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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
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