Document:

Ex-10.5 Amended and Restated Employment Agreement

 

EXHIBIT 10.5

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     This Amended and Restated Employment Agreement (this “Agreement”) is entered into and shall be
effective as of September 1, 2005, by and among FGX International Inc., a Delaware corporation (the
“Company”), Steven Crellin, a resident of the State of Massachusetts (the “Employee”) and, solely
with respect to Section 21 of this Agreement, Magnivision, Inc., a Delaware corporation
(“Magnivision”).

RECITALS

     Magnivision and the Employee are parties to a certain Employment Agreement dated as of October
1, 2004 (the “Original Agreement”). The Company, the Employee and Magnivision desire to amend and
restate the Original Agreement to modify certain of the terms and conditions set forth therein.

TERMS OF AGREEMENT

     In consideration of the above recitals and the mutual covenants contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:

     1. Employment. The Company hereby agrees to employ the Employee to serve in the
capacities described herein, and the Employee agrees to accept such employment and perform such
services, upon the terms and subject to the conditions set forth in this Agreement.

     2. Term. The Employee’s employment by the Company under this Agreement shall commence on
September 1, 2005 (the “Commencement Date”) and expire on the close of business on August 31, 2008
(the “Expiration Date”). Thereafter, this Agreement shall automatically renew for successive one
(1) year periods, unless either party provides written notice to the other party of its intention
to terminate this Agreement thirty (30) days prior to the expiration of the term (each a “Renewal
Term” and together with the Initial Term, the “Term”). The Term shall be subject to earlier
termination in accordance with the terms and conditions of this Agreement. For purposes of this
Agreement, “Termination Date” shall mean the date on which this Agreement is terminated in
accordance with the terms of this Agreement.

     3. Duties and Responsibilities. During the Term, the Employee shall serve as an
Executive Vice President of FGX International Holdings Limited, a British Virgin Islands
corporation and the indirect parent of the Company (“FGX Holdings”), and each of its subsidiaries
(together with FGX Holdings, the “FGX Group”), and be responsible for overall sales, profitability
and business development for the FGX Group. The Employee shall perform such duties and have such
authority as may be assigned and delegated to him from time to time by the President of FGX
Holdings or the Board of Directors of FGX Holdings (the “Board”). The Employee shall at all times
perform his duties and responsibilities honestly, diligently, in good faith and to the best of his
ability. The Employee shall observe and comply with all of the rules, regulations, policies and
procedures established by the Company from time to time and all applicable laws, rules

 

 

and regulations imposed by governmental and regulatory authorities from time to time. The Employee’s
employment by the Company shall be full-time and exclusive and the Employee agrees that he will
devote his full business time, attention and energies to the performance of his obligations
hereunder. Notwithstanding the foregoing, the Employee shall be permitted to engage in charitable
and civic activities and manage his personal passive investments, provided such personal passive
investments are not in a company which engages in a business competitive with any business of the
FGX Group and provided that such activities do not individually or collectively interfere with the
performance of his duties and responsibilities under this Agreement. The Employee shall be based
in the greater Providence, Rhode Island area, subject to such travel as may be necessary to fulfill
his obligations under this Agreement.

     4. Compensation. As compensation for his services hereunder and in consideration of the
covenants set forth in Sections 10, 11, 12, 13, 14 and 15 below, the Company shall pay to the
Employee the following compensation, subject to any withholding and other taxes as may be imposed
by applicable federal, state or local government authorities and other normal and usual employee
deductions:

          (a) Base Salary. The Company shall pay to the Employee an annual base salary (the “Base
Salary”) of Three Hundred Thousand Dollars ($300,000.00) per year during the Term. The Base Salary
may be increased from time to time during the Term in the sole discretion of the Board. The Base
Salary shall, at a minimum, be reviewed by the Board on each anniversary of the date of Agreement
and shall be increased by no less than six percent (6%) on September 1, 2006 and September 1, 2007.
The Base Salary shall be payable in accordance with the Company’s customary payroll practices and
procedures and shall be prorated for any partial year during the Term.

          (b) Bonus. In addition to the Base Salary, the Employee shall be eligible for payment of
a bonus (the “Bonus”) of no less than 10% of the Base Salary and up to a maximum of 50% of the Base
Salary on account of the services rendered by him during each calendar year during the Term and the
attainment of certain performance goals established by the Company, and the amount of any such
bonus shall be payable from time to time during the Term in the sole discretion of the Board.

     5. Stock Options. Employee acknowledges that he has been granted stock options to
purchase ordinary shares of FGX Holdings on the terms and subject to the conditions set forth in
that certain Time-Based Incentive Stock Option Agreement dated October 2, 2004, which agreement
shall remain in full force and effect and unchanged hereby. In connection with the execution of
this Agreement, Employee shall also be granted additional options to purchase ordinary shares of
FGX Holdings pursuant to a separate Time-Based Incentive Stock Option Agreement dated as of
December 15, 2005 in the form attached hereto as Exhibit A.

     6. Fringe Benefits. The Employee shall be entitled to participate in all employee
benefit plans and programs (including, without limitation, profit sharing,
medical, disability and life insurance plans and programs) that the Company establishes and
makes generally available from time to time to its employees, subject, however, to the

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applicable eligibility requirements and other provisions of such plans and programs (including, without
limitation, requirements as to position, tenure, salary, age and health). The Employee shall also
be entitled to receive such fringe benefits and perquisites as may be generally provided by the
Company from time to time to its employees, in accordance with the policies of the Company in
effect from time to time.

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

     8. Reimbursement of Expenses. The Company shall pay or reimburse the Employee for all
reasonable travel, entertainment and other expenses incurred by him in connection with the
performance of his duties hereunder in accordance with the policies and procedures of the Company
as in effect from time to time provided that (a) such expenditure is of a nature
deductible under Section 162 of the Internal Revenue Code (the “Code”) on the Federal income tax
return of the Company as a business expense and not as deductible compensation to the Employee and
(b) Employee provides the Company with such documentary evidence as may in the opinion of the
Company be required by the Code or any regulation promulgated thereunder for the substantiation of
such expenditure as a deductible business expense of the Company and not as deductible compensation
to the Employee. The Employee agrees that, if at any time, any payment made to the Employee by the
Company as a business expense reimbursement shall be disallowed as a deductible expense to the
Company by the appropriate taxing authorities, the Employee shall reimburse the Company to the full
extent of such disallowance.

     9. Termination. Notwithstanding anything to the contrary contained in this Agreement,
the parties hereto shall have the right, in addition to any other rights and remedies which they
may have, to terminate this Agreement and the Employee’s employment hereunder as follows:

          (a) For Cause. The Company shall have the right to immediately terminate this Agreement
and the Employee’s employment with the Company hereunder by delivery of written notice to the
Employee upon (i) the willful failure of the Employee to follow the good faith directions of the
President of the Company or the executive officer of the Company charged with the supervision of
the Employee provided to the Employee consistent with the provisions of this Agreement (other than
any such failure resulting from his incapacity due to illness or physical or mental disability
which is subject to the provisions of Section 9(c) after written notice thereof from the Company
and a ten (10) day opportunity to cure, (ii) any act by the Employee of fraud or dishonesty,
misappropriation or embezzlement, or willful misconduct or gross negligence in connection with the
performance of the Employee’s duties hereunder, (iii) a breach by the Employee of any
provision hereof or of any contractual or legal duty to the Company (including, but not limited to,
the unauthorized disclosure of Confidential Information (as defined herein), and

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non-compliance with the written policies, guidelines and procedures of the Company or any of its affiliates),
after written notice thereof from the Company and a ten (10) day opportunity to cure in the event
that such breach was not willful, (iv) the commission by the Employee of a felony or a crime
involving moral turpitude (including pleading guilty or no contest to such crime or a lesser crime
which results from plea bargaining), whether or not such felony, crime or lesser offense was
committed in connection with the business of the Company, (v) habitual drunkenness or substance
abuse by the Employee or (vi) any act of the Employee which injures or could reasonably be expected
to injure the reputation, business or business relationships of the Company.

          (b) Death. This Agreement shall automatically terminate in the event of the Employee’s
death without notice to either party.

          (c) Disability. The Company shall have the right to terminate this Agreement and the
Employee’s employment with the Company hereunder upon not less than thirty (30) days’ prior written
notice to the Employee in the event that the Employee shall be unable to perform his duties
hereunder by virtue of illness or physical or mental disability (from any cause or causes
whatsoever) in substantially the manner and to the extent required of him hereunder prior to the
commencement of such disability, and the Employee shall fail to perform such duties for periods
aggregating one hundred eighty (180) days, whether or not continuous, in any continuous three
hundred sixty (360) day period (“Disability”).

          (d) Without Cause. The Company shall have the right to terminate this Agreement and the
Employee’s employment with the Company at any time without cause on not less than this (30) days’
prior written notice to the Employee.

          (e) Resignation for Good Reason. Notwithstanding anything to the contrary within this
Agreement, if the Company substantially changes the terms and conditions of Employee’s employment
by either (i) unilaterally reducing his Base Salary or (ii) substantially changing his job
responsibilities without his consent, then Employee shall have the right to terminate his
employment with the Company for “Good Reason.” Prior to doing so, the Employee shall be required to
provide notice to the Company in writing of the specific circumstances which the Employee contends
justify his resignation for “Good Reason,” and the Company shall have fifteen (15) business days in
which to cure such changes which led to the Employee’s determination to that he had the right to
resign for “Good Reason.” If the Employee resigns for “Good Reason,” he shall be entitled to the
severance benefits as if he had been terminated without cause as described in subsection (g) below.

          (f) Mutual Agreement. The parties may terminate the Employee’s employment with the
Company hereunder upon their mutual written consent.

          (g) Payments Upon Termination. In the event that the Company shall terminate this
Agreement and the Employee’s employment with the Company under Section 9(a), (b) or (c) above or
the Employee terminates his employment with the Company for any reason prior to the Expiration
Date, then the Company shall pay to the

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Employee (or his heirs and/or personal representatives) the
Base Salary earned through the date of termination and shall reimburse the Employee for any
expenses for which the Employee is entitled to reimbursement under Section 8 of this Agreement, and
the Company shall have no further obligation to the Employee. In the event that the Company shall
terminate this Agreement and the Employee’s employment with the Company under Section 9(d) above
(for a reason other than those covered by Sections 9(a), (b) or (c) above), then the Company shall
(i) pay to the Employee the Base Salary earned through the date of termination, when and as the
same would have been payable but for such termination, (ii) pay to the Employee the Bonus, if any,
that is payable to the Employee pursuant to Section 4(b) above on account of any year preceding the
year in which such termination occurs, when and as the same would have been payable hereunder but
for such termination, (iii) reimburse the Employee for any expenses for which the Employee is
entitled to reimbursement under Section 8 of this Agreement, when and as the same would have been
reimbursed but for such termination, (iv) continue to pay to the Employee the Base Salary (as in
effect on the last day of his employment with the Company) for a period of twelve (12) months
following the date of termination, or if the Company exercises its Noncompete Extension (as defined
below) the Company will continue to pay to the Employee the Base Salary (as in effect on the last
day of his employment with the Company) for a period of eighteen (18) months, and (v) continue to
provide the Employee with those medical, life and disability insurance benefits, if any, which are
provided to the Employee on the last day of his employment with the Company for a period of twelve
(12) months following his last day of employment with the Company, and the Company shall have no
further obligation to the Employee. In the event of termination, the Employee shall make reasonable
efforts to mitigate damages by seeking other employment; provided, however, that he
shall not be required to accept a position of substantially different character than the highest
position held by him with the Company or a position that would cause him to violate the provisions
of Section 12 hereunder, nor shall he be required to accept a position in a location which is
unreasonable, given the personal circumstances of the Employee. To the extent that the Employee
shall receive compensation, benefits and service credit for benefits from such other employment
during such twelve (12) month period following the date of termination, the payment to be made and
the benefits to be provided by the Company under the provisions of this Subsection 9(g) shall be
correspondingly reduced.

          (h) Change in Control. In the event that the assets of the Company are sold or
substantially divested, and any such successor in interest to the Company does not assume this
Agreement, then the Company agrees that the Employee shall be entitled to the severance benefits as
if he had been terminated without cause as described in subsection (g) above.

          (i) Certain Reductions of Payments by the Company.

               (1) Anything in this Agreement to the contrary notwithstanding, in the event it shall
be determined that any payment or distribution by the Company to or for the benefit of the
Employee, whether paid or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise (a “Payment”), would constitute an “excess parachute payment”
within the meaning of

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Section 280G(b) of the Code, and thus would result in the Employee
incurring an excise tax under Section 4999 of the Code, then the aggregate present value of
amounts payable or distributable to or for the benefit of the Employee pursuant to this
Agreement (such payments or distributions pursuant to this Agreement are hereinafter
referred to as “Agreement Payments”) shall be reduced to the Reduced Amount, but only if
and to the extent that the after-tax value to the Employee of reduced Agreement Payments
would exceed the after-tax value to the Employee of the Agreement Payments received by the
Employee without application of such reduction. The “Reduced Amount” shall be an amount
expressed in present value which maximizes the aggregate present value of Agreement
Payments without causing any Payment to be nondeductible by the Company because of Section
280G of the Code. Anything to the contrary notwithstanding, if the Reduced Amount is zero
and it is determined further that any Payment which is not an Agreement Payment would
nevertheless be nondeductible by the Company for Federal income tax purposes because of
Section 280G of the Code, then the aggregate present value of Payments’ which are not
Agreement Payments shall also be reduced (but not below zero) to an amount expressed in
present value which maximizes the aggregate present value of Payments without causing any
Payment to be nondeductible by the Company because of Section 280G of the Code. For
purposes of this Section 9(e)(i), present value shall be determined in accordance with
Section 280G(d)(4) of the Code. Thus, for illustrative purposes only, if the Employee’s
average W-2 compensation for the five (5) years prior to the year in which a change in
control occurs (the “Base Amount”) was $500,000, and the value of the payments and benefits
that are contingent upon the change in control (the “Parachute Payments”) was $1,510,000,
the Employee would have an excess parachute payment within the meaning of Section 280G(b)
of the Code since the value of the parachute payments ($1,510,000) would be greater than
three (3) times the Employee’s Base Amount ($1,500,000). The amount of the excess
parachute payment would be $1,010,000 (the amount by which the value of the parachute
payments exceeds one (1) times the Base Amount), and if the aggregate amount of the
parachute payments was not reduced, the Employee would incur an excise tax under Section
4999 of the Code equal to 20% of the excess parachute payment (or $202,000). This excess
parachute payment could be avoided if instead, the value of the parachute payments was
reduced by $10,001 to $1,499,999 (since the value of the parachute payments then would be
less than three (3) times the Base Amount). Since the Employee would receive a greater
after tax amount, under the foregoing example, if his parachute payments were reduced by
$10,001 (to $1,499,999) than he would if his parachute payments were not reduced and the
Employee incurred a $202,000 excise tax (reducing his parachute payments to $1,308,000) on
the excess parachute payment, the Employee’s parachute payments would be reduced under this
provision to $1,499,999 (by $10,001) to avoid any excess parachute payments.

               (2) All determinations required to be made under this Section 9(e)(i) shall be made by
the Company’s accountants for the Company’s last fiscal year or, at the mutual agreement of
the Employee and the Company, any other nationally or regionally recognized firm of
independent public accountants (the “Accounting Firm”), which shall provide detailed
supporting calculations both to

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the Company and the Employee within twenty (20) business
days of the date of termination or such earlier time as is requested by the Company and an
opinion to the Employee that he has substantial authority not to report any excise tax on
his Federal income tax return with respect to any Payments. Any such determination by the
Accounting Firm shall be binding upon the Company and the Employee. The Employee shall
determine which and how much of the Payments shall be eliminated or reduced consistent with
the requirements of this Section 9(e)(i), provided that, if the Employee does not make such
determination within ten business days of the receipt of the calculations made by the
Accounting Firm, the Company shall elect which and how much of the Payments shall be
eliminated or reduced consistent with the requirements of this Section 9(e)(i) and shall
notify the Employee promptly of such election. Within five business days thereafter, the
Company shall pay to or distribute to or for the benefit of the Employee such amounts as
are then due to the Employee under this Agreement. All fees and expenses of the Accounting
Firm incurred in connection with the determinations contemplated by this Section 9(e)(i)
shall be borne by the Company.

               (3) As a result of the uncertainty in the application of Section 280G of the Code at
the time of the initial determination by the Accounting Firm hereunder, it is possible that
Payments will have been made by the Company which should not have been made (“Overpayment”)
or that additional Payments which will not have been made by the Company could have been
made (“Underpayment”), in each case, consistent with the calculations required to be made
hereunder. In the event that the Accounting Firm, based upon the assertion of a deficiency
by the Internal Revenue Service against the Employee which the Accounting Firm believes has
a high probability of success, determines that an Overpayment has been made, any such
Overpayment paid or distributed by the Company to or for the benefit of the Employee shall
be treated for all purposes as a loan ab initio to the Employee which the Employee shall
repay to the Company together with interest at the applicable federal rate provided for in
Section 7872(f)(2) of the Code; provided, however, that no such loan shall be deemed to
have been made and no amount shall be payable by the Employee to the Company if and to the
extent such deemed loan and payment would not either reduce the amount on which the
Employee is subject to tax under Section 1 and Section 4999 of the Code or generate a
refund of such taxes. In the event that the Accounting Firm, based upon controlling
precedent or other substantial authority, determines that an Underpayment has occurred, any
such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee together with interest at
the applicable federal rate provided for in Section 7872(f)(2) of the Code.

     10. Confidential Information. The Employee recognizes and acknowledges that he will have
access to certain Confidential Information (as defined below) and that such information constitutes
valuable, special and unique property of FGX Group. The Employee acknowledges that the Confidential
Information is and shall remain the exclusive property of the FGX Group. The Employee agrees that
he will not at any time (whether during the Term or at any time thereafter) disclose any
Confidential Information to anyone outside the FGX Group, or utilize any Confidential Information
for his own

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benefit or the benefit of any third party without the prior written consent of the
Company. The Employee further agrees that all memoranda, disks, files, notes, records or other
documents which contain Confidential Information, whether in electronic form or hard copy, and
whether created by the Employee or others, which come into his possession, shall be and remain the
exclusive property of the FGX Group to be used by the Employee only in the performance of his
obligations hereunder. The Employee agrees that the foregoing restrictions shall apply whether or
not such information is marked “Confidential,” “Proprietary” or otherwise. For purposes hereof,
“Confidential Information” shall mean and include all information, whether written or oral,
tangible or intangible, of a private, secret, proprietary or confidential nature, of or concerning
the FGX Group or their business or operations, including without limitation any trade-secrets or
know-how, computer software programs in both source code and object code form, any technique,
process or methodology, any sales, promotional or marketing plans, programs, techniques, practices
or strategies, any expansion plans (including existing and entry into new markets), any operational
or management guidelines any cost, pricing or other financial data or projections, the identity and
background of any customer, employee, prospect, supplier or investor, and any other information
that is to be treated as confidential because of any duty of confidentiality owed by the FGX Group
to a third party or any other information that any member of the FGX Group shall, in the ordinary
course of business, possess or use and not release externally without restriction on use or
disclosure. Notwithstanding the foregoing, the term “Confidential Information” shall not include
information which (a) was known by the Employee prior to the commencement of his employment with
the Company, (b) becomes available to the Employee from a source other than a member of the FGX
Group or parties with whom any member of the FGX Group does business that is not bound by a duty of
confidentiality to any member of the FGX Group or such other parties or (c) becomes generally
available or known in the industry other than as a result of its disclosure by the Employee. In the
event that the Employee becomes, on the advice of counsel, legally obligated to disclose any
Confidential Information other than to a member of the FGX Group, he will provide the Company with
prompt written notice thereof so that the FGX Group may seek a protective order or other
appropriate remedy and the Employee will cooperate with and assist the FGX Group in securing such
protective order or other remedy. In the event that such protective order is not obtained, or that
the FGX Group waives compliance with the provisions of this Section to permit a particular
disclosure, the Employee will furnish only that portion of the Confidential Information which he
is, on the advice of counsel, legally required to disclose. The Employee agrees to execute such
confidentiality agreements that the Board may adopt and/or modify from time to time as a standard form to be executed by
employees of the Company.

     11. Return of Documents and Property. Upon the termination of the Employee’s employment
with the Company or at any other time upon the request of the Company, the Employee (or his heirs
or personal representatives) (a) shall deliver to the Company all memoranda, disks, flies, notes,
records or other documents which contain or are based upon Confidential Information and shall not
retain any copies thereof in any format or storage medium (including computer disk or memory) and
(b) purge from any computer system in his possession other than those owned by and returned to the

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Company, all computer files which contain or are based upon any Confidential Information and
confirm such purging in writing to the Company.

     12. Noncompetition. The Employee acknowledges that the members of the FGX Group engage in
a competitive business, the Employee’s services and responsibilities are unique in character and
are of particular significance to the members of the FGX Group, and the Employee’s position with
the Company will place him in a position of confidence and trust with the customers, suppliers,
employees of and investors in the FGX Group. The Employee consequently agrees that it is reasonable
and necessary for the protection of the members of the FGX Group and its goodwill and business that
the Employee makes the commitments set forth herein. The Employee therefore agrees that during the
Term and for a period of eighteen (18) months thereafter (the “Noncompete Period”), he will not as
an individual proprietor, partner, shareholder, officer, director, employee, consultant,
independent contractor, agent, joint venturer, investor or lender, directly or indirectly, engage
anywhere in the United States in the business of providing services relating to the sale or
distribution of jewelry, sunglasses, reading glasses or any of their accessories or in any other
business engaged in by any member of the FGX Group while the Employee was employed by the Company;
provided, however, that the beneficial ownership by the Employee of less than five
percent (5%) of the shares of common stock of any other corporation having a class of equity
securities actively traded on a national securities exchange or over-the-counter market shall not
be deemed, in and of itself, to violate the prohibitions of this Section 12. Notwithstanding the
foregoing, for so long as a majority of the issued and outstanding capital stock of the Company is
owned directly or indirectly by Berggruen Holdings, Inc. or one or more of its affiliates or a
representative of Berggruen Holdings, Inc. or one or more of its affiliates is on the Board (or any
entity owning a majority of the issued and outstanding shares of the Company, whether directly or
indirectly) the Company shall have the right to extend the Noncompete Period for an additional six
(6) months for a total of twenty-four (24) months (the “Noncompete Extension”) by delivering to
Employee written notice of such decision prior to termination of the original eighteen (18) month
Noncompete Period.

     13. Non-Solicitation of Employees. The Employee agrees that he will not during the
Noncompete Period, directly or indirectly, employ or permit any company or business directly or
indirectly controlled by him to employ, any person who is, or at any time during the preceding
twelve month period, was an employee of any member of the
FGX Group, or induce, persuade or seek to induce or persuade any such person to leave his
employment with any member of the FGX Group.

     14. Non-Disparagement. The Employee agrees that at all times during and after the Term,
the Employee will not engage in any conduct that is injurious to the reputation or interests of any
member of the FGX Group, including, but not limited to, making disparaging comments (or inducing or
encouraging others to make disparaging comments) about any member of the FGX Group, or any of their
respective, directors, officers, employees or agents, or their respective operations, financial
condition, prospects, content, products or services.

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     15. Intellectual Property.

          (a) Ownership of Developments. The Employee acknowledges that all original works of
authorship, inventions, improvements, discoveries, developments, concepts, software (including,
without limitation, images, text, source code, object code, html code and scripts), databases and
trade secrets and other original works, and any upgrades, modifications, improvements or
enhancements to the foregoing and any related patents, patent applications, copyrights and
copyright applications, which are created, made, conceived, developed or reduced to practice by the
Employee or under his or her direction or jointly with others during the Term or within one (1)
year thereafter (whether or not during normal working hours, on the premises of the Company or
using Company’s equipment or Confidential Information), which relate to the present or anticipated
business activities of the FGX Group (all of which are collectively referred to as “Developments”)
are and shall remain the sole and exclusive property of the Company, and all right, title and
interest therein, whether or not used by the Company, shall, from the inception of development, be
exclusively and perpetually the property of the Company. Unless otherwise agreed to in writing by
the Company, nothing in this or any agreement or in the course of dealing between the Employee and
the Company shall be construed to grant the Employee or his affiliates any ownership right, title
or interest in or license to any of the Developments. The Employee acknowledges that all
Developments made by the Employee (solely or with others) within the scope of the Employee’s
employment and winch are protectable by copyright are “works made for hire” within the meaning of
the U.S. Copyright Act and any other U.S. and foreign laws relating to intellectual property. To
the extent that any Developments shall not be deemed “works made for hire”, the Employee hereby
irrevocably assigns to the Company any of his worldwide right, title or interest in and to all
Developments and all intellectual property rights, including but not limited to all worldwide
copyrights, trade secrets, patent rights and trademark rights, in and to all of the Developments,
and any extensions and renewals thereof.

          (b) Obligations of the Employee. The Employee shall (i) promptly notify, make full
disclosure to, and execute and deliver any documents requested by, the Company, to evidence or
better assure title to all Developments in the Company, as so requested, (ii) renounce any and all
claims, including but not limited to claims of ownership and royalty, with respect to all
Developments and all other property owned or licensed by any member of the FGX Group, (iii) assist
the members of the FGX Group in obtaining, maintaining and enforcing for itself at its own expense United States and foreign
patents, copyrights, trademark, trade secret or other protection of any and all Developments and
(iv) promptly execute, whether during his employment with the Company or thereafter, all
applications, endorsements or other documents necessary or appropriate to maintain patents and
other rights for any member of the FGX Group and to protect the title of the members of the FGX
Group thereto, including but not limited to assignments of such patents, copyrights, trademark,
trade secrets and other rights in accordance with Subsection (c) below.

          (c) Patent and Copyright Registrations. The FGX Group and their nominees shall have the
right to use and apply for common law and statutory protections of all Developments in any and all
countries and jurisdictions. Furthermore, the Employee

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agrees to assist the members of the FGX Group or their designees, at the FGX Group’s expense, in every proper way to secure the FGX Group’s
rights in the Developments and any patents, copyrights, trademark and mask work rights or other
intellectual property rights relating thereto in any and all countries and jurisdictions, including
the disclosure to the Company of all pertinent information and data with respect thereto, the
execution of all applications, specifications, oaths, assignments and all other instruments which
the Company shall deem necessary in order to apply for and obtain such rights and in order to
assign and convey to the FGX Group, their successors, assigns and nominees the sole and exclusive
right, title and interest in and to such Developments, including all rights associated with works
of authorship throughout the world, any copyrights, patents, mask work rights, trade secrets, or
other intellectual property rights relating thereto or analogous to those set forth herein. The
Employee further agrees that his obligation to execute or cause to be executed any such instrument
or papers shall continue after the termination of this Agreement. If the FGX Group is unable
because of the Employee’s mental or physical incapacity, his refusal or for any other reason to
secure his signature to apply for or to pursue any application for any United States or foreign
patents or copyright registrations covering Developments, then the Employee hereby irrevocably
designates and appoints the Company and its duly authorized officers and agents as his agent and
attorney-in-fact, which designation and appointment is coupled with an interest, to act for and on
his behalf and stead, to execute and file any such applications and to do all other lawfully
permitted acts to further the prosecution and issuance of patent or copyright registrations thereon
with the same legal force and effect as if executed by the Employee. The foregoing rights shall
also apply to any divisions, continuations, renewals, reissues and extensions of the foregoing, as
applicable, now existing or hereafter filed, issued or acquired.

          (d) Prior Inventions Retained and Licensed. Attached hereto as Exhibit B is a
list describing all inventions, original works of authorship, developments, improvements and trade
secrets which were created, made, conceived, developed or reduced to practice by the Employee prior
to his employment with the Company which relate to the present or anticipated business activities
of the FGX Group(collectively, the “Prior Inventions”). The Prior Inventions shall belong to the
Employee and shall not be assigned to the Company hereunder. If no such Prior Inventions are
listed on Exhibit B, the Employee represents that there are no such Prior Inventions. If
in the course of his employment with the Company, the Employee incorporates into any invention,
improvement, development, product, copyrightable material or trade secret any invention,
improvement, development, concept, discovery or other proprietary information owned by the Employee
or in which the Employee has an interest, the Company is hereby granted and shall have a
nonexclusive royalty-free, irrevocable, perpetual, worldwide license to make, have made, modify,
use and sell such item as part of or in connection with such product, process or machine.

          (e) Inventions Assigned to the United States. The Employee agrees to assign to the United
States government all his right, title, and interest in and to any and all Developments whenever
such full title is required to be in the United States by a contract between the Company and the
United States or any of its agencies.

11

 

          (f) Maintenance of Records. The Employee agrees to keep and maintain adequate and current
written records of all Developments made by the Employee (solely or jointly with others) during the
term of his employment with the Company. The records will be in the form of notes, sketches,
drawings, and any other format that may be specified by the Company. The records will be available
to and remain the sole property of the Company at all times.

     16. Enforceability of Restrictive Covenants. The Employee hereby acknowledges that the
restrictions on his activity contained in Sections 10, 11, 12, 13, 14 and 15 are necessary for the
reasonable protection of the members of the FGX Group and are a material inducement to the Company
entering into this Agreement and the Option Agreement. The Employee further acknowledges that a
breach or threatened breach of any such provisions would cause irreparable harm to the members of
the FGX Group for which there is no adequate remedy at law. The Employee agrees that in the event
of any breach or threatened breach of any provision contained in Section 10, 11, 12, 13, 14 or 15
of this Agreement, the Company shall have the right, in addition to any other rights or remedies it
may have, to seek injunctive relief without having to post bond or other security and without
having to prove special damages or the inadequacy of the available remedies at law. The parties
acknowledge that (a) the time, scope, geographic area and other provisions contained in Sections
10, 11, 12, 13, 14 and 15 are reasonable and necessary to protect the goodwill and business of the
Company, (b) the customers of the Company may be serviced from any location and accordingly it is
reasonable that the covenants set forth herein are not limited by narrow geographic area and (c)
the restrictions contained in Sections 10, 11, 12, 13, 14 and 15 will not prevent him from being
employed or earning a livelihood. If any covenant contained in Section 10, 11, 12, 13, 14 or 15 is
held to be unenforceable by reason of the time, scope or geographic area covered thereby, such
covenant shall be interpreted to extend to the maximum time, scope or geographic area for which it
may be enforced as determined by a court making such determination, and such covenant shall only
apply in its reduced form to the operation of such covenant in the particular jurisdiction in which
such adjudication is made. In the event that the Company shall bring any action, suit or
proceeding against the Employee for the enforcement of this Agreement, the calculation of the
Noncompete Period shall not include the period of time commencing with the filing of the action,
suit or proceeding to enforce this Agreement through the date of the final judgment or final
resolution (including all appeals, if any) of such action, suit
or proceeding. The existence of any claim or cause of action by the Employee against any
member of the FGX Group predicated on this Agreement or otherwise shall not constitute a defense to
the enforcement by the Company of any provision of Section 10, 11, 12, 13, 14 or 15.

     17. Section 409A. To the extent that the Employee otherwise would be entitled to any
payment (whether pursuant to this Agreement or otherwise) during the six months beginning on the
Expiration Date that would be subject to the additional tax imposed under Section 409A of the Code
(“Section 409A”), (x) the payment shall not be made to the Employee during such six month period
and (y) the payment, together with interest at the applicable federal rate provided for in Section
7872(f)(2) of the Code shall be paid to the Employee on the earlier of the six-month anniversary of
the Expiration Date or the Employee’s death or Disability. Similarly, to the extent that the
Employee otherwise

12

 

would be entitled to any benefit (other than a payment) during the six months
beginning on the Expiration Date that would be subject to the Section 409A additional tax, the
benefit shall be delayed and shall begin being provided (together, if applicable, with an
adjustment to compensate the Employee for the delay) on the earlier of the six-month anniversary of
the Expiration Date, or the Employee’s death or Disability.

     18. Limited Arbitration. In the event that the Employee is terminated by the Company
hereunder for Cause, the Employee shall have the right to give notice to the Company of his
decision to arbitrate whether or not such termination was for Cause or without Cause, provided that
the Employee provides the Company with written notice of his intent to arbitrate such dispute
within thirty (30) days of the date of termination. Each party shall select one arbitrator, and
the two arbitrators thereby selected shall select a third arbitrator. The arbitration shall take
place in Providence County, Rhode Island or such other place as the parties shall agree, under the
then-current Commercial Arbitration Rules of the American Arbitration Association. The decision of
a majority of the three arbitrators will be final and binding on the parties to this Agreement.
The arbitrators will only have the authority to determine whether such termination was for Cause or
without Cause, and will not have the authority to award any damages whatsoever. Following such
decision, the parties agree that all of the terms of this Agreement shall continue to govern the
parties, including, without limitation, the restrictive covenants in Sections 10 through 15 and any
severance payments or benefits, if any, to be provided by the Company to the Employee.

     19. Conflict. The Employee hereby represents and warrants to the Company that neither the
execution or delivery of this Agreement by him nor the performance by him of his duties hereunder
shall constitute a default, breach or violation of any understanding, contract or commitment,
written or oral, express or implied, to which the Employee is a party or to which the Employee is
or may be bound, including, without limitation, any understanding, contract or commitment with any
present or former employer. The Employee hereby agrees to indemnify and hold the Company harmless
from and against any and all claims, losses, damages, liabilities, costs and expenses (including,
without limitation, attorneys fees and expenses) incurred by the Company in
connection with any default, breach or violation by the Employee of any such understanding,
contract or commitment.

     20. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors and assigns, except that the Employee may not
assign any of his rights or delegate any of his duties hereunder without the prior written consent
of the Company (which may be granted or withheld in the Company’s sole and absolute discretion).

     21. Entire Agreement. This Agreement constitutes the entire understanding of the parties
relating to the subject matter hereof and supersedes and cancels any and all prior agreements,
understandings, arrangements, promises and commitments, whether written or oral, express or
implied, relating to the subject matter hereof, including, without limitation, that certain
Employment Agreement dated as of March 1, 1997 between American Greetings Corporation and the
Employee, as assigned to Magnivision, Inc. as of

13

 

July 29, 2004 (the “Prior Agreement”), the Original Agreement and all such prior agreements, understandings, arrangements, promises and
commitments, including, without limitation, the Prior Agreement and the Original Agreement, are
hereby canceled and terminated. The Employee hereby acknowledges that any compensation or benefits
the Employee otherwise may have been entitled to under the Prior Agreement and the Original
Agreement are hereby waived. Magnivision hereby acknowledges that any rights of Magnivision or
obligations of the Employee under the Prior Agreement and Original Agreement are hereby waived.

     22. Amendment. This Agreement may not be amended, supplemented or modified in whole or in
part except by an instrument in writing signed by the party or parties against whom enforcement of
such amendment, supplement or modification is sought.

     23. Survival. The provisions of Sections 9 through 33 hereof shall survive the
termination or expiration of this Agreement.

     24. Notices. Any notice, request or other document required or permitted to be given
under this Agreement shall be in writing and shall be deemed given (a) upon delivery, if delivered
by hand, (b) three (3) days after the date of deposit in
the mail, postage prepaid if mailed by U.S. certified or registered mail, or (c) on the next business day, if sent by prepaid overnight
courier service, in each case, addressed as follows:

If to the Employee, to the address

set forth below his name on the

signature page hereto.

If to the Company, to:

FGX International Inc.

Attention: President

500 George Washington Highway

Smithfield, Rhode Island 02917

with a copy to:

Greenberg Traurig

401 E. Las Olas Boulevard, Suite 2000

Fort Lauderdale, Florida 33301

Attention: Bruce I. March, Esq.

Any party may change the address to which notice shall be sent by giving notice of such change of
address to the other parties in the manner provided above.

     25. Waivers. The failure or delay of any party to enforce any provision of this Agreement
shall in no way affect the right of such party to enforce the same or any other provision of this
Agreement. The waiver by any party of any breach of any provision of this Agreement shall not be
construed as a waiver by such party of any succeeding breach

14

 

of such provision or a waiver by such
party of a breach of any other provision. The granting of any consent or approval by any party in
any one instance shall not be construed to waive or limit the need for such consent or approval in
any other or subsequent instance.

     26. Governing Law and Jurisdiction. This Agreement shall be construed in accordance with
and governed by the laws of the State of Rhode Island applicable to contracts executed and to be
wholly performed within such State (without regard to the choice of law provisions thereof). Each
party hereby irrevocably and unconditionally consents and submits to the exclusive jurisdiction of
the courts of the State of Rhode Island sitting in Providence County, Rhode Island and of the
United States District Court for the District of Rhode Island for any actions, suits or proceedings
arising out of or relating to this Agreement and the transactions contemplated hereby and each
party agrees not to commence any action, suit or proceeding relating thereto except in such courts
(except as set forth in Section 18 above). Each party further agrees that any service of process,
summons, notice or document sent by U.S. registered mail to its address set forth herein shall be
effective service of process for any action, suit or proceeding brought against it in any such
court. Each party irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions contemplated
hereby in such courts, and irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any action, suit or proceeding brought in any such court has been brought in
an inconvenient forum.

     27. Severability. If any term or provision of this Agreement shall be determined by a
court of competent jurisdiction to be illegal, invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall remain enforceable and the invalid, illegal or
unenforceable provisions shall be modified so as to be valid and enforceable and shall be enforced.

     28. Assignment. The rights and obligations of the parties under this Agreement shall
inure to the benefit of and shall be binding upon the successors and permitted assigns of the
parties. Notwithstanding anything contained herein to the contrary, the Company shall have the
right to assign this Agreement to any member of the FGX Group or any third party who acquires the
Company or substantially all of the assets of the Company. Except as otherwise set forth in this
Agreement, neither party may assign his or its rights or obligations under this Agreement without
the prior written consent of the other party.

     29. Third Party Beneficiaries. Each of the parties hereto agree that each member of the
FGX Group is and shall be deemed an intended third party beneficiary of the Company’s rights under
Sections 10 through 16 of this Agreement with full rights to enforce the provisions thereof as if a
signatory hereto.

     30. Section Headings. Section headings are included in this Agreement for convenience of
reference only, and shall in no way affect the meaning or interpretation of this Agreement.

15

 

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

     32. Number of Days. In computing the number of days for purposes of this Agreement; all
days shall be counted, including Saturdays, Sundays and holidays; provided,
however, if the final day of any time period falls on a Saturday, Sunday or holiday on
which federal banks in the United States are or may elect to be closed, then the final day should
be deemed the next day which is not a Saturday, Sunday or such holiday.

     33. Attorneys’ Fees. In any action brought to enforce any provision of this Agreement,
the prevailing party shall be entitled to recover reasonable attorneys’ fees and costs from the
other party to the action or proceeding. For purposes of this Agreement, the “prevailing party”
shall be deemed to be that party who obtains substantially the result sought, whether by
settlement, mediation, judgment, arbitration or otherwise, and “attorneys’ fees” shall include,
without limitation, the actual attorneys’ fees incurred in retaining counsel for advice,
negotiations, suit, or other legal proceeding, including mediation and arbitration.

[SIGNATURES ON FOLLOWING PAGE]

16

 

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

	 	 	 	 	 
	 	FGX INTERNATIONAL INC.

 	 
	 	By:  	/s/ Brian J. Lagarto
 	 
	 	 	Name:  	Brian Lagarto 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	EMPLOYEE

 	 
	 	By:  	/s/ Steven Crellin
 	 
	 	 	Name:  	Steven Crellin 	 
	 	 	Address: 10 Hales Pond Lane

Wrentham, MA 02093 	 
	 
	 	MAGNIVISION, INC.

 	 
	 	 	 
	 	By:  	                                        /s/ Brian J. Lagarto
 	 
	 	 	Name:  	Brian Lagarto 	 
	 	 	Title:  	Chief Financial Officer 	 

17

 

	 	 	 	 	 

EXHIBIT A

FORM OF TIME-BASED INCENTIVE STOCK OPTION AGREEMENT

18

 

EXHIBIT B

PRIOR INVENTIONS

19

 

EXECUTIVE EMPLOYEE BENEFITS

	 	1.	 	Pre-Tax Medical — eligible the 1st of the month following 30 days
of employment. Open Enrollment is January of each year.
	 
	 	2.	 	Pre-Tax Dental — eligible the 1st of the month following 30 days
of employment. Open Enrollment is January of each year.
	 
	 	3.	 	Life Insurance through Medical Life Insurance Company, after 30 days of
employment. This benefit is company paid and pays two times annual salary over
$60,000 up to an aggregate of $400,000. Supplemental units of this life insurance for
spouse and children will soon be available through payroll deductions.
	 
	 	4.	 	401K Plan through Fidelity Investments, eligible the 1st of the
month(4) . There are 12 investment options. The company will match 25% of the first
6% of salary deducted by eligible employees.
	 
	 	5.	 	Paid Time Off “PTO.” Twenty (20) Days per year based on the Company’s PTO
policy.
	 
	 	6.	 	Company Paid Long Term Disability, through Prudential & Unum Provident for
salary of $75,000 and over.
	 
	 	7.	 	Vision Reimbursement of up to $100 per year for the purchase of eyeglasses or
contacts for the employee as well as each family member enrolled in the company’s
healthcare plan.
	 
	 	8.	 	Annual auto allowance of $11,400.00 paid weekly to begin upon termination of
Magnivision automobile lease.
	 
	 	9.	 	If the terms of this Agreement shall be extended, annual wage review on
September 1 of each year starting with August 1, 2008 shall be by no less than the
increase in the Consumer Price Index for all Urban Consumers (CPI-U), Boston,
Massachusetts, published by the Bureau of Labor Statistics of the United States
Department of Labor (1982-1984=100) (the “Index”) with increase based on CPI-U Boston
base date January 2005.

     These Executive Employee Benefits may be modified or changed by the Company from time to time
at the discretion of the Board.

20Ex-10.6 Amended and Restated Employment Agreement

 

EXHHIBIT 10.6

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     This Amended and Restated Employment Agreement (the “Agreement”) is entered into as of the
10th day of April, 2006, by and among FGX International Inc., a Delaware corporation
with a mailing address of 500 George Washington Highway, Smithfield, Rhode Island 02917 (the
“Company”), John H. Flynn, Jr., an individual with a residence address of 52 Second Street,
Newport, Rhode Island 02840 (“Executive”), and, solely with respect to Section 13 of this
Agreement, AAi.FosterGrant, Inc., a Rhode Island corporation (“FosterGrant”).

INTRODUCTION

     FosterGrant and Executive are parties to a certain Employment Agreement dated April 10, 2002,
as amended on October 1, 2003 and September 30, 2004 (the “Original Agreement”). The Company,
Executive and FosterGrant desire to amend and restate the Original Agreement to modify certain of
the terms and conditions set forth therein.

AGREEMENT

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

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

     2. Employment; Duties. Subject to the terms and conditions set forth herein,
Executive shall serve as President of FGX International Holdings Limited, a British Virgin Islands
corporation and the indirect parent of the Company (“FGX Holdings”), and each of its subsidiaries
(together with FGX Holdings, the “FGX Group”) during the Employment Period. The duties assigned
and authority granted to Executive shall be as set forth in the By-laws of the Company and as
determined by the Chief Executive Officer from time to time. Executive agrees to perform his
duties for the FGX Group diligently, competently, and in a good faith manner. Executive may also
engage in civic and charitable activities to the extent they are not inconsistent with Executive’s
duties hereunder.

     3. Salary and Bonus.

          (a) Base Salary. Executive shall be entitled to receive a base salary from the
Company during the Employment Period at the rate of no less than Three Hundred Seventy Thousand and
00/100 Dollars ($370,000) per annum (as from time to time, if at all increased, the “Salary”).
Executive’s Salary shall not be decreased, and after the first twelve (12) months shall be
increased on each anniversary date of this Agreement (the “Anniversary Date”), based upon the
increase in the Consumer Price Index for all Urban Consumers (CPI-U), Boston, Massachusetts,
published by the Bureau of Labor Statistics of the United States Department of Labor
(1982-1984=100) (the “Index”). If, on an Anniversary Date, the Index shows an increase from the
base date of January, 2005 (the “Base Date”), then Executive’s Salary for the ensuing 12 months
shall be the product of (a) Three Hundred Seventy Thousand Dollars ($370,000) and

 

 

(b) one plus a percentage equal to the percentage increase in the Index on each such Anniversary
date over the Index on the Base Date. In the event the Bureau of Labor Statistics no longer
publishes the Index the Company shall use that index then available which most closely replicates
the Index. In addition, the Board of Directors of the Company may further increase Executive’s
Salary from time to time in their discretion, based upon the Company’s performance and Executive’s
particular contributions.

          (b) Bonus. Executive shall be eligible for an annual cash bonus of up to fifty
percent (50%) of his Salary under the Company’s Executive Incentive Compensation Plan (“Annual
Target Bonus Amount”) during the Employment Period, subject to the discretion of the Company’s
Board of Directors.

     4. Other Benefits.

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

          (b) Vacation. Executive shall be entitled to five (5) weeks paid vacation annually,
to be taken at such time(s) as shall not, in the reasonable judgment of the Company’s Board of
Directors, interfere with the Executive’s fulfillment of his duties hereunder and otherwise in
accordance with the Company’s policies and procedures in effect from time to time, including the
Company’s policies and procedures with respect to the payment for or carryover of accrued and
unused vacation time.

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

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

2

 

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

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

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

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

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

          6.1 Notice/Events.

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

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

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

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

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

               (c) except if such action applies to all senior executive officers of the Company generally,
any failure by the Company to continue in effect its present Executive Incentive Compensation Plan,
any fringe benefits, the taking of any action by the Company which would, directly or indirectly,
materially reduce Executive’s benefits or deprive Executive

3

 

of any fringe benefits enjoyed by Executive at the date hereof, or the failure by the Company
to provide Executive with the number of paid vacation days to which Executive is entitled at the
date hereof;

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

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

          6.3 Severance.

               (a) Without Cause. If the Company terminates Executive’s employment without Cause, or
if Executive terminates his employment pursuant to Section 6.2 hereof, then, subject to Section 8,
commencing on the date of termination of employment, the Company shall provide Executive with a
severance package which shall consist of the following: (i) for a period equal to two (2) years
after the date of termination (i) payment on the first business day of each month of an amount
equal to one-twelfth of Executive’s then current Salary under Section 3(a) hereof; (ii) payment on
the first business day of each month of an amount equal to one-twelfth of Executive’s Annual Target
Bonus Amount under the Company’s Executive Incentive Compensation Plan for the year of termination;
and (iii) continuation of all benefits under Section 4 (a) hereof; provided, however, that the
amount of any severance payments hereunder shall be reduced by the amount of income otherwise
earned by Executive during the two year period following termination and provided, further that
benefits under Section 4(a) shall be discontinued as of the date on which Executive is provided
comparable benefits from any other source.

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

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

               (d) Certain Reductions of Payments by the Company.

                    (1) Anything in this Agreement to the contrary notwithstanding, in the event it
shall be determined that any payment or distribution by the Company to or for the
benefit of the Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise (a “Payment”), would constitute
an “excess parachute payment”

4

 

within the meaning of Section 280G(b) of the U.S. Internal Revenue Code (the
“Code”), and thus would result in the Executive incurring an excise tax under
Section 4999 of the Code, then the aggregate present value of amounts payable or
distributable to or for the benefit of the Executive pursuant to this Agreement
(such payments or distributions pursuant to this Agreement are hereinafter referred
to as “Agreement Payments”) shall be reduced to the Reduced Amount, but only if and
to the extent that the after-tax value to the Executive of reduced Agreement
Payments would exceed the after-tax value to the Executive of the Agreement Payments
received by the Executive without application of such reduction. The “Reduced
Amount” shall be an amount expressed in present value which maximizes the aggregate
present value of Agreement Payments without causing any Payment to be nondeductible
by the Company because of Section 280G of the Code. Anything to the contrary
notwithstanding, if the Reduced Amount is zero and it is determined further that any
Payment which is not an Agreement Payment would nevertheless be nondeductible by the
Company for Federal income tax purposes because of Section 280G of the Code, then
the aggregate present value of Payments’ which are not Agreement Payments shall also
be reduced (but not below zero) to an amount expressed in present value which
maximizes the aggregate present value of Payments without causing any Payment to be
nondeductible by the Company because of Section 280G of the Code. For purposes of
this Section 6(c)(iv), present value shall be determined in accordance with Section
280G(d)(4) of the Code. Thus, for illustrative purposes only, if the Executive’s
average W-2 compensation for the five (5) years prior to the year in which a Change
in Control occurs (the “Base Amount”) was $500,000, and the value of the payments
and benefits that are contingent upon the Change in Control (the “Parachute
Payments”) was $1,510,000, the Executive would have an excess parachute payment
within the meaning of Section 280G(b) of the Code since the value of the parachute
payments ($1,510,000) would be greater than three (3) times the Executive’s Base
Amount ($1,500,000). The amount of the excess parachute payment would be $1,010,000
(the amount by which the value of the parachute payments exceeds one (1) times the
Base Amount), and if the aggregate amount of the parachute payments was not reduced,
the Executive would incur an excise tax under Section 4999 of the Code equal to 20%
of the excess parachute payment (or $202,000). This excess parachute payment could
be avoided if instead, the value of the parachute payments was reduced by $10,001 to
$1,499,999 (since the value of the parachute payments then would be less than three
(3) times the Base Amount). Since the Executive would receive a greater after tax
amount, under the foregoing example, if his parachute payments were reduced by
$10,001 (to $1,499,999) than he would if his parachute payments were not reduced and
the Executive incurred a $202,000 excise tax (reducing his parachute payments to
$1,308,000) on the excess parachute payment, the Executive’s parachute payments
would be reduced under this provision to $1,499,999 (by $10,001) to avoid any excess
parachute payments.

                    (2) All determinations required to be made under this Section 6(c)(iv) shall be
made by the Company’s accountants for the Company’s last fiscal year or, at the
mutual agreement of the Executive and the Company, any

5

 

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

                    (3) As a result of the uncertainty in the application of Section 280G of the
Code at the time of the initial determination by the Accounting Firm hereunder, it
is possible that Payments will have been made by the Company which should not have
been made (“Overpayment”) or that additional Payments which will not have been made
by the Company could have been made (“Underpayment”), in each case, consistent with
the calculations required to be made hereunder. In the event that the Accounting
Firm, based upon the assertion of a deficiency by the Internal Revenue Service
against the Executive which the Accounting Firm believes has a high probability of
success, determines that an Overpayment has been made, any such Overpayment paid or
distributed by the Company to or for the benefit of the Executive shall be treated
for all purposes as a loan ab initio to the Executive which the Executive shall
repay to the Company together with interest at the applicable federal rate provided
for in Section 7872(f)(2) of the Code; provided, however, that no such loan shall be
deemed to have been made and no amount shall be payable by the Executive to the
Company if and to the extent such deemed loan and payment would not either reduce
the amount on which the Executive is subject to tax under Section 1 and Section 4999
of the Code or generate a refund of such taxes. In the event that the Accounting
Firm, based upon controlling precedent or other substantial authority, determines
that an Underpayment has occurred, any such Underpayment shall be promptly paid by
the Company to or for the benefit of the Executive together with interest at the
applicable federal rate provided for in Section 7872(f)(2) of the Code.

     7. Death or Disability. In the event of Executive’s death or disability, the
Employment Period will automatically terminate effective as of the date of such death or
disability. As used in this Agreement, the term “disability” shall mean inability on the part of

6

 

Executive for a period of more than six (6) months in the aggregate during any twelve (12)
consecutive month period to perform the services contemplated under this Agreement. A
determination of disability shall be made by a physician satisfactory to both Executive and the
Company, provided that if Executive and the Company do not agree on a physician, Executive and the
Company shall each select a physician and these two physicians together shall select a third
physician, whose determination as to disability shall be binding on all parties.

     8. Change in Control.

          (a) If Executive’s employment is terminated by the Company without Cause or by Executive for
Good Reason within six (6) months before and in anticipation of, or twelve (12) months after, a
Change in Control (as defined in Paragraph (b) of this Section 8), Executive shall be entitled to
receive a supplemental bonus payment (the “Change in Control Payment”) from the Company equal to
two (2) times the sum of Executive’s then current Salary and Executive’s Annual Target Bonus Amount
under the Company’s Executive Incentive Compensation Plan for the year of termination. The Change
in Control Payment shall be paid to Executive within fifteen (15) days after: (i) the Change in
Control if Executive’s employment was terminated within six (6) months before the Change in
Control; or (ii) the termination of Executive’s employment by the Company if Executive’s employment
terminates within twelve (12) months after the Change in Control. Executive shall also be entitled
to continuation of all benefits under Section 4(a) hereof, ending on the earlier of (x) the two (2)
year anniversary of the termination date and (v) the date on which Executive is provided comparable
benefits from any other source. In addition, all stock options held by Executive shall vest and
become immediately exercisable. If Executive is entitled to a Change in Control Payment, Executive
shall not have any rights to receive any severance payments or benefits pursuant to Section 6(c)
hereof. If Executive’s employment by the Company terminates within six (6) months prior to the
Change in Control and Executive received severance payments pursuant to Section 6(c) hereof, any
amounts so paid by the Company to Executive shall be deducted from any Change in Control Payment
otherwise payable to Executive pursuant to this Section 8(a).

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

          (c) A “Takeover Transaction” shall mean (i) a merger or consolidation of FGX Holdings with, or
an acquisition of FGX Holdings or all or substantially all of its assets by, any other corporation,
other than a merger, consolidation or acquisition in which the individuals who were members of the
Board of Directors of FGX Holdings immediately prior to such transaction continue to constitute a
majority of the Board of Directors of the surviving corporation (or, in the case of an acquisition
involving a holding company, constitute a majority of the Board of Directors of the holding
company) for a period of not less than twelve (12)

7

 

months following the closing of such transaction, or (ii) when any person, including any “group”
as such term is defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), becomes after the date hereof the “beneficial owner” (as defined in Rule
13d-3 under the Exchange Act) of securities of FGX Holdings representing more than fifty percent
(50%) of the total number of votes that may be cast for the election of directors of FGX Holdings,
excluding (i) any person that is excluded from the definition of “beneficial owner” under Rule
16(a)-1(a)(l) under the Exchange Act and (ii) any person (including any such group) that consists
of or is controlled by (within the meaning of the definition of “affiliate” in Rule 144 under the
Securities Act of 1933, as amended (an “Affiliate”)) any person that is a shareholder of FGX
Holdings on the Effective Date or any Affiliate of such person.

     9. Non-Competition. During the Employment Period and after termination of Executive’s
employment hereunder, whether or not such termination is without Cause or for Good Reason,
Executive shall not be involved in the Restricted Business Activities, as defined below, for the
period ending two (2) years after the date of termination of Executive’s employment (the
“Non-compete Period”) provided that the Company has not otherwise breached its obligations under
the Agreement. As used in this Agreement, the term “Restricted Business Activities” shall mean any
business which markets and sells to customers of a class or category to which the FGX Group markets
and sells at the time Executive’s employment terminated products or services marketed and sold by
the FGX Group at such time or products or services which at such time the FGX Group was actively
considering marketing and selling to such customers. During the Non-compete Period, Executive
shall not, without the written approval of the Company, directly or indirectly, either as an
individual, partner, joint venturer, employee or agent for any person, company, corporation or
association, or as an officer, director or stockholder of a corporation or otherwise, enter into or
engage in or have a proprietary interest in the Restricted Business Activities other than the
ownership of (a) the stock of the Company then held by Executive, and (b) no more than five percent
(5%) of the securities of any other publicly-held company.

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

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

8

 

     10. Confidentiality Covenants.

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

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

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

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

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

9

 

waived. This Agreement shall not be changed, altered, modified or amended, except by a
written agreement signed by both parties hereto.

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

	 	 	 
	(a)

	 	to the Company at:

500 George Washington Highway

Smithfield, Rhode Island 02917

Attn: President
	 
	 	 
	(b)

	 	to FosterGrant at:

500 George Washington Highway

Smithfield, Rhode Island 02917

Attn: President
	 
	 	 
	 

	 	In each case, with a copy (which shall not constitute
notice) to:
	 
	 	 
	 

	 	Greenberg Traurig, P.A.

401 East Las Olas Blvd., Suite 2000

Fort Lauderdale, Florida 33301

Attn: Bruce I. March, Esq.

	 
	 	 
	(c)

	 	to Executive at:

52 Second Street

Newport, Rhode Island 02840

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

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

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

10

 

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

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

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

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

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

[Signatures Appear on Next Page]

11

 

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

	 	 	 	 	 
	 	FGX INTERNATIONAL INC.

 	 
	 	By:  	/s/ Brian J. Lagarto
 	 
	 	 	Name:  	Brian J. Lagarto 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	EXECUTIVE

 	 
	 	By:  	/s/ John H. Flynn, Jr.
 	 
	 	 	Name:  	John H. Flynn, Jr. 	 
	 	 	Address: 52 Second Street

Newport, RI 02840 	 
	 
	 	 AAI.FOSTERGRANT, INC.

(solely with respect to Section 13 of this

Agreement)

 	 
	 	 	 
	 	By:  	                      /s/ Brian J. Lagarto
 	 
	 	 	Name:  	Brian Lagarto 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

12

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