Document:

<PAGE>   1
                                                                    EXHIBIT 10.3

                                                                  Execution Copy

                           SUBORDINATION AGREEMENT, dated as of August 13, 2001,
                  among CASTLE HARLAN PARTNERS III, L.P. (the "Sponsor"), WFS
                  HOLDINGS, INC. ("Holdings"), WORLDWIDE FLIGHT SERVICES, INC.,
                  (the "Borrower") and The Chase Manhattan Bank, as
                  Administrative Agent (the "Agent") for the Lenders under the
                  Credit Agreement dated as of August 12, 1999, as amended (the
                  "Credit Agreement"), among Holdings, the Borrower, the lenders
                  party thereto (the "Lenders"), the Agent, and DLJ CAPITAL
                  FUNDING, INC., as Syndication Agent.

         The Sponsor owns substantially all of the Equity Interests in Holdings,
and Holdings owns all of the Equity Interests in the Borrower. Holdings and the
Borrower have requested that the Lenders grant a limited waiver of compliance
with certain provisions of the Credit Agreement in the manner provided in the
Waiver to the Credit Agreement (the "Waiver") dated as of the date hereof. In
order to induce the Lenders to approve the Waiver, the Sponsor has agreed,
pursuant to a support agreement dated as of the date hereof among the Sponsor,
Holdings, the Borrower and the Agent (the "Support Agreement"), t o make Sponsor
Contributions to the Borrower upon each occurrence of a Support Event (as each
such term is defined in the Support Agreement) upon the terms and subject to the
conditions set forth in the Support Agreement. The Sponsor Contributions will be
made as subordinated loans, which will be evidenced by one or more unsecured
promissory notes of the Borrower in the form of Exhibit A to the Support
Agreement (the "Sponsor Notes"). The Sponsor has agreed that the Borrower's
obligations in respect of the Sponsor Notes shall be subordinated to the
Obligations upon the terms and subject to the conditions set forth herein.
Accordingly, the parties hereto agree as follows:

                                   ARTICLE I
                                  Definitions

         SECTION 1.1. Definition of Terms Used Herein. Unless the context
otherwise requires, all capitalized terms used but not defined herein shall have
the meanings set forth in the Credit Agreement (including by reference to the
other Loan Documents).

         SECTION 1.2. Definition of Certain Terms Used Herein. As used herein,
the following terms shall have the following meanings:

         "Available Liquidity" means, on any date, the sum of (a) the
Unrestricted Cash Balances of the Borrower and the Subsidiary Loan Parties on
such date and (b) undrawn Revolving Commitments available to the Borrower and
the Subsidiary Loan Parties under the Credit Agreement on such date as to which
all conditions to borrowing are satisfied as of such date.

         "Maturity Date" means December 31, 2001.

         "Senior Creditors" means the Secured Parties and their respective
successors and assigns.

<PAGE>   2

                                                                               2

         "Senior Obligations" means all monetary obligations of the Borrower
that constitute Obligations.

         "Sponsor Note Obligations" means all monetary obligations of the
Borrower, whether in respect of principal, premium interest or otherwise, in
respect of any Sponsor Notes.

         "Unrestricted Cash Balances" means, as of any date, all cash and cash
equivalents held by the Borrower and the Subsidiary Loan Parties on such date
that are not (a) contractually committed to be spent, reserved for or applied to
a specific purpose, (b) required to be maintained or kept available by the
applicable Loan Party or (c) otherwise subject to contractual or other
restrictions limiting the applicable Loan Party's ability to spend, transfer or
otherwise apply such cash or cash equivalents.

                                   ARTICLE II

                                  Subordination

         SECTION 2.1. Subordination. The Sponsor hereby agrees that all the
Sponsor Note Obligations owed to it by the Borrower are hereby expressly
subordinated, to the extent and in the manner set forth in this Article II, to
the prior payment in full in cash of all Senior Obligations of the Borrower in
accordance with the terms thereof.

         SECTION 2.2. Dissolution or Insolvency. Upon any distribution of the
assets of the Borrower or upon any dissolution, winding up, liquidation or
reorganization of the Borrower, whether in bankruptcy, insolvency,
reorganization, arrangement or receivership proceedings or otherwise, or upon
any assignment for the benefit of creditors or any other marshaling of the
assets and liabilities of the Borrower, or otherwise:

         (a) the Senior Creditors of the Borrower shall first be entitled to
receive payment in full in cash of all of the Senior Obligations of the Borrower
in accordance with the terms thereof before the Sponsor shall be entitled to
receive any payment on account of any Sponsor Note Obligations of the Borrower,
whether as principal, interest or otherwise; and

         (b) any payment by, or distribution of the assets of, the Borrower of
any kind or character, whether in cash, property or securities, to which the
Sponsor would be entitled except for the provisions of this Agreement shall be
paid or delivered by the Person making such payment or distribution (whether a
trustee in bankruptcy, a receiver, custodian or liquidating trustee or
otherwise) directly to the Agent to the extent necessary to make payment in full
in cash of all Senior Obligations of the Borrower remaining unpaid, after giving
effect to any concurrent payment or distribution to the Senior Creditors in
respect of the Senior Obligations.

         SECTION 2.3. Payment of Sponsor Note Obligations Prohibited. (a)
Subject to paragraphs (c) and (d) of this Section 2.3, no payment (whether
directly, by exercise of any right of set-off or otherwise) in respect of any
Sponsor Notes Obligation of the Borrower, whether as principal, interest or
otherwise, shall be permitted at any time until all Senior Obligations have been
paid in full.

<PAGE>   3

                                                                               3

         (b) Subject to paragraphs (c) and (d) of this Section 2.3, no payment
of any Sponsor Notes Obligation that is prohibited by paragraph (a) above shall
be received or accepted by or on behalf of the Sponsor.

         (c) Notwithstanding anything contained herein to the contrary, the
Borrower may make repayments of principal in respect of the Sponsor Notes on or
after the Maturity Date if (a) the Borrower's Available Liquidity on such date
is at least $10,000,000 after giving effect to such repayment and (b) no Default
has occurred and is continuing under the Credit Agreement, the Senior Notes
Documents or any other Material Indebtedness of the Borrower, and no such
Default would result from such repayment.

         (d) Nothing contained herein shall prevent the Borrower from (i) making
payments of interest in respect of the Sponsor Notes to the extent such payments
are made solely in the form of additional Sponsor Notes or (ii) exchanging any
Sponsor Notes for Sponsor Notes of a different tenor or rate of interest;
provided that all such additional Sponsor Notes shall be subject to the
provisions hereof.

         SECTION 2.4. Certain Payments Held in Trust. In the event that any
payment by, or distribution of the assets of, the Borrower of any kind or
character, whether in cash, property or securities, and whether directly, by
exercise of any right of set-off or otherwise, shall be received by or on behalf
of the Sponsor at a time when such payment is prohibited by this Agreement, such
payment or distribution shall be held in trust for the benefit of, and shall be
paid over to, (a) the Agent to the extent necessary to make payment in full in
cash of all Senior Obligations of the Borrower remaining unpaid, after giving
effect to any concurrent payment or distribution to the Senior Creditors in
respect of such Senior Obligations or (b) in the case of any payment prohibited
under Section 2.3, the Borrower.

         SECTION 2.5. Subrogation. Subject to the prior payment in full in cash
of the Senior Obligations of the Borrower, to the extent that, as a result of
the provisions of this Agreement, any Senior Creditors of the Borrower receive
payments or distributions from the Borrower that otherwise would have been made
to the Sponsor, the Sponsor shall be subrogated to the rights of the Senior
Creditors of the Borrower to receive payments or distributions in cash, property
or securities of the Borrower applicable to such Senior Obligations until all
amounts owing on the Sponsor Note Obligations of the Borrower shall be paid in
full, and as between and among the Borrower, its creditors (other than its
Senior Creditors) and the Sponsor, no such payment or distribution made to the
Agent by virtue of this Agreement that otherwise would have been made to the
Sponsor shall be deemed to be a payment by the Borrower on account of its
Sponsor Note Obligations, it being understood that the provisions of this
Agreement are intended solely for the purpose of defining the relative rights of
the Sponsor, on the one hand, and the Senior Creditors, on the other hand.

                                  ARTICLE III

              Other Matters Regarding the Sponsor Note Obligations

         SECTION 3.1. Other Creditors. Nothing contained in this Agreement is
intended to or shall impair, as between and among the Borrower, its creditors
(other than

<PAGE>   4

                                                                               4

the Senior Creditors) and the Sponsor, the obligations of the Borrower to pay to
the Sponsor the Sponsor Note Obligations of the Borrower as and when the same
shall become due and payable in accordance with the terms thereof, or affect the
relative rights of the Sponsor and the other creditors of the Borrower (other
than their Senior Creditors).

         SECTION 3.2. Proofs of Claim. In the event of any dissolution, winding
up, liquidation or reorganization of the Borrower, or the commencement of any
bankruptcy, insolvency, reorganization, arrangement or receivership proceedings
or otherwise, or any assignment for the benefit of creditors or any other
marshaling of the assets and liabilities of the Borrower, the Sponsor agrees to
file proofs of claim for the Sponsor Note Obligations owed to it at least 30
days prior to the date on which such proofs of claim are required to be filed,
in default of which the Agent or other authorized representative of the Senior
Creditors is hereby irrevocably authorized so to file in order to effectuate the
provisions hereof. This Section shall not be construed to permit the Sponsor to
retain any payment received by it in respect of a Sponsor Notes Obligation that
the Sponsor is not entitled to receive and retain under any other provision of
this Agreement.

         SECTION 3.3. No Waiver. No right of any Senior Creditor to enforce this
Agreement shall at any time or in any way be prejudiced or impaired by any act
or failure to act on the part of any of the Agent, the other Senior Creditors,
or the Borrower, or by any noncompliance by the Borrower with the terms,
provisions and covenants contained herein, and the Senior Creditors are hereby
expressly authorized to extend, renew, increase, decrease, modify or amend the
terms of the Senior Obligations or any security therefor, and to release, sell
or exchange any such security and otherwise deal freely with the Borrower, all
without notice to or consent of the Sponsor and without affecting the
liabilities and obligations of the parties hereto.

         SECTION 3.4. Acceleration and Remedies; Bankruptcy Filings. The Sponsor
agrees that, except for claims submitted in any proceeding contemplated by
Section 3.2 hereof, it will not exercise any remedies or take any action or
proceeding to enforce any Sponsor Notes Obligation if the payment in cash of
such Sponsor Notes Obligation is then prohibited by Section 2.3, and the Sponsor
solely in its capacity as the holder of the Sponsor Notes Obligations further
agrees not to file, or to join with any other creditors of the Borrower in
filing, any petition commencing any bankruptcy, insolvency, reorganization,
arrangement or receivership proceeding or any assignment for the benefit of
creditors against or in respect of the Borrower or any other marshaling of the
assets and liabilities of the Borrower. Notwithstanding anything to the contrary
contained herein, this Agreement shall not prevent the Sponsor from causing the
Borrower to file any such petition, commence any such proceeding or make any
such assignment referred to above if the Sponsor is taking such action in its
capacity as a holder of the Equity Interests of the Borrower.

         SECTION 3.5. Obligations Hereunder Not Affected. (a) All rights and
interests of the Senior Creditors hereunder, and all agreements and obligations
of the Sponsor hereunder, shall remain in full force and effect irrespective of:

         (i) any lack of validity or enforceability of any Loan Document;

         (ii) any change in the time, manner or place of payment of, or in any
     other term of, all or any of the Senior Obligations, or any other amendment
     or waiver of or consent to departure from any Loan Document;

<PAGE>   5

                                                                               5

         (iii) any exchange, release or nonperfection of any security interest
     in or Lien on any Collateral, or any release or amendment or waiver of or
     consent to departure from any Guarantee, in respect of all or any of the
     Senior Obligations; or

         (iv) any other circumstance that might otherwise constitute a defense
     available to, or a discharge of, the Borrower in respect of its Senior
     Obligations or of the Sponsor in respect of this Agreement.

         (b) This Agreement shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of the Senior Obligations or any
part thereof is rescinded or must otherwise be returned by any Senior Creditor
upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise,
all as though such payment had not been made.

         (c) The Sponsor hereby authorizes the Senior Creditors, without notice
or demand and without affecting or impairing any of the obligations of the
Sponsor hereunder, from time to time to (i) renew, compromise, extend, increase,
accelerate or otherwise change the time for payment of, or otherwise change the
terms of, the Senior Obligations or any part thereof and (ii) exercise or
refrain from exercising any rights against the Sponsor, the Borrower or any
other Person.

                                   ARTICLE IV

                   Representations And Warranties the Sponsor

         The Sponsor represents and warrants to the Agent, for the benefit of
the Senior Creditors, that:

         (a) It is duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized.

         (b) The execution, delivery and performance by it of this Agreement and
the consummation of the transactions contemplated hereby are within its powers,
have been duly authorized by all necessary action on its part, require no action
by or in respect of, or filing with, any Governmental Authority (other than such
as have been duly taken or made) and do not contravene, or constitute a default
under, any provision of applicable law or regulation or of its certificate of
incorporation or by-laws (or other organizational documents, as applicable) or
of any material agreement, judgment, injunction, order, decree or other
instrument binding upon it or any of its subsidiaries.

         (c) This Agreement constitutes a valid and binding agreement of the
Sponsor, enforceable against the Sponsor in accordance with its terms, subject
to the effect of applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and equitable principles of general applicability.

<PAGE>   6

                                                                               6

                                   ARTICLE V

                                 Miscellaneous

         SECTION 5.1. Notices. All communications and notices hereunder shall be
in writing and shall be given as provided in Section 6.02 of the Support
Agreement Any party hereto may change its address or facsimile number for
notices and other communications hereunder by notice to the other parties
hereto.

         SECTION 5.2. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party (including, in the case of any Lender, each
transferee or assignee of Obligations held by it); and all covenants, promises
and agreements by or on behalf of any of the Sponsor, the Borrower or the Agent
that are contained in this Agreement shall bind and inure to the benefit of
their respective successors and assigns. Each of the Sponsor and the Borrower
agrees that it shall not assign or delegate any of its obligations under this
Agreement without the prior written consent of each Lender, and any purported
assignment or delegation without such consent shall be void and of no effect.

         SECTION 5.3. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK (INCLUDING ALL MATTERS OF STRUCTURE, VALIDITY AND PERFORMANCE).

         SECTION 5.4. Jurisdiction; Consent to Service of Process. TO THE EXTENT
PERMITTED BY LAW, ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE SPONSOR OR THE
AGENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN
THE STATE OF NEW YORK AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT EACH OF
THE SPONSOR AND THE AGENT ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT. TO THE EXTENT PERMITTED BY LAW, THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY JURY, AND EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. TO THE EXTENT PERMITTED
BY LAW, EACH OF THE PARTIES HERETO HEREBY AGREES THAT SERVICE UPON IT BY MAIL
SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

         SECTION 5.5. Waivers; Amendment. (a) No failure or delay of the Agent
in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further

<PAGE>   7

                                                                               7

exercise thereof or the exercise of any other right or power. The rights and
remedies of the Agent hereunder and of the Agent and the Lenders under the Loan
Documents are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provisions of this Agreement or
consent to the departure by the Sponsor therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) below, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice to or demand by the Sponsor or the
Borrower in any case shall entitle the Sponsor or the Borrower to any other or
further notice or demand in similar or other circumstances.

         (b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Agent, with the approval of the Required Lenders to the
extent required by the Credit Agreement, the Borrower and the Sponsor.

         SECTION 5.6. Severability. In case any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired thereby
(it being understood that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect the validity of such
provision in any other jurisdiction). The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.

         SECTION 5.7. Counterparts. This Agreement may be executed in two or
more counterparts (and by different parties hereto on different counterparts),
each of which shall constitute an original but all of which when taken together
shall constitute but one contract (subject to Section 5.6). Delivery of an
executed signature page to this Agreement by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof.

         SECTION 5.8. Headings. Article and Section headings used herein are for
the purpose of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.

         SECTION 5.9. Termination. This Agreement shall automatically terminate
upon the earlier to occur of (a) the date on which all the Senior Obligations
have been paid in full in cash, there are no Letters of Credit outstanding and
no Lender has any Commitments outstanding and (b) the date on which all the
Sponsor Note Obligations have been paid in cash in full.

         SECTION 5.10. Loan Document. The Sponsor acknowledges receipt of a copy
of the Credit Agreement and the Support Agreement, and the Sponsor and the
Borrower agree that this Agreement shall constitute a Loan Document for all
purposes. The Sponsor acknowledges that the provisions of each Loan Document
other than this Agreement may be at any time amended, waived and otherwise
modified without notice to or consent from the Sponsor.

<PAGE>   8

                                                                               8

         IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Agreement to be duly executed and delivered as of the date first above
written.

                              CASTLE HARLAN PARTNERS III, L.P.,

                              By: Castle Harlan Associates III, L.P.,
                              its General Partner,

                              By: Castle Harlan Partners III G.P., Inc.,
                              its General Partner,

                              By:
                                 ----------------------------------------
                              Name:
                              Title:

                              WFS HOLDINGS, INC.,

                              By:
                                 ----------------------------------------
                              Name:
                              Title:

                              WORLDWIDE FLIGHTS SERVICES, INC.,

                              By:     /s/ DF CHARENSON
                                 ----------------------------------------
                              Name:   DF Charenson
                              Title:  VP

                              THE CHASE MANHATTAN BANK,

                              By:
                                 ----------------------------------------
                              Name:
                              Title:<PAGE>   1
                                                                   EXHIBIT 10.20

                                AAI.FOSTER GRANT

May 9, 2001

Brian Lagarto

Dear Brian,

This letter summarizes the changes in your Duties, Salary and Benefits

1.       POSITION:  Chief Financial Officer

2.       REPORTING RELATIONSHIP: John Ranelli CEO

3.       PRIMARY RESPONSIBILITIES: Overall responsibility for the financial
         operations of the company including: Accounting, Cost Accounting,
         Treasury, Accounts Payable, Budget/Analysis and Accounts Receivable.
         In addition you will be responsible for all aspects of the
         relationships with our Financial Institutions.

4.       BASE SALARY: Your base annual salary will be $165,000 commencing
         April 23, 2001

5.       BONUS:  You will participate in the Management Incentive Award
         Program and will be eligible to receive a 30% bonus based set
         objectives to be discussed and agreed upon at a later date

6.       BENEFITS: You will be eligible for all Executive level Benefits that
         the company offers.

7.       PERFORMANCE REVIEW: In accordance with company policy you will be
         given a ninety (90) day non-financial review. As agreed upon you will
         also receive a six(6) month performance and salary review will be
         given on or about six(6) months from April 23, 2001

8.       PROPRIETARY RIGHTS/NON-COMPETITION:  Attachment A shall apply

9.       SPECIAL PROVISION/SEVERANCE: Attachment B shall appy

<PAGE>   2
                                AAI.FOSTER GRANT

Brian Lagarto
May 9, 2001
Page 2

If you are in agreement with the foregoing, please signify by signing below and
Attachment A and B.

Brian, I believe that you have the skills, experience, intellect and energy
level that will make you a successful team member. I am excited about our
opportunity and look forward to your participation in this process as well as
working with you to build our team and achieving common objectives.

Sincerely,                                   Agreed and Accepted

/s/ John Ranelli                             /s/ Brian J. Lagarto
--------------------------------             -----------------------------------
John Ranelli                                 Brian J. Lagarto
Chief Executive Officer
AAi.FosterGrant, Inc.

Date: 5/24/01                                Date: 5/24/01
     ---------------------------                  ------------------------------

<PAGE>   3
                                AAI.FOSTER GRANT

ATTACHMENT A

                  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 Brian Lagarto

         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.

<PAGE>   4
                                AAI.FOSTER GRANT

         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. 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, merchandise, financial, technological, marketing and sales
skills in competition with the 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,

<PAGE>   5
                                AAI.FOSTER GRANT

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. This agreement does not include any retail operation that does
not currently or, in the 5 years prior to execution of this agreement, conduct
business with the Company or one of it's Subsidiaries.

         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 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/ Brian J. Lagarto
                                                 -------------------------------
                                                 Brian Lagarto

                                                 5/24/01
                                                 -------------------------------
                                                 Date

<PAGE>   6

                                AAI.FOSTER GRANT

                                  ATTACHMENT B

                          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 Six (6) 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. The severance program will also provide benefit
continuation for the entire severance period. 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 A; (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.

1.       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.

     By: /s/ John R. Ranelli                    By: /s/ Brian J. Lagarto
        ------------------------------          --------------------------------
        John R. Ranelli                         Brian J. Lagarto

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