Document:

<PAGE>   1
                                                                    Exhibit 10.2

                                PLEDGE AGREEMENT

     This is a pledge agreement made as of the 31st day of July, 2000 between
Edward Terino, an individual residing at 17 Canterbury Road, Windham, NH 03087
("Pledgor") and Applix, Inc., a corporation organized under the laws of
Massachusetts with its principal office at 112 Turnpike Road, Westboro, MA 01581
("Pledgee").

                                  WITNESSETH:

     WHEREAS, Pledgor has executed and delivered a secured promissory note (the
"Note") of even date herewith in the original principal amount of $180,000.63
payable to the Pledgee; and

     WHEREAS, the Pledgor is the owner of the shares of common stock of the
Pledgee as set forth on EXHIBIT A attached hereto (the "Pledged Shares") and

     WHEREAS, as collateral security for the obligations of the Pledgor under
the Note, the Pledgor has agreed to pledge and grant to the Pledgee a first
priority security interest in the Pledged Shares, as more fully set forth
herein;

     NOW THEREFORE, the parties hereto agree and acknowledge that the foregoing
recitals are true and correct and to the following:

     1. PLEDGE OF SHARES. As security for the full payment and performance of
the obligations of the Pledgor under the Note (the "Obligations"), the Pledgor
hereby pledges and grants to the Pledgee a security interest in and to all of
the Pledged Shares along with any and all stock rights, powers and other
distributions, dividends or proceeds in respect thereof (the "Shares").

     2. DELIVERY OF THE SHARES. The Shares have been delivered to the Pledgee on
the date hereof, together with undated stock powers executed in blank. So long
as the Pledgor is not in default pursuant to Section 7 of this Agreement, the
Pledgee shall release to the Pledgor or his broker, that number of shares as
have been sold by the Pledgor, upon delivery in cash (or other form acceptable
to the Pledgee) of the purchase price for such Shares (minus any brokers
commissions or fees) for application to the Pledgor's obligation under the Note.
Upon payment in full of the Note, the Pledgee shall return to the Pledgor the
Shares, undated stock powers as well as such other instruments, documents, stock
certificates, money and goods as may come into Pledgee's possession pursuant to
this Pledge Agreement from time to time, whether through delivery by Pledgor or
otherwise.

     3. PLEDGEE'S RIGHTS AND DUTIES WITH RESPECT TO THE SHARES. Pledgee's only
duty with respect to the Shares shall be to exercise reasonable care to secure
the safe custody thereof, all other duties being hereby expressly disclaimed.
Pledgee shall have the right but not the obligation to (a) demand, sue for,
receive and collect all money or money damages payable on account of any Shares,
(b) protect, preserve or assert any other rights of Pledgor or take any other
action with respect to the Shares, (c) pay any taxes, liens, assessments,
insurance premiums or other charges pertaining to Shares. Any expenses incurred
by Pledgee under the preceding sentence shall be paid by Pledgor upon demand,
become part of the Obligations secured by the

<PAGE>   2

Shares and bear interest at the Default Rate provided in the Note until paid.
Pledgee shall be relieved of all responsibility for the Shares upon surrendering
them to Pledgor.

     4. PLEDGOR'S WARRANTIES AND INDEMNITY. Pledgor represents, warrants and
covenants (a) that he is and will be the lawful owner of the Shares, (b) that
the Shares are and will be fully paid and non-assessable, (c) that the Shares
are and will remain free and clear of all liens, encumbrances and security
interests other than the security interest granted by Pledgor hereunder, (d)
that the Shares are not subject to any outstanding rights of redemption or
options to purchase or sell, (e) that Pledgor has the sole right and lawful
authority to pledge the Shares and otherwise to comply with the provisions
hereof, (f) no litigation is pending or threatened against the Pledgor, which if
adversely determined, would have a material adverse effect against the Pledgor
or the Pledgee's rights in respect of the Shares, (g) that the Pledgor agrees to
defend the Pledgee's title in the Shares and the security interest therein
against any and all claims and demands, and (h) this Pledge Agreement
constitutes the legal, valid and binding obligation of the Pledgor, enforceable
against the Pledgor in accordance with its terms. In the event that any adverse
claim is asserted in respect of the Shares or any portion thereof, except such
as may result from an act of Pledgee not authorized hereunder, Pledgor promises
and agrees to indemnify Pledgee and hold Pledgee harmless from and against any
losses, liabilities, damages, expenses, costs and reasonable counsel fees
incurred by Pledgee in exercising any right, power or remedy of Pledgee
hereunder or defending, protecting or enforcing the security interests created
hereunder. Any such loss, liability or expense so incurred shall be paid by
Pledgor upon demand, become part of the Obligations secured by the Shares and
bear interest at the Default Rate provided in the Note until paid.

     5. VOTING OF SHARES. While Pledgor is not in default hereunder, Pledgor may
vote the Shares, provided that such voting shall be in conformity with the
Pledgor's performance under this Pledge Agreement and the Note.

     6. DIVIDENDS AND OTHER DISTRIBUTIONS. While Pledgor is not in default
hereunder, Pledgor may receive cash dividends, payments of principal and
interest, and other cash distributions (other than liquidating distributions)
payable with respect to Shares, provided, however, that Pledgor shall
immediately inform Pledgee of the receipt of any such dividend, payment or other
distribution and shall hold the amount thereof in trust for Pledgee unless and
until Pledgee shall in writing release Pledgor from such trust. Pledgor shall
cause all non-cash dividends, liquidating distributions and other distributions
with respect to Shares to be distributed directly to Pledgee, to be held by
Pledgee as additional Shares, and if any such distribution is made to Pledgor,
Pledgor shall receive such distribution in trust for Pledgee and shall
immediately transfer it to Pledgee.

     7. PLEDGOR'S DEFAULT. Pledgor shall be in default hereunder upon the
occurrence of any of the following events:

          (a) Any Event of Default (as defined in the Note) shall occur;

          (b) If Pledgor dies or becomes incapacitated, or if a conservator or
guardian of Pledgor is appointed, or if Pledgor suffers any other legal
disability;

                                      -2-
<PAGE>   3

          (c) If any lien, encumbrance or adverse claim of any nature whatsoever
is asserted with respect to any Shares;

          (d) If any representation or warranty of Pledgor hereunder is or shall
become false; or

          (e) If Pledgor fails to fulfill any obligation hereunder.

     8. PLEDGEE'S RIGHTS UPON DEFAULT. Upon the occurrence of any default as
defined in the preceding section, Pledgee may, if Pledgee so elects in its sole
option:

          (a) at any time and from time to time, sell, assign and deliver the
whole or any of the Shares, or interest therein, at a sale through a broker in a
public market where securities of the type constituting such Shares are usually
traded, without any advertisement, presentment, demand for performance, protest,
notice of protest, notice of dishonor or any other notice, except to the extent
otherwise required by applicable law;

          (b) at any time and from time to time sell, assign and deliver all or
any of the Shares, or any interest therein, at any other public or private sale,
for cash, on credit or for other property, for immediate or future delivery
without any assumption of credit risk, and for such price or prices and on such
terms as Pledgee in its absolute discretion may determine, PROVIDED that (i) at
least ten days' notice of the time and place of any such sale shall be given to
Pledgor, and (ii) in the case of any private sale, such notice shall also
contain the minimum terms of the proposed sale;

          (c) exercise the right to vote, the right to receive cash dividends
and other distributions, and all other rights with respect to the Shares as
though Pledgee were the absolute owner thereof, whether or not such rights were
retained by Pledgor as against Pledgee before default; and

          (d) exercise all other rights available to a secured party under the
Uniform Commercial Code and other applicable law.

     9. APPLICATION OF SALE PROCEEDS. In the event of a sale of Shares, the
proceeds shall first be applied to the payment of the expenses of the sale,
including brokers' commissions, counsel fees, any taxes or other charges imposed
by law upon the Shares or the transfer thereof and all other charges paid or
incurred by Pledgee pertaining to the sale; and, second, to satisfy outstanding
Obligations, in the order in which Pledgee elects in its sole discretion; and,
third, the surplus (if any) shall be paid to Pledgor.

     10. NOTICES. All notices made or required to be made hereunder shall be
sent by United States first class or certified or registered mail, with postage
prepaid, or delivered by hand to Pledgee or to Pledgor at the addresses first
above written.

                                      -3-
<PAGE>   4

     11. HEIRS, SUCCESSORS, ETC. This Pledge Agreement and all of its terms and
provisions shall benefit and bind the heirs, successors, assigns, transferees,
executors and administrators of each of the parties hereto.

     12. PLEDGEE'S FORBEARANCE. Any forbearance, failure or delay by Pledgee in
exercising any right, power or remedy hereunder shall not be deemed a waiver of
such right, power or remedy. Any single or partial exercise of any right, power
or remedy of Pledgee shall continue in full force and effect until such right,
power or remedy is specifically waived in writing by Pledgee.

     13. FURTHER ASSURANCES. The Pledgor covenants and agrees to execute and
deliver, or cause to be executed or delivered, all such other stock powers,
proxies, instruments, and documents, and will take such other action or actions
as the Pledgee may reasonably request from time to time in order to carry out
the provisions and purposes hereof.

     14. TERMINATION. This Agreement and the pledge and security interest
represented hereby shall terminate upon the indefeasible payment in full of the
Obligations.

     15. MISCELLANEOUS.

          (a) This Agreement or any part hereof cannot be changed, waived, or
amended except by an instrument in writing signed by Pledgee; and waiver on one
occasion shall not operate as a waiver on any other occasion.

          (b) The Uniform Commercial Code and other laws of the Commonwealth of
Massachusetts shall govern the construction and enforcement of this Agreement.

          (c) If any part of this Agreement or any agreement, document, or
instrument executed in connection herewith shall be deemed invalid or
unenforceable by a court of competent jurisdiction, the remaining provisions
shall remain in full force and effect, and shall continue to be binding upon the
parties.

     16. JURISDICTION. The Pledgor irrevocably submits to the jurisdiction of
the courts of the Commonwealth of Massachusetts and the United States District
Court for the District of Massachusetts for the purpose of any suit, action or
other proceeding brought by the Pledgee arising out of or relating to this
Pledge Agreement, and the Pledgor waives and agrees not to assert by way of
motion, as a defense or otherwise in any such suit, action or proceeding, any
claim that the Pledgor is not personally subject to the jurisdiction of the
courts of the Commonwealth of Massachusetts or the United States District Court
for the District of Massachusetts or that the Pledgor's property is exempt or
immune from execution or attachment, either prior to judgment or in aid of
execution, that the suit, action or proceeding is improper, or that this Pledge
Agreement or the subject matter hereof may not be enforced in or by such court.
THE PLEDGOR HEREBY WAIVES ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING IN CONNECTION WITH ALL MATTERS CONTEMPLATED HEREBY AND DOCUMENTS
EXECUTED IN CONNECTION HEREWITH.

                                      -4-

<PAGE>   5

EXECUTED under seal at Westboro, Massachusetts as of the date first above
written.

                                           PLEDGOR:

                                           /s/ Edward Terino
                                           ------------------
                                           Edward Terino

                                           PLEDGEE:
                                           APPLIX, INC.

                                           By: /s/ Alan Goldsworthy
                                              ----------------------
                                           Name: Alan Goldsworthy
                                           Title: CEO

                                      -5-
<PAGE>   6

                EXHIBIT A TO PLEDGE AGREEMENT DATED JULY 31, 2000

  41,143 shares of Common Stock of Applix, Inc., a Massachusetts corporation.

                                      -6-
<PAGE>   7

                             SECURED PROMISSORY NOTE

                                                                   July 31, 2000

$180,000.63                                              Westboro, Massachusetts

     FOR VALUE RECEIVED, Edward Terino (the "Maker"), promises to pay to Applix,
Inc. ("Applix"), or order, at the offices of Applix or at such other place as
the holder of this Note may designate, the principal sum of $180,000.63,
together with interest on the unpaid principal balance of this Note from time to
time outstanding at the rate of six (6)% per year, compounded annually until
paid in full. Principal and interest shall be due and payable on July 31, 2005.
Any and all unpaid amounts hereunder, whether for principal, interest or other
charges shall be due and payable on July 31, 2005. In the event that the Maker
sells any Shares (as defined in the Pledge Agreement (as defined below)) prior
to July 31, 2005, the net proceeds from such sale shall become immediately due
and payable without notice or demand.

     Interest on this Note shall be computed on the basis of a year of 365 days
for the actual number of days elapsed. All payments by the Maker under this Note
shall be in immediately available funds.

     Payment of this Note is secured by a security interest in certain property
of the Maker (the "Collateral") pursuant to a pledge agreement of even date
herewith between the Maker and Applix (the "Pledge Agreement").

     This Note shall become immediately due and payable without notice or demand
upon the occurrence at any time of any of the following events of default
(individually, "an Event of Default" and collectively, "Events of Default"):

     (1)  default in the payment or performance of this or any other liability
          or obligation of the Maker to the holder, including the payment when
          due of any principal, premium or interest under this Note;

     (2)  the voluntary termination of the Maker's employment with Applix or the
          termination by Applix of the Maker's employment for Cause. For the
          purposes of this Note, "Cause" shall mean (a) a good faith finding by
          Applix that (i) the Maker has failed to perform his or her assigned
          duties for Applix and has failed to remedy such failure within 10 days
          following written notice from Applix to the Maker notifying him or her
          of such failure, or (ii) the Maker has engaged in dishonesty, gross
          negligence or misconduct, or (b) the conviction of the Maker of, or
          the entry of a pleading of guilty or nolo contendere by the Maker to,
          any crime involving moral turpitude or any felony;

     (3)  the occurrence of any event of default under the Pledge Agreement;

     (4)  the institution by or against the Maker or any indorser or guarantor
          of this Note of any proceedings under the United States Bankruptcy
          Code or any other federal or state bankruptcy, reorganization,
          receivership, insolvency or other similar law affecting the rights of
          creditors generally or the making by the Maker or any

<PAGE>   8

          indorser or guarantor of this Note of a composition or an assignment
          or trust mortgage for the benefit of creditors; or

     Upon the occurrence of an Event of Default, the holder shall have then, or
at any time thereafter, all of the rights and remedies afforded by the Uniform
Commercial Code as from time to time in effect in the Commonwealth of
Massachusetts or afforded by other applicable law.

     Every amount overdue under this Note shall bear interest from and after the
date on which such amount first became overdue at an annual rate which is two
(2) percentage points above the rate per year specified in the first paragraph
of this Note (the "Default Rate"). Such interest on overdue amounts under this
Note shall be payable on demand and shall accrue and be compounded monthly until
the obligation of the Maker with respect to the payment of such interest has
been discharged (whether before or after judgment).

     In no event shall any interest charged, collected or reserved under this
Note exceed the maximum rate then permitted by applicable law and if any such
payment is paid by the Maker, then such excess sum shall be credited by the
holder as a payment of principal.

     All payments by the Maker under this Note shall be made without set-off or
counterclaim and be free and clear and without any deduction or withholding for
any taxes or fees of any nature whatever, unless the obligation to make such
deduction or withholding is imposed by law. The Maker shall pay and save the
holder harmless from all liabilities with respect to or resulting from any delay
or omission to make any such deduction or withholding required by law.

     Whenever any amount is paid under this Note, such amount shall be applied
to first to interest, and then, to the extent the then outstanding interest has
been fully paid, to principal. Notwithstanding the foregoing sentence, at any
time after an Event of Default, the holder may apply any amounts paid under this
Note thereafter to principal, premium or interest, in such order and manner as
shall be determined by the holder in its discretion.

     No reference in this Note to the Pledge Agreement or any guaranty shall
impair the obligation of the Maker, which is absolute and unconditional, to pay
all amounts under this Note strictly in accordance with the terms of this Note.

     The Maker agrees to pay on demand all costs of collection, including
reasonable attorneys' fees, incurred by the holder in enforcing the obligations
of the Maker under this Note.

     No delay or omission on the part of the holder in exercising any right
under this Note or the Pledge Agreement shall operate as a waiver of such right
or of any other right of such holder, nor shall any delay, omission or waiver on
any one occasion be deemed a bar to or waiver of the same or any other right on
any future occasion. The Maker and every indorser or guarantor of this Note
regardless of the time, order or place of signing waives presentment, demand,
protest and notices of every kind and assents to any extension or postponement
of the time of payment or any other indulgence, to any substitution, exchange or
release of collateral, and to the addition or release of any other party or
person primarily or secondarily liable.

                                      -2-
<PAGE>   9

     This Note may be prepaid in whole or in part at any time or from time to
time upon five (5) days' prior written notice to the holder. Any such prepayment
shall be without premium or penalty.

     None of the terms or provisions of this Note may be excluded, modified or
amended except by a written instrument duly executed on behalf of the holder
expressly referring to this Note and setting forth the provision so excluded,
modified or amended.

     All rights and obligations hereunder shall be governed by the laws of the
Commonwealth of Massachusetts and this Note is executed as an instrument under
seal.

                                                /s/ Edward Terino
                                                --------------------
                                                Edward Terino

Attest:

/s/ Jerry Sisitsky
--------------------
Name: Jerry Sisitsky

                                      -3-<PAGE>   1
                                                                  Exhibit 10.1.4

                               FOURTH AMENDMENT TO
          SECOND AMENDED AND RESTATED FINANCING AND SECURITY AGREEMENT

     THIS FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED FINANCING AND SECURITY
AGREEMENT (this "Agreement") is made as of the 14th day of August, 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, Second Amendment to
Second Amended and Restated Financing and Security Agreement dated as of March
24, 2000, Third Amendment to Second Amended and Restated Financing and Security
Agreement dated as of June 12, 2000 (the "Third Amendment", 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 among the Borrower, the Guarantors, the Lenders and the Agent
with respect to the "Loan" (as defined in the Financing Agreement), including
the Revolving Credit Facility (as

                                       1
<PAGE>   2

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.

     B.   The Borrower has requested that the Agent and Lenders modify the SNR
Facility (as that term is defined in the Financing Agreement).

     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,
the Guarantors, the 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 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 August 11, 2000 is
$24,546,674.32 and under the SNR Note as of the open of business on the date of
this Agreement is $2,750,000.

     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.

                                       2
<PAGE>   3

          (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 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.   The Financing Agreement is hereby amended as follows:

          (h)  Section 1.1 of the Financing Agreement is hereby amended by
changing certain existing definitions in their entirety and adding certain new
definitions as follows:

          "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, EXCLUDING, HOWEVER, AN AMOUNT EQUAL TO CASH SEVERANCE PAYMENTS
     FOR EXECUTIVES WHO HAVE NOT BEEN REPLACED.

          "SNR COMMITMENT PERIOD" MEANS THE PERIOD OF TIME FROM THE SNR CLOSING
     DATE TO DECEMBER 31, 2000.

          "SNR PARTICIPANT" MEANS THE EACH OF THE FOLLOWING ENTITIES AND ITS AND
     ITS SUCCESSORS AND "SNR PARTICIPANTS" THE COLLECTIVE REFERENCE TO ALL OF
     FOLLOWING ENTITIES :

               WESTON PRESIDIO CAPITAL II, L.P., A DELAWARE LIMITED PARTNERSHIP

               BANCBOSTON VENTURES, INC., A DELAWARE CORPORATION

               ST. PAUL VENTURE CAPITAL V, LLC, A DELAWARE LIMITED LIABILITY
               COMPANY

               NATIONAL CITY CAPITAL CORPORATION, A DELAWARE CORPORATION

               MARLIN CAPITAL, L.P., A DELAWARE LIMITED PARTNERSHIP

                                       3
<PAGE>   4

          "SNR PARTICIPATION AGREEMENT" MEANS EACH NOTE PARTICIPATION AGREEMENT
     DATED AS OF AUGUST 14, 2000, ONE EACH FROM EACH SNR PARTICIPANT, SEVERALLY,
     IN FAVOR OF THE AGENT AND THE SNR LENDERS, AS AMENDED, MODIFIED, RESTATED,
     SUBSTITUTED, EXTENDED AND RENEWED FROM TIME TO TIME, WITH RESPECT TO THE
     SENIOR NOTE REDEMPTION SUBFACILITY; AND "SNR PARTICIPATION AGREEMENTS"
     MEANS THE COLLECTIVE REFERENCE TO ALL PARTICIPATION AGREEMENTS INCLUDED IN
     THE TERM "SNR PARTICIPATION AGREEMENT." THE "MAXIMUM INVESTMENT" (AS
     DEFINED RESPECTIVELY IN THE PARTICIPATION AGREEMENT S) FOR THE SNR
     PARTICIPANTS IS AS FOLLOWS:

<TABLE>
<CAPTION>
------------------------------------- ----------------------------- --------------------------
           SNR PARTICIPANT                     MAXIMUM                   CORRESPONDING
                                              INVESTMENT                   PERCENTAGE
------------------------------------- ----------------------------- --------------------------

<S>                                      <C>                          <C>
WESTON PRESIDIO CAPITAL II, L.P.               $4,000,000                   56.3550%
------------------------------------- ----------------------------- --------------------------

BANCBOSTON VENTURES, INC.                      $  586,875                    8.2683%
------------------------------------- ----------------------------- --------------------------

ST. PAUL  VENTURE CAPITAL V, LLC               $1,173,750                   16.5366%
------------------------------------- ----------------------------- --------------------------

NATIONAL CITY CAPITAL CORPORATION              $  587,250                    8.2736%
------------------------------------- ----------------------------- --------------------------

MARLIN CAPITAL, L.P.                           $  750,000                   10.5665%
------------------------------------- ----------------------------- --------------------------
</TABLE>
          (i)  References in the Financing Agreement and in any of the Financing
Agreement to "NationsBank" shall mean Bank of America.

     5.   The second paragraph of Section 2.6.1 (Senior Note Redemption
Subfacility) is hereby amended in its entirety as follows:

                    THE AMOUNT SET FORTH IN THE FOLLOWING TABLE IS HEREIN
     CALLED SUCH SNR LENDER'S "SNR COMMITTED AMOUNT," THE AGGREGATE OF ALL SNR
     LENDER'S SNR COMMITTED AMOUNTS EQUAL SEVEN MILLION NINETY-SEVEN THOUSAND
     EIGHT HUNDRED SEVENTY-FIVE DOLLARS ($7,097,875.00) AND IS HEREIN CALLED THE
     "TOTAL SNR COMMITTED AMOUNT," AND THE PROPORTIONATE SHARE SET FORTH IN THE
     FOLLOWING TABLE IS HEREIN CALLED SUCH SNR LENDER'S "SNR PRO RATA SHARE."

SNR LENDER                 SNR COMMITTED AMOUNT      SNR PRO RATA SHARE

BANK OF AMERICA               $3,275,946.13               46.1539%

                                       4
<PAGE>   5

SNR LENDER                 SNR COMMITTED AMOUNT      SNR PRO RATA SHARE

LASALLE                       $2,183,959.35               30.7692%

PNC                           $1,637,969.52               23.0769%

TOTAL SNR COMMITTED
AMOUNT                        $7,097,875                    100%

     6.   References in the Financing Agreement to the "SNR Participation
Agreement" and to the "SNR Participant" shall include all of the "SNR
Participation Agreements" and all of the "SNR Participants."

     7.   It is a condition of the agreements of the Agent and the Lenders under
this Agreement that as of the date of this Agreement (a) each of the Obligors
shall meet each of the requirements of Section 5.3 of the Financing Agreement
that were applicable to the Obligors on the SNR Closing Date, and (b) each of
the SNR Participants shall meet each of the requirements of Section 5.3 of the
Financing Agreement that were applicable to the "SNR Participant" (as that term
is defined in the Third Amendment), except that an opinion of counsel shall be
required only for Weston Presidio Capital II, L.P., a Delaware limited
partnership. Upon fulfillment of those requirements (including, without
limitation, the execution and delivery of the SNR Participation Agreements), the
"SNR Guaranty" (as that term is defined in the Third Amendment) and the "SNR
Participation" (as that term is defined in the Third Amendment) shall be
released, terminated and of no further force or effect.

     8.   With respect to the SNR Participations:

          (a)  After February 28, 2001 and before April 15, 2001, the SNR
Participants or the Borrower by notice to the Agent and the SNR Lenders may
request that the SNR Participation Agreements be released, which the Agent and
the SNR Lenders shall do if (i) the Borrower has delivered the annual financial
statements, certificates and opinions as and when required by Sections 6.1.1(a)
and (b); (ii) there shall exist no Default or Event of Default as of the date of
those financial statements, the date of the notice and the date of the release;
(iii) the outstanding principal amount of the Revolving Loan plus the
Outstanding Letter of Credit Obligations does not on the date of release exceed
(after the application of any proceeds of an advance under the Revolving Credit
Facility permitted under subsection (d) below) an amount equal to the lesser of
(A) the Total Revolving Credit Committed Amount or (B) the Borrowing Base, minus
Ten Million Dollars ($10,000,000) and minus an amount equal to accrued and
unpaid interest on the Senior Notes; and (iv) the conditions of the following
subparagraph (c) have been met. For the purposes of this release, the Agent may
conduct a field examination of the Borrower to confirm the values included in
the Borrowing Base and to confirm that trade, taxes, other amounts payable and
other obligations of the Borrower and the Guarantors have continued to be paid
when due.

                                       5
<PAGE>   6

          (b)  If the SNR Participants or the Borrower do not make a request
meeting the requirements of subsection (a) above, for a period of thirty (30)
days after the Borrower delivers the financial statements and certificates as
and when required by Sections 6.1.1(c) for a month that is also the end of a
fiscal quarter of the Borrower, the SNR Participants or the Borrower by notice
to the Agent and the SNR Lenders may request that the SNR Participation
Agreements be released, which the Agent and the SNR Lenders shall do if (i) the
Borrower has delivered the monthly financial statements and certificates as and
when required by Sections 6.1.1(c) for the fiscal quarter most recently ended;
(ii) there shall exist no Default or Event of Default as of the date of those
financial statements, the date of the notice and the date of the release; (iii)
the outstanding principal amount of the Revolving Loan plus the Outstanding
Letter of Credit Obligations does not on the date of release exceed (after the
application of any proceeds of an advance under the Revolving Credit Facility
permitted under subsection (d) below) an amount equal to the lesser of (A) the
Total Revolving Credit Committed Amount or (B) the Borrowing Base, minus Ten
Million Dollars ($10,000,000) and minus an amount equal to accrued and unpaid
interest on the Senior Notes; and (iv) the conditions of the following
subparagraph (c) have been met. For the purposes of this release, the Agent may
conduct a field examination of the Borrower to confirm the values included in
the Borrowing Base and to confirm that trade, taxes, other amounts payable and
other obligations of the Borrower and the Guarantors have continued to be paid
when due.

          (c)  The SNR Lenders shall have no obligation to release the SNR
Participation Agreements unless the Mortgage at the time of the release shall
grant a Lien covering the real property described therein to the Agent, for the
ratable benefit of the SNR Lenders and the Agent to secure the SNR Loan
Obligations (including, without limitation, the Agent's Obligations with respect
thereto), and shall:

               (i)  be in form and substance satisfactory to the Agent;

               (ii) create a first priority Lien in such real property in favor
     of the Agent, for the ratable benefit of the SNR Lenders and the Agent to
     secure the SNR Loan Obligations (including, without limitation, the Agent's
     Obligations with respect thereto), subject only to Permitted Liens, zoning
     ordinances, existing leases related to a PILOT program, and such other
     matters as the Agent may reasonably approve and subject to no preference
     claims or other claims under the Bankruptcy Codes or under other Laws
     affecting the rights of creditors generally;

               (iii) be accompanied by a current appraisal of the fair market
     value of the subject real property prepared by appraisers reasonably
     satisfactory to the Agent, which appraisal shall show that the outstanding
     principal balance of the SNR Loan does not exceed 75% of such fair market
     value, which balance shall not exceed $5,775,000 after the application of
     any proceeds of an advance under the Revolving Credit Facility permitted
     under subsection (d) below;

               (iv) be accompanied by a current survey reasonably satisfactory
     in all respects to the Agent of the subject real property, prepared by a
     registered land surveyor or engineer satisfactory to the Agent;

                                       6
<PAGE>   7

               (v)  be accompanied by evidence (including, without limitation, a
     Phase I report ordered by and for the Agent and meeting ASTM standards and
     the Agent's then current standards) reasonably satisfactory to the Agent
     regarding the current and past pollution control practices at such real
     property in connection with the discharge, emission, handling, disposal or
     existence of Hazardous Materials, which may include, at the Agent's
     request, an environmental audit of such real property prepared by a person
     or firm acceptable to the Agent;

               (vi) be accompanied by a mortgagee's title insurance policy or
     marked-up unconditional commitment or binder for such insurance in form and
     substance satisfactory to the Agent and issued by a title insurance company
     reasonably satisfactory to the Agent; and

               (vii) upon request of the Agent, be accompanied by a signed
     opinion of counsel addressed to the Agent and each of the Lenders, in form
     and substance satisfactory to the Agent, and from counsel, satisfactory to
     the Agent, licensed to practice in the state where the subject real
     property is located.

          (d)  The Agent and the Lenders agree that the proceeds of the
Revolving Credit Facility may be used to prepay the SNR Loan only if (i) at the
time of a request for release under subparagraph (a) or (b) above, the Borrower
makes a request for such use, stating the amount requested, (ii) the amount of
the requested use is necessary to enable the Borrower to meet the requirements
of clause (iii) of subparagraph (c) above, and (iii) upon such use, all
conditions for the release requested have been met.

     9.   The Borrower covenants and agrees to provide on or before August 31,
2000, the item required by clause (iv) of Section 8(c) above. This Section 9
replaces Section 10 of the Third Amendment.

     10.  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.

     11.  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.

     12.  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.

     13.  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

                                       7
<PAGE>   8

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.

     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 on the pages that follow.

           THE SIGNATURES FOLLOW ON SIGNATURE PAGES S-1 THROUGH S-7.

                                       8
<PAGE>   9

                                 Signature Page

                               Fourth Amendment to
                           Second Amended and Restated
                        Financing and Security Agreement

                                      among

 AAi.FOSTERGRANT, INC. and certain of its affiliates, BANK OF AMERICA, N.A.(in
  its capacity as "Agent"), and BANK OF AMERICA, N.A. and the other financial
     institutions which are parties to the Financing Agreement as "Lenders"

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

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

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

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

                                   FANTASMA, LLC

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

                                      S-1
<PAGE>   10

                                 Signature Page

                 Fourth Amendment to Second Amended and Restated
                        Financing and Security Agreement

                                      among

 AAi.FOSTERGRANT, INC. and certain of its affiliates, BANK OF AMERICA, N.A.(in
  its capacity as "Agent"), and BANK OF AMERICA, N.A. and the other financial
     institutions which are parties to the Financing Agreement as "Lenders"

                                   F.G.G. INVESTMENTS, INC.

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

                                   THE BONNEAU COMPANY

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

                                   BONNEAU GENERAL, INC.

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

                                      S-2
<PAGE>   11

                                 Signature Page

                 Fourth Amendment to Second Amended and Restated
                        Financing and Security Agreement

                                      among

 AAi.FOSTERGRANT, INC. and certain of its affiliates, BANK OF AMERICA, N.A.(in
  its capacity as "Agent"), and BANK OF AMERICA, N.A. and the other financial
     institutions which are parties to the Financing Agreement as "Lenders"

                                   BONNEAU HOLDINGS, INC.

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

                                   FOSTER GRANT HOLDINGS, INC.

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

                                      S-3
<PAGE>   12

                                 Signature Page

                 Fourth Amendment to Second Amended and Restated
                        Financing and Security Agreement

                                      among

 AAi.FOSTERGRANT, INC. and certain of its affiliates, BANK OF AMERICA, N.A.(in
  its capacity as "Agent"), and BANK OF AMERICA, N.A. and the other financial
     institutions which are parties to the Financing Agreement as "Lenders"

                                   O-RAY HOLDINGS, INC.

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

                                      S-4
<PAGE>   13

                                 Signature Page

                 Fourth Amendment to Second Amended and Restated
                        Financing and Security Agreement

                                      among

 AAi.FOSTERGRANT, INC. and certain of its affiliates, BANK OF AMERICA, N.A.(in
  its capacity as "Agent"), and BANK OF AMERICA, N.A. and the other financial
     institutions which are parties to the Financing Agreement as "Lenders"

                                   BANK OF AMERICA, N.A., Agent

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

                                   BANK OF AMERICA, N.A.
                                   in its capacity as a Lender

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

                                      S-5
<PAGE>   14

                                 Signature Page

                 Fourth Amendment to Second Amended and Restated
                        Financing and Security Agreement

                                      among

 AAi.FOSTERGRANT, INC. and certain of its affiliates, BANK OF AMERICA, N.A.(in
  its capacity as "Agent"), and BANK OF AMERICA, N.A. and the other financial
     institutions which are parties to the Financing Agreement as "Lenders"

                                   LASALLE BUSINESS CREDIT, INC.

                                   By: /s/ Stephen V. Rieger              (SEAL)
                                       -----------------------------------
                                       Stephen V. Rieger
                                       First Vice President

                                      S-6
<PAGE>   15

                                 Signature Page

                 Fourth Amendment to Second Amended and Restated
                        Financing and Security Agreement

                                      among

 AAi.FOSTERGRANT, INC. and certain of its affiliates, BANK OF AMERICA, N.A.(in
  its capacity as "Agent"), and BANK OF AMERICA, N.A. and the other financial
     institutions which are parties to the Financing Agreement as "Lenders"

                                   PNC BANK, NATIONAL ASSOCIATION

                                   By: /s/ Rose Crump                     (SEAL)
                                       -----------------------------------
                                       Rose Crump
                                       Vice President

                                      S-7
<PAGE>   16

EXHIBIT A-2

                                    SNR NOTE

$__________                                                  Baltimore, Maryland

                                                                 August __, 2000

     FOR VALUE RECEIVED, 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"), promises to pay to the order of
________________ (the "SNR Lender"), the principal sum of ____________________
DOLLARS ($___________) (the "Principal Sum"), or so much thereof as has been or
may be advanced to or for the account of the Borrower pursuant to the terms and
conditions of the "Financing Agreement" (as hereinafter defined) with respect to
the SNR Lender's SNR Pro Rata Share of the SNR Loan (as those terms are defined
in the Financing Agreement), together with interest thereon at the rate or rates
provided in the Financing Agreement. All capitalized terms used, but not
specifically defined herein, shall have the meanings given such terms in the
Financing Agreement.

     1.   INTEREST.

     Commencing as of the date hereof and continuing until repayment in full of
all sums due hereunder, the unpaid Principal Sum shall bear interest at the
Applicable Interest Rate or, if applicable, the Post Default Rate. The rate of
interest charged under this Note shall change immediately and contemporaneously
with any change in the Applicable Interest Rate. All interest payable under the
terms of this Note shall be calculated on the basis of a 360-day year and the
actual number of days elapsed.

     2.   PAYMENTS AND MATURITY.

     The unpaid Principal Sum, together with interest thereon at the rate or
rates provided above, shall be payable as follows:

          (e)  Interest shall be paid at the times for the payment of interest
set forth in Section 2.3 of the Financing Agreement; and

          (f)  The Borrower shall make installment payments of principal at the
times and in the amounts provided in Section 2.6.4 (Payments of Senior Note
Redemption Subfacility) of the Financing Agreement; and

          (g)  Unless sooner paid, the unpaid Principal Sum, together with
interest accrued and unpaid thereon, shall be due and payable in full on the
Revolving Credit Expiration Date (as that term is defined in the Financing
Agreement).

The fact that the balance hereunder may remain at or may be reduced to zero from
time to time pursuant to the Financing Agreement will not affect the continuing
validity of this Note or the

                                       14
<PAGE>   17

Financing Agreement, and the balance may be increased to the Principal Sum after
any such reduction to zero.

     3.   LATE CHARGES.

     If the Borrower shall fail to make any payment under the terms of this Note
within ten (10) days after the date such payment is due, the Borrower shall pay
to the SNR Lender on demand a late charge equal to five percent (5%) of such
payment.

     4.   APPLICATION AND PLACE OF PAYMENTS.

     All payments, made on account of this Note shall be applied first to the
payment of any late charge then due hereunder, second to the payment of accrued
and unpaid interest then due hereunder, then to any installments of principal
then due and payable hereunder, and, if the Borrower is permitted to make a SNR
Loan Optional Prepayment (as that term is defined in the Financing Agreement),
then to any applicable Early Termination Fee (as that term is defined in the
Financing Agreement), and the remainder, if any, shall be applied to
installments of principal in the inverse order of maturity. All payments on
account of this Note shall be paid in lawful money of the United States of
America in immediately available funds during regular business hours of Bank of
America, N. A. (the "Agent") at the office of Bank of America Business Credit in
Baltimore, Maryland or at such other times and places as the Agent (as that term
is defined in the Financing Agreement) may at any time and from time to time
designate in writing to the Borrower.

     5.   FINANCING AGREEMENT.

     This Note is an "SNR Note" described in 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, Second Amendment to Second Amended and Restated
Financing and Security Agreement dated as of March 24, 2000, Third Amendment to
Financing and Security Agreement dated the same date as this Note (the "Third
Amendment"), and as further amended, restated, modified, substituted, extended,
and renewed from time to time, the "Financing Agreement") by and among the
Borrower, Bank of America, N.A., a national banking association, in its capacity
as Agent (the "Agent"), the SNR Lender, and others identified from time to time
therein as "Obligors," "SNR Lenders" and "Lenders" under the Financing
Agreement. The indebtedness evidenced by this Note is included within the
meaning of the term "Obligations" under the Financing Agreement.

     6.   SECURITY.

     This Note is secured by the Mortgage (as that term is defined in the
Financing Agreement) and as otherwise provided in the Financing Agreement.

     7.   EVENTS OF DEFAULT.

     The occurrence of any one or more of the following events shall constitute
an event of default (individually, an "Event of Default" and collectively, the
"Events of Default") under the terms of this Note:

                                       15
<PAGE>   18

          (h)  The failure of the Borrower to pay to the SNR Lender when due any
and all amounts payable by the Borrower to the SNR Lender under the terms of
this Note; or

          (i)  The occurrence of an "Event of Default" (as defined in the
Financing Agreement).

     8.   REMEDIES.

         Upon the occurrence of an Event of Default, at the option of the SNR
Lender, all amounts payable by the Borrower to the SNR Lender under the terms of
this Note shall immediately become due and payable by the Borrower to the SNR
Lender without notice to the Borrower or any other person, and the SNR Lender
shall have all of the rights, powers, and remedies available under the terms of
this Note, any of the other Financing Documents and all applicable laws. The
Borrower and all endorsers, guarantors, and other parties who may now or in the
future be primarily or secondarily liable for the payment of the indebtedness
evidenced by this Note hereby waives presentment, protest and demand, notice of
protest, notice of demand and of dishonor and non-payment of this Note and
expressly agrees that this Note or any payment hereunder may be extended from
time to time without in any way affecting the liability of the Borrower,
guarantors and endorsers.

         The SNR Lender agrees with the Agent and the other Lenders that the
decisions and determinations of the Required Lenders in enforcing this Note and
in guiding the Agent in this matter shall be binding upon the SNR Lender,
including, without limitation, authorizing the Agent at the pro rata expense of
the SNR Lenders (to the extent not reimbursed by the Borrower) to retain
attorneys to seek judgment on this Note. The SNR Lender similarly agrees with
the Agent and the other Lenders and covenants with the Borrower that it will not
seek to separately institute any legal action on this Note. All rights of action
under this Note may be enforced by the Agent only and any suit or proceeding
instituted by the Agent in furtherance of such enforcement may be brought in its
name as Agent without the necessity of joining as plaintiffs or defendants the
SNR Lender, and the recovery of any judgment shall be for the benefit of the
Agent and the SNR Lenders, subject to the expenses of the Agent.

     9.   ARBITRATION.

     ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO INCLUDING, BUT
NOT LIMITED TO THOSE ARISING OUT OF THIS NOTE, THE FINANCING AGREEMENT OR THE
OTHER FINANCING DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN
ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE
FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE ACT), THE
RULES OF PRACTICE AND PROCEDURE FOR ARBITRATION OF COMMERCIAL DISPUTES OF THE
JUDICIAL ARBITRATION AND MEDIATION SERVICES, INC. (J.A.M.S.) AND THE "SPECIAL
RULES" SET FORTH BELOW. IN THE EVENT OF AN INCONSISTENCY, THE SPECIAL RULES
SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION. ANY PARTY TO THIS NOTE OR ANY OTHER FINANCING DOCUMENT MAY
BRING ANY ACTION, INCLUDING A SUMMARY OR EXPEDITED

                                       16
<PAGE>   19

PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS NOTE
RELATES IN ANY COURTS HAVING JURISDICTION OVER SUCH ACTION.

     (A)  SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE CITY OF
AGENT'S DOMICILE AT THE TIME OF EXECUTION OF THIS NOTE AND ADMINISTERED BY
J.A.M.S. WHO WILL APPOINT AN ARBITRATOR. IF J.A.M.S. IS UNABLE OR LEGALLY
PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION
ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90
DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A
SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCING OF SUCH HEARING FOR AN
ADDITIONAL 60 DAYS.

     (B)  RESERVATION OF RIGHTS. NOTHING IN THIS NOTE OR OTHER FINANCING
DOCUMENTS SHALL BE DEEMED TO: (I) LIMIT OR EXPAND THE APPLICABILITY OF ANY
OTHERWISE APPLICABLE STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED
IN THIS INSTRUMENT, AGREEMENT OR DOCUMENT; OR (II) BE A WAIVER BY THE LENDER OF
THE PROTECTION AFFORDED TO IT BY 12 U.S.C. 91 OR ANY SUBSTANTIALLY EQUIVALENT
STATE LAW; OR (III) LIMIT OR EXPAND THE RIGHT OF THE LENDER. (A) TO EXERCISE
SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SET OFF, OR (B) TO FORECLOSE
AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN FROM A COURT
PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE
RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE LENDER MAY
EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH
PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY
ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS NOTE OR ANOTHER LOAN DOCUMENT.
NEITHER THE EXERCISE OF SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF
ANY ACTION FOR FORECLOSURE OR FOR PROVISIONAL OR ANCILLARY REMEDIES SHALL
CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN SUCH
ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT
TO SUCH REMEDIES.

     10.  NOTICES.

     Any notice, request, or demand to or upon the Borrower or the SNR Lender
shall be deemed to have been properly given or made when delivered in accordance
with Section 9.1 of the Financing Agreement.

     11.  APPLICABLE LAW.

     The Borrower acknowledges and agrees that this Note shall be governed by
the laws of the State of Maryland, even though for the convenience and at the
request of the Borrower, this Note may be executed elsewhere.

                                       17
<PAGE>   20

     IN WITNESS WHEREOF, each of the Borrower has caused this Note to be
executed under seal by its duly authorized officers as of the date first written
above.

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

                                   By: /s/ Mark Kost                      (Seal)
----------------------------           -----------------------------------
                                       Mark Kost
                                       Chief Financial Officer

                                       18

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