10.	 	 	Taxes

	 	 	29	 
	 	 	 	5.11.	 	 	Federal Regulations

	 	 	29	 
	 	 	 	5.12.	 	 	Labor Matters

	 	 	29	 
	 	 	 	5.13.	 	 	ERISA

	 	 	30	 
	 	 	 	5.14.	 	 	Investment Company Act; Other Regulations

	 	 	30	 
	 	 	 	5.15.	 	 	Subsidiaries

	 	 	30	 
	 	 	 	5.16.	 	 	Use of Proceeds

	 	 	30	 

i

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	 	 	 	5.17.	 	 	Environmental Matters

	 	 	30	 
	 	 	 	5.18.	 	 	Accuracy of Information, etc.

	 	 	31	 
	 	 	 	5.19.	 	 	Second Lien Security Documents

	 	 	31	 
	 	 	 	5.20.	 	 	Solvency

	 	 	32	 
	 	 	 	5.21.	 	 	Regulation H

	 	 	32	 
	 
	 	 	 	 	 	 
	 	 	 	 
	Section
	 	 	6.	 	 	CONDITIONS PRECEDENT

	 	 	32	 
	 
	 	 	 	 	 	 
	 	 	 	 
	Section
	 	 	7.	 	 	AFFIRMATIVE COVENANTS

	 	 	36	 
	 	 	 	7.1.	 	 	Financial Statements

	 	 	36	 
	 	 	 	7.2.	 	 	Certificates; Other Information

	 	 	37	 
	 	 	 	7.3.	 	 	Payment of Obligations

	 	 	38	 
	 	 	 	7.4.	 	 	Maintenance of Existence; Compliance

	 	 	38	 
	 	 	 	7.5.	 	 	Maintenance of Property; Insurance

	 	 	38	 
	 	 	 	7.6.	 	 	Inspection of Property; Books and Records; Discussions

	 	 	39	 
	 	 	 	7.7.	 	 	Notices

	 	 	39	 
	 	 	 	7.8.	 	 	Environmental Laws

	 	 	39	 
	 	 	 	7.9.	 	 	Interest Rate Protection

	 	 	40	 
	 	 	 	7.10.	 	 	Additional Collateral, etc

	 	 	40	 
	 	 	 	7.11.	 	 	Further Assurances

	 	 	41	 
	 	 	 	7.12.	 	 	Maintenance of Cash and Cash Equivalents in the United States

	 	 	41	 
	 	 	 	7.13.	 	 	Maintenance of Ratings

	 	 	42	 
	 
	 	 	 	 	 	 
	 	 	 	 
	Section
	 	 	8.	 	 	NEGATIVE COVENANTS

	 	 	42	 
	 	 	 	8.1.	 	 	Financial Condition Covenants

	 	 	42	 
	 	 	 	8.2.	 	 	Indebtedness

	 	 	43	 
	 	 	 	8.3.	 	 	Liens

	 	 	44	 
	 	 	 	8.4.	 	 	Fundamental Changes

	 	 	46	 
	 	 	 	8.5.	 	 	Disposition of Property

	 	 	46	 
	 	 	 	8.6.	 	 	Restricted Payments

	 	 	47	 
	 	 	 	8.7.	 	 	Capital Expenditures

	 	 	47	 
	 	 	 	8.8.	 	 	Investments

	 	 	47	 
	 	 	 	8.9.	 	 	Transactions with Affiliates

	 	 	48	 
	 	 	 	8.10.	 	 	Sales and Leasebacks

	 	 	49	 
	 	 	 	8.11.	 	 	Hedge Agreements

	 	 	49	 
	 	 	 	8.12.	 	 	Changes in Fiscal Periods

	 	 	49	 
	 	 	 	8.13.	 	 	Negative Pledge Clauses

	 	 	49	 
	 	 	 	8.14.	 	 	Clauses Restricting Subsidiary Distributions

	 	 	49	 
	 	 	 	8.15.	 	 	[Reserved].

	 	 	49	 
	 	 	 	8.16.	 	 	Lines of Business

	 	 	49	 
	 	 	 	8.17.	 	 	Limitation on Activities of the BVI Borrower

	 	 	49	 
	 	 	 	8.18.	 	 	Factoring Agreements

	 	 	50	 
	 
	 	 	 	 	 	 
	 	 	 	 
	Section
	 	 	9.	 	 	EVENTS OF DEFAULT

	 	 	50	 
	 
	 	 	 	 	 	 
	 	 	 	 
	Section
	 	 	10.	 	 	THE AGENTS

	 	 	53	 
	 	 	 	10.1.	 	 	Appointment

	 	 	53	 
	 	 	 	10.2.	 	 	Delegation of Duties

	 	 	53	 
	 	 	 	10.3.	 	 	Exculpatory Provisions

	 	 	53	 
	 	 	 	10.4.	 	 	Reliance by Agents

	 	 	54	 
	 	 	 	10.5.	 	 	Notice of Default

	 	 	54	 

-ii-

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	 	 	 	10.6.	 	 	Non-Reliance on Agents and Other Lenders

	 	 	54	 
	 	 	 	10.7.	 	 	Indemnification

	 	 	55	 
	 	 	 	10.8.	 	 	Agent in Its Individual Capacity

	 	 	55	 
	 	 	 	10.9.	 	 	Successor Administrative Agent

	 	 	55	 
	 	 	 	10.10.	 	 	Agents Generally

	 	 	56	 
	 	 	 	10.11.	 	 	The Syndication Agent

	 	 	56	 
	 	 	 	10.12.	 	 	[Reserved].

	 	 	56	 
	 	 	 	10.13.	 	 	Second Lien Collateral Agent

	 	 	56	 
	 
	 	 	 	 	 	 
	 	 	 	 
	Section
	 	 	11.	 	 	MISCELLANEOUS

	 	 	57	 
	 	 	 	11.1.	 	 	Amendments and Waivers

	 	 	57	 
	 	 	 	11.2.	 	 	Notices

	 	 	58	 
	 	 	 	11.3.	 	 	No Waiver; Cumulative Remedies

	 	 	59	 
	 	 	 	11.4.	 	 	Survival of Representations and Warranties

	 	 	59	 
	 	 	 	11.5.	 	 	Payment of Expenses and Taxes

	 	 	59	 
	 	 	 	11.6.	 	 	Successors and Assigns; Participations and Assignments

	 	 	60	 
	 	 	 	11.7.	 	 	Adjustments; Set-off

	 	 	63	 
	 	 	 	11.8.	 	 	Counterparts

	 	 	64	 
	 	 	 	11.9.	 	 	Severability

	 	 	64	 
	 	 	 	11.10.	 	 	Integration

	 	 	64	 
	 	 	 	11.11.	 	 	GOVERNING LAW

	 	 	64	 
	 	 	 	11.12.	 	 	Submission To Jurisdiction; Waivers

	 	 	64	 
	 	 	 	11.13.	 	 	Third Party Beneficiary

	 	 	65	 
	 	 	 	11.14.	 	 	Acknowledgments

	 	 	65	 
	 	 	 	11.15.	 	 	Releases of Guarantees and Liens

	 	 	66	 
	 	 	 	11.16.	 	 	Confidentiality

	 	 	66	 
	 	 	 	11.17.	 	 	[Reserved].

	 	 	67	 
	 	 	 	11.18.	 	 	Judgment Currency

	 	 	67	 
	 	 	 	11.19.	 	 	WAIVERS OF JURY TRIAL

	 	 	67	 
	 	 	 	11.20.	 	 	Delivery of Addenda

	 	 	67	 

-iii-

 

	 	 	 
	SCHEDULES:
	 	 
	 
	 	 
	1.1

	 	Mortgaged Property
	5.4

	 	Consents, Authorizations, Filings and Notices
	5.6

	 	Litigation
	5.15

	 	Subsidiaries
	5.19(a)

	 	UCC Filing Jurisdictions
	5.19(b)

	 	Mortgage Filing Jurisdictions
	8.2(d)

	 	Existing Indebtedness
	8.3(f)

	 	Existing Liens
	 
	 	 
	 
	 	 
	EXHIBITS:
	 	 
	 
	 	 
	A

	 	Form of Second Lien Guarantee and Collateral Agreement
	B

	 	Form of Compliance Certificate
	C

	 	Form of Closing Certificate
	D

	 	Form of Mortgage
	E

	 	Form of Assignment and Assumption
	F-1

	 	Form of Legal Opinion of Greenberg Traurig LLP
	F-2

	 	Form of Legal Opinion of Morgan & Morgan
	F-3

	 	Form of Legal Opinion of Nixon Peabody LLP
	G

	 	Form of Exemption Certificate
	H

	 	Form of Addendum
	I

	 	Form of Intercreditor Agreement

-iv-

 

     SECOND LIEN CREDIT AGREEMENT, dated as of December 9, 2005, among FGX INTERNATIONAL INC., a
Delaware corporation (the “US Borrower”), FGX INTERNATIONAL LIMITED, a British Virgin
Islands international business company (the “BVI Borrower”, and together with the US
Borrower, the “Borrowers” and, individually, each a “Borrower”), the several banks
and other financial institutions or entities from time to time parties to this Agreement (the
“Lenders”), GENERAL ELECTRIC CAPITAL CORPORATION, as syndication agent (in such capacity,
the “Syndication Agent”), and JPMORGAN CHASE BANK, N.A., as administrative agent.

     The parties hereto hereby agree as follows:

SECTION 1. DEFINITIONS

     1.1. Defined Terms. As used in this Agreement, the terms listed in this Section 1.1
shall have the respective meanings set forth in this Section 1.1.

     “Addendum”: an instrument, substantially in the form of Exhibit H, by which a Lender
becomes a party to this Agreement as of the Closing Date.

     “Adjustment Date”: the date that is three Business Days after the date on which
financial statements are delivered to the Lenders pursuant to Section 7.1.

     “Administrative Agent”: JPMorgan Chase Bank, N.A., together with its affiliates, as
the arranger of the Commitments and as the administrative agent for the Lenders under this
Agreement and the other Second Lien Loan Documents, together with any of its successors.

     “Affiliate”: as to any Person, any other Person that, directly or indirectly, is in
control of, is controlled by, or is under common control with, such Person. For purposes of this
definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10%
or more of the securities having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.

     “Agents”: the collective reference to the Second Lien Collateral Agent, the
Syndication Agent and the Administrative Agent.

     “Agreement”: this Second Lien Credit Agreement.

     “Applicable Margin”: 6.75% per annum in the case of Base Rate Loans and 7.75% per
annum in the case of Eurodollar Loans.

     “Asset Sale”: any Disposition of Property or series of related Dispositions of
Property (excluding any such Disposition permitted by clause (a), (b), (c), (d) or (f) of Section
8.5) that yields gross proceeds to any Group Member (valued at the initial principal amount thereof
in the case of non-cash proceeds consisting of notes or other debt securities and valued at fair
market value in the case of other non-cash proceeds) in excess of $100,000.

     “Assignee”: as defined in Section 11.6(b).

     “Assignment and Assumption”: an Assignment and Assumption, substantially in the form
of Exhibit E.

 

 

     “Base Rate”: for any day, a rate per annum (rounded upwards, if necessary, to the
next 1/16 of 1%) equal to the greater of (a) the Prime Rate in effect on such day and (b) the
Federal Funds Effective Rate in effect on such day plus 0.50%. For purposes hereof: “Prime
Rate” shall mean the rate of interest per annum publicly announced from time to time by the
Reference Lender as its prime rate in effect at its principal office in New York City (the Prime
Rate not being intended to be the lowest rate of interest charged by the Reference Lender in
connection with extensions of credit to debtors). Any change in the Base Rate due to a change in
the Prime Rate or the Federal Funds Effective Rate shall be effective as of the opening of business
on the effective day of such change in the Prime Rate or the Federal Funds Effective Rate,
respectively.

     “Base Rate Loans”: Second Lien Term Loans the rate of interest applicable to which is
based upon the Base Rate.

     “Benefitted Lender”: as defined in Section 11.7(a).

     “Board”: the Board of Governors of the Federal Reserve System of the United States
(or any successor).

     “Borrowers”: as defined in the preamble to this Agreement.

     “Business”: as defined in Section 5.17(b).

     “Business Day”: a day other than a Saturday, Sunday or other day on which commercial
banks in New York City are authorized or required by law to close, provided, that with
respect to notices and determinations in connection with, and payments of principal and interest
on, Eurodollar Loans, such day is also a day for trading by and between banks in Dollar deposits in
the interbank eurodollar market.

     “BVI Borrower”: as defined in the preamble to this Agreement.

     “BVI Borrower Business”: the purchase and/or sale of products, and of other ancillary
or related items, whether as principal or agent, as part of the purchase or distribution of such
products by Domestic Subsidiaries or, in the case of products distributed outside the United
States, by any Subsidiaries, and the performance of other ancillary services on behalf of such
Domestic Subsidiaries or Subsidiaries, as the case may be, related to the business conducted by
such Subsidiaries, whether such performance is conducted by the BVI Borrower, or by Subsidiaries of
the BVI Borrower, and the operation and maintenance of one or more offices and of such staff, and
the conduct of such business necessary, incidental or ancillary for or to the conduct of any of the
foregoing.

     “Capital Expenditures”: for any period, with respect to any Person, the aggregate of
all expenditures by such Person and its Subsidiaries for the acquisition or leasing (pursuant to a
capital lease) of fixed or capital assets or additions to equipment (including replacements,
capitalized repairs and improvements during such period) or with respect to competitive payments to
customers, in each case, that should be capitalized under GAAP on a consolidated balance sheet of
such Person and its Subsidiaries.

     “Capital Lease Obligations”: as to any Person, the obligations of such Person to pay
rent or other amounts under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes
of this Agreement, the amount of such obligations at any time shall be the capitalized amount
thereof at such time determined in accordance with GAAP.

2

 

     “Capital Stock”: any and all shares, interests, participations or other equivalents
(however designated) of capital stock of a company or corporation, any and all equivalent ownership
interests in a Person (other than a corporation) and any and all warrants, rights or options to
purchase any of the foregoing.

     “Cash Equivalents”: (a) marketable direct obligations issued by, or unconditionally
guaranteed by, the United States Government or issued by any agency thereof and backed by the full
faith and credit of the United States, in each case maturing within one year from the date of
acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank
deposits having maturities of six months or less from the date of acquisition issued by any Lender
or by any commercial bank organized under the laws of the United States or any state thereof having
combined capital and surplus of not less than $500,000,000; (c) commercial paper of an issuer rated
at least A-1 by S&P or B-1 by Moody’s, or carrying an equivalent rating by a nationally recognized
rating agency, if both of the two named rating agencies cease publishing ratings of commercial
paper issuers generally, and maturing within six months from the date of acquisition; (d)
repurchase obligations of any Lender or of any commercial bank satisfying the requirements of
clause (b) of this definition, having a term of not more than 30 days, with respect to securities
issued or fully guaranteed or insured by the United States government; (e) securities with
maturities of one year or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States, by any political subdivision or taxing
authority of any such state, commonwealth or territory or by any foreign government, the securities
of which state, commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by Moody’s; (f) securities with
maturities of six months or less from the date of acquisition backed by standby letters of credit
issued by any Lender or any commercial bank satisfying the requirements of clause (b) of this
definition; or (g) shares of money market mutual or similar funds which invest exclusively in
assets satisfying the requirements of clauses (a) through (f) of this definition; or (h) money
market funds that (i) comply with the criteria set forth in Securities and Exchange Commission Rule
2a-7 under the Investment Company Act of 1940, as amended, (ii) are rated AAA by S&P and Aaa by
Moody’s and (iii) have portfolio assets of at least $5,000,000,000.

     “Closing Date”: the date on which the conditions precedent set forth in Section 6
shall have been satisfied.

     “Code”: the Internal Revenue Code of 1986, as amended from time to time.

     “Collateral”: all property of the Loan Parties, now owned or hereafter acquired, upon
which a Lien is purported to be created by any Second Lien Security Document.

     “Commitment”: as to any Lender, the obligation of such Lender, if any, to make a
Second Lien Term Loan to the US Borrower hereunder in a principal amount not to exceed the amount
set forth under the heading “Commitment” under such Lender’s name on such Lender’s Addendum. The
original aggregate amount of the Commitments is $50,000,000.

     “Commonly Controlled Entity”: an entity, whether or not incorporated, that is under
common control with Holdings within the meaning of Section 4001 of ERISA or is part of a group that
includes Holdings and that is treated as a single employer under Section 414 of the Code.

     “Compliance Certificate”: a certificate duly executed by a Responsible Officer of
Holdings substantially in the form of Exhibit B.

3

 

     “Conduit Lender”: any special purpose entity organized and administered by any Lender
for the purpose of making Second Lien Term Loans otherwise required to be made by such Lender and
designated by such Lender in a written instrument, subject to the consent of the Administrative
Agent (which consent shall not be unreasonably withheld); provided, that the designation by
any Lender of a Conduit Lender shall not relieve the designating Lender of any of its obligations
to fund a Second Lien Term Loan under this Agreement if, for any reason, its Conduit Lender fails
to fund any such Second Lien Term Loan, and the designating Lender (and not the Conduit Lender)
shall have the sole right and responsibility to deliver all consents and waivers required or
requested under this Agreement with respect to its Conduit Lender, and provided,
further, that no Conduit Lender shall be entitled to receive any greater amount pursuant to
Section 4.9, 4.10, 4.11 or 11.5 than the designating Lender would have been entitled to receive in
respect of the extensions of credit made by such Conduit Lender.

     “Confidential Information Memorandum”: the Confidential Information Memorandum dated
October 2005 and furnished to the Lenders.

     “Consolidated Current Assets”: at any date, all amounts (other than cash and Cash
Equivalents) that would, in conformity with GAAP, be set forth opposite the caption “total current
assets” (or any like caption) on a consolidated balance sheet of Holdings and its Subsidiaries at
such date.

     “Consolidated Current Liabilities”: at any date, all amounts that would, in
conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like
caption) on a consolidated balance sheet of Holdings and its Subsidiaries at such date, but
excluding (a) the current portion of any Funded Debt of Holdings and its Subsidiaries and (b)
without duplication of clause (a) above, all Indebtedness consisting of revolving loans under the
First Lien Credit Agreement to the extent otherwise included therein.

     “Consolidated EBITDA”: for any period, Consolidated Net Income for such period
plus, without duplication and to the extent reflected as a charge in the statement of such
Consolidated Net Income for such period, the sum of (a) income tax expense, (b) interest expense,
amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and
other fees and charges associated with Indebtedness (including the Second Lien Term Loans), (c)
depreciation and amortization expense (including amortization expense related to competitive
payments to customers resulting in Capital Expenditures of Holdings or any of its Subsidiaries),
(d) amortization of intangibles (including, but not limited to, goodwill) and organization costs,
(e) non-cash compensation expenses arising from the issuance of stock, options to purchase stock
and stock appreciation rights to the management of Holdings or any of its Subsidiaries, (f) any
extraordinary charges or losses determined in accordance with GAAP, (g) any other non-cash charges,
non-cash expenses or non-cash losses of Holdings or any of its Subsidiaries for such period
(excluding any such charge, expense or loss incurred in the ordinary course of business that
constitutes an accrual of or a reserve for cash charges for any future period), (h) any pro
forma adjustment referred to in the Confidential Information Memorandum that had a
favorable impact on Consolidated EBITDA during the fiscal periods up to and including the fiscal
year ending December 31, 2005 and (i) any cash or non-cash expense incurred during the fiscal year
ending December 31, 2005 in connection with the termination of the employment of any officer or
executive of the Borrowers or their Affiliates, provided, however, that cash
payments made in such period or in any future period in respect of such non-cash charges, expenses
or losses (excluding any such charge, expense or loss incurred in the ordinary course of business
that constitutes an accrual of or a reserve for cash charges for any future period) shall be
subtracted from Consolidated Net Income in calculating Consolidated EBITDA in the period when such
payments are made, and minus, to the extent included in the statement of such Consolidated
Net Income for such period, the sum of (a) interest income, (b) any extraordinary income or gains
determined in accordance with GAAP, (c) any other non-cash income (excluding any items that
represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any
prior period

4

 

that are described in the parenthetical to clause (g) above) and (d) any pro
forma adjustment referred to in the Confidential Information Memorandum that had an
unfavorable impact on Consolidated EBITDA during the fiscal periods up to and including the fiscal
year ending December 31, 2005, all as determined on a consolidated basis. For the purposes of
calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a
“Reference Period”) pursuant to any determination of the Consolidated Leverage Ratio or the
Consolidated First Lien Leverage Ratio, (i) if at any time during such Reference Period Holdings or
any Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for such Reference
Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to
the property that is the subject of such Material Disposition for such Reference Period or
increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such
Reference Period and (ii) if during such Reference Period Holdings or any Subsidiary shall have
made a Material Acquisition, Consolidated EBITDA for such Reference Period shall be calculated
after giving pro forma effect thereto as if such Material Acquisition occurred on
the first day of such Reference Period, provided that, with respect to the Acquisition and
the Contribution, such pro forma calculation shall be done in a manner consistent with the pro
forma financial statements described in Section 5.1(a). As used in this definition, “Material
Acquisition” means any acquisition of property or series of related acquisitions of property
that (a) constitutes assets comprising all or substantially all of an operating unit of a business
or constitutes all or substantially all of the common stock of a Person and (b) involves the
payment of consideration by Holdings and its Subsidiaries in excess of $1,000,000; and
“Material Disposition” means any Disposition of property or series of related Dispositions
of property that yields gross proceeds to Holdings or any of its Subsidiaries in excess of
$1,000,000.

     “Consolidated First Lien Leverage Ratio”: as at the last day of any period, the ratio
of (a) Consolidated Total Debt (excluding any Second Lien Term Loans included therein) on such day
to (b) Consolidated EBITDA for such period.

     “Consolidated Interest Coverage Ratio”: for any period, the ratio of (a) Consolidated
EBITDA for such period to (b) Consolidated Interest Expense for such period.

     “Consolidated Interest Expense”: for any period, total cash interest expense
(including that attributable to Capital Lease Obligations) of Holdings and its Subsidiaries for
such period with respect to all outstanding Indebtedness of Holdings and its Subsidiaries
(including all commissions, discounts and other fees and charges owed with respect to letters of
credit and bankers’ acceptance financing and net costs under Hedge Agreements in respect of
interest rates to the extent such net costs are allocable to such period in accordance with GAAP)
but excluding all amortized financing fees incurred in connection with the loans described in the
Existing Credit Agreement and with the Second Lien Term Loans and the First Lien Term Loans.

     “Consolidated Leverage Ratio”: as at the last day of any period, the ratio of (a)
Consolidated Total Debt on such day to (b) Consolidated EBITDA for such period.

     “Consolidated Net Income”: for any period, the consolidated net income (or loss) of
Holdings and its Subsidiaries, determined on a consolidated basis in accordance with GAAP;
provided that there shall be excluded (a) the income (or deficit) of any Person accrued
prior to the date it becomes a Subsidiary of Holdings or is merged into or consolidated with
Holdings or any of its Subsidiaries, (b) the income (or deficit) of any Person (other than a
Subsidiary of Holdings) in which Holdings or any of its Subsidiaries has an ownership interest,
except to the extent that any such income is actually received by Holdings or such Subsidiary in
the form of dividends or similar distributions and (c) the undistributed earnings of any Subsidiary
of Holdings to the extent that the declaration or payment of dividends or similar distributions by
such Subsidiary is not at the time permitted by the terms of any Contractual

5

 

Obligation (other than under any Second Lien Loan Document) or Requirement of Law applicable
to such Subsidiary.

     “Consolidated Total Debt”: at any date, the aggregate principal amount of all
Indebtedness of Holdings and its Subsidiaries at such date, determined on a consolidated basis in
accordance with GAAP.

     “Consolidated Working Capital”: at any date, the excess of Consolidated Current
Assets on such date over Consolidated Current Liabilities on such date.

     “Continuing Directors”: the directors of Holdings on the Closing Date, and each other
director, if, in each case, such other director’s nomination for election to the board of directors
of Holdings is recommended by at least 51% of the then Continuing Directors or such other director
receives the vote of the Permitted Investors in his or her election by the shareholders of
Holdings.

     “Contractual Obligation”: as to any Person, any provision of any security issued by
such Person or of any agreement, instrument or other undertaking to which such Person is a party or
by which it or any of its property is bound.

     “Control Agreement”: as defined in Section 7.12, including any Control Agreements
delivered on the Closing Date pursuant to Section 6(o).

     “Control Investment Affiliate”: as to any Person, any other Person that (a) directly
or indirectly, is in control of, is controlled by, or is under common control with, such Person and
(b) is organized by such Person primarily for the purpose of making equity or debt investments in
one or more companies. For purposes of this definition, “control” of a Person means the power,
directly or indirectly, to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise.

     “Default”: any of the events specified in Section 9, whether or not any requirement
for the giving of notice, the lapse of time, or both, has been satisfied.

     “Disposition”: with respect to any Property, any sale, lease, sale and leaseback,
assignment, conveyance, transfer or other disposition thereof. The terms “Dispose” and
“Disposed of” shall have correlative meanings.

     “Dollars” and “$”: dollars in lawful currency of the United States.

     “Domestic Subsidiary”: any Subsidiary of Holdings organized under the laws of any
jurisdiction within the United States.

     “ECF Percentage”: with respect to any fiscal year following the fiscal year in which
the Closing Date occurs, (a) 75%, to the extent the Consolidated Leverage Ratio as of last day of
such fiscal year is greater than 2.50 to 1.00, (b) 50%, to the extent the Consolidated Leverage
Ratio as of last day of such fiscal year is greater than 1.50 to 1.00 but less than or equal to
2.50 to 1.00, (c) 25%, to the extent the Consolidated Leverage Ratio as of last day of such fiscal
year is greater than 1.00 to 1.00 but less than or equal to 1.50 to 1.00 and (d) 0%, to the extent
the Consolidated Leverage Ratio as of last day of such fiscal year is less than or equal to 1.00 to
1.00.

     “Environmental Laws”: any and all foreign, Federal, state, local or municipal laws,
rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental
Authority or

6

 

other Requirements of Law (including common law) regulating, relating to or imposing liability
or standards of conduct concerning protection of human health or the environment, as now or may at
any time hereafter be in effect.

     “ERISA”: the Employee Retirement Income Security Act of 1974, as amended from time to
time.

     “Eurocurrency Reserve Requirements”: for any day as applied to a Eurodollar Loan, the
aggregate (without duplication) of the maximum rates (expressed as a decimal fraction) of reserve
requirements in effect on such day (including basic, supplemental, marginal and emergency reserves
under any regulations of the Board or other Governmental Authority having jurisdiction with respect
thereto) dealing with reserve requirements prescribed for eurocurrency funding (currently referred
to as “Eurocurrency Liabilities” in Regulation D of the Board) maintained by a member bank of the
Federal Reserve System.

     “Eurodollar Base Rate”: with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, the rate per annum determined on the basis of the rate for
deposits in Dollars for a period equal to such Interest Period commencing on the first day of such
Interest Period appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London time, two
Business Days prior to the beginning of such Interest Period. In the event that such rate does not
appear on Page 3750 of the Telerate screen (or otherwise on such screen), the “Eurodollar Base
Rate” shall be determined by reference to such other comparable publicly available service for
displaying eurodollar rates as may be selected by the Administrative Agent or, in the absence of
such availability, by reference to the rate at which the Administrative Agent is offered Dollar
deposits at or about 11:00 A.M., New York City time, two Business Days prior to the beginning of
such Interest Period in the interbank eurodollar market where its eurodollar and foreign currency
and exchange operations are then being conducted for delivery on the first day of such Interest
Period for the number of days comprised therein.

     “Eurodollar Loans”: Second Lien Term Loans that bear interest at a rate of interest
based upon the Eurodollar Rate.

     “Eurodollar Rate”: with respect to each day during each Interest Period pertaining to
a Eurodollar Loan, a rate per annum determined for such day in accordance with the following
formula (rounded upward to the nearest 1/100th of 1%):

Eurodollar Base Rate

 

1.00 — Eurocurrency Reserve Requirements

     “Eurodollar Tranche”: the collective reference to Eurodollar Loans of a Borrower the
then current Interest Periods with respect to all of which begin on the same date and end on the
same later date (whether or not such Second Lien Term Loans shall originally have been made on the
same day).

     “Event of Default”: any of the events specified in Section 9, provided that
any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

     “Excess Cash Flow”: for any fiscal year of Holdings, the excess, if any, of (a) the
sum, without duplication, of (i) Consolidated Net Income for such fiscal year, (ii) the amount of
all non-cash charges (including depreciation and amortization but excluding any such charge,
expense or loss incurred in the ordinary course of business that constitutes an accrual of or a
reserve for cash charges for any future period, but including any reversal of any such accrual or
reserve) deducted in arriving at such Consolidated Net Income, (iii) decreases in Consolidated
Working Capital for such fiscal year, and (iv)

7

 

the aggregate net amount of non-cash loss on the Disposition of Property by Holdings and its
Subsidiaries during such fiscal year (other than sales of inventory in the ordinary course of
business), to the extent deducted in arriving at such Consolidated Net Income, over (b) the
sum, without duplication, of (i) the amount of all non-cash credits included in arriving at such
Consolidated Net Income, (ii) the aggregate amount actually paid by Holdings and its Subsidiaries
in cash during such fiscal year on account of Capital Expenditures (excluding the principal amount
of Indebtedness incurred to finance such expenditures (but including repayments of any such
Indebtedness incurring during such period or any prior period) and any such expenditures financed
with the proceeds of any Reinvestment Deferred Amount), (iii) the aggregate amount of all
prepayments of revolving loans under the First Lien Credit Agreement during such fiscal year to the
extent accompanying permanent optional reductions of the revolving commitments under the First Lien
Credit Agreement and the aggregate amount of all optional prepayments of the Second Lien Term Loans
and the First Lien Term Loans during such fiscal year (except to the extent refinanced), (iv) the
aggregate amount of all regularly scheduled principal payments and mandatory prepayments (to the
extent made with gains from asset sales) of Funded Debt (including the Second Lien Term Loans and
the First Lien Term Loans) of Holdings and its Subsidiaries made during such fiscal year (other
than in respect of any revolving credit facility to the extent there is not an equivalent permanent
reduction in commitments thereunder) (except to the extent refinanced), (v) increases in
Consolidated Working Capital for such fiscal year, and (vi) the aggregate net amount of non-cash
gain on the Disposition of Property by Holdings and its Subsidiaries during such fiscal year (other
than sales of inventory in the ordinary course of business), to the extent included in arriving at
such Consolidated Net Income.

     “Excess Cash Flow Application Date”: as defined in Section 4.2.

     “Excluded Foreign Subsidiary”: any Foreign Subsidiary in respect of which either (a)
the pledge of all of the Capital Stock of such Subsidiary as Collateral or (b) the guaranteeing by
such Subsidiary of the Obligations, would, in the good faith judgment of the US Borrower, result in
adverse tax consequences to the US Borrower.

     “Excluded Indebtedness”: all Indebtedness permitted by clauses (a), (b), (c), (d),
(e), (f), (g) and (h) of Section 8.1.

     “Existing Credit Agreement”: the Credit Agreement dated as of October 1, 2004, among
the US Borrower (f/k/a Envision Worldwide Inc.), the BVI Borrower (f/k/a Envision Worldwide
Limited), Bear Stearns Corporate Lending Inc., as administrative agent, and the other financial
institutions named therein.

     “Federal Funds Effective Rate”: for any day, the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Reference Lender from three federal
funds brokers of recognized standing selected by it.

     “First Lien Collateral Agent”: JPMorgan Chase Bank, N.A., or any replacement
therefor, in each case in its capacity as First Lien Collateral Agent for the Administrative Agent
and the Lenders under the First Lien Loan Documents.

     “First Lien Credit Agreement”: the First Lien Credit Agreement, dated as of December
9, 2005, among the Borrowers, the several agents, banks and other financial institutions or
entities from time to time parties thereto and JPMorgan Chase Bank, N.A., as administrative agent.

8

 

     “First Lien Debt”: Indebtedness outstanding under the First Lien Credit Agreement.

     “First Lien Guarantee and Collateral Agreement”: the First Lien Guarantee and
Collateral Agreement to be executed and delivered by the First Lien Collateral Agent, Holdings, the
Borrowers and each Subsidiary Guarantor.

     “First Lien Loan Documents”: the First Lien Credit Agreement, the First Lien Security
Documents, any notes issued pursuant to the First Lien Credit Agreement and any amendment, waiver,
supplement or other modification to, and all other documents and agreements executed in connection
with, any of the foregoing.

     “First Lien Security Documents”: the collective reference to the First Lien Guarantee
and Collateral Agreement, any Control Agreement, any mortgage delivered to the First Lien
Collateral Agent pursuant to the First Lien Credit Agreement, the Intercreditor Agreement and all
other security documents hereafter delivered to the First Lien Collateral Agent granting a Lien on
any property of any Person to secure the obligations and liabilities of any “Loan Party” to any
“Lender” under any First Lien Loan Document.

     “Foreign Subsidiary”: any Subsidiary of Holdings that is not a Domestic Subsidiary.

     “Foster Grant”: AAi.FosterGrant, Inc., a Rhode Island corporation.

     “Funded Debt”: as to any Person, all Indebtedness of such Person that matures more
than one year from the date of its creation or matures within one year from such date but is
renewable or extendible, at the option of such Person, to a date more than one year from such date
or arises under a revolving credit or similar agreement that obligates the lender or lenders to
extend credit during a period of more than one year from such date, including all current
maturities and current sinking fund payments in respect of such Indebtedness whether or not
required to be paid within one year from the date of its creation and, in the case of either
Borrower, Indebtedness in respect of the Second Lien Term Loans and the First Lien Debt.

     “Funding Office”: the office of the Administrative Agent specified in Section 11.2 or
such other office as may be specified from time to time by the Administrative Agent as its funding
office by written notice to the US Borrower and the Lenders.

     “GAAP”: generally accepted accounting principles in the United States as in effect
from time to time.

     “Governmental Authority”: any nation or government, any state or other political
subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative
functions of or pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).

     “Group Members”: the collective reference to Holdings and its Subsidiaries.

     “Guarantee Obligation”: as to any Person (the “guaranteeing person”), any
obligation of (a) the guaranteeing person or (b) another Person (including any bank under any
letter of credit) to induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other obligations (the “primary
obligations”) of any other third Person (the “primary obligor”) in any

9

 

manner, whether directly or indirectly, including any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any property constituting
direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or
payment of any such primary obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation
against loss in respect thereof; provided, however, that the term Guarantee
Obligation shall not include endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be
deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such
Guarantee Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability
in respect thereof as determined by the relevant Borrower in good faith.

     “Guarantors”: the collective reference to Holdings and the Subsidiary Guarantors.

     “Hedge Agreements”: any agreement with respect to any swap, forward, future, cap,
collar or derivative transaction or option or similar agreement involving, or settled by reference
to, one or more rates, currencies, commodities, equity or debt instruments or securities, or
economic, financial or pricing indices or measures of economic, financial or pricing risk or value
or any similar transaction or any combination of these transactions; provided that no
phantom stock or similar plan providing for payments only on account of services provided by
current or former directors, officers, employees or consultants of Holdings or the Subsidiaries
shall be a Hedge Agreement.

     “Holdings”: FGX International Holdings Limited, a British Virgin Islands
international business company.

     “Indebtedness”: of any Person at any date, without duplication, (a) all indebtedness
of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase
price of property or services (other than current trade payables incurred in the ordinary course of
such Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures
or other similar instruments (excluding, however, any such instrument relating to the termination
of the employment of an officer or executive of the Borrowers or of any of their Affiliates during
the fiscal year ending December 31, 2005), (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such property), (e) all Capital Lease
Obligations of such Person, (f) all obligations of such Person, contingent or otherwise, as an
account party or applicant under or in respect of acceptances, letters of credit, surety bonds or
similar arrangements, (g) the liquidation value of all preferred Capital Stock of such Person
redeemable by the holder thereof, (h) all Guarantee Obligations of such Person in respect of
obligations of the kind referred to in clauses (a) through (g) above, (i) all obligations of the
kind referred to in clauses (a) through (h) above secured by (or for which the holder of such
obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property
(including accounts and contract rights) owned by such Person, whether or not such Person has
assumed or become liable for the payment of such obligation, and (j) for the purposes of Sections
8.2 and 9(e) only, all obligations of such Person in respect of Hedge Agreements. The Indebtedness
of any Person shall include the Indebtedness of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person is liable

10

 

therefor as a result of such Person’s ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness expressly provide that such Person is
not liable therefor.

     “Indemnified Liabilities”: as defined in Section 11.5.

     “Indemnitee”: as defined in Section 11.5.

     “Insolvency”: with respect to any Multiemployer Plan, the condition that such Plan is
insolvent within the meaning of Section 4245 of ERISA.

     “Insolvent”: pertaining to a condition of Insolvency.

     “Intellectual Property”: the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United States, multinational or
foreign laws or otherwise, including copyrights, copyright licenses, patents, patent licenses,
trademarks, trademark licenses, technology, know-how and processes, and all rights to sue at law or
in equity for any infringement or other impairment thereof, including the right to receive all
proceeds and damages therefrom.

     “Intercreditor Agreement”: the Intercreditor Agreement to be executed and delivered
by the First Lien Collateral Agent, the Second Lien Collateral Agent and the Loan Parties,
substantially in the form of Exhibit I.

     “Interest Payment Date”: (a) as to any Base Rate Loan, the last day of each March,
June, September and December to occur while such Base Rate Loan is outstanding and the final
maturity date of such Base Rate Loan, (b) as to any Eurodollar Loan having an Interest Period of
three months or less, the last day of such Interest Period, (c) as to any Eurodollar Loan having an
Interest Period longer than three months, each day that is three months, or a whole multiple
thereof, after the first day of such Interest Period and the last day of such Interest Period and
(d) as to any Second Lien Term Loan, the date of any repayment or prepayment made in respect
thereof.

     “Interest Period”: as to any Eurodollar Loan made to a Borrower, (a) initially, the
period commencing on the borrowing or conversion date, as the case may be, with respect to such
Eurodollar Loan and ending one, two, three or six or (if consented to by all Lenders) nine or
twelve months thereafter, as selected by such Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and (b) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable to such Eurodollar Loan
and ending one, two, three or six or (if consented to by all Lenders) nine or twelve months
thereafter, as selected by such Borrower by irrevocable notice to the Administrative Agent no later
than 11:00 A.M., New York City time, on the date that is three Business Days prior to the last day
of the then current Interest Period with respect thereto; provided that, all of the
foregoing provisions relating to Interest Periods are subject to the following:

     (i) if any Interest Period would otherwise end on a day that is not a Business
Day, such Interest Period shall be extended to the next succeeding Business Day
unless the result of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period shall end on the
immediately preceding Business Day;

     (ii) such Borrower may not select an Interest Period that would extend beyond
the date final payment is due on the Second Lien Term Loans;

11

 

     (iii) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last Business
Day of a calendar month; and

     (iv) such Borrower shall select Interest Periods so as not to require a payment
or prepayment of any Eurodollar Loan during an Interest Period for such Loan.

     “Investments”: as defined in Section 8.8.

     “IPO”: an initial public offering of the common equity of the US Borrower or the BVI
Borrower.

     “Judgment Currency”: as defined in Section 11.18.

     “Judgment Currency Conversion Date”: as defined in Section 11.18.

     “Lenders”: as defined in the preamble hereto; provided, that unless the
context otherwise requires, each reference herein to the Lenders shall be deemed to include any
Conduit Lender.

     “Lien”: any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge or other security interest or any preference,
priority or other security agreement or preferential arrangement of any kind or nature whatsoever
(including any conditional sale or other title retention agreement and any capital lease having
substantially the same economic effect as any of the foregoing).

     “Loan Parties”: each Group Member that is a party to a Second Lien Loan Document.

     “Material Adverse Effect”: a material adverse effect on (a) the business, assets,
property, condition (financial or otherwise), results of operations or prospects of Holdings and
its Subsidiaries, taken as a whole, or (b) the validity or enforceability of this Agreement or any
of the other Second Lien Loan Documents or the rights or remedies of the Agents or the Lenders
hereunder or thereunder.

     “Materials of Environmental Concern”: any gasoline or petroleum (including crude oil
or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or
wastes, defined or regulated as such in or under any Environmental Law, including asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.

     “Mexican Joint Venture”: AAi./JOSKE’s S. de R.L. de C.V., a Mexican limited liability
company.

     “Milberg Factoring Agreements”: (a) the Amended and Restated Account Receivable
Non-Notification Non-Lending Factoring Agreement, dated as of January 30, 2003, as amended, among
FosterGrant, AAi.FosterGrant of Canada Co. and Milberg and (b) the Account Receivable
Non-Notification Non-Lending Factoring Agreement, dated as of October 1, 2004, between Magnivision,
Inc and Milberg, each as in effect on the date hereof.

     “Milberg”: Milberg Factors, Inc.

     “Moody’s”: Moody’s Investors Service, Inc.

12

 

     “Mortgaged Properties”: (a) the real properties listed on Schedule 1.1 and (b) the
real properties covered by any Mortgage delivered pursuant to Section 7.10(b), in each case, as to
which the Second Lien Collateral Agent, for the benefit of the Lenders, shall be granted a Lien
pursuant to the Mortgages.

     “Mortgages”: each of the mortgages and deeds of trust made by any Loan Party in favor
of, or for the benefit of, the Second Lien Collateral Agent, for the benefit of the Lenders,
substantially in the form of Exhibit D (with such changes thereto as shall be advisable under the
law of the jurisdiction in which such mortgage or deed of trust is to be recorded).

     “Multiemployer Plan”: a Plan that is a multiemployer plan as defined in Section
4001(a)(3) of ERISA.

     “Net Cash Proceeds”: (a) in connection with any Asset Sale or any Recovery Event,
the proceeds thereof in the form of cash and Cash Equivalents (including any such proceeds received
by way of deferred payment of principal pursuant to a note or installment receivable or purchase
price adjustment receivable or by the Disposition of any non-cash consideration received in
connection therewith or otherwise, but only as and when received) of such Asset Sale or Recovery
Event, net of attorneys’ fees, accountants’ fees, investment banking fees, amounts required to be
applied to the repayment of Indebtedness secured by a Lien expressly permitted hereunder on any
asset that is the subject of such Asset Sale or Recovery Event (other than any Lien pursuant to a
First Lien Security Document and the Second Lien Security Documents) and other customary fees and
expenses actually incurred in connection therewith and net of taxes paid or reasonably estimated to
be payable as a result thereof (after taking into account any available tax credits or deductions
and any tax sharing arrangements) and (b) in connection with any issuance or sale of Capital Stock,
any capital contribution or any incurrence of Indebtedness, the cash proceeds received from such
issuance, contribution or incurrence, net of attorneys’ fees, investment banking fees, accountants’
fees, underwriting discounts and commissions and other customary fees and expenses actually
incurred in connection therewith.

     “Non-Excluded Taxes”: as defined in Section 4.10(a).

     “Non-U.S. Lender”: as defined in Section 4.10(d).

     “Notes”: the collective reference to any promissory note evidencing Second Lien Term
Loans.

     “Obligations”: the unpaid principal of and interest on (including interest accruing
after the maturity of the Second Lien Term Loans and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding,
relating to either Borrower, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) the Second Lien Term Loans and all other obligations and liabilities of
the Borrowers to any Agent or to any Lender (or, in the case of Specified Hedge Agreements, any
affiliate of any Lender), whether direct or indirect, absolute or contingent, due or to become due,
or now existing or hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, any other Second Lien Loan Document, any Specified Hedge Agreement or any other document
made, delivered or given in connection herewith or therewith, whether on account of principal,
interest, fees, indemnities, costs, expenses (including all fees, charges and disbursements of
counsel to any Agent or to any Lender that are required to be paid by the Borrowers pursuant
hereto) or otherwise; provided, that (i) obligations of the Borrowers or any Subsidiary
under any Specified Hedge Agreement shall be secured and guaranteed pursuant to the Second Lien
Security Documents only to the extent that, and for so long as, the other Obligations are so
secured and

13

 

guaranteed and (ii) any release of Collateral or Guarantors effected in the manner permitted
by this Agreement shall not require the consent of holders of obligations under Specified Hedge
Agreements.

     “Other Taxes”: any and all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment made hereunder or from
the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Second Lien Loan Document other than any such taxes, charges or similar levies arising from
an assignment of, or a sale of a participation in, all or a portion of a Lender’s rights and
obligations under this Agreement.

     “Participant”: as defined in Section 11.6(c).

     “PBGC”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A
of Title IV of ERISA (or any successor).

     “Permitted Investors”: the collective reference to the Sponsor and its Control
Investment Affiliates.

     “Person”: an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.

     “Plan”: at a particular time, any employee benefit plan that is covered by ERISA and
in respect of which Holdings or a Commonly Controlled Entity is (or, if such plan were terminated
at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in
Section 3(5) of ERISA.

     “Pro Forma Balance Sheet”: as defined in Section 5.1(a).

     “Projections”: as defined in Section 7.2(c).

     “Properties”: as defined in Section 5.17(a).

     “Property”: any right or interest in or to property of any kind whatsoever, whether
real, personal or mixed and whether tangible or intangible, including, without limitation, Capital
Stock.

     “Recovery Event”: any settlement of or payment in respect of any property or casualty
insurance claim or any condemnation proceeding relating to any asset of any Group Member.

     “Reference Lender”: JPMorgan Chase Bank, N.A.

     “Register”: as defined in Section 11.6(b).

     “Register of Mortgages, Charges and Other Encumbrances”: a register in which a
British Virgin Islands international business company enters details of any security interest
granted in or over any of its assets.

     “Regulation U”: Regulation U of the Board as in effect from time to time.

     “Reinvestment Deferred Amount”: with respect to any Reinvestment Event, the aggregate
Net Cash Proceeds received by any Group Member in connection therewith that are not applied to
prepay the Second Lien Term Loans pursuant to Section 4.2(c) as a result of the delivery of a
Reinvestment Notice.

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     “Reinvestment Event”: any Asset Sale or Recovery Event in respect of which either
Borrower has delivered a Reinvestment Notice.

     “Reinvestment Notice”: a written notice executed by a Responsible Officer of either
Borrower stating that no Event of Default has occurred and is continuing and that the Borrowers
(directly or indirectly through a Subsidiary) intend and expect to use all or a specified portion
of the Net Cash Proceeds of an Asset Sale or Recovery Event to acquire or repair fixed or capital
assets useful in its business or, in the case of a Recovery Event, to repair or replace the assets
which were the subject of such Recovery Event.

     “Reinvestment Prepayment Amount”: with respect to any Reinvestment Event, the
Reinvestment Deferred Amount relating thereto less any amount expended prior to the relevant
Reinvestment Prepayment Date to acquire or repair fixed or capital assets useful in any Group
Member’s business or, in the case of a Recovery Event, to repair or replace the assets which were
the subject of the relevant Recovery Event.

     “Reinvestment Prepayment Date”: with respect to any Reinvestment Event, the earlier
of (a) the date occurring 360 days after such Reinvestment Event and (b) the date on which either
Borrower shall have determined not to, or shall have otherwise ceased to, acquire or repair fixed
or capital assets useful in any Group Member’s business or, in the case of a Recovery Event, repair
or replace the assets which were the subject of the relevant Recovery Event with all or any portion
of the relevant Reinvestment Deferred Amount.

     “Related Parties”: as defined in Section 10.3.

     “Reorganization”: with respect to any Multiemployer Plan, the condition that such
plan is in reorganization within the meaning of Section 4241 of ERISA.

     “Reportable Event”: any of the events set forth in Section 4043(b) of ERISA, other
than those events as to which the thirty day notice period is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. § 4043.

     “Required Lenders”: at any time, the holders of more than 50% of the aggregate unpaid
principal amount of the Second Lien Term Loans.

     “Requirement of Law”: as to any Person, the Certificate of Incorporation and By-Laws
or other organizational or governing documents of such Person, and any law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental Authority, in each
case applicable to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

     “Responsible Officer”: with respect to Holdings or either Borrower, as applicable,
the chief executive officer, president or chief financial officer of Holdings or either Borrower,
as applicable, but in any event, with respect to financial matters, the chief financial officer of
Holdings or either Borrower, as applicable.

     “S&P”: Standard & Poor’s Ratings Services.

     “SEC”: the Securities and Exchange Commission, any successor thereto and any
analogous Governmental Authority.

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     “Second Lien Collateral Agent”: Wilmington Trust Company, or any replacement therefor
in accordance with the terms of Section 10.13, in each case in its capacity as Second Lien
Collateral Agent for the administrative agent and the lenders under the Second Lien Loan Documents.

     “Second Lien Guarantee and Collateral Agreement”: the Second Lien Guarantee and
Collateral Agreement to be executed and delivered by the Second Lien Collateral Agent, Holdings,
the Borrowers and each Subsidiary Guarantor, substantially in the form of Exhibit A.

     “Second Lien Loan Documents”: this Agreement, the Second Lien Security Documents, the
Notes and any amendment, waiver, supplement or other modification to, and all other documents and
agreements executed in connection with, any of the foregoing.

     “Second Lien Security Documents”: the collective reference to the Second Lien
Guarantee and Collateral Agreement, any Control Agreement, the Mortgages, the Intercreditor
Agreement and all other security documents hereafter delivered to the Second Lien Collateral Agent
granting a Lien on any property of any Person to secure the obligations and liabilities of any Loan
Party to any Lender under any Second Lien Loan Document.

     “Second Lien Term Loan”: as defined in Section 2.1.

     “Second Lien Term Percentage”: as to any Lender at any time, the percentage which the
aggregate principal amount of such Lender’s Second Lien Term Loans then outstanding constitutes of
the aggregate principal amount of the Second Lien Term Loans then outstanding.

     “Single Employer Plan”: any Plan that is covered by Title IV of ERISA, but that is
not a Multiemployer Plan.

     “Solvent”: when used with respect to any Person, means that, as of any date of
determination, (a) the amount of the “present fair saleable value” of the assets of such Person
will, as of such date, exceed the amount of all “liabilities of such Person, contingent or
otherwise”, as of such date, as such quoted terms are determined in accordance with applicable
federal and state laws governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater than the amount that
will be required to pay the liability of such Person on its debts as such debts become absolute and
matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital
with which to conduct its business, and (d) such Person will be able to pay its debts as they
mature. For purposes of this definition, (i) “debt” means liability on a “claim”, and (ii) “claim”
means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach
gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.

     “Specified Change of Control”: any of the events described in clauses (i) and (ii) of
Section 9(l) of the First Lien Credit Agreement.

     “Specified Hedge Agreement”: any Hedge Agreement (a) entered into by (i) either
Borrower or any of its Subsidiaries and (ii) any Agent or Lender or any affiliate thereof, as
counterparty and (b) that has been designated by such Agent or Lender, as the case may be, and
either Borrower, by notice to the Administrative Agent, as a Specified Hedge Agreement. The
designation of any Hedge Agreement as a Specified Hedge Agreement shall not create in favor of the
Agent, Lender or affiliate

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thereof that is a party thereto any rights in connection with the management or release of any
Collateral or of the obligations of any Guarantor under any Second Lien Security Document.

     “Sponsor”: Berggruen Holdings, Inc.

     “Subsidiary”: as to any Person, a corporation, partnership, limited liability company
or other entity of which shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such
Person. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this
Agreement shall refer to a Subsidiary or Subsidiaries of Holdings.

     “Subsidiary Guarantor”: each Subsidiary of Holdings other than (a) any Excluded
Foreign Subsidiary and (b) the Borrowers.

     “Syndication Agent”: as defined in the preamble to this Agreement.

     “Transaction”: the collective reference to (i) the dividend to be paid by the
Borrowers to Holdings and other direct and indirect holders of their Capital Stock in an amount not
to exceed $100,000,000 in the aggregate, (ii) the refinancing and replacement by the Borrowers of
the Existing Credit Agreement and the repayment of certain existing Indebtedness in an amount not
to exceed $98,000,000 in the aggregate and (iii) the payment of related fees and expenses in
connection therewith.

     “Transferee”: any Assignee or Participant.

     “Type”: as to any Second Lien Term Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.

     “United States”: the United States of America.

     1.2. Other Definitional Provisions. i) Unless otherwise specified therein, all terms
defined in this Agreement shall have the defined meanings when used in the other Second Lien Loan
Documents or any certificate or other document made or delivered pursuant hereto or thereto.

     (a) As used herein and in the other Second Lien Loan Documents, and any certificate or other
document made or delivered pursuant hereto or thereto, (i) accounting terms relating to any Group
Member not defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent
not defined, shall have the respective meanings given to them under GAAP, (ii) the words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without limitation”, (iii)
the word “incur” shall be construed to mean incur, create, issue, assume, become liable in respect
of or suffer to exist (and the words “incurred” and “incurrence” shall have correlative meanings),
(iv) the words “asset” and “property” shall be construed to have the same meaning and effect and to
refer to any and all tangible and intangible assets and properties, including cash, Capital Stock,
securities, revenues, accounts, leasehold interests and contract rights, and (v) references to
agreements or other Contractual Obligations shall, unless otherwise specified, be deemed to refer
to such agreements or Contractual Obligations as amended, supplemented, restated or otherwise
modified from time to time (subject to any applicable restrictions hereunder).

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     (b) The words “hereof”, “herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise
specified.

     (c) The meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.

     (d) Except as otherwise expressly provided herein, all terms of an accounting or financial
nature shall be construed in accordance with GAAP; provided that, if either Borrower
notifies the Administrative Agent that such Borrower requests an amendment to any provision hereof
to eliminate the effect of any change occurring after the date hereof in GAAP or in the application
thereof on the operation of such provision (or if the Administrative Agent notifies the Borrowers
that the Required Lenders request an amendment to any provision hereof for such purpose),
regardless of whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and
applied immediately before such change shall have become effective until such notice shall have
been withdrawn or such provision amended in accordance herewith.

SECTION 2. AMOUNT AND TERMS OF COMMITMENTS

     2.1. Commitments. Subject to the terms and conditions hereof, each Lender
severally agrees to make a second lien term loan (a “Second Lien Term Loan”) to the US
Borrower on the Closing Date in the amount of the Commitment of such Lender. The Second Lien Term
Loans may from time to time be Eurodollar Loans or Base Rate Loans, as determined by the US
Borrower and notified to the Administrative Agent in accordance with Sections 2.2 and 4.3.

     2.2. Procedure for Second Lien Term Loan Borrowing. The US Borrower shall give the
Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent
prior to 10:00 A.M., New York City time, one Business Day prior to the anticipated Closing Date)
requesting that the Lenders make the Second Lien Term Loans on the Closing Date and specifying the
amount to be borrowed. The Second Lien Term Loans made on the Closing Date shall initially be Base
Rate Loans. Upon receipt of such notice the Administrative Agent shall promptly notify each Lender
thereof. Not later than 12:00 Noon, New York City time, on the Closing Date, each Lender shall
make available to the Administrative Agent at the Funding Office an amount in immediately available
funds equal to the Second Lien Term Loans to be made by such Lender. The Administrative Agent
shall credit the account of the US Borrower in respect of the Second Lien Term Loans made to the US
Borrower on the books of such office of the Administrative Agent with the aggregate of the amounts
made available to the Administrative Agent in immediately available funds.

     2.3. Repayment of Second Lien Term Loans. The Second Lien Term Loan of each Lender shall
be due and payable in a single installment on the eighth anniversary of the Closing Date.

     2.4. Fees. The Borrowers jointly and severally agree to pay to the Administrative
Agent and the Syndication Agent the fees in the amounts and on the dates previously agreed to in
writing by the Borrowers, the Administrative Agent and the Syndication Agent by letter dated
October 19, 2005, subject to the reduction previously agreed to by the Borrowers, the
Administrative Agent and the Syndication Agent and as reflected in the wire transfer instructions
on the Closing Date.

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SECTION 3. [RESERVED]

SECTION 4. GENERAL PROVISIONS APPLICABLE

TO SECOND LIEN TERM LOANS

     4.1. Optional Prepayments. ii) Each Borrower may at any time and from time to time
prepay the Second Lien Term Loans, in whole or in part, without premium or penalty, upon
irrevocable notice delivered to the Administrative Agent no later than 11:00 A.M., New York City
time, three Business Days prior thereto, in the case of Eurodollar Loans, and no later than 11:00
A.M., New York City time, one Business Day prior thereto, in the case of Base Rate Loans, which
notice shall specify the date and amount of prepayment and whether the prepayment is of Eurodollar
Loans or Base Rate Loans; provided, that if a Eurodollar Loan is prepaid on any day other
than the last day of the Interest Period applicable thereto, such Borrower shall also pay any
amounts owing pursuant to Section 4.11. Upon receipt of any such notice the Administrative Agent
shall promptly notify each relevant Lender thereof. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified therein, together with
accrued interest to such date on the amount prepaid. Partial prepayments of Second Lien Term Loans
shall be in an aggregate principal amount of $500,000 or a whole multiple thereof.

     iii) All voluntary prepayments of the Second Lien Term Loans effected on or prior to the
second anniversary of the Closing Date shall be accompanied by a prepayment fee equal to (i) 2.00%
of the aggregate amount of such prepayment, in the case of any prepayment made on or prior to the
first anniversary of the Closing Date and (ii) 1.00% of the aggregate amount of such prepayment, in
the case of any prepayment made after the first anniversary of the Closing Date but on or prior to
the second anniversary of the Closing Date. Payments or prepayments of the Second Lien Term Loans
in connection with any event set forth in Section 9(l) effected on or prior to the eighth
anniversary of the Closing Date shall be accompanied by a prepayment fee of 1.00% of the aggregate
amount thereof.

     4.2. Mandatory Prepayments. iv) If any Indebtedness shall be incurred by any Group
Member (other than Excluded Indebtedness), an amount equal to 100% of the Net Cash Proceeds thereof
shall be applied on the date of such incurrence toward the prepayment of the First Lien Debt (as
set forth in Section 4.2(e) of the First Lien Credit Agreement) and the Second Lien Term Loans.

     (a) If any Capital Stock shall be issued by any Group Member, an amount equal to 100% of the
Net Cash Proceeds thereof shall be applied on the date of such issuance toward the prepayment of
the First Lien Debt (as set forth in Section 4.2(e) of the First Lien Credit Agreement) and the
Second Lien Term Loans; provided, however, that if after giving pro
forma effect to such issuance, the Consolidated Leverage Ratio as of the last day of the
most recent period of four consecutive fiscal quarters of Holdings for which financial reports have
then been delivered pursuant to Section 7.1 does not exceed 2.50 to 1.0, no prepayment shall be
required pursuant to this clause (b).

     (b) If on any date any Group Member shall receive Net Cash Proceeds from any Asset Sale or
Recovery Event then, unless a Reinvestment Notice shall be delivered in respect thereof, such Net
Cash Proceeds shall be applied on such date toward the prepayment of the First Lien Debt (as set
forth in Section 4.2(e) of the First Lien Credit Agreement) and the Second Lien Term Loans;
provided, that, notwithstanding the foregoing, (i) the aggregate Net Cash Proceeds of Asset
Sales that may be excluded from the foregoing requirement pursuant to a Reinvestment Notice shall
not exceed $500,000 in any fiscal year of Holdings and (ii) on each Reinvestment Prepayment Date,
an amount equal to the Reinvestment Prepayment Amount with respect to the relevant Reinvestment
Event shall be applied toward the prepayment of the Second Lien Term Loans as set forth in Section
4.2(e).

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     (c) If for any fiscal year of Holdings commencing with the fiscal year ending December 31,
2006, there shall be Excess Cash Flow, the ECF Percentage of such Excess Cash Flow shall be applied
on the relevant Excess Cash Flow Application Date toward the prepayment of the First Lien Debt (as
set forth in Section 4.2(e) of the First Lien Credit Agreement) and the Second Lien Term Loans.
Each such prepayment shall be made on a date (an “Excess Cash Flow Application Date”) no
later than five days after the earlier of (i) the date on which the financial statements of
Holdings referred to in Section 7.1(a), for the fiscal year with respect to which such prepayment
is made, are required to be delivered to the Lenders and (ii) the date such financial statements
are actually delivered (to the extent such financial statements are delivered later than the date
on which such statements are required to be delivered pursuant to Section 7.1(a)).

     (d) Amounts to be applied in connection with prepayments made pursuant to foregoing clauses
(a), (b), (c) and (d) of this Section 4.2 shall be applied, first, to the prepayment in
full of the First Lien Debt (as set forth in Section 4.2(e) of the First Lien Credit Agreement)
and, second, to the Second Lien Term Loans in accordance with Section 4.8. Each prepayment
of the Second Lien Term Loans under Section 4.2 shall be accompanied by accrued interest to the
date of such prepayment on the amount prepaid.

     4.3. Conversion and Continuation Options. v) Each Borrower may elect from time to
time to convert Eurodollar Loans to Base Rate Loans by giving the Administrative Agent prior
irrevocable notice of such election no later than 11:00 A.M., New York City time, on the Business
Day preceding the proposed conversion date, provided that any such conversion of Eurodollar
Loans may only be made on the last day of an Interest Period with respect thereto. Each Borrower
may elect from time to time to convert Base Rate Loans to Eurodollar Loans by giving the
Administrative Agent prior irrevocable notice of such election no later than 11:00 A.M., New York
City time, on the third Business Day preceding the proposed conversion date (which notice shall
specify the length of the initial Interest Period therefor), provided that no Base Rate
Loan may be converted into a Eurodollar Loan when any Event of Default has occurred and is
continuing and the Administrative Agent or the Required Lenders have determined in its or their
sole discretion not to permit such conversions. Upon receipt of any such notice the Administrative
Agent shall promptly notify each relevant Lender thereof.

     (a) Any Eurodollar Loan may be continued as such upon the expiration of the then current
Interest Period with respect thereto by the relevant Borrower giving irrevocable notice to the
Administrative Agent, in accordance with the applicable provisions of the term “Interest Period”
set forth in Section 1.1, of the length of the next Interest Period to be applicable to such Second
Lien Term Loans, provided that no Eurodollar Loan may be continued as such when any Event
of Default has occurred and is continuing and the Administrative Agent has or the Required Lenders
have determined in its or their sole discretion not to permit such continuations, and
provided, further, that if the relevant Borrower shall fail to give any required
notice as described above in this paragraph or if such continuation is not permitted pursuant to
the preceding proviso such Eurodollar Loans shall be automatically converted to Base Rate Loans on
the last day of such then expiring Interest Period. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.

     4.4. Limitations on Eurodollar Tranches. Notwithstanding anything to the contrary in
this Agreement, all borrowings, conversions and continuations of Eurodollar Loans hereunder and all
selections of Interest Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, (a) after giving effect thereto, the aggregate principal amount of the
Eurodollar Loans comprising each Eurodollar Tranche shall be equal to $1,000,000 or a whole
multiple of $100,000 in excess thereof and (b) no more than twelve Eurodollar Tranches shall be
outstanding at any one time.

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     4.5. Interest Rates and Payment Dates. vi) Each Eurodollar Loan shall bear interest
for each day during each Interest Period with respect thereto at a rate per annum equal to the
Eurodollar Rate determined for such day plus the Applicable Margin.

     (a) Each Base Rate Loan shall bear interest at a rate per annum equal to the Base Rate plus
the Applicable Margin.

     (b) (i) If all or a portion of the principal amount of any Second Lien Term Loan shall not be
paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount
shall bear interest at a rate per annum equal to the rate that would otherwise be applicable
thereto pursuant to the foregoing provisions of this Section plus 2%, and (ii) if all or a
portion of any interest payable on any Second Lien Term Loan or other amount payable hereunder
shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such
overdue amount shall bear interest at a rate per annum equal to the rate then applicable to Base
Rate Loans plus 2%, in each case, with respect to clauses (i) and (ii) above, from the date
of such non-payment until such amount is paid in full (as well after as before judgment).

     (c) Interest shall be payable in arrears on each Interest Payment Date, provided that
interest accruing pursuant to paragraph (c) of this Section shall be payable from time to time on
demand.

     4.6. Computation of Interest and Fees. vii) Interest and fees payable pursuant
hereto shall be calculated on the basis of a 360-day year for the actual days elapsed, except that,
with respect to Base Rate Loans the rate of interest on which is calculated on the basis of the
Prime Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-, as the case
may be) day year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the relevant Borrower and the relevant Lenders of each determination of a
Eurodollar Rate. Any change in the interest rate on a Second Lien Term Loan resulting from a
change in the Base Rate or the Eurocurrency Reserve Requirements shall become effective as of the
opening of business on the day on which such change becomes effective. The Administrative Agent
shall as soon as practicable notify the relevant Borrower and the relevant Lenders of the effective
date and the amount of each such change in interest rate.

     (a) Each determination of an interest rate by the Administrative Agent pursuant to any
provision of this Agreement shall be conclusive and binding on the Borrowers and the Lenders in the
absence of manifest error. The Administrative Agent shall, at the request of either Borrower,
deliver to such Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 4.5(a).

     4.7. Inability to Determine Interest Rate. If prior to the first day of any Interest
Period:

     (a) the Administrative Agent shall have determined (which determination
shall be conclusive and binding upon the Borrowers) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, or

     (b) the Administrative Agent shall have received notice from the Required
Lenders that the Eurodollar Rate determined or to be determined for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (as conclusively
certified by such Lenders) of making or maintaining their affected Second Lien Term
Loans during such Interest Period,

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the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrowers and the
relevant Lenders as soon as practicable thereafter. If such notice is given (x) any Eurodollar
Loans requested to be made on the first day of such Interest Period shall be made as Base Rate
Loans, (y) any Second Lien Term Loans that were to have been converted on the first day of such
Interest Period to Eurodollar Loans shall be continued as Base Rate Loans and (z) any outstanding
Eurodollar Loans shall be converted, on the last day of the then-current Interest Period, to Base
Rate Loans. Until such notice has been withdrawn by the Administrative Agent, no further
Eurodollar Loans shall be made or continued as such, nor shall either Borrower have the right to
convert Second Lien Term Loans to Eurodollar Loans.

     4.8. Pro Rata Treatment and Payments. viii) [Reserved].

     (a) Each payment (including each prepayment) by the US Borrower on account of principal of and
interest on the Second Lien Term Loans shall be made pro rata according to the
respective outstanding principal amounts of the Second Lien Term Loans then held by the Lenders.
Amounts repaid or prepaid on account of the Second Lien Term Loans may not be reborrowed.

     (b) [Reserved].

     (c) All payments (including prepayments) to be made by the Borrowers hereunder, whether on
account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and
shall be made prior to 1:00 P.M., New York City time, on the due date thereof to the Administrative
Agent, for the account of the Lenders, at the Funding Office, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the Lenders promptly
upon receipt in like funds as received. If any payment hereunder (other than payments on the
Eurodollar Loans) becomes due and payable on a day other than a Business Day, such payment shall be
extended to the next succeeding Business Day. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day unless the result of such extension would be to extend such payment into
another calendar month, in which event such payment shall be made on the immediately preceding
Business Day. In the case of any extension of any payment of principal pursuant to the preceding
two sentences, interest thereon shall be payable at the then applicable rate during such extension.

     (d) Unless the Administrative Agent shall have been notified in writing by any Lender prior to
a borrowing that such Lender will not make the amount that would constitute its share of such
borrowing available to the Administrative Agent, the Administrative Agent may assume that such
Lender is making such amount available to the Administrative Agent, and the Administrative Agent
may, in reliance upon such assumption, make available to the relevant Borrower a corresponding
amount. If such amount is not made available to the Administrative Agent by the required time on
the Closing Date therefor, such Lender shall pay to the Administrative Agent, on demand, such
amount with interest thereon at a rate equal to the greater of (i) the Federal Funds Effective Rate
and (ii) a rate determined by the Administrative Agent in accordance with banking industry rules on
interbank compensation for the period until such Lender makes such amount immediately available to
the Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this paragraph shall be conclusive in the absence of manifest
error. If such Lender’s share of such borrowing is not made available to the Administrative Agent
by such Lender within three Business Days of the Closing Date, the Administrative Agent shall also
be entitled to recover such amount with interest thereon at the rate per annum applicable to Base
Rate Loans, on demand, from the relevant Borrower.

     (e) Unless the Administrative Agent shall have been notified in writing by a Borrower prior to
the date of any payment due to be made by such Borrower hereunder that such Borrower will not make
such payment to the Administrative Agent, the Administrative Agent may

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assume that such Borrower is making such payment, and the Administrative Agent may, but shall
not be required to, in reliance upon such assumption, make available to the Lenders their
respective pro rata shares of a corresponding amount. If such payment is not made
to the Administrative Agent by such Borrower within three Business Days after such due date, the
Administrative Agent shall be entitled to recover, on demand, from each Lender to which any amount
which was made available pursuant to the preceding sentence, such amount with interest thereon at
the rate per annum equal to the daily average Federal Funds Effective Rate. Nothing herein shall
be deemed to limit the rights of the Administrative Agent or any Lender against either Borrower.

     4.9. Requirements of Law. ix) If the adoption of or any change in any Requirement of
Law or in the interpretation or application thereof or compliance by any Lender with any request or
directive (whether or not having the force of law) from any central bank or other Governmental
Authority made subsequent to the date hereof:

     (i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement or any Eurodollar Loan made by it, or change the basis of
taxation of payments to such Lender in respect thereof (except for Non-Excluded
Taxes covered by Section 4.10 and changes in the rate of tax on the overall net
income of such Lender);

     (ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by, deposits or
other liabilities in or for the account of, advances, loans or other extensions of
credit by, or any other acquisition of funds by, any office of such Lender that is
not otherwise included in the determination of the Eurodollar Rate hereunder; or

     (iii) shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender, by an amount that
such Lender deems to be material, of making, converting into, continuing or maintaining Eurodollar
Loans or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the
relevant Borrower agrees to promptly pay such Lender, upon its demand, any additional amounts
necessary to compensate such Lender for such increased cost or reduced amount receivable. If any
Lender becomes entitled to claim any additional amounts pursuant to this paragraph, it shall
promptly notify the relevant Borrower (with a copy to the Administrative Agent) of the event by
reason of which it has become so entitled.

     (b) If any Lender shall have determined that the adoption of or any change in any Requirement
of Law regarding capital adequacy or in the interpretation or application thereof or compliance by
such Lender or any corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental Authority made
subsequent to the date hereof shall have the effect of reducing the rate of return on such Lender’s
or such corporation’s capital as a consequence of its obligations hereunder to a level below that
which such Lender or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender’s or such corporation’s policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrowers (with a copy to the Administrative Agent) of a written
request therefor, the Borrowers jointly and severally agree to pay to such Lender such additional
amount or amounts as will compensate such Lender or such corporation for such reduction.

     (c) A certificate as to any additional amounts payable pursuant to this Section submitted by
any Lender to the Borrowers (with a copy to the Administrative Agent) shall be conclusive

23

 

in the absence of manifest error. Notwithstanding anything to the contrary in this Section,
neither Borrower shall be required to compensate a Lender pursuant to this Section for any amounts
incurred more than six months prior to the date that such Lender notifies such Borrower of such
Lender’s intention to claim compensation therefor; provided that, if such circumstances
giving rise to such claim have a retroactive effect, then such six-month period shall be extended
to include the period of such retroactive effect. The obligations of the Borrowers pursuant to
this Section shall survive the termination of this Agreement and the payment of the Second Lien
Term Loans and all other amounts payable hereunder.

     4.10. Taxes. x) All payments made by the Borrowers under this Agreement shall be
made free and clear of, and without deduction or withholding for or on account of, any present or
future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding income taxes imposed on, or measured by net income, net profits or capital,
and franchise taxes however denominated, imposed in whole or in part on a basis in lieu of net
income imposed on any Agent or any Lender as a result of a present or former connection between
such Agent or such Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any such connection
arising solely from such Agent or such Lender having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement or any other Second Lien Loan
Document). If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings (“Non-Excluded Taxes”) or Other Taxes are required to be withheld from any
amounts payable to any Agent or any Lender hereunder, the amounts so payable to such Agent or such
Lender shall be increased to the extent necessary to yield to such Agent or such Lender (after
payment of all Non-Excluded Taxes and Other Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement, provided,
however, that neither Borrower shall be required to increase any such amounts payable to
any Lender with respect to any Non-Excluded Taxes (i) that are attributable to such Lender’s
failure to comply with the requirements of paragraph (d) or (e) of this Section or (ii) other than
with respect to an assignee pursuant to a request by the Borrowers under Section 4.13, that are
United States withholding taxes imposed on amounts payable to such Lender at the time such Lender
becomes a party to this Agreement (or designates a new lending office), except to the extent that
such Lender, in the case of the designation of a new lending office, or Lender’s assignor (if any)
was entitled, at the time of assignment or designation (as applicable), to receive additional
amounts from a Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph.

     (a) In addition, each Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.

     (b) Whenever any Non-Excluded Taxes or Other Taxes are payable by either Borrower, as promptly
as possible thereafter such Borrower shall send to the Administrative Agent for its own account or
for the account of such Agent or Lender, as the case may be, a certified copy of an original
official receipt received by such Borrower showing payment thereof. If either Borrower fails to
pay any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent the required receipts or other required documentary evidence, the
Borrowers jointly and severally agree to indemnify the Agents and the Lenders for any incremental
taxes, interest or penalties that may become payable by any Agent or any Lender as a result of any
such failure.

     (c) Each Lender (or Transferee) that is not a “U.S. Person” as defined in Section 7701(a)(30)
of the Code (a “Non-U.S. Lender”) shall deliver to the US Borrower and the Administrative
Agent (or, in the case of a Participant, to the Lender from which the related participation shall
have been purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI,
or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under
Section

24

 

871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, a statement
substantially in the form of Exhibit G and a Form W-8BEN, or any subsequent versions thereof or
successors thereto, properly completed and duly executed by such Non-U.S. Lender claiming complete
exemption from, or a reduced rate of, U.S. federal withholding tax on all payments by the US
Borrower under this Agreement and the other Second Lien Loan Documents. Each Lender who is a “U.S.
Person” as defined in Section 7701(a)(30) of the Code shall deliver to the Borrower and the
Administrative Agent two copies of a U.S. Internal Revenue Service Form W-9 properly completed and
duly executed by such Lender establishing an exemption from “backup withholding,” except that such
form shall not be required to the extent such Lender (such as a corporation) is otherwise exempt
from backup withholding. Such forms and statements shall be delivered by the applicable Person
each Non-U.S. Lender on or before the date it becomes a party to this Agreement (or, in the case of
any Participant, on or before the date such Participant purchases the related participation). In
addition, such Person shall deliver such forms and statements promptly upon the obsolescence or
invalidity of any form or statement previously delivered by such Person. Each Person providing
forms or statements hereunder shall promptly notify the US Borrower at any time it determines that
it is no longer in a position to provide any previously delivered certificate to the US Borrower
(or any other form of certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this paragraph, a Lender shall not be required to deliver
any form pursuant to this paragraph that such Lender is not legally able to deliver.

     (d) A Lender that is entitled to an exemption from or reduction of non-U.S. withholding tax
under the law of the jurisdiction in which the BVI Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall deliver to the BVI
Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable
law or reasonably requested by the BVI Borrower, such properly completed and executed documentation
prescribed by applicable law as will permit such payments to be made without withholding or at a
reduced rate, provided that such Lender is legally entitled to complete, execute and
deliver such documentation and in such Lender’s judgment such completion, execution or submission
would not materially prejudice the legal position of such Lender.

     (e) The agreements in this Section shall survive the termination of this Agreement and the
payment of the Second Lien Term Loans and all other amounts payable hereunder.

     4.11. Indemnity. Each Borrower agrees to indemnify each Lender and to hold each
Lender harmless from any loss or expense that such Lender may sustain or incur as a consequence of
(a) default by such Borrower in making a borrowing of, conversion into or continuation of
Eurodollar Loans after such Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by such Borrower in making any prepayment of or
conversion from Eurodollar Loans after such Borrower has given a notice thereof in accordance with
the provisions of this Agreement or (c) the making of a prepayment of Eurodollar Loans on a day
that is not the last day of an Interest Period with respect thereto. Such indemnification may
include an amount equal to the excess, if any, of (i) the amount of interest that would have
accrued on the amount so prepaid, or not so borrowed, converted or continued, for the period from
the date of such prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or continue, the Interest
Period that would have commenced on the date of such failure) in each case at the applicable rate
of interest for such Second Lien Term Loans provided for herein (excluding, however, the Applicable
Margin included therein, if any) over (ii) the amount of interest (as reasonably determined by such
Lender) that would have accrued to such Lender on such amount by placing such amount on deposit for
a comparable period with leading banks in the interbank eurodollar market. A certificate as to any
amounts payable pursuant to this Section submitted to the relevant Borrower by any Lender shall be
conclusive in the absence of manifest error. This covenant shall survive the termination of this
Agreement and the payment of the Second Lien Term Loans and all other amounts payable hereunder.

25

 

     4.12. Change of Lending Office. Each Lender agrees that, upon the occurrence of any
event giving rise to the operation of Section 4.9 or 4.10(a) with respect to such Lender, it will,
if requested by the Borrowers, use reasonable efforts to designate another lending office for any
Second Lien Term Loans affected by such event with the object of avoiding the consequences of such
event; provided, that such designation is made on terms that, in the sole judgment of such
Lender, cause such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided, further, that nothing in this Section shall affect or
postpone any of the obligations of either Borrower or the rights of any Lender pursuant to Section
4.9 or 4.10(a).

     4.13. Replacement of Lenders. The Borrowers shall be permitted to replace any Lender
that (a) requests reimbursement for amounts owing pursuant to Section 4.9 or 4.10(a) or (b)
defaults in its obligation to make Second Lien Term Loans hereunder, with a replacement financial
institution; provided that (i) such replacement does not conflict with any Requirement of
Law, (ii) no Event of Default shall have occurred and be continuing at the time of such
replacement, (iii) prior to any such replacement, such Lender shall have taken no action under
Section 4.12 so as to eliminate the continued need for payment of amounts owing pursuant to Section
4.9 or 4.10(a), (iv) the replacement financial institution shall purchase, at par, all Second Lien
Term Loans and other amounts owing to such replaced Lender on or prior to the date of replacement,
(v) the Borrowers shall be liable to such replaced Lender under Section 4.11 if any Eurodollar Loan
owing to such replaced Lender shall be purchased other than on the last day of the Interest Period
relating thereto, (vi) the replacement financial institution, if not already a Lender, shall be
reasonably satisfactory to the Administrative Agent, (vii) the replaced Lender shall be obligated
to make such replacement in accordance with the provisions of Section 11.6 (provided that
the Borrowers shall be jointly and severally obligated to pay the registration and processing fee
referred to therein), (viii) until such time as such replacement shall be consummated, the
Borrowers shall pay all additional amounts (if any) required pursuant to Section 4.9 or 4.10(a), as
the case may be, and (ix) any such replacement shall not be deemed to be a waiver of any rights
that either Borrower, the Administrative Agent or any other Lender shall have against the replaced
Lender.

     4.14. Evidence of Debt. xi) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of each Borrower to such Lender resulting
from each Second Lien Term Loan of such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time under this Agreement.

     (a) The Administrative Agent, on behalf of the Borrowers, shall maintain the Register pursuant
to Section 11.6(b), and a subaccount therein for each Lender, in which shall be recorded (i) the
amount of each Second Lien Term Loan made hereunder and any Note evidencing such Second Lien Term
Loan, the Type of such Second Lien Term Loan and each Interest Period applicable thereto, (ii) the
amount of any principal or interest due and payable or to become due and payable from each Borrower
to each Lender hereunder and (iii) both the amount of any sum received by the Administrative Agent
hereunder from each Borrower and each Lender’s share thereof.

     (b) The entries made in the Register and the accounts of each Lender maintained pursuant to
Section 4.14(a) shall, to the extent permitted by applicable law, be prima facie
evidence of the existence and amounts of the obligations of each Borrower therein recorded;
provided, however, that the failure of any Lender or the Administrative Agent to
maintain the Register or any such account, or any error therein, shall not in any manner affect the
obligation of each Borrower to repay (with applicable interest) the Second Lien Term Loans made to
such Borrower by such Lender in accordance with the terms of this Agreement.

26

 

     (c) The Borrowers agree that, upon the request to the Administrative Agent by any Lender, they
will execute and deliver to such Lender a promissory note evidencing any Second Lien Term Loans of
such Lender, in a form reasonably satisfactory to the Administrative Agent and the Borrowers.

     4.15. Illegality. Notwithstanding any other provision herein, if the adoption of or
any change in any Requirement of Law or in the interpretation or application thereof shall make it
unlawful for any Lender to make or maintain Eurodollar Loans as contemplated by this Agreement, (a)
the commitment of such Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such
and convert Base Rate Loans to Eurodollar Loans shall forthwith be canceled and (b) such Lender’s
Second Lien Term Loans then outstanding as Eurodollar Loans, if any, shall be converted
automatically to Base Rate Loans on the respective last days of the then current Interest Periods
with respect to such Second Lien Term Loans or within such earlier period as required by law. If
any such conversion of a Eurodollar Loan occurs on a day which is not the last day of the then
current Interest Period with respect thereto, the Borrowers shall pay to such Lender such amounts,
if any, as may be required pursuant to Section 4.11.

SECTION 5. REPRESENTATIONS AND WARRANTIES

     To induce the Agents and the Lenders to enter into this Agreement and to make the Second Lien
Term Loans, the Borrowers hereby jointly and severally represent and warrant to each Agent and each
Lender that:

     5.1. Financial Condition. xii) The unaudited pro forma consolidated
balance sheet of Holdings and its consolidated Subsidiaries as of October 1, 2005 (including the
notes thereto) (the “Pro Forma Balance Sheet”) and the unaudited pro forma
consolidated statement of operations of Holdings and its consolidated Subsidiaries (i) as of
January 1, 2005, (ii) for the nine-month period ended October 1, 2005 and (iii) for the
twelve-month period ended October 1, 2005 (collectively, the “Pro Forma Operating
Statement”), copies of which have heretofore been furnished to each Lender, have been prepared
giving effect to (A) the consummation of the Transaction, (B) the Second Lien Term Loans to be made
on the Closing Date and the use of proceeds thereof, (C) the First Lien Debt to be incurred on the
Closing Date and the use of proceeds thereof and (D) the payment of fees and expenses in connection
with the foregoing as if such events, in the case of the Pro Forma Balance Sheet, had occurred on
such date or, in the case of the Pro Forma Operating Statement, had occurred on the first day of
the fiscal year ended January 1, 2005. The Pro Forma Balance Sheet and the Pro Forma Operating
Statement have been prepared based on the best information available to Holdings as of the date of
delivery thereof, and present fairly on a pro forma basis the estimated financial position of
Holdings and its consolidated Subsidiaries as at October 1, 2005 and the results of operations for
such periods, as applicable, assuming that the events specified in the preceding sentence had
actually occurred at such dates.

     (a) The audited consolidated balance sheets of Holdings and its consolidated Subsidiaries as
of December 27, 2003 and January 1, 2005 and the related consolidated statements of income and of
cash flows for the fiscal periods ended on such dates, reported on by and accompanied by an
unqualified report from KPMG LLP present fairly the consolidated financial condition of Holdings
and its consolidated Subsidiaries as at such dates, and the consolidated results of its operations
and its consolidated cash flows for the respective fiscal periods then ended. The unaudited
consolidated balance sheet of Holdings and its consolidated Subsidiaries as at April 2, 2005, July
2, 2005 and October 1, 2005 and the related unaudited consolidated statements of income and cash
flows for the quarterly periods ended on such dates, present fairly the consolidated financial
condition of Holdings and its consolidated Subsidiaries as at such dates, and the consolidated
results of its operations and its consolidated cash flows for the quarterly periods then ended
(subject to normal year-end audit adjustments). All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by the aforementioned

27

 

firm of accountants and disclosed therein). Neither Holdings nor any of its Subsidiaries has
any material Guarantee Obligations, contingent liabilities and liabilities for taxes, or any
long-term leases or unusual forward or long-term commitments, including any interest rate or
foreign currency swap or exchange transaction or other obligation in respect of derivatives, that
are not reflected in the most recent financial statements referred to in this paragraph. During
the period from January 1, 2005 and including the date hereof there has been no Disposition by
Holdings or any of its consolidated Subsidiaries of any material part of their respective business
or property.

     5.2. No Change. During the period from January 1, 2005 through and including December
9, 2005, there has been no development or event that has had or could reasonably be expected to
have a Material Adverse Effect.

     5.3. Corporate Existence; Compliance with Law. Each Group Member (a) is duly
organized or incorporated, validly existing and in good standing under the laws of the jurisdiction
of its organization or incorporation, (b) has the power and authority, and the legal right, to own
and operate its property, to lease the property it operates as lessee and to conduct the business
in which it is currently engaged, (c) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.

     5.4. Power; Authorization; Enforceable Obligations. Each Loan Party has the power and
authority, and the legal right, to make, deliver and perform the Second Lien Loan Documents to
which it is a party and, in the case of either Borrower, to obtain extensions of credit hereunder.
Each Loan Party has taken all necessary organizational action to authorize the execution, delivery
and performance of the Second Lien Loan Documents to which it is a party and, in the case of either
Borrower, to authorize the extensions of credit on the terms and conditions of this Agreement. No
consent or authorization of, filing with, notice to or other act by or in respect of, any
Governmental Authority or any other Person is required in connection with the Transaction and the
extensions of credit hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement or any of the Second Lien Loan Documents, except (i) consents,
authorizations, filings and notices described in Schedule 5.4, which consents, authorizations,
filings and notices have been obtained or made and are in full force and effect and (ii) the
filings referred to in Section 5.19. Each Second Lien Loan Document has been duly executed and
delivered on behalf of each Loan Party party thereto. This Agreement constitutes, and each other
Second Lien Loan Document upon execution will constitute, a legal, valid and binding obligation of
each Loan Party party thereto, enforceable against each such Loan Party in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally
and by general equitable principles (whether enforcement is sought by proceedings in equity or at
law).

     5.5. No Legal Bar. The execution, delivery and performance of this Agreement and the
other Second Lien Loan Documents, the borrowings hereunder and the use of the proceeds thereof will
not violate any Requirement of Law or any Contractual Obligation of any Group Member and will not
result in, or require, the creation or imposition of any Lien on any of their respective properties
or revenues pursuant to any Requirement of Law or any such Contractual Obligation (other than the
Liens created by the Second Lien Security Documents). No Requirement of Law or Contractual
Obligation applicable to any Group Member could reasonably be expected to have a Material Adverse
Effect.

     5.6. Litigation. Except as set forth on Schedule 5.6, no litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of

28

 

either Borrower, threatened (or, in the case of any such litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority after the Closing Date, threatened
in writing) by or against any Group Member or against any of their respective properties or
revenues (including, in the case of clause (b) below, any adverse developments after the date
hereof in the litigation described on Schedule 5.6) (a) with respect to any of the Second Lien Loan
Documents or any of the transactions contemplated hereby or thereby, or (b) that could reasonably
be expected to have a Material Adverse Effect.

     5.7. No Default. No Group Member is in default under or with respect to any of its
Contractual Obligations in any respect that could reasonably be expected to have a Material Adverse
Effect. No Default or Event of Default has occurred and is continuing.

     5.8. Ownership of Property; Liens. Each Group Member has title in fee simple to, or a
valid leasehold interest in, all its real property, and good title to, or a valid leasehold
interest in, all its other property, and none of such property is subject to any Lien except as
permitted by Section 8.3.

     5.9. Intellectual Property. Except to the extent the same could not reasonably be
expected to have a Material Adverse Effect: (a) each Group Member owns, or is licensed to use, all
Intellectual Property necessary for the conduct of its business as currently conducted; (b) no
material claim has been asserted and is pending by any Person challenging or questioning the use of
any Intellectual Property or the validity or effectiveness of any Intellectual Property, nor does
either Borrower know of any valid basis for any such claim; and (c) the use of Intellectual
Property by each Group Member does not infringe on the rights of any Person in any material
respect.

     5.10. Taxes. Except as, in the aggregate, could not be reasonably expected to have a
Material Adverse Effect: (a) each Group Member has filed or caused to be filed all Federal, state
and other material tax returns that are required to be filed and has paid all taxes shown to be due
and payable on said returns or on any assessments made against it or any of its property and all
other taxes, fees or other charges imposed on it or any of its property by any Governmental
Authority (other than any the amount or validity of that are currently being contested in good
faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have
been provided on the books of the relevant Borrower or its Subsidiaries, as the case may be); and
(b) no tax Lien has been filed, other than Liens on property for current taxes, fees or other
charges not yet due and payable, and, to the knowledge of either Borrower, no claim is being
asserted, with respect to any such tax, fee or other charge other than claims being contested in
good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP
have been provided on the books of the relevant Borrower or its Subsidiaries, as the case may be.

     5.11. Federal Regulations. No part of the proceeds of any Second Lien Term Loans, and
no other extensions of credit hereunder, will be used for “buying” or “carrying” any “margin stock”
within the respective meanings of each of the quoted terms under Regulation U as now and from time
to time hereafter in effect or for any purpose that violates the provisions of the Regulations of
the Board. If requested by any Lender or the Administrative Agent, the Borrowers will furnish to
the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in Regulation U.

     5.12. Labor Matters. Except as, in the aggregate, could not reasonably be expected to
have a Material Adverse Effect: (a) there are no strikes or other labor disputes against any Group
Member pending or, to the knowledge of either Borrower, threatened; (b) hours worked by and payment
made to employees of each Group Member have not been in violation of the Fair Labor Standards Act
or any other applicable Requirement of Law dealing with such matters; and (c) all payments due from
any

29

 

Group Member on account of employee health and welfare insurance have been paid or accrued as
a liability on the books of the relevant Group Member.

     5.13. ERISA. Neither a Reportable Event nor an “accumulated funding deficiency”
(within the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred during the
five-year period prior to the date on which this representation is made or deemed made with respect
to any Plan, and each Plan has complied in all material respects with the applicable provisions of
ERISA and the Code. No termination of a Single Employer Plan has occurred, and no Lien in favor of
the PBGC or a Plan has arisen, during such five-year period. The present value of all accrued
benefits under each Single Employer Plan (based on those assumptions used to fund such Plans) did
not, as of the last annual valuation date prior to the date on which this representation is made or
deemed made, exceed the value of the assets of such Plan allocable to such accrued benefits by a
material amount. Neither Borrower nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan that has resulted or could reasonably be expected to result
in a material liability under ERISA, and neither Borrower nor any Commonly Controlled Entity would
become subject to any material liability under ERISA if either Borrower or any such Commonly
Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date
most closely preceding the date on which this representation is made or deemed made. No such
Multiemployer Plan is in Reorganization or Insolvent.

     5.14. Investment Company Act; Other Regulations. No Loan Party is an “investment
company”, or a company “controlled” by an “investment company”, within the meaning of the
Investment Company Act of 1940, as amended. No Loan Party is subject to regulation under any
Requirement of Law (other than Regulation X of the Board) that limits its ability to incur
Indebtedness.

     5.15. Subsidiaries. Except as disclosed to the Administrative Agent by the Borrowers
in writing from time to time after the Closing Date, (a) Schedule 5.15 sets forth the name and
jurisdiction of incorporation of each Subsidiary and, as to each such Subsidiary, the percentage of
each class of Capital Stock owned by any Loan Party and (b) there are no outstanding subscriptions,
options, warrants, calls, rights or other agreements or commitments (other than stock options
granted to employees or directors and directors’ qualifying shares) of any nature relating to any
Capital Stock of either Borrower or any Subsidiary, except as created by the Second Lien Loan
Documents and the First Lien Loan Documents.

     5.16. Use of Proceeds. The proceeds of the Second Lien Term Loans shall be used to
finance a portion of the Transaction and to pay related fees and expenses.

     5.17. Environmental Matters. Except as, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect:

     (a) the facilities and properties owned, leased or operated by any Group
Member (the “Properties”) do not contain, and have not previously contained, any
Materials of Environmental Concern in amounts or concentrations or under circumstances
that constitute or constituted a violation of, or could give rise to liability under,
any Environmental Law;

     (b) no Group Member has received or is aware of any notice of violation,
alleged violation, non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard to any of the
Properties or the business operated by any Group Member (the “Business”), nor
does either Borrower have knowledge or reason to believe that any such notice will be
received or is being threatened;

30

 

     (c) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location that
could give rise to liability under, any Environmental Law, nor have any Materials of
Environmental Concern been generated, treated, stored or disposed of at, on or under any
of the Properties in violation of, or in a manner that could give rise to liability
under, any applicable Environmental Law;

     (d) no judicial proceeding or governmental or administrative action is
pending or, to the knowledge of either Borrower, threatened, under any Environmental Law
to which any Group Member is or will be named as a party with respect to the Properties
or the Business, nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the Properties or the Business;

     (e) there has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to the
operations of any Group Member in connection with the Properties or otherwise in
connection with the Business, in violation of or in amounts or in a manner that could
give rise to liability under Environmental Laws;

     (f) the Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, with all applicable
Environmental Laws, and there is no contamination at, under or about the Properties or
violation of any Environmental Law with respect to the Properties or the Business; and

     (g) no Group Member has assumed any liability of any other Person under
Environmental Laws.

     5.18. Accuracy of Information, etc. No statement or information contained in this
Agreement, any other Second Lien Loan Document, the Confidential Information Memorandum or any
other document, certificate or statement furnished by or on behalf of any Loan Party to the
Administrative Agent or the Lenders, or any of them, for use in connection with the transactions
contemplated by this Agreement or the other Second Lien Loan Documents, contained as of the date
such statement, information, document or certificate was so furnished (or, in the case of the
Confidential Information Memorandum, as of the date of this Agreement), any untrue statement of a
material fact or omitted to state a material fact necessary to make the statements contained herein
or therein not misleading. The projections and pro forma financial information
contained in the materials referenced above are based upon good faith estimates and assumptions
believed by management of the Borrowers to be reasonable at the time made, it being recognized by
the Lenders that such financial information as it relates to future events is not to be viewed as
fact and that actual results during the period or periods covered by such financial information may
differ from the projected results set forth therein by a material amount. There is no fact known
to any Loan Party that could reasonably be expected to have a Material Adverse Effect that has not
been expressly disclosed herein, in the other Second Lien Loan Documents, in the Confidential
Information Memorandum or in any other documents, certificates and statements furnished to the
Administrative Agent and the Lenders for use in connection with the transactions contemplated
hereby and by the other Second Lien Loan Documents.

     5.19. Second Lien Security Documents. xiii) The Second Lien Guarantee and Collateral
Agreement is effective to create in favor of the Second Lien Collateral Agent, for the benefit of
the Lenders, a legal, valid and enforceable security interest in the Collateral described therein
and proceeds thereof. In the case of (i) the Pledged Stock described in the Second Lien Guarantee
and

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Collateral Agreement, when stock certificates representing such Pledged Stock are delivered to
the Second Lien Collateral Agent (provided that such certificates have not previously been
delivered to the First Lien Collateral Agent in accordance with the terms of the First Lien Credit
Agreement), (ii) the BVI Pledged Stock described in the Second Lien Guarantee and Collateral
Agreement, when the share certificates evidencing such BVI Pledged Stock are delivered to the
Second Lien Collateral Agent (provided that such certificates have not previously been delivered to
the First Lien Collateral Agent in accordance with the terms of the First Lien Credit Agreement), a
notation is made in the share register of the BVI Borrower and a copy of the share register is
filed at the British Virgin Islands Registry of Corporate Affairs and (iii) the other Collateral
described in the Second Lien Guarantee and Collateral Agreement, when financing statements,
Register of Mortgages, Charges and Other Encumbrances and other filings specified on Schedule
5.19(a) in appropriate form are filed in the offices specified on Schedule 5.19(a), the Second Lien
Guarantee and Collateral Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in such Collateral and the proceeds
thereof, as security for the Obligations (as defined in the Second Lien Guarantee and Collateral
Agreement), in each case, subject to the terms of the Intercreditor Agreement, prior and superior
in right to any other Person (except, in the case of Collateral other than Pledged Stock, subject
to certain Liens expressly permitted by Section 8.3).

     (a) Each Mortgage is effective to create in favor of the Second Lien Collateral Agent, for the
benefit of the Lenders, a legal, valid and enforceable Lien on the Mortgaged Properties described
therein and proceeds thereof, and when the Mortgages are filed in the offices specified on Schedule
5.19(b), each such Mortgage shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the Loan Parties in the Mortgaged Properties and the proceeds
thereof, as security for the Obligations (as defined in the relevant Mortgage), in each case prior
and superior in right to any other Person, subject to liens permitted under Section 8.3(e).
Schedule 1.1 lists, as of the Closing Date, each parcel of owned real property and each leasehold
interest in real property located in the United States and held by US Borrower or any of its
Subsidiaries that has a value, in the reasonable opinion of the US Borrower, in excess of $100,000.

     5.20. Solvency. Each Loan Party is, and after giving effect to the Transaction and
the incurrence of all Indebtedness and obligations being incurred in connection herewith and
therewith will be, and will continue to be, Solvent.

     5.21. Regulation H. No Mortgage encumbers improved real property that is located in
an area that has been identified by the Secretary of Housing and Urban Development as an area
having special flood hazards and in which flood insurance has been made available under the
National Flood Insurance Act of 1968.

SECTION 6. CONDITIONS PRECEDENT

     The agreement of each Lender to make the Second Lien Term Loan requested to be made by it is
subject to the satisfaction, prior to or concurrently with the making of such Second Lien Term Loan
on the Closing Date (but in any event no later than December 14, 2005), of the following conditions
precedent:

     (a) Second Lien Credit Agreement; Other Agreements. The
Administrative Agent shall have received (i) this Agreement, or, in the case of the
Lenders, an Addendum, executed and delivered by each Agent, each Borrower and each
Person that is a Lender as of the Closing Date, (ii) the Second Lien Guarantee and
Collateral Agreement, executed and delivered by the Second Lien Collateral Agent,
Holdings, the US Borrower, the BVI Borrower and each Subsidiary Guarantor, (iii) an
Acknowledgment and Consent in the form

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attached to the Second Lien Guarantee and Collateral Agreement, executed and
delivered by each Issuer (as defined therein), if any, that is not a Loan Party and (iv)
the Intercreditor Agreement, executed and delivered by the First Lien Collateral Agent,
the Second Lien Collateral Agent and each Loan Party.

     (b) Transaction, etc. The following transactions shall have been
or shall concurrently be consummated:

     (i) The Borrowers shall have paid a dividend in an amount not to
exceed $100,000,000 to Holdings and other holders of their Capital Stock;

     (ii) The Borrowers shall have received $150,000,000 in cash proceeds
from the incurrence of the First Lien Debt;

     (iii) The Administrative Agent shall have received satisfactory
evidence that the fees and expenses to be incurred in connection with the
Transaction and the financing thereof shall not exceed $4,300,000; and

     (iv) The Administrative Agent shall have received evidence
satisfactory to it that the Existing Credit Agreement shall have been terminated and
all amounts thereunder shall have been paid in full and satisfactory arrangements
shall have been made for the termination of all Liens granted in connection
therewith.

     (c) Pro Forma Balance Sheet; Financial Statements. The
Administrative Agent shall have received the financial statements described in Section
5.1 and such financial statements shall not, in the reasonable judgment of the
Administrative Agent, reflect any material adverse change in the consolidated financial
condition of Holdings and its Subsidiaries, as reflected in the financial statements or
projections contained in the Confidential Information Memorandum.

     (d) Financial Condition. The Administrative Agent shall have
received evidence satisfactory to it that the ratio of Funded Debt of Holdings and its
consolidated Subsidiaries to Consolidated EBITDA (each calculated on a pro forma basis
in a manner satisfactory to the Administrative Agent and consistent with the Pro Forma
Balance Sheet) for the nine-month period ended as of October 1, 2005 shall not exceed
4.75 to 1.0, and Holdings shall provide support for such calculation of a nature that is
satisfactory to the Administrative Agent.

     (e) Lien Searches. The Administrative Agent shall have received
the results of a recent lien search in each of the jurisdictions in the United States of
America where the Loan Parties are organized, and such search shall reveal no liens on
any of the assets of the Loan Parties except for liens permitted by Section 8.3 or
discharged on or prior to the Closing Date pursuant to documentation satisfactory to the
Administrative Agent.

     (f) Fees. The Lenders and the Agents shall have received all
fees required to be paid, and all expenses for which invoices have been presented
(including the reasonable fees and expenses of legal counsel), on or before the Closing
Date. All such amounts will be paid with proceeds of Second Lien Term Loans and the
First Lien Term Loans made on the Closing Date and will be reflected in the funding
instructions given by the Borrowers to the Administrative Agent on or before the Closing
Date.

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     (g) Closing Certificate. The Administrative Agent shall have
received a certificate of each Loan Party, dated the Closing Date, substantially in the
form of Exhibit C, with appropriate insertions and attachments including (i) the
certificate of incorporation of each Loan Party that is a corporation certified by the
relevant authority of the jurisdiction of organization of such Loan Party, and (ii) a
long form good standing certificate for each Loan Party from its jurisdiction of
organization.

     (h) Legal Opinions. The Administrative Agent shall have received
the following executed legal opinions:

     (i) the legal opinion of Greenberg Traurig, LLP, counsel to the
Borrowers and their Subsidiaries, substantially in the form of Exhibit F-1;

     (ii) the legal opinion of Morgan & Morgan, special counsel to the BVI
Borrower, substantially in the form of Exhibit F-2; and

     (iii) the legal opinion of Nixon Peabody LLP, substantially in the
form of Exhibit F-3.

Each such legal opinion shall cover such other matters incident to the transactions
contemplated by this Agreement as the Administrative Agent may reasonably require.

     (i) Pledged Stock; Stock Powers; Pledged Notes. The First Lien
Collateral Agent shall have received (i) the certificates representing the shares of
Capital Stock pledged pursuant to the Second Lien Guarantee and Collateral Agreement,
together with an undated stock power or an instrument of transfer for each such
certificate executed in blank by a duly authorized officer of the pledgor thereof and
(ii) each promissory note (if any) pledged to the First Lien Collateral Agent pursuant
to the Second Lien Guarantee and Collateral Agreement endorsed (without recourse) in
blank (or accompanied by an executed transfer form in blank) by the pledgor thereof.

     (j) Filings, Registrations and Recordings. 1. Each document
(including any Uniform Commercial Code financing statement) required by the Second Lien
Security Documents or under law or reasonably requested by Administrative Agent or Second
Lien Collateral Agent to be filed, registered or recorded in order to create in favor of the
Second Lien Collateral Agent, for the benefit of the Lenders, a perfected Lien on the
Collateral described therein, subject to the terms of the Intercreditor Agreement, prior and
superior in right to any other Person (subject to certain Liens expressly permitted by
Section 8.3), shall be in proper form for filing, registration or recordation.

     (i) The entry to be made in the Register of Mortgages, Charges and
Other Encumbrances of each of Holdings and the BVI Borrower shall be in a form
satisfactory to the Administrative Agent and shall be filed with the Registrar of
Companies in the British Virgin Islands no more than five Business Days after the
Closing Date.

     (ii) A notation to be made in the share register of the BVI Borrower
shall be in a form satisfactory the Administrative Agent and a copy of such share
register shall be filed with the Registrar of Companies in the British Virgin
Islands no more than five Business Days after the Closing Date.

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     (k) Mortgages, etc. 2. The Administrative Agent shall have
received a Mortgage with respect to each Mortgaged Property, executed and delivered by a
duly authorized officer of each party thereto.

     (i) If requested by the Administrative Agent, the Administrative
Agent shall have received, and the title insurance company issuing the policy
referred to in clause (iii) below (the “Title Insurance Company”) shall have
received, maps or plats of an as-built survey of the sites of the Mortgaged
Properties certified to the Administrative Agent and the Title Insurance Company in
a manner satisfactory to them, dated a date satisfactory to the Administrative Agent
and the Title Insurance Company by an independent professional licensed land
surveyor satisfactory to the Administrative Agent and the Title Insurance Company,
which maps or plats and the surveys on which they are based shall be made in
accordance with the Minimum Standard Detail Requirements for Land Title Surveys
jointly established and adopted by the American Land Title Association and the
American Congress on Surveying and Mapping in 1992, and, without limiting the
generality of the foregoing, there shall be surveyed and shown on such maps, plats
or surveys the following: (A) the locations on such sites of all the buildings,
structures and other improvements and the established building setback lines; (B)
the lines of streets abutting the sites and width thereof; (C) all access and other
easements appurtenant to the sites; (D) all roadways, paths, driveways, easements,
encroachments and overhanging projections and similar encumbrances affecting the
site, whether recorded, apparent from a physical inspection of the sites or
otherwise known to the surveyor; (E) any encroachments on any adjoining property by
the building structures and improvements on the sites; (F) if the site is described
as being on a filed map, a legend relating the survey to said map; and (G) the flood
zone designations, if any, in which the Mortgaged Properties are located.

     (ii) The Administrative Agent shall have received in respect of each
Mortgaged Property a mortgagee’s title insurance policy (or policies) or marked up
unconditional binder for such insurance. Each such policy shall (A) be in an amount
satisfactory to the Administrative Agent; (B) be issued at ordinary rates; (C)
insure that the Mortgage insured thereby creates a valid second Lien on such
Mortgaged Property free and clear of all defects and encumbrances, except as
disclosed therein; (D) name the Administrative Agent for the benefit of the Lenders
as the insured thereunder; (E) be in the form of ALTA Loan Policy — 1970 (Amended
10/17/70 and 10/17/84) (or equivalent policies); (F) contain such endorsements and
affirmative coverage as the Administrative Agent may reasonably request and (G) be
issued by title companies satisfactory to the Administrative Agent (including any
such title companies acting as co-insurers or reinsurers, at the option of the
Administrative Agent). The Administrative Agent shall have received evidence
satisfactory to it that all premiums in respect of each such policy, all charges for
mortgage recording tax, and all related expenses, if any, have been paid.

     (iii) If requested by the Administrative Agent, the Administrative
Agent shall have received (A) a policy of flood insurance that (1) covers any parcel
of improved real property that is encumbered by any Mortgage, (2) is written in an
amount not less than the outstanding principal amount of the indebtedness secured by
such Mortgage that is reasonably allocable to such real property or the maximum
limit of coverage made available with respect to the particular type of property
under the National Flood Insurance Act of 1968, whichever is less, and (3) has a
term ending not later than the maturity of the Indebtedness secured by such Mortgage
and (B) confirmation that US

35

 

Borrower has received the notice required pursuant to Section 208(e)(3) of
Regulation H of the Board.

     (iv) The Administrative Agent shall have received a copy of all
recorded documents referred to, or listed as exceptions to title in, the title
policy or policies referred to in clause (iii) above and a copy of all other
material documents affecting the Mortgaged Properties.

     (l) Solvency Certificate. The Administrative Agent shall have
received a solvency certificate of the chief financial officer of Holdings which shall
document the solvency of Holdings and its Subsidiaries after giving effect to the
Transaction, the making of Second Lien Term Loans hereunder and the incurrence of the
First Lien Debt.

     (m) Insurance. The Administrative Agent shall have received
insurance certificates satisfying the requirements of Section 5.3(b) of the Second Lien
Guarantee and Collateral Agreement.

     (n) Agent for Service of Process. The Administrative Agent shall
have received a letter from CT Corporation System accepting its appointment as agent for
service of process for the BVI Borrower as required by Section 11.12.

     (o) Control Agreements. The Administrative Agent shall have
received control agreements in form and substance satisfactory to the Administrative
Agent from institutions sufficient to comply with the requirements set forth in Section
7.12 as of the Closing Date.

     (p) Ratings. The Facilities shall have received a rating from each
of S&P and Moody’s.

     (q) Projections. The Administrative Agent shall have received
projections through 2012.

     (r) USA PATRIOT Act. Each Lender shall have received, prior to
the Closing Date, all documentation and other information required by regulatory
authorities under applicable “know your customer” and anti-money laundering rules and
regulations, including, without limitation, the USA PATRIOT Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)) and requested by the Lenders.

     (s) Representations and Warranties. Each of the representations
and warranties made by any Loan Party in or pursuant to the Second Lien Loan Documents
shall be true and correct on and as of such date as if made on and as of such date.

     (t) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to Second Lien Term Loans
to be made on such date.

SECTION 7. AFFIRMATIVE COVENANTS

     Each Borrower jointly and severally hereby agrees that, so long as any Second Lien Term Loan
or other amount is owing to any Lender or Agent hereunder, such Borrower shall and shall cause each
of its Subsidiaries to (with the exception of the restrictions set forth in Section 7.12 which
shall only apply to the Borrowers and the Domestic Subsidiaries):

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     7.1. Financial Statements. Furnish to the Administrative Agent and each Lender:

     (a) as soon as available, but in any event within 90 days after the end
of each fiscal year of Holdings, a copy of the audited consolidated balance sheet of
Holdings and its consolidated Subsidiaries as at the end of such year and the related
audited consolidated statements of income and of cash flows for such year, setting forth
in each case in comparative form the figures for the previous year, reported on without
a “going concern” or like qualification or exception, or qualification arising out of
the scope of the audit, by KPMG LLP or other independent certified public accountants of
nationally recognized standing;

     (b) as soon as available, but in any event not later than 45 days after
the end of each of the first three quarterly periods of each fiscal year of Holdings,
the unaudited consolidated balance sheet of Holdings and its consolidated Subsidiaries
as at the end of such quarter and the related unaudited consolidated statements of
income and of cash flows for such quarter and the portion of the fiscal year through the
end of such quarter, setting forth in each case in comparative form the figures for the
previous year, certified by a Responsible Officer of Holdings as being fairly stated in
all material respects (subject to normal year-end audit adjustments); and

     (c) as soon as available, but in any event not later than 45 days after
the end of each month occurring during each fiscal year of Holdings (other than the
third, sixth, ninth and twelfth such month), the unaudited consolidated balance sheets
of Holdings and its Subsidiaries as at the end of such month and the related unaudited
consolidated statements of income and of cash flows for such month and the portion of
the fiscal year through the end of such month, setting forth in each case in comparative
form the figures for the previous year, certified by a Responsible Officer of Holdings
as being fairly stated in all material respects (subject to normal year-end audit
adjustments).

All such financial statements shall be complete and correct in all material respects and shall be
prepared in reasonable detail and in accordance with GAAP applied consistently throughout the
periods reflected therein and with prior periods (except as approved by such accountants or
officer, as the case may be, and disclosed therein).

     7.2. Certificates; Other Information. Furnish to the Administrative Agent and each
Lender (or, in the case of clause (f), to the relevant Lender or Agent):

     (a) concurrently with the delivery of the financial statements referred to in
Section 7.1(a), a certificate of the independent certified public accountants reporting on
such financial statements stating that in making the examination necessary therefor no
knowledge was obtained of any Default or Event of Default with respect to any financial
covenant, except as specified in such certificate;

     (b) concurrently with the delivery of any financial statements pursuant
to Section 7.1, (i) a certificate of a Responsible Officer of the Borrowers stating
that, to the best of each such Responsible Officer’s knowledge, each Loan Party during
such period has observed or performed all of its covenants and other agreements, and
satisfied every condition contained in this Agreement and the other Second Lien Loan
Documents to which it is a party to be observed, performed or satisfied by it, and that
such Responsible Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate and (ii) in the case of quarterly or annual
financial statements, (x) a Compliance Certificate

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containing all information and calculations necessary for determining compliance by
each Group Member with the provisions of this Agreement referred to therein as of the
last day of the fiscal quarter or fiscal year of Holdings, as the case may be, and (y)
to the extent not previously disclosed to the Administrative Agent, a listing of any
Intellectual Property acquired by any Loan Party since the date of the most recent list
delivered pursuant to this clause (y) (or, in the case of the first such list so
delivered, since the Closing Date);

     (c) as soon as available, and in any event no later than 45 days after
the end of each fiscal year of Holdings, a detailed consolidated budget for the
following fiscal year (including a projected consolidated balance sheet of Holdings and
its Subsidiaries as of the end of the following fiscal year, the related consolidated
statements of projected cash flow, projected changes in financial position and projected
income and a description of the underlying assumptions applicable thereto), and, as soon
as available, significant revisions, if any, of such budget and projections with respect
to such fiscal year (collectively, the “Projections”), which Projections shall
in each case be accompanied by a certificate of a Responsible Officer of Holdings
stating that such Projections are based on reasonable estimates, information and
assumptions and that such Responsible Officer has no reason to believe that such
Projections are incorrect or misleading in any material respect;

     (d) if Holdings is not then a reporting company under the Securities
Exchange Act of 1934, as amended, within 45 days after the end of each fiscal quarter of
Holdings (or 90 days, in the case of the last fiscal quarter of any fiscal year), a
narrative discussion and analysis of the financial condition and results of operations
of Holdings and its Subsidiaries for such fiscal quarter and for the period from the
beginning of the then current fiscal year to the end of such fiscal quarter, as compared
to the portion of the Projections covering such periods and to the comparable periods of
the previous year;

     (e) within five days after the same are sent, copies of all financial
statements and reports that Holdings sends to the holders of any class of its debt
securities or public equity securities (in their capacity as such) and, within five days
after the same are filed, copies of all financial statements and reports that Holdings
may make to, or file with, the SEC; and

     (f) promptly, such additional financial and other information as any
Lender or any Agent may from time to time reasonably request.

     7.3. Payment of Obligations. Pay, discharge or otherwise satisfy at or before
maturity or before they become delinquent, as the case may be, all its material obligations of
whatever nature, except where the amount or validity thereof is currently being contested in good
faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have
been provided on the books of the relevant Group Member.

     7.4. Maintenance of Existence; Compliance. xiv)(i) Preserve, renew and keep in full
force and effect its organizational existence and (ii) take all reasonable action to maintain all
rights, privileges and franchises necessary or desirable in the normal conduct of its business,
except, in each case, as otherwise permitted by Section 8.4 and except, in the case of clause (ii)
above, to the extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect; and (b) comply with all Contractual Obligations and Requirements of Law except to
the extent that failure to comply therewith could not, in the aggregate, reasonably be expected to
have a Material Adverse Effect.

     7.5. Maintenance of Property; Insurance. xv) Maintain all property useful and
necessary in its business in good working order and condition, ordinary wear and tear excepted,
except to

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the extent the failure to so maintain such assets could not reasonably be expected to have a
Material Adverse Effect, and (b) maintain with financially sound and reputable insurance companies
insurance on all its property in at least such amounts and against at least such risks (but
including in any event public liability, product liability and business interruption) as are
usually insured against in the same general area by companies engaged in the same or a similar
business.

     7.6. Inspection of Property; Books and Records; Discussions. xvi) Keep proper books
of records and account in which full, true and correct entries in conformity with GAAP and all
Requirements of Law shall be made of all dealings and transactions in relation to its business and
activities and (b) permit representatives of any Lender or any Agent to visit and inspect any of
its properties and examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and to discuss the business, operations, properties
and financial and other condition of the Group Members with officers and employees of the Group
Members and with their independent certified public accountants upon reasonable advance notice to
Borrowers (which advance notice, in the case of discussions with the Borrowers’ independent
accountants, shall afford the Borrowers the opportunity to be present during such discussions).

     7.7. Notices. Promptly give notice to the Administrative Agent and each Lender of:

     (a) the occurrence of any Default or Event of Default;

     (b) any (i) default or event of default under any Contractual Obligation
of any Group Member or (ii) litigation, investigation or proceeding that may exist at
any time between any Group Member and any Governmental Authority, that, in either case,
if not cured or if adversely determined, as the case may be, could reasonably be
expected to have a Material Adverse Effect;

     (c) any litigation or proceeding affecting any Group Member (i) in which
the amount involved is $500,000 or more and not covered by insurance, (ii) in which
injunctive or similar relief is sought or (iii) which relates to any Second Lien Loan
Document;

     (d) the following events, as soon as possible and in any event within 30
days after either Borrower knows or has reason to know thereof: (i) the occurrence of
any Reportable Event with respect to any Plan, a failure to make any required
contribution to a Plan, the creation of any Lien in favor of the PBGC or a Plan or any
withdrawal from, or the termination, Reorganization or Insolvency of, any Multiemployer
Plan or (ii) the institution of proceedings or the taking of any other action by the
PBGC or either Borrower or any Commonly Controlled Entity or any Multiemployer Plan with
respect to the withdrawal from, or the termination, Reorganization or Insolvency of, any
Plan; and

     (e) any development or event that has had or could reasonably be expected
to have a Material Adverse Effect.

Each notice pursuant to this Section 7.7 shall be accompanied by a statement of a Responsible
Officer of the Borrowers setting forth details of the occurrence referred to therein and stating
what action the relevant Borrower or the relevant Subsidiary proposes to take with respect thereto.

     7.8. Environmental Laws. xvii) Comply in all material respects with, and ensure
compliance in all material respects by all tenants and subtenants, if any, with, all applicable
Environmental Laws, and obtain and comply in all material respects with and maintain, and ensure
that all tenants and subtenants obtain and comply in all material respects with and maintain, any
and all licenses,

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approvals, notifications, registrations or permits required by applicable Environmental Laws,
except, in each case, to the failure to do so could not reasonably be expected to have a Material
Adverse Effect.

     (a) Conduct and complete all investigations, studies, sampling and testing, and all remedial,
removal and other actions required under Environmental Laws and promptly comply in all material
respects with all lawful orders and directives of all Governmental Authorities regarding
Environmental Laws, except to the extent the failure to do so could not reasonably be expected to
have a Material Adverse Effect.

     7.9. Interest Rate Protection. Enter into, and thereafter maintain, Hedge Agreements
to the extent necessary to provide that (a) within 90 days after the Closing Date, at least 30% of
the aggregate principal amount of the Second Lien Term Loans made and the First Lien Debt incurred
on the Closing Date and (b) within 90 days following the first anniversary of the Closing Date, at
least 50% of the aggregate principal amount of the Second Lien Term Loans and the First Lien Debt
outstanding on such date is subject to either a fixed interest rate or interest rate protection for
a period of not less than three years, which Hedge Agreements shall have terms and conditions
reasonably satisfactory to the Administrative Agent.

     7.10. Additional Collateral, etc. xviii) With respect to any property acquired after
the Closing Date by any Group Member (other than (x) any property described in paragraph (b), (c)
or (d) below, (y) any property subject to a Lien expressly permitted by Section 8.3(g) and (z)
property acquired by any Excluded Foreign Subsidiary) as to which the Second Lien Collateral Agent,
for the benefit of the Lenders, does not have a perfected Lien, promptly (i) execute and deliver to
the Second Lien Collateral Agent such amendments to the Second Lien Guarantee and Collateral
Agreement or such other documents as the Second Lien Collateral Agent deems necessary or advisable
to grant to the Second Lien Collateral Agent, for the benefit of the Lenders, a security interest
in such property and (ii) take all actions necessary or advisable to grant to the Second Lien
Collateral Agent, for the benefit of the Lenders, a perfected second priority security interest in
such property, including the filing of Uniform Commercial Code financing statements in such
jurisdictions as may be required by the Second Lien Guarantee and Collateral Agreement or by law or
as may be requested by the Second Lien Collateral Agent.

     (a) With respect to any fee interest in any real property located in the United States having
a value (together with improvements thereof) of at least $500,000 acquired after the Closing Date
by any Group Member (other than (x) any such real property subject to a Lien expressly permitted by
Section 8.3(g) and (y) real property acquired by any Excluded Foreign Subsidiary), promptly (i)
execute and deliver a second priority Mortgage, in favor of the Second Lien Collateral Agent, for
the benefit of the Lenders, covering such real property, (ii) if requested by the Second Lien
Collateral Agent, provide the Second Lien Collateral Agent and the Lenders with (x) title and
extended coverage insurance covering such real property in an amount at least equal to the purchase
price of such real property (or such other amount as shall be reasonably specified by the Second
Lien Collateral Agent) as well as a current ALTA survey thereof, together with a surveyor’s
certificate and (y) any consents or estoppels reasonably deemed necessary or advisable by the
Second Lien Collateral Agent in connection with such Mortgage, each of the foregoing in form and
substance reasonably satisfactory to the Second Lien Collateral Agent and (iii) if requested by the
Second Lien Collateral Agent, deliver to the Second Lien Collateral Agent legal opinions relating
to the matters described above, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Second Lien Collateral Agent.

     (b) With respect to any new Subsidiary (other than an Excluded Foreign Subsidiary) created or
acquired after the Closing Date by any Group Member (which, for the purposes of this paragraph (c),
shall include any existing Subsidiary that ceases to be an Excluded Foreign Subsidiary), promptly
(i) execute and deliver to the Second Lien Collateral Agent such amendments to the Second

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Lien Guarantee and Collateral Agreement as the Second Lien Collateral Agent deems necessary or
advisable to grant to the Second Lien Collateral Agent, for the benefit of the Lenders, a perfected
second priority security interest in the Capital Stock of such new Subsidiary that is owned by any
Group Member, (ii) deliver to the Second Lien Collateral Agent (or the First Lien Collateral Agent,
as applicable) the certificates representing such Capital Stock, together with undated stock
powers, in blank, executed and delivered by a duly authorized officer of the relevant Group Member,
(iii) cause such new Subsidiary (A) to become a party to the Second Lien Guarantee and Collateral
Agreement, (B) to take such actions necessary or advisable to grant to the Second Lien Collateral
Agent, for the benefit of the Lenders, a perfected second priority security interest in the
Collateral described in the Second Lien Guarantee and Collateral Agreement with respect to such new
Subsidiary, including the filing of Uniform Commercial Code financing statements in such
jurisdictions as may be required by the Second Lien Guarantee and Collateral Agreement or by law or
as may be requested by the Second Lien Collateral Agent and (C) to deliver to the Second Lien
Collateral Agent a certificate of such Subsidiary, substantially in the form of Exhibit C, with
appropriate insertions and attachments, and (iv) if requested by the Second Lien Collateral Agent,
deliver to the Second Lien Collateral Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the
Second Lien Collateral Agent.

     (c) With respect to any new Excluded Foreign Subsidiary created or acquired after the Closing
Date by any Group Member (other than by any Group Member that is an Excluded Foreign Subsidiary),
promptly (i) execute and deliver to the Second Lien Collateral Agent such amendments to the First
Lien Guarantee and Collateral Agreement as the Second Lien Collateral Agent deems necessary or
advisable to grant to the Second Lien Collateral Agent, for the benefit of the Lenders, a perfected
second priority security interest in the Capital Stock of such new Subsidiary that is owned by any
such Group Member (provided that in no event shall more than 65% of the total outstanding
Capital Stock of any such new Subsidiary be required to be so pledged), (ii) deliver to the Second
Lien Collateral Agent (or the First Lien Collateral Agent, as applicable) the certificates
representing such Capital Stock, together with undated stock powers, in blank, executed and
delivered by a duly authorized officer of the relevant Group Member, as the case may be, and take
such other action as may be necessary or, in the opinion of the Second Lien Collateral Agent,
desirable to perfect the Second Lien Collateral Agent’s security interest therein, and (iii) if
requested by the Second Lien Collateral Agent, deliver to the Second Lien Collateral Agent legal
opinions relating to the matters described above, which opinions shall be in form and substance,
and from counsel, reasonably satisfactory to the Second Lien Collateral Agent.

     7.11. Further Assurances. From time to time execute and deliver, or cause to be
executed and delivered, such additional instruments, certificates or documents, and take all such
actions (including but not limited to the filing of any Register of Mortgages, Charges and Other
Encumbrances with the Registrar of Companies of the British Virgin Islands), as the Administrative
Agent, the Second Lien Collateral Agent or the Syndication Agent may reasonably request for the
purposes of implementing or effectuating the provisions of this Agreement and the other Second Lien
Loan Documents, or of more fully perfecting or renewing the rights of the Second Lien Collateral
Agent, for the benefit of the Lenders, with respect to the Collateral (or with respect to any
additions thereto or replacements or proceeds thereof or with respect to any other property or
assets hereafter acquired by either Borrower or any Subsidiary which may be deemed to be part of
the Collateral) pursuant hereto or thereto. Upon the exercise by the Administrative Agent, the
Syndication Agent or any Lender of any power, right, privilege or remedy pursuant to this Agreement
or the other Second Lien Loan Documents which requires any consent, approval, recording
qualification or authorization of any Governmental Authority, each Borrower will execute and
deliver, or will cause the execution and delivery of, all applications, certifications, instruments
and other documents and papers that the Administrative Agent, the Syndication Agent or such Lenders
may be required to obtain from such Borrower or any of its Subsidiaries for such governmental
consent, approval, recording, qualification or authorization.

41

 

     7.12. Maintenance of Cash and Cash Equivalents in the United States. Maintain cash
and Cash Equivalents in accounts in the United States with any Lender or any commercial bank
organized under the laws of the United States or any state thereof having combined capital and
surplus of not less than $500,000,000, subject to a control agreement in favor of the
Administrative Agent in form and substance reasonably satisfactory to the Administrative Agent
(each, a “Control Agreement”). The Borrowers may change the banks at which such accounts
are maintained so long as the requirements of the previous sentence are satisfied.

     7.13. Maintenance of Ratings. Use commercially reasonably efforts to maintain ratings
issued by Moody’s and S&P with respect to the Facilities at all times, unless otherwise agreed by
the Administrative Agent.

SECTION 8. NEGATIVE COVENANTS

     Each Borrower jointly and severally hereby agrees that, so long as any Second Lien Term Loan
or other amount is owing to any Lender or Agent hereunder, neither Borrower shall, nor shall it
permit any of its Subsidiaries to, directly or indirectly (with the exception of the restrictions
set forth in Section 8.17 which shall only apply to the BVI Borrower):

     8.1. Financial Condition Covenants. xix) Consolidated Leverage Ratio.
Permit the Consolidated Leverage Ratio as at the last day of any period of four consecutive fiscal
quarters of Holdings ending with any fiscal quarter set forth below to exceed the ratio set forth
below opposite such fiscal quarter:

	 	 	 
	Fiscal Quarter
	 	Consolidated

Leverage Ratio
	 
	 	 
	December 31, 2005

March 31, 2006

June 30, 2006

September 30, 2006

December 31, 2006

March 31, 2007

June 30, 2007

September 30, 2007

December 31, 2007

March 31, 2008

June 30, 2008

September 30, 2008

December 31, 2008

March 31, 2009

June 30, 2009

September 30, 2009

December 31, 2009

March 31, 2010

June 30, 2010

September 30, 2010

December 31, 2010

March 31, 2011 and thereafter
	 	5.75 to 1.00

5.75 to 1.00

5.75 to 1.00

5.75 to 1.00

5.25 to 1.00

4.50 to 1.00

4.50 to 1.00

4.50 to 1.00

4.50 to 1.00

4.00 to 1.00

4.00 to 1.00

4.00 to 1.00

4.00 to 1.00

3.25 to 1.00

3.25 to 1.00

3.25 to 1.00

3.25 to 1.00

3.00 to 1.00

3.00 to 1.00

3.00 to 1.00

3.00 to 1.00

2.50 to 1.00

42

 

     (a) Consolidated First Lien Leverage Ratio. Permit the Consolidated First Lien
Leverage Ratio as at the last day of any period of four consecutive fiscal quarters of Holdings
ending with any fiscal quarter set forth below to exceed the ratio set forth below opposite such
fiscal quarter:

	 	 	 
	Fiscal Quarter
	 	Consolidated

First Lien Leverage Ratio
	 
	 	 
	December 31, 2005

March 31, 2006

June 30, 2006

September 30, 2006

December 31, 2006

March 31, 2007

June 30, 2007

September 30, 2007

December 31, 2007

March 31, 2008

June 30, 2008

September 30, 2008

December 31, 2008

March 31, 2009

June 30, 2009

September 30, 2009

December 31, 2009

March 31, 2010

June 30, 2010

September 30, 2010

December 31, 2010

March 31, 2011 and thereafter
	 	4.50 to 1.00

4.50 to 1.00

4.50 to 1.00

4.50 to 1.00

4.25 to 1.00

3.50 to 1.00

3.50 to 1.00

3.50 to 1.00

3.50 to 1.00

3.00 to 1.00

3.00 to 1.00

3.00 to 1.00

3.00 to 1.00

2.50 to 1.00

2.50 to 1.00

2.50 to 1.00

2.50 to 1.00

2.25 to 1.00

2.25 to 1.00

2.25 to 1.00

2.25 to 1.00

1.75 to 1.00

     8.2. Indebtedness. Create, issue, incur, assume, become liable in respect of or
suffer to exist any Indebtedness, except:

     (a) Indebtedness of any Loan Party pursuant to any Second Lien Loan
Document;

     (b) Indebtedness:

     (i) of the US Borrower to the BVI Borrower or to any Subsidiary
Guarantor;

     (ii) of the BVI Borrower to any Foreign Subsidiary that is not a
Subsidiary of the US Borrower;

     (iii) of any Subsidiary Guarantor which is a Domestic Subsidiary to
either Borrower or any other Subsidiary Guarantor;

     (iv) of any Foreign Subsidiary to any other Foreign Subsidiary (other
than the BVI Borrower); and

     (v) subject to Sections 8.8(f) and (g), of any Foreign Subsidiary to
either Borrower or any Subsidiary Guarantor;

43

 

     (c) Guarantee Obligations incurred in the ordinary course of business by:

     (i) the BVI Borrower or any Subsidiary Guarantor of obligations of
the US Borrower;

     (ii) any Foreign Subsidiary that is not a Subsidiary of the US
Borrower of obligations of the BVI Borrower;

     (iii) either Borrower or any Subsidiary Guarantor of obligations of
any other Subsidiary Guarantor which is a Domestic Subsidiary;

     (iv) any Foreign Subsidiary (other that the BVI Borrower) of
obligations of any other Foreign Subsidiary (including the BVI Borrower);

     (v) subject to Section 8.8(f) and (g), either Borrower or any
Subsidiary Guarantor of obligations of any Foreign Subsidiary (other than the BVI
Borrower); and

     (vi) the US Borrower or any other Subsidiary of obligations of the
BVI Borrower to purchase inventory, raw materials and assets in the conduct of the
BVI Borrower Business or to pay operating lease expenses in the ordinary course of
business;

     (d) Indebtedness outstanding on the date hereof and listed on Schedule
8.2(d) and any refinancings, refundings, renewals or extensions thereof (without
increasing, or shortening the maturity of, the principal amount thereof);

     (e) Indebtedness (including, without limitation, Capital Lease
Obligations) of either Borrower and their Subsidiaries secured by Liens permitted by
Section 8.3(g) in an aggregate principal amount not to exceed $3,000,000 at any one time
outstanding;

     (f) Hedge Agreements permitted under Section 8.11;

     (g) subject to the Intercreditor Agreement, (i) First Lien Debt in an
aggregate principal amount not to exceed $165,000,000 plus the amount of any fees,
premiums and expenses in connection with a permitted refinancing thereof and accrued
interest thereon and (ii) guaranties thereof by Holdings or any Subsidiary that is a
Subsidiary Guarantor thereof; and

     (h) additional Indebtedness of either Borrower and any of their
Subsidiaries in an aggregate principal amount not to exceed $5,000,000 at any one time
outstanding (but not to exceed $1,000,000 with respect to the BVI Borrower and its
Subsidiaries that are not Subsidiaries of the US Borrower).

     8.3. Liens. Create, incur, assume or suffer to exist any Lien upon any of its
property, whether now owned or hereafter acquired, except for:

     (a) Liens for taxes not yet due or that are being contested in good faith
by appropriate proceedings, provided that adequate reserves with respect thereto
are maintained on the books of the relevant Borrower or their respective Subsidiaries,
as the case may be, in conformity with GAAP;

44

 

     (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or
other like Liens arising in the ordinary course of business that are not overdue for a
period of more than 30 days or that are being contested in good faith by appropriate
proceedings;

     (c) pledges or deposits in connection with workers’ compensation,
unemployment insurance and other social security legislation;

     (d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the ordinary course
of business;

     (e) easements, rights-of-way, restrictions and other similar encumbrances
incurred in the ordinary course of business that, in the aggregate, are not substantial
in amount and that do not in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of the business of
either Borrower or any of its Subsidiaries;

     (f) Liens in existence on the date hereof listed on Schedule 8.3(f),
securing Indebtedness permitted by Section 8.2(d), provided that no such Lien is
spread to cover any additional property after the Closing Date and that the amount of
Indebtedness secured thereby is not increased;

     (g) Liens securing Indebtedness of either Borrower or any of their
Subsidiaries incurred pursuant to Section 8.2(e) to finance the acquisition of fixed or
capital assets, provided that (i) such Liens shall be created substantially
simultaneously with the acquisition of such fixed or capital assets, (ii) such Liens do
not at any time encumber any property other than the property financed by such
Indebtedness and (iii) the amount of Indebtedness secured thereby is not increased;

     (h) Liens (i) created pursuant to the Second Lien Security Documents or
(ii) subject to the Intercreditor Agreement, Liens securing the First Lien Debt;

     (i) any interest or title of a lessor under any lease entered into by
either Borrower or any other Subsidiary in the ordinary course of its business and
covering only the assets so leased;

     (j) Liens on accounts receivable assigned to Milberg pursuant to the
Milberg Factoring Agreements, at any time outstanding up to an aggregate principal
amount of $100,000,000, and the proceeds thereof;

     (k) Liens not otherwise permitted by this Section securing Indebtedness
or other obligations of either Borrower and their Subsidiaries so long as neither (i)
the aggregate outstanding principal amount of the obligations secured thereby nor (ii)
the aggregate fair market value (determined as of the date such Lien is incurred) of the
assets subject thereto exceeds (as to each Borrower and all Subsidiaries) $1,000,000 at
any one time; and

     (l) Liens on cash and Cash Equivalents to secure Indebtedness permitted
under Section 8.2(i) of the First Lien Credit Agreement granted in favor of the issuer
or issuers of the related letters of credit.

45

 

     8.4. Fundamental Changes. Enter into any merger, consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of,
all or substantially all of its property or business, except that:

     (a) any Subsidiary of the US Borrower may be merged or consolidated with
or into the US Borrower (provided that the US Borrower shall be the continuing
or surviving corporation) or with or into any Subsidiary Guarantor (provided
that the Subsidiary Guarantor shall be the continuing or surviving corporation) or,
subject to Section 8.8(f) and 8.8(g), with or into any Foreign Subsidiary;

     (b) any (i) Subsidiary of the US Borrower may Dispose of any or all of
its assets (upon voluntary liquidation or otherwise) to the US Borrower or any
Subsidiary Guarantor or, subject to Sections 8.8(f) and 8.8(g), to any Foreign
Subsidiary, (ii) Subsidiary of the BVI Borrower may Dispose of any or all of its assets
(upon voluntary liquidation or otherwise) to any other Subsidiary of the BVI Borrower
and (iii) any Foreign Subsidiary (other than the BVI Borrower) may Dispose of any or all
of its assets (upon voluntary liquidation or otherwise) to any other Foreign Subsidiary;

     (c) the US Borrower or the BVI Borrower may dispose of any or all of its
assets to any Subsidiary of the US Borrower which is a Subsidiary Guarantor (or, in the
case of the BVI Borrower, to the US Borrower);

     (d) any Subsidiary of the BVI Borrower that is not a Subsidiary of the US
Borrower may be merged into the BVI Borrower or may dispose of any or all of its assets
to the BVI Borrower;

     (e) the US Borrower and its Subsidiaries may return inventory purchased
from the BVI Borrower to the BVI Borrower in exchange for a credit or refund of the
purchase price and may assign and transfer accounts receivable to the BVI Borrower for a
credit or for cash in connection with the compromise or collection thereof; and

     (f) any Subsidiary of the BVI Borrower (other than the US Borrower) may
dissolve concurrently with or subsequent to the Disposition of all its assets pursuant
to this Section 8.4(a), (b), (c) or (d).

     8.5. Disposition of Property. Dispose of any of its property, whether now owned or
hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares of such
Subsidiary’s Capital Stock to any Person, except:

     (a) the Disposition of obsolete or worn out property in the ordinary
course of business;

     (b) the sale of inventory in the ordinary course of business;

     (c) Dispositions permitted by Section 8.4(b), (c), (d) and (e);

     (d) the sale or issuance of any Subsidiary’s Capital Stock to the US
Borrower or any Subsidiary Guarantor;

     (e) the Disposition by the US Borrower or any of its Subsidiaries of
other property (other than Dispositions of less than all the Capital Stock of any
Subsidiary owned by the

46

 

Group Members) having a fair market value not to exceed $2,000,000 in the aggregate
for any fiscal year of such Borrower; and

     (f) the assignment of the Assigned Accounts under and as defined in the
Milberg Factoring Agreements to Milberg pursuant to the terms thereof.

     8.6. Restricted Payments. Declare or pay any dividend (other than dividends payable
solely in common stock or shares of the Person making such dividend) on, or make any payment on
account of, or set apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any Capital Stock of any Group Member,
whether now or hereafter outstanding, or make any other distribution in respect thereof, either
directly or indirectly, whether in cash or property or in obligations of either Borrower or any
Subsidiary (collectively, “Restricted Payments”), except that:

     (a) any Subsidiary may make Restricted Payments to the US Borrower or any
Subsidiary Guarantor;

     (b) so long as no Default or Event of Default shall have occurred and be
continuing or would result therefrom, the US Borrower and the BVI Borrower may pay
dividends to Holdings to enable Holdings to purchase the common stock or common stock
options from present or former officers or employees of any Group Member upon the death,
disability or termination of employment of such officer or employee, provided,
that the aggregate amount of payments under this clause (i) after the date hereof (net
of any proceeds received and contributed to Holdings after the date hereof in connection
with resales of any common stock or common stock options so purchased) shall not exceed
$1,000,000;

     (c) any Subsidiary of the BVI Borrower that is not a Subsidiary of the US
Borrower may make Restricted Payments to the BVI Borrower.

     8.7. Capital Expenditures. Make or commit to make any Capital Expenditure, except (a)
Capital Expenditures of the US Borrower and its Subsidiaries in the ordinary course of business not
exceeding during any of the fiscal years of the US Borrower set forth below, the amount set forth
opposite such fiscal year below:

	 	 	 
	Fiscal Year

	 	Amount
	 

	 	 
	2005 through 2009

2010 through 2013

	 	$15,000,000

$20,000,000

provided, that (i) up to $5,000,000 of any such amount referred to above, if not so
expended in the fiscal year for which it is permitted, may be carried over for expenditure in the
next succeeding fiscal year and (ii) Capital Expenditures made pursuant to this clause (a) during
any fiscal year shall be deemed made, first, in respect of amounts permitted for such fiscal year
as provided above and, second, in respect of amounts carried over from the prior fiscal year
pursuant to subclause (i) above; (b) Capital Expenditures made with the proceeds of any
Reinvestment Deferred Amount; and (c) Capital Expenditures of the BVI Borrower and its Subsidiaries
that are not Subsidiaries of the US Borrower in the ordinary course of business not to exceed
$500,000 during any fiscal year.

     8.8. Investments. Make any advance, loan, extension of credit (by way of guaranty or
otherwise) or capital contribution to, or purchase any Capital Stock, bonds, notes, debentures or
other

47

 

debt securities of, or any assets constituting a business unit of, or make any other
investment in, any Person (all of the foregoing, “Investments”), except:

     (a) extensions of trade credit in the ordinary course of business;

     (b) Investments in Cash Equivalents;

     (c) Guarantee Obligations permitted by Section 8.2;

     (d) loans and advances to employees of any Group Member of the US
Borrower in the ordinary course of business (including for travel, entertainment and
relocation expenses) in an aggregate amount for all Group Members not to exceed
$2,000,000 at any one time outstanding;

     (e) intercompany Investments by (i) Holdings in the BVI Borrower, and by
any Group Member in the US Borrower or any Person that, prior to such Investment, is a
Subsidiary Guarantor which is a Domestic Subsidiary and (ii) any Foreign Subsidiary
(other than the BVI Borrower) in any Person that, prior to such Investment, is a Foreign
Subsidiary;

     (f) intercompany Investments by the US Borrower or any of its
Subsidiaries in the Mexican Joint Venture or in any Person, that, prior to such
Investment, is a Foreign Subsidiary (including, without limitation, Guarantee
Obligations with respect to obligations of the Mexican Joint Venture or any such Foreign
Subsidiary, loans made to the Mexican Joint Venture or any such Foreign Subsidiary and
Investments resulting from mergers with or sales of assets to the Mexican Joint Venture
or any such Foreign Subsidiary) in an aggregate amount (valued at cost) not to exceed
$6,000,000 during the term of this Agreement, provided that Investments in the
Mexican Joint Venture do not exceed $1,000,000 during the term of this Agreement;

     (g) in addition to Investments otherwise expressly permitted by this
Section, Investments by the US Borrower or any of its Subsidiaries in an aggregate
amount (valued at cost) not to exceed $4,000,000 during the term of this Agreement;

     (h) in addition to Investments otherwise expressly permitted by this
Section, Investments by the BVI Borrower in any Person that is or becomes a Foreign
Subsidiary at the time of such Investment, in an aggregate amount (valued at cost) not
to exceed $1,000,000 during the term of this Agreement;

     (i) the Term Promissory Note dated April 30, 2003 in the original
principal amount of $1,408,313 from the Mexican Joint Venture in favor of FosterGrant;
and

     (j) Loan Agreement between FosterGrant, as lender, and AAi.Foster Grant
Limited, a company incorporated under the laws of England and Wales, evidencing loans
not to exceed 1,400,000 Pounds Sterling.

     8.9. Transactions with Affiliates. Enter into any transaction, including any
purchase, sale, lease or exchange of property, the rendering of any service or the payment of any
management, advisory or similar fees, with any Affiliate (other than the Borrowers or any
Subsidiary Guarantor) unless such transaction is (a) otherwise permitted under this Agreement, (b)
in the ordinary course of business of the relevant Group Member and (c) upon fair and reasonable
terms no less favorable to the relevant

48

 

Group Member, than it would obtain in a comparable arm’s length transaction with a Person that
is not an Affiliate.

     8.10. Sales and Leasebacks. Enter into any arrangement with any Person providing for
the leasing by any Group Member of real or personal property that has been or is to be sold or
transferred by such Group Member to such Person or to any other Person to whom funds have been or
are to be advanced by such Person on the security of such property or rental obligations of such
Group Member.

     8.11. Hedge Agreements. Enter into any Hedge Agreement with any Agent or Lender or
any affiliate thereof, as counterparty, except (a) Hedge Agreements entered into to hedge or
mitigate risks to which either Borrower or any Subsidiary has actual exposure (other than those in
respect of Capital Stock) and (b) Hedge Agreements entered into in order to effectively cap, collar
or exchange interest rates (from fixed to floating rates, from one floating rate to another
floating rate or otherwise) with respect to any interest-bearing liability or investment of either
Borrower or any Subsidiary.

     8.12. Changes in Fiscal Periods. Permit the fiscal year of Holdings or either
Borrower to end on a day other than the Saturday closest to December 31 or change Holdings or
either Borrower’s method of determining fiscal quarters.

     8.13. Negative Pledge Clauses. Enter into or suffer to exist or become effective any
agreement that prohibits or limits the ability of any Group Member to create, incur, assume or
suffer to exist any Lien upon any of its property or revenues, whether now owned or hereafter
acquired, other than (a) this Agreement and the other Second Lien Loan Documents, (b) the First
Lien Loan Documents and (c) any agreements governing any purchase money Liens or Capital Lease
Obligations otherwise permitted hereby (in which case, any prohibition or limitation shall only be
effective against the assets financed thereby).

     8.14. Clauses Restricting Subsidiary Distributions. Enter into or suffer to exist or
become effective any consensual encumbrance or restriction on the ability of any Subsidiary of the
BVI Borrower to (a) make Restricted Payments in respect of any Capital Stock of such Subsidiary
held by, or pay any Indebtedness owed to, the BVI Borrower or any other Subsidiary of the BVI
Borrower, (b) make loans or advances to, or other Investments in, the BVI Borrower or any other
Subsidiary of the BVI Borrower or (c) transfer any of its assets to the BVI Borrower or any other
Subsidiary of the BVI Borrower, except for such encumbrances or restrictions existing under or by
reason of (i) any restrictions existing under the Second Lien Loan Documents or the First Lien Loan
Documents, (ii) any restrictions with respect to a Subsidiary imposed pursuant to an agreement that
has been entered into in connection with the Disposition of all or substantially all of the Capital
Stock or assets of such Subsidiary, and (iii) any agreements governing any purchase money Liens or
Capital Lease Obligations permitted by Section 8.3(g) (in which case, any prohibition or limitation
shall only be effective against the assets financed thereby).

     8.15. [Reserved].

     8.16. Lines of Business. Enter into any business, either directly or through any
Subsidiary, except for those businesses in which Holdings and its Subsidiaries are engaged on the
date of this Agreement or that are reasonably related thereto.

     8.17. Limitation on Activities of the BVI Borrower. (i) Conduct, transact, purchase,
invest or otherwise engage in, or commit to conduct, transact, purchase, invest or otherwise engage
in, any business or operations, except the BVI Borrower Business, (ii) incur, create, assume or
suffer to exist any Indebtedness or other liabilities or financial obligations, except pursuant to
the Second Lien Loan

49

 

Documents to which it is a party or in the conduct of the BVI Borrower Business subject to the
limitations of this Agreement, or (iii) own, lease, manage or otherwise operate any properties or
assets, other than in each case, the ownership of shares of Capital Stock of the US Borrower or of
any of its Subsidiaries (subject to the limitations set forth in this Agreement) necessary,
incidental or ancillary to the conduct of the BVI Borrower Business.

     8.18. Factoring Agreements. Enter into, either directly or through any Subsidiary, or
suffer to exist, any factoring agreement or other similar agreement for the sale of accounts
receivable to any Person (other than (a) any such agreements in effect on the date hereof
(including the Milberg Factoring Agreements) and (b) sales of accounts receivable for collection in
the ordinary course of business).

SECTION 9. EVENTS OF DEFAULT

     If any of the following events shall occur and be continuing:

     (a) either Borrower shall fail to pay any principal of any Second Lien
Term Loan when due in accordance with the terms hereof; or either Borrower shall fail to
pay any interest on any Second Lien Term Loan or any other amount payable hereunder or
under any other Second Lien Loan Document, within five days after any such interest or
other amount becomes due in accordance with the terms hereof; or

     (b) any representation or warranty made or deemed made by any Loan Party
herein or in any other Second Lien Loan Document or that is contained in any
certificate, document or financial or other statement furnished by it at any time under
or in connection with this Agreement or any such other Second Lien Loan Document shall
prove to have been inaccurate in any material respect on or as of the date made or
deemed made; or

     (c) any Loan Party shall default in the observance or performance of any
agreement contained in clause (i) of Section 7.4(a) (with respect to the Borrowers
only), Section 7.7(a) or Section 8 of this Agreement or Sections 5.6 and 5.8(b) of the
Second Lien Guarantee and Collateral Agreement; or

     (d) any Loan Party shall default in the observance or performance of any
other agreement contained in this Agreement or any other Second Lien Loan Document
(other than as provided in paragraphs (a) through (c) of this Section), and such default
shall continue unremedied for a period of 30 days after notice to the Borrowers from the
Administrative Agent or any Lender; or

     (e) any Group Member (i) defaults in making any payment of any principal
of any Indebtedness (including any Guarantee Obligation, but excluding the Loans and the
First Lien Debt) on the scheduled or original due date with respect thereto; or (ii)
defaults in making any payment of any interest on any such Indebtedness beyond the
period of grace, if any, provided in the instrument or agreement under which such
Indebtedness was created; or (iii) defaults in the observance or performance of any
other agreement or condition relating to any such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event or condition
is to cause after the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or to become subject to a mandatory offer to purchase by
the obligor thereunder or (in the case of any such Indebtedness constituting a Guarantee
Obligation) to become payable; provided, that a default, event or condition

50

 

described in clause (i), (ii) or (iii) of this paragraph (e) shall not at any time
constitute an Event of Default unless, at such time, one or more defaults, events or
conditions of the type described in clauses (i), (ii) and (iii) of this paragraph (e)
shall have occurred and be continuing with respect to Indebtedness the outstanding
principal amount of which exceeds in the aggregate $5,000,000; or

     (f) any Group Member shall (i) default in making any payment of any
principal on the First Lien Debt on the due date (giving effect to any extension or
period of grace) with respect thereto; or (ii) default in making any payment of any
interest on the First Lien Debt beyond any deferral period and the period of grace, if
any, provided therein or in the First Lien Credit Agreement (including any continued
deferral or payment in kind of interest thereunder that does not constitute an “Event of
Default” as provided therein); or (iii) default in the observance or performance of any
other agreement or condition relating to the First Lien Debt or contained in the First
Lien Credit Agreement, or any other event shall occur or condition exist, and as a
consequence of such default or other event or condition the maturity of the First Lien
Debt shall have been accelerated or the First Lien Debt shall have become due prior to
its stated maturity; or

     (g) (i) any Group Member shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have
an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt
or insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or any Group
Member shall make a general assignment for the benefit of its creditors; or (ii) there
shall be commenced against any Group Member any case, proceeding or other action of a
nature referred to in clause (i) above that (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains undismissed, undischarged
or unbonded for a period of 60 days; or (iii) there shall be commenced against any Group
Member any case, proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of its
assets that results in the entry of an order for any such relief that shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days from the
entry thereof; or (iv)any Group Member shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set forth in
clause (i), (ii), or (iii) above; or (v) any Group Member shall generally not, or shall
be unable to, or shall admit in writing its inability to, pay its debts as they become
due; or

     (h) (i) any Person shall engage in any “prohibited transaction” (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii)
any “accumulated funding deficiency” (as defined in Section 302 of ERISA), whether or
not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a
Plan shall arise on the assets of any Group Member or any Commonly Controlled Entity,
(iii) a Reportable Event shall occur with respect to, or proceedings shall commence to
have a trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of the Required
Lenders, likely to result in the termination of such Plan for purposes of Title IV of
ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA,
(v) any Group Member or any Commonly Controlled Entity shall, or in the reasonable
opinion of the Required Lenders is likely to,

51

 

incur any liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur
or exist with respect to a Plan; and in each case in clauses (i) through (vi) above,
such event or condition, together with all other such events or conditions, if any,
could, in the sole judgment of the Required Lenders, reasonably be expected to have a
Material Adverse Effect; or

     (i) one or more judgments or decrees shall be entered against any Group
Member involving in the aggregate a liability (not paid or fully covered by insurance as
to which the relevant insurance company has acknowledged coverage) of $5,000,000 or
more, and all such judgments or decrees shall not have been vacated, discharged, stayed
or bonded pending appeal within 30 days from the entry thereof; or

     (j) any of the Second Lien Security Documents shall cease, for any
reason, to be in full force and effect, or any Loan Party or any Affiliate of any Loan
Party shall so assert, or any Lien created by any of the Second Lien Security Documents
shall cease to be enforceable and of the same effect and priority purported to be
created thereby, or any Loan Party or any Affiliate of any Loan Party shall so assert
the invalidity or lack of perfection or priority of any such Lien; or

     (k) the guarantee contained in Section 2 of the Second Lien Guarantee and
Collateral Agreement shall cease, for any reason, to be in full force and effect or any
Loan Party or any Affiliate of any Loan Party shall so assert; or

     (l) (i) prior to consummation of an IPO, (A) Holdings shall cease to own
of record and beneficially 100% of the Capital Stock of the BVI Borrower, (B) the BVI
Borrower shall cease to own of record and beneficially 100% of the Capital Stock of the
US Borrower, (C) the Permitted Investors shall cease to have the power to vote or direct
the voting of securities having a majority of the ordinary voting power for the election
of directors of Holdings (determined on a fully diluted basis), (D) the Permitted
Investors shall cease to own of record and beneficially an amount of Capital Stock of
Holdings equal to at least 51% of the amount of Capital Stock of Holdings owned by the
Permitted Investors of record and beneficially as of the Closing Date, (E) the board of
directors of Holdings shall cease to consist of a majority of Continuing Directors,
(ii) after consummation of an IPO, any “person” or “group” (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)), excluding the Permitted Investors, shall become, or obtain
rights (whether by means of warrants, options or otherwise) to become, the “beneficial
owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or
indirectly, of more than 20% of the outstanding Capital Stock of Holdings, or (iii) a
Specified Change of Control shall occur or;

     (m) Holdings shall (i) conduct, transact or otherwise engage in, or
commit to conduct, transact or otherwise engage in, any business or operations other
than those incidental to its ownership of the Capital Stock of the BVI Borrower or the
issuance of its own Capital Stock, (ii) incur, create, assume or suffer to exist any
Indebtedness or other liabilities or financial obligations, except (x) nonconsensual
obligations imposed by operation of law, (y) pursuant to the Second Lien Loan Documents
and the First Lien Loan Documents to which it is a party and (z) obligations with
respect to its Capital Stock, or (iii) own, lease, manage or otherwise operate any
properties or assets (including cash (other than cash received in connection with
dividends made by the Borrowers in accordance with Section 8.6 pending application in
the manner contemplated by said Section) and Cash Equivalents) other than the ownership
of shares of Capital Stock of the BVI Borrower;

52

 

then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or
(ii) of paragraph (f) above with respect to either Borrower, automatically the Second Lien Term
Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement
and the other Second Lien Loan Documents shall immediately become due and payable, and (B) if such
event is any other Event of Default, with the consent of the Required Lenders, the Administrative
Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice
to the Borrowers, declare the Second Lien Term Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement and the other Second Lien Loan Documents to be due and
payable forthwith, whereupon the same shall immediately become due and payable. Except as
expressly provided above in this Section, presentment, demand, protest and all other notices of any
kind are hereby expressly waived by the Borrowers.

SECTION 10. THE AGENTS

     10.1. Appointment. Each Lender hereby irrevocably designates and appoints each Agent
as the agent of such Lender, as applicable, under this Agreement and the other Second Lien Loan
Documents, and each such Lender irrevocably authorizes such Agent, in such capacity, to take such
action on its behalf under the provisions of this Agreement and the other Second Lien Loan
Documents and to exercise such powers and perform such duties as are expressly delegated to such
Agent by the terms of this Agreement and the other Second Lien Loan Documents, together with such
other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, no Agent shall have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Second Lien Loan Document or otherwise exist against any Agent.

     10.2. Delegation of Duties. Each Agent may execute any of its duties under this
Agreement and the other Second Lien Loan Documents by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such duties. No Agent
shall be responsible for the negligence or misconduct of any agents or attorneys in-fact selected
by it with reasonable care. The exculpatory provision of this Agreement and of the other Second
Lien Loan Documents shall apply to any such agent or attorney-in-fact and to their Related Parties.

     10.3. Exculpatory Provisions. Neither any Agent nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates (collectively, the “Related Parties”)
shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under
or in connection with this Agreement or any other Second Lien Loan Document (except to the extent
that any of the foregoing are found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from its or such Person’s own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any Loan Party or any officer thereof contained in this
Agreement or any other Second Lien Loan Document or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agents or any of their Related Parties
under or in connection with, this Agreement or any other Second Lien Loan Document or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any
other Second Lien Loan Document or for any failure of any Loan Party a party thereto to perform its
obligations hereunder or thereunder. The Agents shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the agreements contained in,
or conditions of, this Agreement or any other Second Lien Loan Document, or to inspect the
properties, books or records of any Loan Party. The Agents shall not be responsible to any Lender
for the effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of this
Agreement or any other Second Lien Loan Document or for any representations, warranties, recitals
or statements made

53

 

herein or therein or made in any written or oral statement or in any financial or other
statements, instruments, reports, certificates or any other documents in connection herewith or
therewith furnished or made by any Agent to the Lenders or by or on behalf of either Borrower to
any Agent or any Lender or be required to ascertain or inquire as to the performance or observance
of any of the terms, conditions, provisions, covenants or agreements contained herein or therein or
as to the use of the proceeds of the Second Lien Term Loans or of the existence or possible
existence of any Default or Event of Default.

     10.4. Reliance by Agents. Each Agent shall be entitled to rely, and shall be fully
protected in relying, upon any instrument, writing, resolution, notice, consent, certificate,
affidavit, letter, telecopy, telex or teletype message, statement, order or other document or
conversation believed by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrowers), independent accountants and other experts selected by such
Agent. The Administrative Agent may deem and treat the payee of any Note as the owner thereof for
all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been
filed with the Administrative Agent. Each Agent shall be fully justified in failing or refusing to
take any action under this Agreement or any other Second Lien Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders (or, if so specified by this Agreement,
all Lenders or, in the case of the Second Lien Collateral Agent, the concurrence of the
Administrative Agent) as it deems appropriate or it shall first be indemnified to its satisfaction
by the Lenders against any and all liability and expense that may be incurred by it by reason of
taking or continuing to take any such action. The Agents shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the other Second Lien Loan Documents
in accordance with a request of the Required Lenders (or, if so specified by this Agreement, all
Lenders or, in the case of the Second Lien Collateral Agent, the concurrence of the Administrative
Agent), and such request and any action taken or failure to act pursuant thereto shall be binding
upon all the Lenders and all future holders of the Second Lien Term Loans. Each Loan Party, the
Syndication Agent and the Administrative Agent will furnish such information reasonably known to it
(and subject to applicable confidentiality restrictions) about the Collateral, the Loan Parties and
any other information the Second Lien Collateral Agent deems necessary to exercise any of the
rights or powers vested in it by the Second Lien Loan Documents as the Second Lien Collateral Agent
may reasonably request from time to time.

     10.5. Notice of Default. No Agent shall be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless such Agent has received notice from
a Lender or either Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a “notice of default”. In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to
the Lenders. The Administrative Agent shall take such action with respect to such Default or Event
of Default as shall be reasonably directed in writing by the Required Lenders (or, if so specified
by this Agreement, all Lenders or any other instructing group of Lenders specified by this
Agreement); provided that unless and until the Administrative Agent shall have received
such directions, the Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders (it being understood and agreed that any action by
the Administrative Agent without the direction or consent of the Required Lenders under clause (B)
of the final paragraph of Section 9 shall require the consent of the Syndication Agent).

     10.6. Non-Reliance on Agents and Other Lenders. Each Lender expressly acknowledges
that neither the Agents nor any of their Related Parties have made any representations or
warranties to it and that no act by any Agent hereafter taken, including any review of the affairs
of a Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any representation
or warranty by any Agent to any Lender. Each Lender represents to the Agents that it has,
independently and without

54

 

reliance upon any Agent or any other Lender, and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the business, operations,
property, financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans hereunder and enter into this Agreement.
Each Lender also represents that it will, independently and without reliance upon any Agent or any
other Lender, and based on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Second Lien Loan Documents, and to make such investigation as it
deems necessary to inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Loan Parties and their affiliates. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by the Administrative
Agent hereunder, the Agents shall not have any duty or responsibility to provide any Lender with
any credit or other information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of any Loan Party or any affiliate of a Loan Party
that may come into the possession of the Agents or any of their Related Parties.

     10.7. Indemnification. The Lenders agree to indemnify each Agent and any of its
Related Parties, as applicable, (collectively, the “Lender Indemnitees”) in its capacity as such
(to the extent not reimbursed by the Borrowers and without limiting the obligation of the Borrowers
to do so), ratably according to their respective Second Lien Term Percentages in effect on the date
on which indemnification is sought under this Section (or, if indemnification is sought after the
date upon which the Second Lien Term Loans shall have been paid in full, ratably in accordance with
such Second Lien Term Percentages immediately prior to such date), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind (including attorneys’ fees and expenses) whatsoever that may at any time
(whether before or after the payment of the Second Lien Term Loans) be imposed on, incurred by or
asserted against such Lender Indemnitee in any way relating to or arising out of, this Agreement,
any of the other Second Lien Loan Documents or any documents contemplated by or referred to herein
or therein or the transactions contemplated hereby or thereby or any action taken or omitted by
such Lender Indemnitee under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a
final and nonappealable decision of a court of competent jurisdiction to have resulted from such
Lender Indemnitee’s gross negligence or willful misconduct. The agreements in this Section shall
survive the payment of the Second Lien Term Loans and all other amounts payable hereunder. No
Agent shall be required to act hereunder or to advance funds or otherwise incur any financial
liability in the performance of its duties or the exercise of its rights hereunder and under any
other agreements or documents to which it is a party and shall in all cases be fully justified in
failing or refusing to act hereunder unless it shall receive further assurances to its satisfaction
from the Loan Parties and the Lenders (other than the Agents) of their indemnification obligations
hereunder against any and all liability and expense that may be incurred by it by reason of taking
or continuing to take or refraining from taking any such action.

     10.8. Agent in Its Individual Capacity. Each Agent and its affiliates may make loans
to, accept deposits from and generally engage in any kind of business with any Loan Party as though
such Agent were not an Agent. With respect to its Second Lien Term Loans made or renewed by it,
each Agent shall have the same rights and powers under this Agreement and the other Second Lien
Loan Documents as any Lender and may exercise the same as though it were not an Agent, and the
terms “Lender” and “Lenders” shall include each Agent in its individual capacity.

     10.9. Successor Administrative Agent. The Administrative Agent may resign as
Administrative Agent upon 30 days’ notice to the Lenders and the Borrowers. If the Administrative
Agent shall resign as Administrative Agent under this Agreement and the other Second Lien Loan

55

 

Documents, then the Required Lenders shall appoint from among the Lenders a successor agent
for the Lenders, which successor agent shall (unless an Event of Default with respect to either
Borrower shall have occurred and be continuing) be subject to approval by the Borrowers (which
approval shall not be unreasonably withheld or delayed), whereupon such successor agent shall
succeed to the rights, powers and duties of the Administrative Agent, and the term “Administrative
Agent” shall mean such successor agent effective upon such appointment and approval, and the former
Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated,
without any other or further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Second Lien Term Loans. If no successor agent
has accepted appointment as Administrative Agent by the date that is 10 days following a retiring
Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall
nevertheless thereupon become effective and the Lenders shall assume and perform all of the duties
of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a
successor agent as provided for above. After any retiring Administrative Agent’s resignation as
Administrative Agent, the provisions of this Section 10 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement
and the other Second Lien Loan Documents.

     10.10. Agents Generally. Except as expressly set forth herein, no Agent shall have
any duties or responsibilities hereunder in its capacity as such.

     10.11. The Syndication Agent. Except as expressly set forth herein, the Syndication
Agent shall not have any obligations or liabilities hereunder and the rights of the Syndication
Agent under this Agreement shall terminate in the event General Electric Capital Corporation ceases
to be a Lender hereunder.

     10.12. [Reserved].

     10.13. Second Lien Collateral Agent. xx) To the extent applicable, the provisions of
Section 10 shall apply, mutatis mutandis, to Wilmington Trust Company in its
capacity as Second Lien Collateral Agent, and to any successor Second Lien Collateral Agent, and
the Second Lien Collateral Agent shall have all of the benefits and immunities (i) provided to the
Administrative Agent in this Section 10 with respect to any acts taken or omissions suffered by the
Second Lien Collateral Agent in connection with its acting as Second Lien Collateral Agent as fully
as if the term “Administrative Agent”, as used in this Section 10, included the Second Lien
Collateral Agent with respect to such acts and omissions and (ii) as additionally provided in this
Agreement with respect to the Second Lien Collateral Agent. Wilmington Trust Company, as initial
Second Lien Collateral Agent, shall have the right to appoint a successor to itself as Second Lien
Collateral Agent without the consent of the Borrowers or any Lender upon 20 days’ notice to the
Borrowers and the Lenders, and the resigning Second Lien Collateral Agent’s rights, powers and
duties as the Second Lien Collateral Agent shall be terminated, without any other or further act or
deed on the part of such former Second Lien Collateral Agent or any of the parties to this
Agreement; provided that such successor Second Lien Collateral Agent is a bank, trust
company or other financial institution of recognized standing with an office located in New York
City and is legally able to perform the functions of the Second Lien Collateral Agent under the
Second Lien Loan Documents (it being understood that any fee to be charged by such successor Second
Lien Collateral Agent shall be subject to separate agreement between such successor Second Lien
Collateral Agent and the Borrowers); and provided, further, that the Borrowers’
obligations under Section 11.5 with respect to the resigning Second Lien Collateral Agent hereunder
shall survive the resigning Second Lien Collateral Agent’s resignation. After the retiring Second
Lien Collateral Agent’s resignation hereunder as the Second Lien Collateral Agent, the provisions
of this Section 10.13 shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Second Lien Collateral Agent under this Agreement.

56

 

     (a) The Second Lien Collateral Agent is authorized on behalf of all the Lenders, without the
necessity of any notice to or further consent from the Lenders, from time to time to take any
action with respect to any Collateral or the Second Lien Loan Documents which may be necessary to
perfect and maintain a perfected security interest in and Liens upon the Collateral granted
pursuant to the Second Lien Loan Documents. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder or under any of the
other Second Lien Loan Documents, the Second Lien Collateral Agent shall have no duty as to any
Collateral, as to ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, traders or other matters relative to any Collateral, whether or not the Second Lien
Collateral Agent is deemed to have knowledge of such matters, or as to taking of any necessary
steps to preserve rights against any parties or any other rights pertaining to any Collateral
(including the filing of UCC Continuation Statements). The Second Lien Collateral Agent shall be
deemed to have exercised appropriate and due care in the custody and preservation of any Collateral
in its possession if such Collateral is accorded treatment substantially equal to that which other
collateral agents accord similar property. In addition, each of’ the Lenders and the
Administrative Agent irrevocably appoints the Second Lien Collateral Agent to act as “Second
Priority Representative” under the Intercreditor Agreement and authorizes the Second Lien
Collateral Agent and its Related Parties, to execute the Intercreditor Agreement and the other
Second Lien Loan Documents and each of the Lenders and the other Agents agrees to be bound by the
terms thereof.

SECTION 11. MISCELLANEOUS

     11.1. Amendments and Waivers. xxi) Neither this Agreement, any other Second Lien
Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except in
accordance with the provisions of this Section 11.1. The Required Lenders and each Loan Party
party to the relevant Second Lien Loan Document may, or, with the written consent of the Required
Lenders, the Administrative Agent, the Syndication Agent (unless the Required Lenders have approved
the related documentation, in which event the approval of the Syndication Agent shall not be
required), and each Loan Party party to the relevant Second Lien Loan Document may, from time to
time, (a) enter into written amendments, supplements or modifications hereto and to the other
Second Lien Loan Documents for the purpose of adding any provisions to this Agreement or the other
Second Lien Loan Documents or changing in any manner the rights of the Lenders or of the Loan
Parties hereunder or thereunder or (b) waive, on such terms and conditions as the Required Lenders
or the Administrative Agent and the Syndication Agent (unless the Required Lenders have approved
the related documentation, in which event the approval of the Syndication Agent shall not be
required), as the case may be, may specify in such instrument, any of the requirements of this
Agreement or the other Second Lien Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall (i) forgive or reduce the principal amount or extend the final
scheduled date of maturity of any Second Lien Term Loan, extend the scheduled date of any
amortization payment in respect of any Second Lien Term Loan, reduce the stated rate of any
interest or fee (including the prepayment fee provided for in Section 4.1(b)) payable hereunder
(except (x) in connection with the waiver of applicability of any post-default increase in interest
rates, which waiver shall be effective with the consent of the Required Lenders and (y) that any
amendment or modification of defined terms used in the financial covenants in this Agreement shall
not constitute a reduction in the rate of interest or fees (including the prepayment fee provided
for in Section 4.1(b)) for purposes of this clause (i)) without the written consent of each Lender
directly affected thereby; (ii) eliminate or reduce the voting rights of any Lender under this
Section 11.1 or without the written consent of such Lender; (iii) reduce any percentage specified
in the definition of Required Lenders, consent to the assignment or transfer by either Borrower of
any of its rights and obligations under this Agreement and the other Second Lien Loan Documents
(other than a transfer of such rights and obligations by the BVI Borrower to the US Borrower),
release all or substantially all of the Collateral or release Holdings or all or substantially all
of

57

 

the Subsidiary Guarantors from their obligations under the Second Lien Guarantee and
Collateral Agreement, in each case without the written consent of all Lenders; (iv) amend, modify
or waive any provision of Section 4.8 without the written consent of each Lender adversely affected
thereby; and (v) amend, modify or waive any provision of Section 10 or 11 of this Agreement or any
other provision of the Second Lien Documents without the written consent of each Agent adversely
affected thereby. Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Loan Parties, the Lenders, the Agents
and all future holders of the Second Lien Term Loans. In the case of any waiver, the Loan Parties,
the Lenders and the Agents shall be restored to their former position and rights hereunder and
under the other Second Lien Loan Documents, and any Default or Event of Default waived shall be
deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other
Default or Event of Default, or impair any right consequent thereon.

     11.2. Notices. All notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by telecopy) or telephonic notice (promptly
confirmed in writing), and, unless otherwise expressly provided herein, shall be deemed to have
been duly given or made when delivered, or three Business Days after being deposited in the mail,
postage prepaid, or, in the case of telecopy notice, when received, addressed as follows in the
case of the Borrowers and the Agents, and as set forth in an administrative questionnaire delivered
to the Administrative Agent in the case of the Lenders, or to such other address as may be
hereafter notified by the respective parties hereto:

	 	 	 
	The Borrowers:

	 	FGX International Inc.

FGX International Limited
	 
	 	 
	 

	 	c/o AAi.FosterGrant, Inc.

500 George Washington Highway

Smithfield, RI 02917

Attention: Mr. Jack Flynn

Telecopy: (401) 231-3212

Telephone: (401) 719-2102
	 
	 	 
	with copies to:

	 	Berggruen Holdings Inc.

1114 Avenue of the Americas, 41st Floor

New York, NY 10036

Attention: Jared Bluestein

Telecopy: (212) 382-0121

Telephone: (212) 382-2235
	 
	 	 
	The Administrative Agent:

	 	JPMorgan Chase Bank, N.A.

270 Park Avenue

New York, NY 10017

Attention: Katherine Duncan

Telecopy: (212) 270-5808

Telephone: (212) 270-6637

58

 

	 	 	 
	with a copy to:

	 	JPMorgan Chase Bank, N.A.

Loan and Agency Services

1111 Fannin Street

Houston, TX 77002

Attention: Sharon Craft

Telecopy: (713) 750-2666

Telephone: (713) 750-7911

and

Attention: Stacey Ahrendt

Telecopy: (713) 750-2666

Telephone: (713) 750-3524
	 
	 	 
	Syndication Agent:

	 	General Electric Capital Corporation

401 Merritt Seven

Norwalk, CT 06856

Attention: Pier Meager

Telecopy: 203-229-1432

Telephone: 203-229-1955

provided that any notice, request or demand to or upon any Agent or the Lenders shall not
be effective until received.

     Notices and other communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative Agent;
provided that the foregoing shall not apply to notices pursuant to Section 2 unless
otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent
or the Borrowers may, in their discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or communications.

     11.3. No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of any Agent or any Lender, any right, remedy, power or privilege hereunder
or under the other Second Lien Loan Documents shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.

     11.4. Survival of Representations and Warranties. All representations and warranties
made hereunder, in the other Second Lien Loan Documents and in any document, certificate or
statement delivered pursuant hereto or in connection herewith shall survive the execution and
delivery of this Agreement and the making of the Second Lien Term Loans and other extensions of
credit hereunder.

     11.5. Payment of Expenses and Taxes. The Borrowers jointly and severally agree (a) to
pay or reimburse each Agent for all its reasonable out-of-pocket costs and expenses incurred in
connection with the development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement and the other Second Lien Loan Documents and any other documents
prepared in connection herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including the reasonable fees and disbursements of
counsel to such Agent and filing and recording fees and other expenses, with statements with
respect to the foregoing to be submitted to the Borrowers prior to the Closing Date (in the case of
amounts to be paid on the Closing Date) and from time to time thereafter on a quarterly basis or
such other periodic basis as such Agent shall deem appropriate, (b) to pay or reimburse each Lender
and each Agent for all its costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Second Lien Loan Documents and any such
other documents, including the fees and disbursements of counsel (including, without limitation,
the allocated fees and expenses of in-house

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counsel) to each Lender and of counsel to each such Agent, (c) without duplication with
respect to amounts payable under Section 4.10(a), to pay, indemnify, and hold each Lender and each
Agent harmless from, any and all recording and filing fees and any and all liabilities with respect
to, or resulting from any delay in paying and Other Taxes, if any, that may be payable or
determined to be payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this Agreement, the other Second
Lien Loan Documents and any such other documents, and (d) to pay, indemnify, and hold each Lender
and each Agent and their Related Parties (each, an “Indemnitee”) harmless from and against
any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind (including attorneys’ fees and expenses) or nature
whatsoever with respect to the execution, delivery, enforcement, performance and administration of
this Agreement, the other Second Lien Loan Documents and any such other documents, including any of
the foregoing relating to the use of proceeds of the Second Lien Term Loans or the violation of,
noncompliance with or liability under, any Environmental Law applicable to the operations of any
Group Member or any of the Properties and the reasonable fees and expenses of legal counsel in
connection with claims, actions or proceedings by any Indemnitee against any Loan Party under any
Second Lien Loan Document (all the foregoing in this clause (d), collectively, the “Indemnified
Liabilities”), provided, that the Borrowers shall have no obligation hereunder to any
Indemnitee with respect to Indemnified Liabilities to the extent such Indemnified Liabilities are
found by a final and nonappealable decision of a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of such Indemnitee. Without limiting the
foregoing, and to the extent permitted by applicable law, the Borrowers jointly and severally agree
not to assert and to cause their Subsidiaries not to assert, and hereby waive and agree to cause
their Subsidiaries to waive, all rights for contribution or any other rights of recovery with
respect to all claims, demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature, under or related to Environmental Laws, that any of them might
have by statute or otherwise against any Indemnitee. All amounts due under this Section 11.5 shall
be payable not later than 10 days after written demand therefor. Statements payable by the
Borrowers pursuant to this Section 11.5 shall be submitted to Jared Bluestein (Telephone No. (212)
382-2235) (Telecopy No. (212) 382-0121) at the address of the Borrowers set forth in Section 11.2,
or to such other Person or address as may be hereafter designated by the Borrowers in a written
notice to the Administrative Agent. The agreements in this Section 11.5 shall survive repayment of
the Second Lien Term Loans and all other amounts payable hereunder.

     11.6. Successors and Assigns; Participations and Assignments. xxii) The provisions
of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that (i) neither Borrower may assign or
otherwise transfer any of its rights or obligations hereunder (except such an assignment or
transfer by the BVI Borrower to the US Borrower) without the prior written consent of each Lender
(and any attempted assignment or transfer by such Borrower without such consent shall be null and
void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder
except in accordance with this Section.

     (a) (1) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign
to one or more assignees (each, an “Assignee”) all or a portion of its rights and
obligations under this Agreement (including all or a portion of the Second Lien Term Loans at the
time owing to it) with the prior written consent (such consent not to be unreasonably withheld or
delayed) of:

     (A) the Borrowers, provided that no consent of the Borrowers shall be
required for (x) an assignment to a Lender, an affiliate of a Lender, an Approved
Fund (as defined below) or, if an Event of Default has occurred and is continuing,
any other Person, (y) any assignment by the Administrative Agent or the Syndication
Agent (or their respective affiliates) or (z) any assignment of Second Lien Term
Loans; and

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     (B) the Administrative Agent, provided that no consent of the
Administrative Agent shall be required for (x) an assignment to an Assignee that is
a Lender immediately prior to giving effect to such assignment, (y) any assignment
by the Administrative Agent or the Syndication Agent (or their respective
affiliates) or (z) any assignment of Second Lien Term Loans.

     (ii) Assignments shall be subject to the following additional conditions:

     (A) except in the case of an assignment to a Lender, an affiliate of a Lender
or an Approved Fund or an assignment of the entire remaining amount of the assigning
Lender’s Second Lien Term Loans, the amount of the Second Lien Term Loans of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $1,000,000 unless each of the Borrowers
and the Administrative Agent otherwise consent, provided that (1) no such
consent of the Borrowers shall be required if an Event of Default has occurred and
is continuing and (2) such amounts shall be aggregated in respect of each Lender and
its affiliates or Approved Funds, if any;

     (B) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption;

     (C) the Assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an administrative questionnaire; and

     (D) in the case of an assignment by a Lender to a CLO (as defined below)
managed or administered by such Lender or by an Affiliate of such Lender, the
assigning Lender shall retain the sole right to approve any amendment, modification
or waiver of any provision of this Agreement and the other Second Lien Loan
Documents, provided that the Assignment and Assumption between such Lender
and such CLO may provide that such Lender will not, without the consent of such CLO,
agree to any amendment, modification or waiver that (1) requires the consent of each
Lender directly affected thereby pursuant to the proviso to the second sentence of
Section 11.1 and (2) directly affects such CLO.

     For the purposes of this Section 11.6, the terms “Approved Fund” and “CLO” have the following
meanings:

     “Approved Fund” means (a) with respect to any Lender, a CLO managed by such Lender or
by an Affiliate of such Lender and (b) with respect to any Lender that is a fund which invests in
bank loans and similar extensions of credit, any other fund that invests in bank loans and similar
extensions of credit and is managed by the same investment advisor as such Lender or by an
affiliate of such investment advisor.

     “CLO” means any entity (whether a corporation, partnership, trust or otherwise) that
is engaged in making, purchasing, holding or otherwise investing in bank loans and similar
extensions of credit in the ordinary course of its business and is administered or managed by a
Lender or an affiliate of such Lender.

     (iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) below, from
and after the effective date specified in each Assignment and Assumption the Assignee thereunder

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shall be a party hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption,
be released from its obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of
Sections 4.9, 4.10, 4.11 and 11.5). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 11.6 shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (c) of this Section.

     (iv) The Administrative Agent, acting for this purpose as an agent of the Borrowers, shall
maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and principal amount of the
Second Lien Term Loans owing to, each Lender pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be conclusive, and the Borrowers, the
Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for inspection by the
Borrowers and any Lender, at any reasonable time and from time to time upon reasonable prior
notice.

     (v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning
Lender and an Assignee, the Assignee’s completed administrative questionnaire (unless the Assignee
shall already be a Lender hereunder) and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register. No assignment shall be effective for
purposes of this Agreement unless it has been recorded in the Register as provided in this
paragraph.

     (b) (i) Any Lender may, without the consent of the Borrowers or the Required Lenders, sell
participations to one or more banks or other entities (a “Participant”) in all or a portion
of such Lender’s rights and obligations under this Agreement (including all or a portion of the
Second Lien Term Loans owing to it); provided that (A) such Lender’s obligations under this
Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (C) the Borrower, the Administrative
Agent, the Syndication Agent and the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender’s rights and obligations under this Agreement. Any
agreement pursuant to which a Lender sells such a participation shall provide that such Lender
shall retain the sole right to enforce this Agreement and to approve any amendment, modification or
waiver of any provision of this Agreement; provided that such agreement may provide that
such Lender will not, without the consent of the Participant, agree to any amendment, modification
or waiver that (1) requires the consent of each Lender directly affected thereby pursuant to the
proviso to the second sentence of Section 11.1 and (2) directly affects such Participant. Subject
to paragraph (c)(ii) of this Section, the Borrowers jointly and severally agree that each
Participant shall be entitled to the benefits of Sections 4.9, 4.10 and 4.11 to the same extent as
if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this
Section. To the extent permitted by law, each Participant also shall be entitled to the benefits
of Section 11.7(b) as though it were a Lender, provided such Participant shall be subject to
Section 11.7(a) as though it were a Lender.

     (ii) A Participant shall not be entitled to receive any greater payment under Section 4.9 or
4.10 than the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to such Participant is
made with the

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Borrowers’ prior written consent. A Participant shall not be entitled to the benefits of
Section 4.10 unless such Participant complies with Sections 4.10(d) and (e), as applicable.

     (c) Any Lender may, without the consent of the Borrowers or the Administrative Agent, at any
time pledge or assign a security interest in all or any portion of its rights under this Agreement
to secure obligations of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a
security interest; provided that no such pledge or assignment of a security interest shall
release a Lender from any of its obligations hereunder or substitute any such pledgee or Assignee
for such Lender as a party hereto.

     (d) The Borrowers, upon receipt of written notice from the relevant Lender, jointly and
severally agree to issue Notes to any Lender requiring Notes to facilitate transactions of the type
described in paragraph (d) above.

     (e) Notwithstanding the foregoing, any Conduit Lender may assign any or all of the Second Lien
Term Loans it may have funded hereunder to its designating Lender without the consent of the
Borrowers or the Administrative Agent and without regard to the limitations set forth in Section
11.6(b). Each of Borrower, each Lender and the Administrative Agent hereby confirms that it will
not institute against a Conduit Lender or join any other Person in instituting against a Conduit
Lender any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any
state bankruptcy or similar law, for one year and one day after the payment in full of the latest
maturing commercial paper note issued by such Conduit Lender; provided, however,
that each Lender designating any Conduit Lender hereby agrees to indemnify, save and hold harmless
each other party hereto for any loss, cost, damage or expense arising out of its inability to
institute such a proceeding against such Conduit Lender during such period of forbearance.

     11.7. Adjustments; Set-off. xxiii) Except to the extent that this Agreement
expressly provides for payments to be allocated to a particular Lender (a “Benefitted
Lender”) shall, at any time after the Second Lien Term Loans and other amounts payable
hereunder shall immediately become due and payable pursuant to Section 9, receive any payment of
all or part of the Obligations owing to it, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred
to in Section 9(g), or otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of the Obligations owing to such other Lender,
such Benefitted Lender shall purchase for cash from the other Lenders a participating interest in
such portion of the Obligations owing to each such other Lender, or shall provide such other
Lenders with the benefits of any such collateral, as shall be necessary to cause such Benefitted
Lender to share the excess payment or benefits of such collateral ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such Benefitted Lender, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery, but without interest.

     (a) In addition to any rights and remedies of the Agents and Lenders provided by law, each
Lender and each Agent shall have the right, subject to the terms of the Intercreditor Agreement,
without prior notice to either Borrower, any such notice being expressly waived by such Borrower to
the extent permitted by applicable law, upon any amount becoming due and payable by either Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise), to set off and
appropriate and apply against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at
any time held or owing by such Lender or such Agent or any branch or agency thereof to or for the
credit or the account of either Borrower. Each Lender and each Agent agrees promptly to notify the
Borrowers and the Agents after any

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such setoff and application made by such Lender or such Agent, provided that the
failure to give such notice shall not affect the validity of such setoff and application.

     11.8. Counterparts. This Agreement may be executed by one or more of the parties to
this Agreement on any number of separate counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument. Delivery of an executed signature page
of this Agreement by facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the parties shall be
lodged with the Borrowers and the Administrative Agent.

     11.9. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

     11.10. Integration. This Agreement and the other Second Lien Loan Documents represent
the entire agreement of the Borrowers, the Agents and the Lenders with respect to the subject
matter hereof and thereof, and there are no promises, undertakings, representations or warranties
by any Agent or any Lender relative to subject matter hereof not expressly set forth or referred to
herein or in the other Second Lien Loan Documents.

     11.11. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK.

     11.12. Submission To Jurisdiction; Waivers. (i) Each Borrower hereby irrevocably and
unconditionally:

     (i) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Second Lien Loan Documents to
which it is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of New
York, the courts of the United States for the Southern District of New York, and
appellate courts from any thereof;

     (ii) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the same;

     (iii) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Borrower, as the case
may be at its address set forth in Section 11.2 or at such other address of which
the Administrative Agent shall have been notified pursuant thereto;

     (iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right to
sue in any other jurisdiction; and

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     (v) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.

     (b) For the purpose of proceedings in the Courts of the State of New York and the United
States Courts for the Southern District of New York, in each case sitting in the Borough of
Manhattan, relating to this Agreement and the other Second Lien Loan Documents to which it is a
party, the BVI Borrower hereby irrevocably designates as of the Closing Date CT Corporation System
with offices currently located at 111 Eighth Avenue, New York, New York 10011 as its agent for
service of process. In the event that such agent or any successor shall cease to be located in the
Borough of Manhattan, the BVI Borrower shall promptly and irrevocably before the relocation of such
agent for service of process, if practicable, or promptly thereafter designate a successor agent,
which successor agent shall be located in the Borough of Manhattan, and notify the Administrative
Agent thereof, to accept on their behalf service of any and all process or other documents which
may be served in any action or proceeding in any of such courts and further agrees that service
upon such agent shall constitute valid and effective service upon the BVI Borrower and that failure
of any such agent to give any notice of such service to the BVI Borrower shall not affect the
validity of such service or any judgment rendered in any action or proceeding based thereon.
Excepting the BVI Borrower, each of the parties hereto agrees that service of any and all such
process or other documents on such person may also be effected by registered mail to its address as
set forth in Section 11.2. With respect to the BVI Borrower, service, of any and all such process
or other documents to CT Corporation or such other agent for service of process designated by the
BVI Borrower in accordance with this Agreement, shall constitute valid and effective service only
if made in person.

     11.13. Third Party Beneficiary. Each party hereto agrees that the Second Lien
Collateral Agent and each of its Related Parties is a third party beneficiary of each term and
condition of this Agreement and may conclusively rely thereon.

     11.14. Acknowledgments. xxiv) Each Borrower hereby acknowledges that:

     (i) it has been advised by counsel in the negotiation, execution and delivery
of this Agreement and the other Second Lien Loan Documents;

     (ii) no Agent or Lender has any fiduciary relationship with or duty to either
Borrower arising out of or in connection with this Agreement or any of the other
Second Lien Loan Documents, and the relationship between the Agents and Lenders, on
one hand, and the Borrowers, on the other hand, in connection herewith or therewith
is solely that of debtor and creditor; and

     (iii) no joint venture is created hereby or by the other Second Lien Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Lenders or among the Borrowers and the Lenders.

     (b) Each Lender hereby acknowledges that:

     (i) it has received a copy of the Intercreditor Agreement;

     (ii) consents to the subordination of Liens provided for in the Intercreditor
Agreement;

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     (iii) agrees that it will be bound by and will take no actions contrary to the
provisions of the Intercreditor Agreement;

     (iv) authorizes and instructs the Second Lien Collateral Agent to enter into
the Intercreditor Agreement as Second Lien Collateral Agent and on behalf of such
Lender; and

     (v) the foregoing provisions are intended as an inducement to the lenders under
the First Lien Credit Agreement to extend credit to the Borrowers and such lenders
are intended third party beneficiaries of such provisions.

     11.15. Releases of Guarantees and Liens. xxv) Notwithstanding anything to the
contrary contained herein or in any other Second Lien Loan Document, the Administrative Agent is
hereby irrevocably authorized by each Lender (without requirement of notice to or consent of any
Lender except as expressly required by Section 11.1) to take any action requested by the Borrowers
having the effect of releasing any Collateral or guarantee obligations (i) to the extent necessary
to permit consummation of any transaction not prohibited by any Second Lien Loan Document or that
has been consented to in accordance with Section 11.1 or (ii) under the circumstances described in
paragraph (b) below.

     (a) At such time as the Second Lien Term Loans and the other obligations under the Second Lien
Loan Documents (other than obligations under or in respect of Hedge Agreements) shall have been
paid in full, the Collateral shall be released from the Liens created by the Second Lien Security
Documents, and the Second Lien Security Documents and all obligations (other than those expressly
stated to survive such termination) of the Administrative Agent and each Loan Party under the
Second Lien Security Documents shall terminate, all without delivery of any instrument or
performance of any act by any Person.

     11.16. Confidentiality. Each Agent and each Lender agrees to use commercially
reasonable efforts (equivalent to the efforts such Agent or such Lender applies to maintaining the
confidentiality of its own confidential non-public information) to keep confidential all non-public
information provided to it by any Loan Party pursuant to this Agreement that is designated by such
Loan Party as confidential for a period of two years following the receipt thereof;
provided that nothing herein shall prevent any Agent or any Lender from disclosing any such
information (a) to any Agent, any other Lender or any Lender Affiliate, (b) subject to an agreement
to comply with the provisions of this Section, to any actual or prospective Transferee or any
direct or indirect counterparty to any Hedge Agreement (or any professional advisor to such
counterparty), (c) to its employees, directors, trustees, agents, attorneys, accountants and other
professional advisors or those of any of its affiliates, (d) upon the request or demand of any
Governmental Authority, (e) in response to any order of any court or other Governmental Authority
or as may otherwise be required pursuant to any Requirement of Law, (f) if requested or required to
do so in connection with any litigation or similar proceeding, (g) that has been publicly
disclosed, (h) to the National Association of Insurance Commissioners or any similar organization
or any nationally recognized rating agency that requires access to information about a Lender’s
investment portfolio in connection with ratings issued with respect to such Lender, or (i) in
connection with the exercise of any remedy hereunder or under any other Second Lien Loan Document.
Notwithstanding anything herein to the contrary, any party subject to confidentiality obligations
hereunder or under any other related document (and any employee, representative or other agent of
such party) may disclose to any and all persons, without limitation of any kind, such party’s U.S.
federal income tax treatment and the U.S. federal income tax structure of the transactions
contemplated by this Agreement relating to such party and all materials of any kind (including
opinions or other tax analyses) that are provided to it relating to such tax treatment and tax
structure. However, no such party shall disclose any information

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relating to such tax treatment or tax structure to the extent nondisclosure is reasonably
necessary in order to comply with applicable securities laws.

     11.17. [Reserved].

     11.18. Judgment Currency. xxvi) The Borrowers’ obligations hereunder and under the
other Second Lien Loan Documents to make payments in Dollars shall not be discharged or satisfied
by any tender or recovery pursuant to any judgment expressed in or converted into any currency
other than Dollars, except to the extent that such tender or recovery results in the effective
receipt by the Administrative Agent or a Lender of the full amount of Dollars expressed to be
payable to the Administrative Agent or such Lender under this Agreement or the other Second Lien
Loan Documents. If, for the purpose of obtaining or enforcing judgment against any Loan Party in
any court or in any jurisdiction, it becomes necessary to convert into or from any currency other
than Dollars (such other currency being hereinafter referred to as the “Judgment Currency”)
an amount due in Dollars, the conversion shall be made, at the rate of exchange (as quoted by the
Administrative Agent or if the Administrative Agent does not quote a rate of exchange on such
currency, by a known dealer in such currency designated by the Administrative Agent) determined, in
each case, as of the Business Day immediately preceding the date on which the judgment is given
(such Business Day being hereinafter referred to as the “Judgment Currency Conversion
Date”).

     (a) If there is a change in the rate of exchange prevailing between the Judgment Currency
Conversion Date and the date of actual payment of the amount due, the Borrowers jointly and
severally covenant and agree to pay, or cause to be paid, such additional amounts, if any (but in
any event not a lesser amount), as may be necessary to ensure that the amount paid in the Judgment
Currency, when converted at the rate of exchange prevailing on the date of payment, will produce
the amount of Dollars which could have been purchased with the amount of Judgment Currency
stipulated in the judgment or judicial award at the rate of exchange prevailing on the Judgment
Currency Conversion Date.

     (b) For purposes of determining any rate of exchange or currency equivalent for this Section,
such amounts shall include any premium and costs payable in connection with the purchase of
Dollars.

     11.19. WAIVERS OF JURY TRIAL. THE BORROWERS, THE AGENTS AND THE LENDERS HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO
THIS AGREEMENT OR ANY OTHER SECOND LIEN LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

     11.20. Delivery of Addenda. Each initial Lender shall become a party to this
Agreement by delivering to the Administrative Agent an Addendum duly executed by such Lender.

[signature page follows]

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by their proper and duly authorized officers as of the day and year first above written.

	 	 	 	 	 
	 	FGX INTERNATIONAL INC.

 	 
	 	By:  	                    / s / Brian J. Lagarto
 	 
	 	 	Name:  	Brian J. Lagarto 	 
	 	 	Title:  	CFO 	 
	 
	 	FGX INTERNATIONAL LIMITED

 	 
	 	By:  	/ s / Brian J. Lagarto
 	 
	 	 	Name:  	Brian J. Lagarto 	 
	 	 	Title:  	CFO 	 

Credit Agreement

 

	 	 	 	 	 

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., as Administrative

Agent and as Lender

 	 
	 	By:  	/s/ Kathryn A. Duncan
 	 
	 	 	Name:  	Kathryn A. Duncan 	 
	 	 	Title:  	Vice President 	 

Second Lien Credit Agreement

 

	 	 	 	 	 

	 	 	 	 	 
	 	GENERAL ELECTRIC CAPITAL CORPORATION, as

Syndication Agent and as Lender

 	 
	 	By:  	/s/ Pier Meager
 	 
	 	 	Name:  	Pier Meager 	 
	 	 	Title:  	Authorized Signatory 	 

Second Lien Credit AgreementEx-10.4 Amended and Restated Employment Agreement

 

EXHIBIT 10.4

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     This Amended and Restated Employment Agreement (the “Agreement”) is entered into and shall be
effective as of August 15, 2005, by and among FGX International Inc., a Delaware corporation with a
mailing address of 500 George Washington Highway, Smithfield, Rhode Island 02917 (the “Company”),
Brian J. Lagarto, an individual with a residence address of 16 Barberry Hill Road, Cumberland, RI
02864 (“Executive”) and, solely with respect to Section 13 of this Agreement, AAi.FosterGrant,
Inc., a Rhode Island corporation (“FosterGrant”).

INTRODUCTION

     FosterGrant and Executive are parties to a certain Employment Agreement dated April 10, 2002,
as amended on October 1, 2003 and in September 2004 (the “Original Agreement”). The Company,
Executive and FosterGrant desire to amend and restate the Original Agreement to modify certain of
the terms and conditions set forth therein.

AGREEMENT

     In consideration of the premises and mutual promises herein below set forth, the parties
hereby agree as follows:

     1. Employment Period. The term of Executive’s Employment by the Company pursuant to this
Agreement (the “Employment Period”) shall commence on the date hereof (the “Effective Date”) and
shall continue until terminated as provided herein. For purposes of this agreement “Termination
Date” means the date on which the Employment Period ends.

     2. Employment; Duties. Subject to the terms and conditions set forth herein, the
Executive shall serve as the Chief Financial Officer of FGX International Holdings Limited, a
British Virgin Islands corporation and the indirect parent of the Company (“FGX Holdings”), and
each of its subsidiaries during the Employment Period. The duties assigned and authority granted
to Executive shall be as set forth in the By-laws of the Company and as determined by the Chief
Executive Officer from time to time. Executive agrees to perform his duties for FGX Holdings and
each of its subsidiaries diligently, competently and in a good faith manner. Notwithstanding
anything to the contrary set forth herein, the Executive shall be permitted during the Employment
Period to (a) engage in civic and charitable activities to the extent they are not inconsistent
with Executive’s duties hereunder and (b) serve as a member of the board of directors of not more
than two additional for profit corporations.

     3. Salary and Bonus.

          a. Base Salary. Executive shall be entitled to receive a base salary from the Company
during the Employment Period at the rate of no less than Two Hundred Fifty Thousand Dollars
($250,000) per annum (as from time to time, if at all, increased, the “Salary”). The Salary may be
increased (but not decreased) from time to time during the Employment Period. The Salary shall, at
a minimum, be reviewed by the Board of Directors of the Company (the “Board”) on August
1st of each year during the Employment Period (the “Anniversary Date”), and shall be
increased by no less than six percent (6%) on August 1, 2006 and August 1, 2007, and on each August
1 occurring thereafter by no less than the increase in the Consumer Price

 

 

Index for all Urban Consumers (CPI-U), Boston, Massachusetts, published by the Bureau of Labor
Statistics of the United States Department of Labor (1982-1984=100) (the “Index”). If, on an
Anniversary Date, the Index shows an increase from the base date of January, 2005 (the “Base
Date”), then Executive’s Salary for the ensuing 12 months shall be the product of (a) Two Hundred
Fifty Thousand Dollars ($250,000) and (b) one plus a percentage equal to the percentage increase in
the Index on each such Anniversary Date over the Index on the Base Date. In the event the Bureau
of Labor Statistics no longer publishes the Index the Company shall use that index then available
which most closely replicates the Index. In addition, the Board may further increase Executive’s
Salary from time to time in their discretion, based upon the Company’s performance and Executive’s
particular contributions.

          b. Bonus. Executive shall be eligible for an annual cash bonus of no less than
thirty-five percent (35%) of his Salary and up to a maximum of fifty percent (50%) of his Salary
under the Company’s Executive Incentive Compensation Plan (“Annual Target Bonus Amount”) on account
of the services rendered by him during each calendar year during the Employment Period and the
attainment of certain performance goals and successful completion of certain initiatives
established by the Company, and the amount of any such bonus shall be payable from time to time
during the Employment Period in the sole discretion of the Board.

     4. Other Benefits.

          a. Insurance and Other Benefits. During the Employment Period, Executive shall be
entitled to participate in, and shall receive the maximum benefits available under, the Company’s
insurance programs (including health, supplemental health and life insurance) and any ERISA benefit
plans, as the same may be adopted and/or amended from time to time, and shall receive all other
benefits that are provided by the Company to other senior executives. The Company shall purchase a
disability insurance policy, in which the maximum monthly benefit payable pursuant to such policy,
based upon Executive’s monthly Salary, shall become payable after a six-month period of disability.
The Company shall contribute the maximum amount permitted under current law and under the terms of
the applicable plan for Executive’s account under the Company’s qualified and non-qualified 401(k)
Plan, Supplemental 401(k) Plan, and any other Company pension or retirement plan as in effect from
time to time during the Employment Period. Notwithstanding the foregoing, Executive shall be
entitled to life insurance in the amount of, at a minimum, two times Salary, up to an aggregate
benefit of $400,000.

          b. Paid Time Off. Executive shall be entitled to twenty (20) days of paid time off
annually in accordance with the Company’s paid time off policies in effect from time to time, to be
taken at such time(s) as shall not, in the reasonable judgment of the President of the Company,
interfere with Executive’s fulfillment of his duties hereunder. Executive shall be entitled to as
many holidays, sick days and personal days as are generally provided by the Company from time to
time to its employees in accordance with the Company’s policies as in effect from time to time.

          c. Automobile Allowance. During the Employment Period, the Company shall provide
Executive with a monthly automobile allowance consistent with the plan adopted or to be adopted by
the Company for other senior executives but in all events the monthly automobile allowance shall be
no less than that in existence as of the Effective Date.

2

 

          d. Stock Options. Executive acknowledges that he has been granted stock options to
purchase ordinary shares of FGX Holdings on the terms and subject to the condition set forth in
that certain Time-Based Incentive Stock Option Agreement dated September 29, 2004, which agreement
shall remain in full force and effect and unchanged hereby.

     5. Termination by the Company With Cause. Upon prior written notice to Executive, the
Company may terminate Executive’s employment if any of the following events shall occur (any of the
following events shall constitute “Cause” for all purposes hereof):

          a. the conviction of Executive for a crime involving fraud or moral turpitude;

          b. deliberate dishonesty of Executive with respect to the Company or any of its subsidiaries;
or

          c. the refusal of Executive to follow the reasonable and lawful written instructions of the
Chief Executive Officer of the Company with respect to the services to be rendered and the manner
of rendering such services by Executive, provided such refusal is material and repetitive and is
not justified or excused either by the terms of this Agreement or by actions taken by the Company
in violation of this Agreement.

     6. Termination by Executive; Termination by the Company Without Cause.

          a. Notice/Events:

               i. Termination by Executive. Executive may terminate his employment at any
time by providing written notice to the Company.

               ii. Termination by the Company Without Cause. The Company may terminate
Executive’s employment at any time, without Cause by providing written notice to Executive.
As used in this Agreement, the term “without Cause” shall mean termination for any reason
not specified in Section 5 or Section 7 hereof.

          b. Executive’s Right-to-Terminate. Executive may terminate Executive’s employment for
Good Reason at any time during the term of this Agreement. For purposes of this Agreement, “Good
Reason” shall mean any of the following (without Executive’s express written consent):

               i. the assignment to Executive by the Company of any duties materially inconsistent
with Executive’s status with the Company or a material alteration in the nature or status of
Executive’s responsibilities from those in effect on the date hereof, or a material
reduction in Executive’s titles as in effect on the date hereof, or any removal of Executive
from, or any failure to reelect Executive to, any of such positions, except in connection
with the termination of his employment for disability or for any reason specified in Section
5 hereof or as a result of Executive’s death or by Executive other than for Good Reason;

3

 

               ii. a reduction by the Company in Executive’s Salary as in effect on the date hereof or
as the same may be increased from time to time during the term of this Agreement;

               iii. except if such action applies to all senior executive officers of the Company
generally, any failure by the Company to continue in effect its present Executive Incentive
Compensation Plan, any fringe benefits, the taking of any action by the Company which would,
directly or indirectly, materially reduce Executive’s benefits or deprive Executive of any
fringe benefits enjoyed by Executive at the date hereof, or the failure by the Company to
provide Executive with the number of paid vacation days to which Executive is entitled at
the date hereof;

               iv. a relocation of the Company’s principal executive offices to a location more than
50 miles from their current location in, or the Company’s requiring Executive to be based
anywhere other than the Company’s principal executive offices; or

               v. any material breach, which remains uncured for twenty (20) days after reasonable
notice, by the Company of any provisions of this Agreement.

          c. Severance.

               i. Without Cause. If the Company terminates Executive’s employment without
Cause, or if Executive terminates his employment pursuant to Section 6(b) hereof, then,
subject to Section 8, commencing on the date of termination of employment, the Company shall
provide Executive with a severance package which shall consist of the following: (i) for a
period equal to one (1) year after the date of termination or, if the Company exercises its
Non-compete Extension (as defined below), eighteen (18) months (x) payment on the first
business day of each month of an amount equal to one-twelfth of Executive’s then current
Salary under Section 3(a) hereof; (y) payment on the first business day of each month of an
amount equal to one-twelfth of Executive’s Annual Target Bonus Amount under the Company’s
Executive Incentive Compensation Plan for the year of termination (assuming for purposes of
calculating such amount that the percentage of Salary payable as a bonus to Executive on
account of the year of termination will be the same percentage of Salary paid as a bonus to
Executive on account of the immediately preceding year); and (z) continuation of all
benefits under Section 4(a) hereof; provided, however, that the amount of any severance
payments hereunder shall be reduced by the amount of income otherwise earned by Executive
during the one year period following termination and provided, further that benefits under
Section 4(a) shall be discontinued as of the date on which Executive is provided comparable
benefits from any other source.

               ii. General Release. As a condition precedent to receiving any severance
payment, Executive shall execute a general release of any and all claims which Executive or
his heirs, executors, agents or assigns might have against the Company, its subsidiaries,
affiliates, successors, assigns and its past, present and future employees, officers,
directors, agents and attorneys, except for claims arising under this Agreement or any
employee benefit plan (other than any employee benefit plan providing a benefit in

4

 

the nature of a severance benefit) in which Executive participates or for any right to
indemnification to which Executive may be entitled as an officer and director of the
Company.

               iii. Withholding. All payments made by the Company under this Agreement shall
be net of any tax or other amounts required to be withheld by the Employer under applicable
law.

               iv. Certain Reductions of Payments by the Company.

                    1. Anything in this Agreement to the contrary notwithstanding, in the event it
shall be determined that any payment or distribution by the Company to or for the
benefit of the Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise (a “Payment”), would constitute
an “excess parachute payment” within the meaning of Section 280G(b) of the U.S.
Internal Revenue Code (the “Code”), and thus would result in the Executive incurring
an excise tax under Section 4999 of the Code, then the aggregate present value of
amounts payable or distributable to or for the benefit of the Executive pursuant to
this Agreement (such payments or distributions pursuant to this Agreement are
hereinafter referred to as “Agreement Payments”) shall be reduced to the Reduced
Amount, but only if and to the extent that the after-tax value to the Executive of
reduced Agreement Payments would exceed the after-tax value to the Executive of the
Agreement Payments received by the Executive without application of such reduction.
The “Reduced Amount” shall be an amount expressed in present value which maximizes
the aggregate present value of Agreement Payments without causing any Payment to be
nondeductible by the Company because of Section 280G of the Code. Anything to the
contrary notwithstanding, if the Reduced Amount is zero and it is determined further
that any Payment which is not an Agreement Payment would nevertheless be
nondeductible by the Company for Federal income tax purposes because of Section 280G
of the Code, then the aggregate present value of Payments’ which are not Agreement
Payments shall also be reduced (but not below zero) to an amount expressed in
present value which maximizes the aggregate present value of Payments without
causing any Payment to be nondeductible by the Company because of Section 280G of
the Code. For purposes of this Section 6(c)(iv), present value shall be determined
in accordance with Section 280G(d)(4) of the Code. Thus, for illustrative purposes
only, if the Executive’s average W-2 compensation for the five (5) years prior to
the year in which a change in control occurs (the “Base Amount”) was $500,000, and
the value of the payments and benefits that are contingent upon the change in
control (the “Parachute Payments”) was $1,510,000, the Executive would have an
excess parachute payment within the meaning of Section 280G(b) of the Code since the
value of the parachute payments ($1,510,000) would be greater than three (3) times
the Executive’s Base Amount ($1,500,000). The amount of the excess parachute
payment would be $1,010,000 (the amount by which the value of the parachute payments
exceeds one (1) times the Base Amount), and if the aggregate amount of the parachute
payments was not reduced, the Executive

5

 

would incur an excise tax under Section 4999 of the Code equal to 20% of the
excess parachute payment (or $202,000). This excess parachute payment could be
avoided if instead, the value of the parachute payments was reduced by $10,001 to
$1,499,999 (since the value of the parachute payments then would be less than three
(3) times the Base Amount). Since the Executive would receive a greater after tax
amount, under the foregoing example, if his parachute payments were reduced by
$10,001 (to $1,499,999) than he would if his parachute payments were not reduced and
the Executive incurred a $202,000 excise tax (reducing his parachute payments to
$1,308,000) on the excess parachute payment, the Executive’s parachute payments
would be reduced under this provision to $1,499,999 (by $10,001) to avoid any excess
parachute payments.

                    2. All determinations required to be made under this Section 6(c)(iv) shall be
made by the Company’s accountants for the Company’s last fiscal year or, at the
mutual agreement of the Executive and the Company, any other nationally or
regionally recognized firm of independent public accountants (the “Accounting
Firm”), which shall provide detailed supporting calculations both to the Company and
the Executive within twenty (20) business days of the date of termination or such
earlier time as is requested by the Company and an opinion to the Executive that he
has substantial authority not to report any excise tax on his Federal income tax
return with respect to any Payments. Any such determination by the Accounting Firm
shall be binding upon the Company and the Executive. The Executive shall determine
which and how much of the Payments shall be eliminated or reduced consistent with
the requirements of this Section 6(c)(iv), provided that, if the Executive does not
make such determination within ten business days of the receipt of the calculations
made by the Accounting Firm, the Company shall elect which and how much of the
Payments shall be eliminated or reduced consistent with the requirements of this
Section 6(c)(iv) and shall notify the Executive promptly of such election. Within
five business days thereafter, the Company shall pay to or distribute to or for the
benefit of the Executive such amounts as are then due to the Executive under this
Agreement. All fees and expenses of the Accounting Firm incurred in connection with
the determinations contemplated by this Section 6(c)(iv) shall be borne by the
Company.

                    3. As a result of the uncertainty in the application of Section 280G of the
Code at the time of the initial determination by the Accounting Firm hereunder, it
is possible that Payments will have been made by the Company which should not have
been made (“Overpayment”) or that additional Payments which will not have been made
by the Company could have been made (“Underpayment”), in each case, consistent with
the calculations required to be made hereunder. In the event that the Accounting
Firm, based upon the assertion of a deficiency by the Internal Revenue Service
against the Executive which the Accounting Firm believes has a high probability of
success, determines that an Overpayment has been made, any such Overpayment paid or
distributed by the Company to or for the benefit of the Executive shall be treated
for all purposes as a loan ab initio to the Executive which the Executive shall
repay to the Company

6

 

together with interest at the applicable federal rate provided for in Section
7872(f)(2) of the Code; provided, however, that no such loan shall be deemed to have
been made and no amount shall be payable by the Executive to the Company if and to
the extent such deemed loan and payment would not either reduce the amount on which
the Executive is subject to tax under Section 1 and Section 4999 of the Code or
generate a refund of such taxes. In the event that the Accounting Firm, based upon
controlling precedent or other substantial authority, determines that an
Underpayment has occurred, any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive together with interest at the
applicable federal rate provided for in Section 7872(f)(2) of the Code.

     7. Death or Disability. In the event of Executive’s death or disability, the Employment
Period will automatically terminate effective as of the date of such death or disability. As used
in this Agreement, the term “disability” shall mean inability on the part of Executive for a period
of more than six (6) months in the aggregate during any twelve (12) consecutive month period to
perform the services contemplated under this Agreement. A determination of disability shall be
made by a physician satisfactory to both Executive and the Company, provided that if Executive and
the Company do not agree on a physician, Executive and the Company shall each select a physician
and these two physicians together shall select a third physician, whose determination as to
disability shall be binding on all parties.

     8. Change in Control.

          a. If Executive’s employment is terminated by the Company without Cause or by Executive for
Good Reason within six (6) months before and in anticipation of, or twelve (12) months after, a
Change in Control (as defined in Paragraph (b) of this Section 8), Executive shall be entitled to
receive a supplemental bonus payment (the “Change in Control Payment”) from the Company equal to
one (1) times the sum of Executive’s then current Salary and Executive’s Annual Target Bonus Amount
(assuming for purposes of calculating such amount that the percentage of Salary payable as a bonus
to Executive on account of the year of termination will be the same percentage of Salary paid as a
bonus to Executive on account of the immediately preceding year) under the Company’s Executive
Incentive Compensation Plan for the year of termination. The Change in Control Payment shall be
paid to Executive within fifteen (15) days after: (i) the Change in Control if Executive’s
employment was terminated within six (6) months before the Change in Control; or (ii) the
termination of Executive’s employment by the Company if Executive’s employment terminates within
twelve (12) months after the Change in Control. Executive shall also be entitled to continuation
of all benefits under Section 4(a) hereof, ending on the earlier of (x) the one year anniversary of
the termination date and (v) the date on which Executive is provided comparable benefits from any
other source. In addition, all stock options held by Executive shall vest and become immediately
exercisable. If Executive is entitled to a Change in Control Payment, Executive shall not have any
rights to receive any severance payments or benefits pursuant to Section 6(c) hereof. If
Executive’s employment by the Company terminates within six (6) months prior to the Change in
Control and Executive received severance payments pursuant to Section 6(c) hereof, any amounts so
paid by the Company to Executive shall be deducted from any Change in Control Payment otherwise
payable to Executive pursuant to this Section 8(a).

7

 

          b. A “Change in Control” will be deemed to have occurred if (i) a Takeover Transaction occurs,
or (ii) any election of directors of FGX Holdings takes place (whether by the directors then in
office or by the stockholders at a meeting or by written consent) and a majority of the directors
in the office following such election are individuals who were not nominated by a vote of
two-thirds of the members of the Board of Directors immediately preceding such election, or (iii)
FGX Holdings effectuates a complete liquidation of FGX Holdings or a sale or disposition of all or
substantially all of its assets. A “Change in Control” shall not be deemed to include, the
recapitalization of FGX Holdings or any transactions related thereto, consummated on or prior to
the Effective Date.

          c. A “Takeover Transaction” shall mean (i) a merger or consolidation of FGX Holdings with, or
an acquisition of FGX Holdings or all or substantially all of either of its assets by, any other
corporation, other than a merger, consolidation or acquisition in which the individuals who were
members of the Board of Directors of FGX Holdings immediately prior to such transaction continue to
constitute a majority of the Board of Directors of the surviving corporation (or, in the case of an
acquisition involving a holding company, constitute a majority of the Board of Directors of the
holding company) for a period of not less than twelve (12) months following the closing of such
transaction, or (ii) when any person, including any “group” as such term is defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), becomes after the date
hereof the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of securities of
FGX Holdings representing more than fifty percent (50%) of the total number of votes that may be
cast for the election of directors of FGX Holdings, as applicable, excluding (i) any person that is
excluded from the definition of “beneficial owner” under Rule 16(a)-1(a)(1) under the Exchange Act
and (ii) any person (including any such group) that consists of or is controlled by (within the
meaning of the definition of “affiliate” in Rule 144 under the Securities Act of 1933, as amended
(an “Affiliate”)) any person that is a shareholder of FGX Holdings on the Effective Date or any
Affiliate of such person.

     9. Non-Competition. During the Employment Period and after termination of Executive’s
employment hereunder, whether or not such termination is without Cause or for Good Reason,
Executive shall not be involved in the Restricted Business Activities, as defined below, for the
period ending eighteen (18) months after the date of termination of Executive’s employment (the
“Non-compete Period”) provided that the Company has not otherwise breached its obligations under
the Agreement. As used in this Agreement, the term “Restricted Business Activities” shall mean any
business which markets and sells to customers of a class or category to which FGX Holdings or any
of its subsidiaries, markets and sells at the time Executive’s employment terminated products or
services marketed and sold by FGX Holdings or any of its subsidiaries at such time or products or
services which at such time FGX Holdings or any of its subsidiaries was actively considering
marketing and selling to such customers. During the Non-compete Period, Executive shall not,
without the written approval of the Company, directly or indirectly, either as an individual,
partner, joint venturer, employee or agent for any person, company, corporation or association, or
as an officer, director or stockholder of a corporation or otherwise, enter into or engage in or
have a proprietary interest in the Restricted Business Activities other than the ownership of (a)
the stock of the Company then held by Executive, and (b) no more than five percent (5%) of the
securities of any other publicly-held company. Notwithstanding the foregoing, for so long as a
majority of the issued and outstanding capital

8

 

stock of the Company is owned directly or indirectly by Berggruen Holdings, Limited or one or
more of its affiliates or a representative of Berggruen Holdings, Limited or one or more of its
affiliates is on the Board (or any entity owning a majority of the issued and outstanding shares of
the Company, whether directly or indirectly), the Company shall have the right to extend the
Non-compete Period for an additional six (6) months for a total of twenty-four (24) months (the
“Non-compete Extension”) by delivering to Executive written notice of such decision prior to
termination of the original eighteen (18) month Non-compete Period.

     Executive recognizes and agrees that because a violation by him of his obligations under this
Section 9 will cause irreparable harm to FGX Holdings or any of its subsidiaries that would be
difficult to quantify and for which money damages would be inadequate, any party included in the
definition of FGX Holdings or any of its subsidiaries shall have the right to injunctive relief to
prevent or restrain any such violation, without the necessity of posting a bond. The Non-compete
Period will be extended by the duration of any violation by Executive of any of his obligations
under this Section 9.

     Executive expressly agrees that the character, duration and scope of his obligations under
this Section 9 are reasonable in light of the circumstances as they exist at the date upon which
this Agreement has been executed. However, should a determination nonetheless be made by a court
of competent jurisdiction at a later date that the character, duration or geographical scope of
such obligations is unreasonable in light of the circumstances as they then exist, then it is the
intention of both Executive and the Company that Executive’s obligations under this Section 9 shall
be construed by the court in such a manner as to impose only those restrictions on the conduct of
Executive which are reasonable in light of the circumstances as they then exist and necessary to
assure the Company of the intended benefit of Executive’s obligations under this Section 9.

     10. Confidentiality Covenants.

          a. Executive understands that FGX Holdings or any of its subsidiaries may impart to him
confidential business information, including but not limited to designs, financial information,
personnel information, real estate information, and the like (collectively “Confidential
Information”). Executive hereby acknowledges FGX Holdings’ exclusive ownership of such
Confidential Information. So long as the Confidential Information is not in the public domain and
except to the extent Executive receives Confidential Information from a third party not known to
Executive to be under an obligation of confidentiality, Executive agrees as follows: (1) only to
use the Confidential Information to provide services to FGX Holdings or any of its subsidiaries;
(2) only to communicate the Confidential Information to fellow employees, agents and
representatives on a need-to-know basis; and (3) not to otherwise disclose or use any Confidential
Information. Upon demand by Company or upon termination of Executive’s employment, Executive will
deliver to Company all manuals, photographs, recordings, and any other instrument or device by
which, through which, or on which Confidential Information has been recorded and/or preserved,
which are in my Executive’s possession, custody or control.

          b. The Company will not disclose the terms and conditions of Executive’s employment, unless it
is required by law to do so.

9

 

     11. Section 409A. To the extent that the Executive otherwise would be entitled to any
payment (whether pursuant to this Agreement or otherwise) during the six (6) months beginning on
the Termination Date that would be subject to the additional tax imposed under Section 409A of the
Code (“Section 409A”), (x) the payment shall not be made to the Executive during such six (6) month
period and (y) the payment, together with interest at the applicable federal rate provided for in
Section 7872(f)(2) of the Code shall be paid to the Executive on the earlier of the six-month
anniversary of the Termination Date or the Executive’s death or disability. Similarly, to the
extent that the Executive otherwise would be entitled to any benefit (other than a payment) during
the six months beginning on the Termination Date that would be subject to the Section 409A
additional tax, the benefit shall be delayed and shall begin being provided (together, if
applicable, with an adjustment to compensate the Executive for the delay) on the earlier of the
six-month anniversary of the Termination Date, or the Executive’s death or disability.

     12. Governing Law/Jurisdiction. This Agreement shall be governed by and interpreted and
governed in accordance with the laws of the State of Rhode Island. The parties agree that this
Agreement was made and entered into in Rhode Island and each party hereby consents to the
jurisdiction of a competent court in Rhode Island to hear any dispute arising out of this
Agreement.

     13. Entire Agreement. This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and thereof and supersedes and cancels any and all
previous agreements, written and oral, regarding the subject matter hereof between the parties
hereto, including but not limited to the Original Agreement. The Executive hereby acknowledges
that any compensation or benefits the Executive otherwise may have been entitled to under the
Original Agreement are hereby waived. FosterGrant hereby acknowledges that any rights of
FosterGrant or obligations of the Executive under the Original Agreement are hereby waived. This
Agreement shall not be changed, altered, modified or amended, except by a written agreement signed
by both parties hereto.

     14. Notices. All notices, requests, demands and other communications required or
permitted to be given or made under this Agreement shall be in writing and shall be deemed to have
been given if delivered by hand, sent by generally recognized overnight courier service, telex or
telecopy, or certified mail, return receipt requested.

	 	 	 
	(a)

	 	to the Company at:

500 George Washington Highway

Smithfield, Rhode Island 02917

Attn: President

10

 

	 	 	 
	(b)

	 	to FosterGrant at:

500 George Washington Highway

Smithfield, Rhode Island 02917

Attn: President
	 
	 	 
	 

	 	In each case, with a copy (which shall not constitute

note) to:
	 
	 	 
	 

	 	Greenberg Traurig, P.A.

401 East Las Olas Blvd., Suite 2000

Fort Lauderdale, Florida 33301

Attn: Bruce I. March, Esq.
	 
	 	 
	(c)

	 	to Executive at:

16 Barberry Hill Road

Cumberland, RI 02864

     Any such notice or other communication will be considered to have been given (i) on the date
of delivery in person, (ii) on the third day after mailing by certified mail, provided that receipt
of delivery is confirmed in writing, (iii) on the first business day following delivery to a
commercial over-night courier or (iv) on the date of facsimile transmission (telecopy) provided
that the giver of the notice obtains telephone confirmation of receipt.

     Either party may, by notice given to the other party in accordance with this Section,
designate another address or person for receipt of notices hereunder.

     15. Severability. If any term or provision of this Agreement, or the application thereof
to any person or under any circumstance, shall to any extent be invalid or unenforceable, the
remainder of this Agreement, or the application of such terms to the persons or under circumstances
other than those as to which it is invalid or unenforceable, shall be considered severable and
shall not be affected thereby, and each term of this Agreement shall be valid and enforceable to
the fullest extent permitted by law. The invalid or unenforceable provisions shall, to the extent
permitted by law, be deemed amended and given such interpretation as to achieve the economic intent
of this Agreement.

     16. Waiver. The failure of any party to insist in any one instance or more upon strict
performance of any of the terms and conditions hereof, or to exercise any right or privilege herein
conferred, shall not be construed as a waiver of such terms, conditions, rights or privileges, but
same shall continue to remain in full force and effect. Any waiver by any party of any violation
of, breach of or default under any provision of this Agreement by the other party shall not be
construed as, or constitute, a continuing waiver of such provision, or waiver of any other
violation of, breach of or default under any other provision of this Agreement.

     17. Successors and Assigns. This Agreement shall be binding upon the Company and any
successors and assigns of the Company and shall inure to the benefit of Executive and his heirs,
personal representations and assigns.

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     18. Indemnification. The Company shall indemnify Executive to the maximum extent
permitted under applicable law against all liabilities and expenses, including amounts paid in
satisfaction of judgments, in compromise, or as fines and penalties, and counsel fees, reasonably
incurred by him in connection with the defense or disposition of any civil, criminal,
administrative, or investigative action, suit or other proceeding, whether civil or criminal, in
which he may be involved or with which he may be threatened, while an officer or director of the
Company or any of its subsidiaries or thereafter, by reason of his being or having been an officer
or director of the Company or any of the Company’s subsidiaries. Expenses (including attorneys’
fees) incurred by Executive in defending any such action, suit or other proceeding shall be paid by
the Company in advance of the final disposition of such action, suit or proceeding upon receipt of
an undertaking by or on behalf of Executive to repay such amount if it shall be ultimately
determined that he is not entitled to be indemnified by the Company. The right of indemnification
provided herein shall not be exclusive of or affect any other rights to which Executive may be
entitled. The provisions hereof shall survive expiration or termination of this Agreement for any
reason whatsoever.

     19. Counterparts. This Agreement may be executed in counterparts and by facsimile, each
of which shall be an original with the same effect as if the signatures thereto and hereto were
upon the same instrument.

     20. Third Party Beneficiaries. Each of the parties hereto agree that FGX Holdings and
each of its subsidiaries is and shall be deemed an intended third party beneficiary of the
Company’s rights under Section 9 and 10 of this Agreement with full rights to enforce the
provisions thereof as if a signatory hereto.

[Signatures Appear on Next Page]

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written
above.

	 	 	 	 	 
	 	FGX INTERNATIONAL INC.

 	 
	 	By:  	/s/ John H. Flynn, Jr.
 	 
	 	 	Name:  	John H. Flynn, Jr. 	 
	 	 	Title:  	President 	 
	 
	 	EXECUTIVE

 	 
	 	By:  	/s/ Brian J. Lagarto
 	 
	 	 	Name:  	Brian J. Lagarto 	 
	 	 	Address:      16 Barberry Hill Road

Cumberland, RI 02864 	 
	 
	 	 AAI.FOSTERGRANT, INC.

(solely with respect to Section 13 of this

Agreement)

 	 
	 	 	 
	 	By:  	                       /s/ John H. Flynn, Jr.
 	 
	 	 	Name:  	John H. Flynn, Jr. 	 
	 	 	Title:  	President 	 
	 

[Signature Page to Executive Employment Agreement]

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