AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and
Restated Employment Agreement (the “Agreement”) is
entered into as of the 10 th 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”).
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.
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.
(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.
(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.
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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 .
(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
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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.
(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”
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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
c
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