Document:

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                                                                  Exhibit 10.1.2

SECOND AMENDMENT TO SECOND AMENDED AND RESTATED FINANCING AND SECURITY AGREEMENT

         THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED FINANCING AND
SECURITY AGREEMENT (this "Agreement") is made as of the 24th day of March, 2000,
by and among

         AAi.FOSTERGRANT, INC. (formerly known as Accessories Associates, Inc.),
a corporation organized and existing under the laws of the State of Rhode Island
(the "Borrower");

         FOSTER GRANT GROUP, L.P., a limited partnership organized under the
laws of the State of Delaware ("Foster Grant") and FANTASMA, LLC, a limited
liability company organized under the laws of the State of Delaware
("Fantasma");

         F.G.G. INVESTMENTS, INC., a corporation organized and existing under
the laws of the State of Delaware, THE BONNEAU COMPANY, a corporation organized
and existing under the laws of the State of Texas, BONNEAU HOLDINGS, INC., a
corporation organized and existing under the laws of the State of Delaware,
BONNEAU GENERAL, INC., a corporation organized and existing under the laws of
the State of Delaware, FOSTER GRANT HOLDINGS, INC., a corporation organized and
existing under the laws of the State of Delaware, and O-RAY HOLDINGS, INC., a
corporation organized and existing under the laws of the State of Delaware (the
"Corporate Guarantors"; the Corporate Guarantors together with Foster Grant and
Fantasma, the "Guarantors"; and the Guarantors together with the Borrower, the
"Obligors");

         BANK OF AMERICA, N.A., a national banking association ("Bank of
America"), formerly NationsBank, N.A., and each other financial institution
which is party to the Financing Agreement (as that term is defined below) from
time to time (collectively, the "Lenders" and individually, a "Lender"); and

         BANK OF AMERICA, N.A., a national banking association (the "Agent"),
formerly NationsBank, N.A., in its capacity as both collateral and
administrative agent for each of the Lenders.

                                    RECITALS

         A. The Borrower, the Guarantors, the Lenders and the Agent entered into
a Second Amended and Restated Financing and Security Agreement dated July 21,
1998 (as amended by that certain First Amendment to Second Amended and Restated
Financing and Security Agreement dated as of May 7, 1999 and as further amended,
restated, modified, substituted, extended, and renewed from time to time, the
"Financing Agreement.") The Financing Agreement provides for some of the
agreements between the Borrower, the Guarantors, the Lenders and the Agent with
respect to the "Loans" (as defined in the Financing Agreement), including the
Revolving Credit Facility (as that term is defined in the Financing Agreement)
in an amount not to exceed $60,000,000 and the Letter of Credit Facility which
is part of the Revolving Credit Facility.

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         B. The Borrower has requested that the Agent and Lenders waive certain
financial covenant violations and amend certain financial covenants.

         C. The Agent and Lenders are willing to agree to the Borrower's request
on the condition, among others, that this Agreement be executed.

                                   AGREEMENTS

         NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, receipt of which is hereby acknowledged, the Borrower,
Lenders and Agent agree as follows:

         1. The Obligors, the Lenders and the Agent agree that the Recitals
above are a part of this Agreement. Unless otherwise expressly defined in this
Agreement, terms defined in the Financing Agreement shall have the same meaning
under this Agreement.

         2. The Obligors, the Lenders and Agent agree that on the date hereof
the aggregate outstanding principal balance under the Revolving Credit Note
(subject to change for returned items and other adjustments made in the ordinary
course of business) as of the close of the business day of March 23, 2000 is
$__________.

         3. Each of The Borrower, Foster Grant and Fantasma represents and
warrants to the Lenders and Agent as follows:

               (a) The Borrower is a corporation duly organized, and validly
existing and in good standing under the laws of the state in which it was
organized and is duly qualified to do business as a foreign corporation in good
standing in every other state wherein the conduct of its business or the
ownership of its property requires such qualification.

               (b) Foster Grant is a limited partnership duly organized, validly
existing and in good standing under the laws of the state in which it was
organized and is duly qualified to do business as a foreign limited partnership
in every other state wherein the conduct of its business or the ownership of its
property requires such qualification.

               (c) Fantasma is a limited liability company duly organized,
validly existing and in good standing under the laws of the state in which it
was organized and is duly qualified to do business as a foreign limited
partnership in every other state wherein the conduct of its business or the
ownership of its property requires such qualification.

               (d) Each of the Borrower, Foster Grant and Fantasma has the power
and authority to execute and deliver this Agreement and perform its obligations
hereunder and has taken all necessary and appropriate corporate, partnership or
limited liability company action, as applicable, to authorize the execution,
delivery and performance of this Agreement.

               (e) The Financing Agreement, as amended by this Agreement, and
each of the other Financing Documents remains in full force and effect, and each
constitutes the valid and

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legally binding obligation of the Borrower, Foster Grant and Fantasma,
enforceable in accordance with its terms.

               (f) All of the Borrower's, Foster Grant's and Fantasma's
representations and warranties contained in the Financing Agreement and the
other Financing Documents are true and correct on and as of the date of the
Borrower's, Foster Grant's and Fantasma's execution of this Agreement.

               (g) No Event of Default and no event which, with notice, lapse of
time or both would constitute an Event of Default, has occurred and is
continuing under the Financing Agreement or the other Financing Documents which
has not been waived in writing by the Lenders and Agent.

         4. As a condition to the Agent's and Lenders' agreement to enter into
this Agreement and to grant the waivers granted herein, the Borrower hereby
agrees to pay to the Lender a fee in the amount of $150,000, which fee shall be
due at the time this Agreement is executed and is fully earned and
non-refundable upon payment.

         5. As a condition to the Agent's and Lenders' agreement to enter into
this Agreement and to grant the waivers granted herein, the Borrower hereby
acknowledges that it has warranted to the Agent and the Lenders that on or
before March 31, 2000 the Borrower shall be in compliance with all reporting
requirements under Sections 6.1.1(a) through and including (h) of the Financing
Agreement. Without implying any limitation on the rights and remedies that the
Agent and the Lenders may have, if that warranty is breached on March 31, 2000
or any future reporting period, the Agent requires that the Borrowing Base
Reports reflect accounts receivable balances updated on a weekly basis from that
point forward.

         6. The Financing Agreement is hereby amended as follows:

               (a) The definition of "EBITDA" is hereby deleted in its entirety
and the following is substituted in its place:

                         "EBITDA" means for any period, the Consolidated Net
                Income of the Borrower and its Subsidiaries for such period
                after all expenses except depreciation, interest, amortization,
                taxes and, for the fiscal year 2000 only, executive severance
                expenses not to exceed the aggregate amount of $2,500,000.

               (b) The definition of "Fixed Charges" is hereby deleted in its
entirety and the following is substituted in its place:

                         "Fixed Charges" means for any period of determination
                thereof, the sum of (a) scheduled or required payments
                (including, without limitation, principal and interest) on all
                Indebtedness for Borrowed Money of the Borrower and its
                Subsidiaries, plus (b) Capital Expenditures made in cash (and
                Permitted Acquisitions to the extent not included in Capital
                Expenditures) of the Borrower and its Subsidiaries, (c) plus
                cash payments of taxes, plus (d) without duplication, dividends,
                distributions, and repurchases, redemptions and other
                transactions regarding equity paid to

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                shareholders including, without limitation, Permitted Affiliate
                Distributions, other than Permitted Affiliate Distributions made
                by one Borrower to another Borrower.

               (c) Section 2.3.1(d) is hereby deleted in its entirety and the
following is substituted in its place:

                                    (d) Changes in the Applicable Margin shall
                  be made not more frequently than quarterly based on the
                  Borrower's Pricing Ratio, determined by the Agent in the
                  exercise of its sole and absolute discretion from the monthly
                  reports for months that are also the end of a fiscal quarter
                  required by Section 6.1.1(c) (Monthly Statements and
                  Certificates) (the first such determination shall be made
                  based on the Borrower's financial statements for the last
                  Business Day of the Borrower's fiscal quarter ending closest
                  to March 31, 2000) and shall be effective as of the first day
                  of the first month after the month in which the Agent receives
                  such statements. The Applicable Margin (expressed as basis
                  points) shall vary depending upon the Borrower's Pricing
                  Ratio, as follows:

<TABLE>
<CAPTION>
                                          Applicable Margin for              Applicable Margin for
             Pricing Ratio                LIBOR Revolving Loans            Base Rate Revolving Loans
             -------------                ---------------------            -------------------------
<S>                                       <C>                             <C>
             Greater than 1.00 to 1.00            275                                 100
             but less than or equal to
             1.05 to 1.00
             ----------------------------------------------------------------------------------------
             Greater than 1.05 to 1.00            250                                  75
             but less than or equal to
             1.10 to 1.00
             ----------------------------------------------------------------------------------------
             Greater than 1.10 to 1.00            225                                  50
             but less than or equal to
             1.15 to 1.00
             ----------------------------------------------------------------------------------------
             Greater than 1.15 to 1.00            200                                  25
             but less than or equal to
             1.60 to 1.00
             ----------------------------------------------------------------------------------------
             Greater than 1.60 to 1.00            175                                   0
             ----------------------------------------------------------------------------------------
</TABLE>

               (d) Section 2.4.3(a) is hereby deleted in its entirety and the
following is substituted in its place:

                              (a) Eighteen Thousand Dollars ($18,000), plus

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               (e) Section 6.1.13(a) is hereby deleted in its entirety and the
following is substituted in its place:

                              (a) Fixed Charge Coverage Ratio. The Borrower and
               its Subsidiaries on a consolidated basis will maintain a Fixed
               Charge Coverage Ratio, tested on the last Business Day of each of
               the Borrower's fiscal quarters beginning on the last Business Day
               of the fiscal quarter ending closest to March 31, 2000, (i) for
               the fiscal year-to-date for the periods ending closest to March
               31, 2000, June 30, 2000, and September 30, 2000, and (ii)
               thereafter, for the four (4) quarter period ending on such date,
               of not less than the following:

<TABLE>
<CAPTION>
                    Fiscal Quarter Ending Closest To:                     Ratio
                    ---------------------------------                     -----
<S>                                                                       <C>
                    March 31, 2000 through and including December 31,     1.00 to 1.00
                    2000
                    ------------------------------------------------------------------------------
                    March 31, 2001 through and including December 31,     1.10 to 1.00
                    2001
                    ------------------------------------------------------------------------------
                    March 31, 2002 through and including December 31,     1.20 to 1.00
                    2002
                    ------------------------------------------------------------------------------
                    March 31, 2003 and thereafter                         1.35 to 1.00
                    ------------------------------------------------------------------------------
</TABLE>

               (f) Section 6.1.13(b) is hereby deleted in its entirety and the
following is substituted in its place:

                              (b) Leverage Ratio. The Borrower and its
               Subsidiaries on a consolidated basis will maintain a ratio of
               Funded Debt to EBITDA, tested on the last Business Day of each of
               the Borrower's fiscal quarters beginning on the last Business Day
               of the fiscal quarter ending closest to March 31, 2000, (i) for
               the fiscal year-to-date (based upon annualized year-to-date
               EBITDA) for the periods ending closest to March 31, 2000, June
               30, 2000 and September 30, 2000 and (ii) thereafter, for the four
               (4) quarter period ending on such date, so that it is not more
               than the following:

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<TABLE>
<CAPTION>
             Fiscal Quarter Ending Closest To:                      Ratio
             ---------------------------------                      -----
<S>                                                                 <C>
             March 31, 2000                                         7.20 to 1.00
             ----------------------------------------------------------------------------
             June 30, 2000                                          4.60 to 1.00
             ----------------------------------------------------------------------------
             September 30, 2000                                     4.50 to 1.00
             ----------------------------------------------------------------------------
             December 31, 2000                                      4.20 to 1.00
             ----------------------------------------------------------------------------
             March 31, 2001 through and including December 31,      3.70 to 1.00
             2001
             ----------------------------------------------------------------------------
             March 31, 2002 through and including December 31,      3.30 to 1.00
             2002
             ----------------------------------------------------------------------------
             March 31, 2003 and thereafter                          2.90 to 1.00
             ----------------------------------------------------------------------------
</TABLE>

               (g) Section 6.1.13(c), is hereby deleted in its entirety and the
following is substituted in its place:

                              (c) EBITDA. The Borrower and its Subsidiaries on a
               consolidated basis will maintain EBITDA, tested on the last
               Business Day of each of the Borrower's fiscal quarters beginning
               on the last Business Day of the fiscal quarter ending closest to
               March 31, 2000, (i) for the fiscal year-to-date for the periods
               ending closest to March 31, 2000, June 30, 2000 and September 30,
               2000 and (ii) thereafter, for the four (4) quarter period ending
               on such date, of not less than the following:

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<TABLE>
<CAPTION>
              Fiscal Quarter Ending Closest To:                              Amount
              ---------------------------------                              ------
<S>                                                                          <C>
              March 31, 2000                                                 $ 3,500,000
              ---------------------------------------------------------------------------------
              June 30, 2000                                                  $10,600,000
              ---------------------------------------------------------------------------------
              September 30, 2000                                             $15,400,000
              ---------------------------------------------------------------------------------
              December 31, 2000                                              $20,300,000
              ---------------------------------------------------------------------------------
              March 31, 2001 through and including December 31, 2001         $22,400,000
              ---------------------------------------------------------------------------------
              March 31, 2002 through and including December 31, 2002         $24,600,000
              ---------------------------------------------------------------------------------
              March 31, 2003 and thereafter                                  $27,100,000
              ---------------------------------------------------------------------------------
</TABLE>

               (h) Section 6.2.7 is hereby deleted in its entirety and the
following is substituted in its place:

         6.2.7 Capital Expenditures.

         The Borrower, Foster Grant and Fantasma will not, directly or
indirectly (by way of the acquisition of the securities of a Person or
otherwise), make any Capital Expenditures (excluding, however, any Buybacks
otherwise included as a Capital Expenditure) in the aggregate for the Borrower,
Foster Grant and Fantasma (taken as a whole) in any fiscal year exceeding
$10,000,000, except the purchase and sale/leaseback of the Headquarters
Property, provided that the prior written consent of the Agent and Lenders is
obtained pursuant to Section 6.2.17 (Sale and Leaseback), which consent may be
conditioned upon the specific application of proceeds.

               (i) Section 6.2.17 is hereby deleted in its entirety and the
following is substituted in its place:

         6.2.17 Sale and Leaseback.

         In the event the Borrower, Foster Grant or Fantasma seek to directly
or indirectly enter into any arrangement to sell or transfer all or any
substantial part of its fixed assets and thereupon or thereafter rent or lease
the assets so sold or transferred, the prior written consent of the Agent and
Lenders shall be obtained, which consent may be conditioned upon the specific
application of proceeds.

         7. On the condition that the Borrower agrees by signing below that no
Permitted Senior Subordinated Note Purchases shall be made unless and until the
Lenders and Agent

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consent, the Lenders and the Agent hereby waive defaults under the following
provisions of the Financing Agreement which through the period stated, existed
under the Obligations; provided, however that this Paragraph shall not be deemed
to waive any defaults under the following provisions after the period stated, or
any other defaults arising out of non-compliance by the Borrower with the
Financing Agreement, whether or not the events, facts or circumstances giving
rise to such non-compliance existed on or prior to the date hereof:

                  Section                            Default
                  -------                            -------
                  6.1.13(a)                          As of February 28, 2000

                  6.1.13(b)                          As of February 28, 2000

                  6.1.13(c)                          As of February 28, 2000

         8. The Obligors, as applicable, hereby issue, ratify and confirm the
representations, warranties and covenants contained in the Financing Agreement,
as amended hereby. The Obligors agree that this Agreement is not intended to and
shall not cause a novation with respect to any or all of the Obligations.

         9. The Obligors acknowledge and warrant that the Agent and Lenders have
acted in good faith and have conducted in a commercially reasonable manner their
relationships with the Obligors in connection with this Agreement and generally
in connection with the Financing Agreement and the Obligations, the Obligors
hereby waiving and releasing any claims to the contrary.

         10. The Obligors shall pay at the time this Agreement is executed and
delivered all fees, commissions, costs, charges, taxes and other expenses
incurred by the Agent and Lenders and their counsel in connection with this
Agreement, including, but not limited to, reasonable fees and expenses of the
Agent's counsel and all recording fees, taxes and charges.

         11. This Agreement may be executed in any number of duplicate originals
or counterparts, each of such duplicate originals or counterparts shall be
deemed to be an original and taken together shall constitute but one and the
same instrument. The parties agree that their respective signatures may be
delivered by facsimile. Any party who chooses to deliver its signature by
facsimile agrees to provide a counterpart of this Agreement with its inked
signature promptly to each other party.

                       SIGNATURES BEGIN ON FOLLOWING PAGE

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         IN WITNESS WHEREOF, the Borrower, the Guarantors, the Lenders and Agent
have executed this Agreement under seal as of the date and year first written
above.

WITNESS                               AAi.FOSTERGRANT, INC. (formerly known as
                                      Accessories, Associates, Inc.)

                                      By:
----------------------------             ---------------------------(SEAL)
                                         Mark Kost
                                         Chief Financial Officer

WITNESS:                               FOSTER GRANT GROUP, L.P.
                                       By:      Bonneau General, Inc.
                                                General Partner

                                       By:
----------------------------             ---------------------------(SEAL)
                                         Mark Kost
                                         Chief Financial Officer

WITNESS:                                             FANTASMA, LLC

                                       By:
----------------------------             ---------------------------(SEAL)
                                          Mark Kost
                                          Chief Financial Officer

WITNESS:                                             F.G.G. INVESTMENTS, INC.

                                       By:
----------------------------             ---------------------------(SEAL)
                                          Mark Kost
                                          Chief Financial Officer

WITNESS:                                             THE BONNEAU COMPANY

                                       By:
----------------------------             ---------------------------(SEAL)
                                          Mark Kost
                                          Chief Financial Officer

                                       9
<PAGE>   10
WITNESS:                               BONNEAU GENERAL, INC.

                                       By:
----------------------------             ---------------------------(SEAL)

                                         Mark Kost
                                         Chief Financial Officer

WITNESS:                               BONNEAU HOLDINGS, INC.

                                       By:
----------------------------             ---------------------------(SEAL)
                                          Mark Kost
                                          Chief Financial Officer

WITNESS:                               FOSTER GRANT HOLDINGS, INC.

                                       By:
----------------------------             ---------------------------(SEAL)
                                          Mark Kost
                                          Chief Financial Officer

WITNESS:                               O-RAY HOLDINGS, INC.

                                       By:
----------------------------             ---------------------------(SEAL)
                                          Mark Kost
                                          Chief Financial Officer

WITNESS:                                BANK OF AMERICA, N.A.

                                       By:
----------------------------             ---------------------------(SEAL)
                                          Gary W. Bartlett
                                          Vice President

                                       10
<PAGE>   11
WITNESS:                                BANK OF AMERICA, N.A.
                                        in its capacity as a Lender

                                       By:
----------------------------             ---------------------------(SEAL)
                                          Gary W. Bartlett
                                          Vice President

WITNESS:                               LASALLE BUSINESS CREDIT, INC.

                                       By:
----------------------------             ---------------------------(SEAL)
                                           Name:
                                           Title:

WITNESS:                               PNC BUSINESS CREDIT

                                       By:
----------------------------             ---------------------------(SEAL)
                                           Name:
                                           Title:

                                       11<PAGE>   1
                                                                   EXHIBIT 10.15

December 15, 1999

Mr. Mark Kost
7 Grassy Lane
Westford, MA 01886

Dear Mark:

I am delighted to formally extend to you our offer to join the AAi.FosterGrant
team. As I am sure you heard from all of us, this is an exciting place to work
with lots of challenges and a great opportunity to contribute to the success of
the company!

This letter summarizes the offer of employment made to you by AAi.FosterGrant,
Inc. ("Company") and is valid until December 22, 1999.

1.    POSITION: Chief Financial Officer.

2.    REPORTING RELATIONSHIP: President & COO.

3.    PRIMARY RESPONSIBILITIES: You have full responsibility for the Company's
      finance and information services functions on a global basis.

4.    BASE SALARY: Your base annual salary will be $217,000 paid in 52 weekly
      installments.

5.    BENEFITS: As a full time employee of the Company you will become eligible
      for our benefits programs including, but not limited to:

-     Medical and Dental insurance
-     Life insurance
-     401(k) program after one year of service
-     Paid vacation (3 weeks)

      A summary of our current benefits is enclosed for your review.

6.    ANNUAL BONUS: You will participate in the FY '01 performance bonus plan at
      the 30% base salary level based equally on your attainment of personal
      goals and the Company's performance against annual corporate business
      goals. You will receive a bonus of $20,000 paid in April, 2000.

7.    STOCK OPTIONS: Attachment A shall apply.
<PAGE>   2
8.    PERFORMANCE REVIEW: In general, performance and salary reviews will be
      effective as of one year from the date of hire.

9.    SPECIAL PROVISIONS/SEVERANCE. Attachment C shall apply.

10.   PROPRIETARY RIGHTS/NON-COMPETITION: Attachment B shall apply.

If you are in agreement with the foregoing, please signify by signing below.

Mark, I believe that you have the skills, experience, intellect and energy level
that will make you a successful team player at AAi.FosterGrant. I look forward
to your participation in this process and to working with you.

Sincerely,                                Agreed and Accepted:

/s/ John R. Ranelli                       /s/ Mark Kost
-----------------------------             ------------------------------
John R. Ranelli                           Mark Kost

President/COO

Encl:  Benefits Summary//I-9 Form

* AAi.Foster Grant verifies the identity and employment authorization of all new
hires, pursuant to the Immigration and Nationality Act. In order to comply with
this legal obligation, we must complete and Employment Eligibility form for your
review within three days of hire. Enclosed is an I-9 form for your review.
Please note that you will need to provide one document from "List A" OR one
document from "List B" AND one document from "List C" of the form. If you
anticipate having difficulty completing the I-9 form, please contact Lori
Gammino, AAi.FOSTER GRANT.
<PAGE>   3
                                  ATTACHMENT A

                                  STOCK OPTIONS

      Pursuant to the provisions of the Company's Incentive Common Stock Option
Plan (a copy of which will be provided to you), the Company will grant to you at
the Board of Directors meeting following the commencement of your employment,
but in no event later than six (6) months following the commencement of your
employment, subject to the terms and conditions of the Plan and the Company's
form of Incentive Stock Option Agreement (copy of which will be provided to
you), the right and option to purchase from the Company all or any part of an
aggregate of 11,224 shares of the common stock ($.01 par value) of the Company
at a purchase price equal to $32.00 per share. The option shall vest upon an
initial public offering of the Company's common stock or the achievement by
Company of $20 million EBIT.
<PAGE>   4
                                  ATTACHMENT B

                 PROPRIETARY RIGHTS/NON-COMPETITION AGREEMENT

      For purposes of this Agreement, the following are collectively referred
to as "Company": AAi.FosterGrant, Inc. and any other corporation, entity or
person, now or hereafter controlled by, controlling or under common control
with Company. "I" shall mean Mark Kost.

      I acknowledge that (1) Company is in the business of providing jewelry,
small leather goods, reading glasses and sunglasses and other accessories sales
and services to numerous customers, and expends significant resources in
developing, marketing and selling its services and products, and in developing
information which is not generally known to others and which is entitled to
protection from improper disclosure and use; (2) I will occupy a position of
special value to Company and, in the discharge of duties customary to that
position, I will have access to Company's vital and unique business information
which allows Company to gain a competitive edge over competitors; and (3) I will
have close, regular contact and relationships with Company's other employees
and, because of the personal nature thereof, such employees will develop
identification with me, rather than the Company itself, could create the
potential for my appropriation of such relationships developed on Company's
behalf and expense.

      I further acknowledge that an essential element of maintaining Company's
relationships with its customers is the development and maintenance of personal
contacts with vendor and customer personnel who are responsible for obtaining
Company services and products and, towards that end, Company (1) encourages
employees, including me, to become personally acquainted with vendor and
customer personnel and (2) provides employees, including me, access to
information gathered by Company about vendors and customers. This policy
represents a significant, costly investment by Company, to the extent additional
manpower is necessary to develop such contacts and relationships and gather such
information. Because of the personal nature of such contacts and relationships,
Company's vendors and customers commonly develop identification with employees,
including me, rather than Company itself. Such identification creates potential
for my appropriation of the benefits of relationships developed with vendors and
customers on Company's behalf and expense.

     In this Agreement, Company's information, data and knowledge is known as
Proprietary Materials. It includes such information, data and knowledge
developed or obtained by or on behalf of Company relating to, used in connection
with or reasonably likely to be useful to any of Company's businesses, ventures,
research, investigations or activities, including but not limited to all of
Company's products, discoveries, ideas, inventions, methods, improvements,
concepts, developments, methods, designs, drawings, works, processes, know-how,
computer programs, internal policies and procedures, vendors, customers,
contacts, prospects, financial information, business records, marketing
practices and any papers labeled "secret," "confidential," or "proprietary," as
well as any confidential information of any of Company's customers provided to
Company. I understand that each of the foregoing constitutes Proprietary
Materials even if conceived, made, developed, created or first reduced to
practice by me during my term of employment with Company, and whether or not (1)
I did so at the request or suggestion of Company, (2) they resulted from or were
suggested by any work that I have performed or may perform for Company, (3) I
did the work alone or in conjunction with others, (4) I did the work during
regular hours of work or otherwise, or at Company's place of business or
elsewhere, and (5) the Proprietary Materials are patentable or copyrightable by
me or someone else. Notwithstanding the foregoing, Company and I agree that
Proprietary Materials will not include any information, data or knowledge that I
can establish by written evidence as having been conceived, made or reduced to
practice by me which was created or conceived without use of Company resources,
outside of regular Company business hours and that is unrelated to or reasonably
unlikely to be useful to Company.

      In order to provide greater comfort to Company that it can continue to
share its Proprietary Materials with me without fear of appropriation thereof,
and to clarify our common understanding concerning our mutual responsibilities,
I am entering into this Agreement. I have read it carefully so that I may
understand its importance.
<PAGE>   5
As a condition to my employment and continued employment, and in consideration
of the premises and the compensation that I accept in connection with such
employment, I agree as follows:

     1. During my employment and thereafter, I shall not, in any way, directly
or indirectly, disclose or appropriate to my own use, or to the use of any party
other than Company, the Proprietary Materials. I shall use my best efforts to
protect the Proprietary Materials from disclosure or misuse, and inform an
executive officer of Company immediately upon learning of any improper
disclosure or misuse of Proprietary Materials by me or by any other employee or
person. I shall not copy or remove from Company's premises any media, papers,
drawings or models relating to or containing any of the Proprietary Materials,
except to the extent necessary in the course of such employment.

      2. During the term of such employment and upon termination of my
employment, I shall promptly and fully disclose to an executive officer of
Company any Proprietary Materials of which I have knowledge.

      3. The Proprietary Materials shall at all times be the exclusive property
of Company, although I am aware that in the absence of this Agreement I may have
been entitled to rights in some of the Proprietary Materials. Accordingly, I
agree that all Proprietary Materials consisting of writings or works (including
but not limited to computer software program codes) shall be considered works
made for hire under the copyright laws, and therefore owned by Company. So as to
assure Company's exclusive rights in the Proprietary Materials, I hereby assign,
transfer and give to Company my entire right, title and interest in and to the
Proprietary Materials, including but not limited to all rights throughout the
world and any renewals and extensions associated therewith. At the request of
Company, during the term of my employment and forever thereafter, I shall (a)
sign, verify, acknowledge, deliver and file any documents necessary or advisable
for Company to obtain ownership of the Proprietary Materials, including, at
Company's expense, the issuance of patents or copyrights to Company with respect
to the Proprietary Materials, and (b) otherwise assist Company in every
reasonable manner in obtaining any of its rights in the Proprietary Materials
(including but not limited to providing testimony at legal proceedings). I
hereby irrevocably appoint Company as my attorney-in-fact (which appointment
shall be deemed a power coupled with an interest) with full powers of
substitution and delegation, to execute, verify, acknowledge and deliver any
such documents.

      4. Upon the termination of my employment for any reason, or if Company
shall request sooner, I shall promptly deliver to an executive officer of
Company all media, papers, drawings, models and other existing material in my
possession or control relating to or containing any of the Proprietary
Materials.

      5. I shall not disclose to Company any knowledge, data or information
which, to my knowledge, another company may consider to be its confidential
information, trade secrets or proprietary information. I am not subject to any
other agreements, whether in writing or verbally, with anyone else that would
prohibit, restrict or interfere with my employment or fulfilling my obligations
under this Agreement.

      6. Were I to leave the Company's employment and utilize my administrative,
financial, technological, marketing and sales skills in competition with
Company, the results would be materially adverse to Company. Accordingly, during
such employment and during the twelve (12) month period following the
termination of my employment with Company (the "non-competition period"), I
shall not engage in or carry on, in any way, directly or indirectly, either for
myself or as a member of a partnership or as a stockholder or investor (except
for ownership of securities, not exceeding 5% of any class, of a corporation
traded on a national securities exchange) or as an officer, director, employee,
agent, representative, advisor or consultant of any entity (other than Company),
any business similar to or competing with any business carried on by Company or
its successors at the time of the termination of my employment, or directly or
indirectly related to the Business and to which I have been exposed at any time
during such employment, in the United States or any other country in which
Company does business or engages in activities at the time of the termination of
such employment.

      7. I shall not, during the non-competition period, in any way, directly or
indirectly (except in the course of such employment), call upon, solicit, advise
or otherwise do or attempt to do, business with any clients, customers or
accounts of Company with whom I had any dealings at any time during the course
of such employment, or take away or interfere or attempt to interfere with any
custom, trade, business or patronage of
<PAGE>   6
Company, or interfere with or attempt to interfere with any officers, employees,
representatives, advisors, consultants or agents of Company, or induce or
attempt to induce any of them to leave the service of Company or violate
agreements with it. At the termination of my employment, Company shall supply to
me a written listing of clients, customers or accounts of Company.

      8. The foregoing shall be deemed to be a series of separate covenants, one
for each county of each state or territory of the United States and one for each
and every country in which Company does business or engages in activity. If a
court shall refuse to enforce all of such separate covenants, then such
unenforceable covenants shall be deemed eliminated for the purpose of such
proceedings to the extent necessary to permit the remaining separate covenants
to be enforced. If a court refuses to enforce any one or more of such separate
covenants because the time thereof is deemed to be excessive or unreasonable,
then such covenants, which would otherwise be unenforceable due to such
excessive or unreasonable period of time, shall be enforced for such lesser
period of time as deemed reasonable and not excessive by such court.

       9. I shall comply with this Agreement even after the termination of my
employment for any reason, and I shall perform each and every obligation set
forth in this Agreement without any further payment or compensation to me,
except for any reasonable out-of-pocket expenses incurred at the request of
Company.

      10. It is understood and agreed that any breach of this Agreement is
likely to result in irreparable injury to Company, and that the remedy at law
alone will be an inadequate remedy for such breach, in that in addition to any
other remedy Company may have, Company shall be entitled to enforce my specific
performance of this Agreement, and to seek both temporary and permanent
injunctive relief (to the extent permitted by law) without the necessity of
proving actual damages.

                                          /s/ Mark Kost
                                          -------------------------------------
                                          Mark Kost
<PAGE>   7
                                  ATTACHMENT C

                          SPECIAL PROVISIONS/SEVERANCE

      1. This letter sets forth the terms of employment, and does not constitute
or promise employment for a specific term. Either you or we can terminate
employment for any reason. Notwithstanding the foregoing, if your employment is
terminated by Company for other than cause, then so long as you are in
compliance with the terms of this letter agreement, including all attachments.
Company shall pay to you a severance consisting of payments on the first
business day of each of the twelve (12) months immediately succeeding the date
of termination of your employment equal to 1/12th of your Base Salary in effect
on the date of termination. For purposes of the prior sentence, "cause" shall
mean: (a) your permanent disability under Company's long-term disability
insurance coverage; (b) failure to devote full time and best efforts to the
performance of your duties; (c) commission of an act of gross negligence,
dishonesty, fraud, gross insubordination, malfeasance, disloyalty, bad faith or
breach of trust in the performance of your duties; (d) failure to observe the
agreements set forth in the agreements attached as Attachment B; (e) commit a
felony or act which, in the judgment of the Board of Directors of Company,
subjects you or Company to public disrespect, scandal or ridicule so as to
materially and adversely affect the utility of your services to Company; or (f)
refuse to perform duties assigned to you in good faith or violate or fail to
observe any lawful business instruction or lawful business policy established by
Company with respect to the operation of its business and affairs or fail to, or
refuse to, substantially perform your duties; and with respect to items (b) and
(f), after a written notice is delivered by Company, which specifically
identifies the manner in which you have become subject to termination for cause,
if not cured (if such matter is susceptible of cure) within twenty (20) days
after such written notice.

      2. This Agreement shall be governed by and construed in accordance with
the laws of the State of Rhode Island, without regard to its Conflict of Laws
Rules. Employee agrees and consents to personal jurisdiction and service in
venue in any Federal or State Court within Rhode Island having subject matter
jurisdiction, for purposes of any action, suit or proceeding arising out of or
relating to this Agreement. Employee waives trial by jury in any such action,
suit or proceeding.

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