EMPLOYMENT AGREEMENT
                               (Warren T. Wishart)


         AGREEMENT,  dated as of  December  31,  2000  between  The  Leslie  Fay
Company,  Inc.,  a  Delaware  corporation,  with its  principal  office  at 1412
Broadway,  New  York,  New York (the  "Corporation"),  and  Warren  T.  Wishart,
residing  at  5  Crestview  Road,   Mountain   Lakes,   New  Jersey  07046  (the
"Executive").

RECITALS

         A.    The     Executive    has    served    as    the    Senior    Vice
President--Administration  and Finance, Chief Financial Officer and Treasurer of
the Corporation  since June 2, 1997, and prior thereto as Senior Vice President,
Chief  Financial  Officer  and  Treasurer  of The  Leslie Fay  Companies,  Inc.,
predecessor-in-interest to the Corporation.

         B. The  Corporation  and the  Executive  are  parties to an  Employment
Agreement  dated as of January 4, 1998,  as amended on January  1999 (the "Prior
Employment Agreement").

         C. The  Corporation  and the  Executive  desire to terminate  the Prior
Employment Agreement.

         D. The  Corporation  desires to secure the  continued  services  of the
Executive,  and the  Executive  desires to continue  to furnish  services to the
Corporation, on the terms and conditions hereinafter set forth.

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
agreements hereinafter contained, the parties hereto hereby agree as follows:

         1. Definitions.  Unless otherwise  defined herein,  the following terms
shall have the respective  meanings specified below and be equally applicable to
the singular and plural of terms defined:

            (a) "AAA" shall mean the American Arbitration Association.

            (b)  "Arbitrator"  shall  have the  meaning  set forth in Section 29
hereof.

            (c) "Base  Salary"  shall  have the  meaning  set forth in Section 5
hereof.

            (d) "Board" shall mean the Board of Directors of the Corporation.

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            (e)  "Bonus"  shall mean,  for any Fiscal Year during the Term,  the
Executive's  allocable portion of the Cash Bonus Pool for such year,  determined
in accordance with Section 6 hereof.

            (f) "Cash  Bonus Pool" shall have the meaning set forth in Section 6
hereof.

            g) "Cause" shall mean (i)  conviction of the Executive in respect of
a felony,  (ii) perpetration by the Executive of (x) an illegal act which causes
significant economic injury to the Corporation or (y) a common law fraud against
the  Corporation,  or (iii)  willful  violation  by the  Executive  (a "Material
Insubordination")  of a specific written direction from the Board concerning one
or more  matters of a material  nature for the  Corporation  or its  business or
operations (following a warning in writing in respect thereto from the Board).

            (h) "Code" shall mean the Internal Revenue Code of 1986, as amended.

            (i) "Compensation  Committee" shall mean the compensation  committee
of the Board, all of whose members are "outside directors" within the meaning of
Section 162(m) of the Code.

            (j)  "Corporation  Senior  Managers"  shall mean the Chairman of the
Board,   the   President   (Chief   Executive   Officer),    the   Senior   Vice
President-Manufacturing  and Sourcing, the Senior Vice  President-Administration
and Finance (Chief Financial  Officer) and up to one other executive  officer of
the Corporation as determined by the Compensation Committee in consultation with
the Chief Executive Officer.

            (k)  "Disabled"  shall mean,  with respect to the  Executive,  being
physically or mentally  disabled,  whether totally or partially,  so that he has
been  substantially  unable to perform his services  hereunder for a consecutive
period of more than six (6) months or for shorter periods aggregating six months
during any twelve-month period.

            (l) "Dispute" shall have the meaning set forth in Section 29 hereof.

            (m) "EBITAB" shall mean for any Fiscal Year of the Corporation,  the
consolidated  earnings before interest,  income taxes,  amortization of the good
will of the Corporation and its consolidated subsidiaries,  non-cash charges for
stock based  compensation,  and  bonuses for  Corporation  Senior  Managers,  as
determined pursuant to generally accepted accounting principles in effect in the
United States of America from time to time.

            (n) "Effective Date" shall mean December 31, 2000.

            (o)  "Fiscal  Year" shall mean the  fifty-two  or  fifty-three  week
period ending on the Saturday closest to December 31 in any year.

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<PAGE>

            (p) "FAA" shall have the meaning set forth in Section 29 hereof.

            (q)  "Good  Reason"  shall  mean  the  continuation  of  any  of the
following  events  for more than ten (10) days after the  Corporation's  receipt
from the Executive of written notice thereof:

                  (i) the Executive shall be removed from the position of Senior
         Vice President--Administration and Finance, Chief Financial Officer and
         Treasurer  of the  Corporation  at any time during the Term (other than
         for Cause);

                  (ii) the Executive shall fail to be vested with the powers and
         authority of Senior Vice  President--Administration  and Finance, Chief
         Financial  Officer and  Treasurer  of the  Corporation  as described in
         Section 4 hereof,  or the powers and  authority of such position or his
         responsibilities  with  respect  thereto  shall  be  diminished  in any
         material respect;

                  (iii) the  Executive  shall have  assigned  to him without his
         express   written   consent  any  duties,   functions,   authority   or
         responsibilities  that are inconsistent with the Executive's  positions
         described in Section 4 hereof;

                  (iv) the Executive's  principal place of employment is changed
         to a location more than  twenty-five (25) miles from the prior location
         without the Executive's prior written consent;

                  (v) any material  failure by the Corporation to fulfill any of
         its obligations under this Agreement,  including,  without  limitation,
         the  failure to make any  material  payment  required to be made by the
         Corporation  pursuant  to  Sections  5, 6 and 7 hereof  within five (5)
         business days after the date such payment is required to be made;

                  (vi)  any  purported  termination  by the  Corporation  of the
         Executive's employment otherwise than as expressly permitted by, and in
         compliance with all conditions and procedures of, this Agreement; or

                  (vii) the Corporation shall fail to comply with the provisions
         of Section 17 or Section 23(a) hereof.

            (r) "Prior Employment Agreement" shall have the meaning set forth in
the Recitals.

            (s) "RONA Net Assets" shall mean at the time of any calculation, the
difference  between  total  assets  of  the  Corporation  and  its  consolidated
subsidiaries  exclusive of unrestricted cash and cash equivalents less (i) total
interest free liabilities of the Corporation and its  consolidated  subsidiaries
and (ii) the after tax cash gain on assets  which  have been  disposed

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<PAGE>

of other than in the ordinary  course of  business,  as  determined  pursuant to
generally  accepted  accounting  principles  in effect in the  United  States of
America from time to time.

            (t)  "Section 7 Bonus"  shall  mean,  for any Fiscal Year during the
Term, the bonus payable to the Executive determined in accordance with Section 7
hereof.

            (u) "Term" shall have the meaning set forth in Section 3 hereof.

         2.  Employment.  The  Corporation  shall employ the Executive,  and the
Executive shall serve the Corporation, upon the terms and conditions hereinafter
set forth.

         3. Term of Employment.  Subject to the terms and conditions hereinafter
set forth, the term of the Executive's employment hereunder shall commence as of
the Effective Date and shall  continue  until December 31, 2005,  unless earlier
terminated  pursuant to the provisions of Sections 10, 11, 12, or 13 hereof (the
"Term").

         4. Duties and Extent of Services.  During the Term, the Executive shall
serve as Senior Vice  President--Administration  and  Finance,  Chief  Financial
Officer  and  Treasurer  of the  Corporation  faithfully  and to the best of his
ability,  and shall devote  substantially  all of his business time,  energy and
skill to such employment,  it being understood and agreed that the Executive may
serve on the  boards  of  directors  or  equivalent  governing  bodies  of other
business corporations or other business organizations;  provided,  however, that
(i) such other corporations or other organizations are not in direct competition
with the  Corporation  and/or its  subsidiaries  and (ii) such  service does not
materially  interfere  with  the  performance  by the  Executive  of his  duties
hereunder.  The Executive  shall be invested with the duties and authority  that
are  customarily  delegated  to  a  senior  vice  president--administration  and
finance,  chief  financial  officer and treasurer of a  corporation  and, in any
event,  with duties and authority of no lesser status than those invested in the
Executive  immediately  prior to the Effective  Date, and shall report to and be
subject to the  direction  of the Board of  Directors  of the  Corporation.  The
Executive  shall also  perform  such  specific  duties and  services of a senior
executive  nature as the Board of Directors of the  Corporation  shall  request,
including,  without  limitation,  serving as a senior officer and/or director of
any of the Corporation's subsidiaries.

         5.  Base  Salary.  During  the  Term,  the  Corporation  shall  pay the
Executive a base salary ("Base  Salary") of Two Hundred Fifty  Thousand  Dollars
($250,000),  or such higher amount as the Board may from time to time determine,
payable in accordance with the Corporation's customary practice.

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<PAGE>

         6. Incentive Compensation.
         --------------------------

            (a) Amount.  The Corporation  shall create an annual cash bonus pool
("Cash Bonus Pool") for payments to the Corporation  Senior Managers  calculated
as follows:

                  (x) EBITAB for such Fiscal Year, less

                  (y)  twenty  percent  (20%) of the  average  monthly  RONA Net
Assets for such Fiscal Year times

                  (z) twenty-five percent (25%);

provided,  however, that the financial aspects of the acquisition or disposition
of a business shall not be considered in calculating  the Cash Bonus Pool in the
Fiscal Year in which any such acquisition is made.

                  The amount of the Cash  Bonus Pool for any Fiscal  Year only a
part of which is within  the Term shall be equal to the amount of the Cash Bonus
Pool that would have been  payable  for such  Fiscal  Year had it been  entirely
within the Term, times a fraction,  the numerator of which is the number of days
of such Fiscal Year occurring  during the Term, and the  denominator of which is
three hundred and sixty-five (365).

                  The  actual  percentage  of the  Cash  Bonus  Pool  which  the
Executive  shall be  entitled to receive for any Fiscal Year during the Term (or
portion thereof, if applicable) shall be determined after the end of each Fiscal
Year by the Compensation  Committee of the Board of Directors of the Corporation
if specific measurable objectives  established by the Compensation  Committee of
the Board of Directors of the  Corporation  and  communicated  to the  Executive
prior to the beginning of the second quarter of such Fiscal Year are met.

            (b) Time of Payment.  The Cash Bonus Pool for any Fiscal Year during
the Term shall be determined  after the close of such Fiscal Year as promptly as
practicable after completion of the Corporation's  audited financial  statements
for such Fiscal Year.  If any payment is required to be made under  Sections 10,
11, 12 or 13 hereof on the basis of the Cash Bonus Pool for any Fiscal Year, and
the Cash Bonus Pool for such Fiscal Year  cannot be  determined  until after the
time that such  payment is  otherwise  required to be made,  then the payment of
that  amount  which is based upon the  determination  of the Cash Bonus Pool for
such Fiscal Year shall be deferred until after such time as the determination of
the Cash  Bonus  Pool for such  Fiscal  Year can  reasonably  be made,  and such
payment shall be made as soon thereafter as practicable.

         7. Bonuses.  In addition to any amounts  payable  pursuant to Section 6
hereof,  if the  Executive is employed by the  Corporation  on the last day of a
Fiscal Year during the Term, the Corporation  shall pay the Executive a bonus on
April 1 of the following Fiscal Year in the

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<PAGE>

following amount: $21,250 on April 1, 2001, $85,000 on each of April 1, 2002 and
2003 and $235,000 on each of April 1, 2004, 2005 and 2006.

         8. Employee Benefits.
         ---------------------

            (a) During the Term,  the  Corporation  shall make  available to the
Executive  coverage  and/or benefits under any and all medical  insurance,  life
insurance,  long-term  disability insurance and pension plans and other employee
benefit  plans of the  Corporation  to the extent  generally  made  available to
senior executives of the Corporation from time to time.

            (b) During the Term, the Corporation shall make available to members
of the Executive's  immediate  family coverage and/or benefits under any and all
medical  insurance,  life  insurance  and  disability  insurance  plans  of  the
Corporation  to the extent  generally made available to members of the immediate
family of other senior executives of the Corporation from time to time.

            (c) During the Term, the Corporation shall provide the Executive (i)
a  general  automobile  allowance  equal to $900  per  month  and  (ii)  with an
automobile for use primarily in connection with travel to and from the Company's
Laflin,  Pennsylvania  facility and  reimbursement for fuel and repair costs and
any  federal,  state or local  taxes  incurred  or payable by the  Executive  in
connection therewith (including by reason of such reimbursement.

            (d)  The  Executive  shall  be  entitled  to paid  vacations  (taken
consecutively or in segments),  in accordance with the standard  vacation policy
of the  Corporation  for senior  executives,  but in no event less than four (4)
weeks each calendar year during the Term. Such vacations shall be taken at times
consistent with the effective discharge of the Executive's duties.

            (e)  During  the  Term,  the  Executive  shall  be  accorded  office
facilities and secretarial  assistance  commensurate with his position as Senior
Vice   President--Administration   and  Finance,  Chief  Financial  Officer  and
Treasurer of the  Corporation  and adequate  for the  performance  of his duties
hereunder.

         9.  Consulting  Fee.  In the event that the  Executive  ceases to be an
employee  of the  Corporation  for any  reason,  the  Corporation  will  pay the
Executive a consulting  fee in the  following  amounts on the  following  dates:
$21,250 on April 1, 2001,  $85,000  each on April 1, 2002 and 2003,  $235,000 on
April 1, 2004,  2005 and 2006 and $85,000 on each of April 1, 2007 and 2008.  No
consulting  fee  shall be paid on any date on which a Section 7 Bonus is paid to
Executive.  The parties recognize and acknowledge that in consideration for such
consulting fee the Executive  would render  consulting  services to the Board of
Directors  of the  Corporation  at such  times  and  locations  as are  mutually
convenient to the  Corporation  and the  Executive.  Executive's  obligations to
provide such services shall not limit his ability to provide services to, or act
as an employee of, any other  enterprise,  subject to the provisions of Sections
14 and 15 hereof. The amounts provided in this Section 9 as such consulting fees
shall  continue to be paid

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<PAGE>

in the event of the death of the  Executive  or in the event that the  Executive
has become  Disabled  (whether  death or Disability  results in  termination  of
employment or occurs  thereafter) as termination  payments which the Corporation
acknowledges are reasonable.

         10. Termination--Death or Disability.
         -------------------------------------

            (a) In the event of the  termination of the  Executive's  employment
because of the death of the Executive during the Term, the Corporation shall pay
to any one or more beneficiaries  designated by the Executive pursuant to notice
to the Corporation, or, failing such designation, to the Executive's estate, (i)
the unpaid Base Salary  owing to the  Executive  through the end of the month of
his death and (ii) any unpaid Bonus for any completed  Fiscal Year preceding the
death of the  Executive,  each in a lump sum within five (5) business days after
his death,  (iii) a Bonus for the Fiscal Year in which such termination  occurs,
equal to the Bonus  (if any) that  would  have  been paid for such  Fiscal  Year
pursuant  to  Section  6 hereof if no such  termination  had  occurred,  times a
fraction,  the  numerator  of which is the number of months in such  Fiscal Year
(but not in excess of twelve  (12))  through  the end of the month in which such
termination  occurs,  and the  denominator  of which is twelve (12) and (iv) any
unpaid Section 7 Bonus. The Corporation shall also promptly reimburse any unpaid
amounts due under Section 16 hereof as of the date of termination.

            (b) In the  event  that  the  Executive  has  become  Disabled,  the
Corporation  shall  have  the  right to  terminate  the  Executive's  employment
hereunder by giving him written notice of such termination. Upon receipt of such
notice, the Executive's  employment  hereunder shall terminate.  In the event of
such termination, the Corporation shall pay to the Executive (i) the unpaid Base
Salary owing to the Executive  through the end of the month of such  termination
and  (ii)  any  unpaid  Bonus  for any  completed  Fiscal  Year  preceding  such
termination,  each in a lump  sum  within  five (5)  business  days  after  such
termination, (iii) a Bonus for the Fiscal Year in which such termination occurs,
equal to the Bonus  (if any) that  would  have  been paid for such  Fiscal  Year
pursuant  to  Section  6 hereof if no such  termination  had  occurred,  times a
fraction,  the  numerator  of which is the number of months in such  Fiscal Year
(but not in excess of twelve  (12))  through  the end of the month in which such
termination  occurs,  and the  denominator  of which is twelve (12) and (iv) any
unpaid Section 7 Bonus. The Corporation shall also promptly reimburse any unpaid
amounts due under Section 16 hereof as of the date of termination.

         11. Termination for Cause by Corporation.
         -----------------------------------------

            (a) The  Executive's  employment  hereunder may be terminated by the
Corporation  for Cause upon  compliance  with the  provisions  of Section  11(b)
hereof.  In the event that  Executive's  employment  hereunder  shall validly be
terminated  by the  Corporation  for Cause  pursuant  to this  Section  11,  the
Corporation  shall (i)  promptly  pay (x) the unpaid  Base  Salary  owing to the
Executive to the date of termination  and (y) any unpaid Bonus for any completed
Fiscal Year preceding such  termination,  (ii) pay in accordance  with Section 7
hereof  any  unpaid  Section 7 Bonus and (iii)  promptly  reimburse  any  unpaid
amounts due under  Section 16 hereof

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<PAGE>

as of the date of termination.  Thereafter the Corporation shall have no further
obligations under this Agreement except under Section 9 hereof. Upon termination
of  the  Executive's   employment  hereunder  for  Cause,  the  Executive  shall
nonetheless  remain bound by the obligations  provided for in Sections 14 and 15
hereof.

            (b)  Termination  for Cause  shall be  effected  only by action of a
majority of the Board then in office  (excluding the Executive if he is a member
of the  Board) at a meeting  duly  called  and held upon at least ten (10) days'
prior written notice to the Executive  specifying the  particulars of the action
or inaction  alleged to  constitute  "Cause" (and at which meeting the Executive
and his counsel were entitled to be present and given reasonable  opportunity to
be heard).

         12. Termination for Good Reason by the Executive.
         -------------------------------------------------

            (a)  Termination  by  Executive  for Good  Reason.  The  Executive's
employment  hereunder  may be  terminated  by the  Executive  for Good Reason by
providing  written notice to the Corporation to such effect (such termination to
be effective on the date specified in such notice,  which date shall not be more
than  sixty  (60) days nor less  than  thirty  (30) days  after the date of such
notice).

            (b)  Severance.   If  at  any  time  the  Executive  terminates  his
employment  for Good  Reason,  then,  in lieu of any other  amounts  that  might
otherwise have been payable hereunder (other than the consulting fee referred to
in Section 9 hereof),  the  Corporation  shall promptly pay to the Executive (i)
all unpaid Base Salary owing to the Executive to the date of  termination,  (ii)
any unpaid Bonus for any completed  Fiscal Year preceding such  termination  and
(iii) an amount  equal to the Base  Salary in effect on the date of  termination
plus an amount equal to the Bonus,  if any, which would have been payable to the
Executive in respect of the Fiscal Year in which such  termination  occurs times
the number of calendar  months between the effective date of termination and the
date on which the Term would have  expired but for such  termination,  but in no
event greater than twelve (12). The  Corporation  shall also promptly  reimburse
any unpaid amounts due under Section 16 hereof as of the date of termination and
shall pay in accordance with Section 7 hereof any unpaid Section 7 Bonus.

         13. Early  Termination.  The  Corporation  and the Executive shall each
have the  right,  on not less than  ninety  (90) and not more  than one  hundred
twenty (120) days' notice,  by action of the Board in the case of termination by
the Corporation, to terminate the Executive's employment,  without Cause or Good
Reason,  as the case may be, effective at the end of each Fiscal Year during the
Term. In the event that the  employment of the Executive is so  terminated,  the
Corporation  shall pay to the  Executive (i) all unpaid Base Salary owing to the
Executive to the date of  termination,  (ii) any unpaid Bonus for any  completed
Fiscal  Year to the date of  termination  and (iii) an amount  equal to the Base
Salary in effect on the date of termination  times the number of calendar months
between the effective date of  termination  and the date on which the Term would
have expired but for such termination, but in no event greater than twelve (12).

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<PAGE>

The amount  provided for in this Section 13 shall be paid promptly after the end
of the Fiscal Year in which the termination  occurs.  The Corporation shall also
promptly reimburse any unpaid amounts due under Section 16 hereof as of the date
of  termination  and shall pay in  accordance  with  Section 7 hereof any unpaid
Section 7 Bonus.

         14.  Confidential  Information.  In  addition  to any other  continuing
confidentiality obligation the Executive may have to the Corporation,  and until
the end of the  original  Term,  the  Executive  shall keep secret and retain in
strictest  confidence,  and  shall not use for his  benefit  or the  benefit  of
others, any and all confidential information relating to the Corporation and its
subsidiaries,  including, without limitation, customer lists, financial plans or
projections,   pricing  policies,   marketing  plans  or  strategies,   business
acquisition or divestiture plans, new personnel acquisition plans, designs, and,
except in connection with the performance of his duties hereunder, the Executive
shall not disclose any such  information to anyone outside the  Corporation  and
any of its  subsidiaries,  except as  required by law  (provided,  to the extent
practicable,  prior  written  notice  thereof is given by the  Executive  to the
Corporation)  or  except  with the  Corporation's  prior  consent,  unless  such
information is known  generally to the public or the trade through sources other
than the Executive's unauthorized disclosure.

         15. Competitive Activity.  The Executive hereby agrees that, during his
employment  hereunder,  and, following a termination of his employment,  for the
balance of the original Term (if any) or one (1) year, if shorter, the Executive
shall not,  without the prior  consent of the Board (i) directly or  indirectly,
engage or be interested in (as owner, partner, shareholder,  employee, director,
officer,  agent,  consultant or otherwise),  with or without  compensation,  any
business wherever located in the world engaged in the manufacture, distribution,
design,  marketing or sale of women's  dresses,  if such  business is a material
competitor  of the  Corporation,  or (ii)  induce or  attempt  to  persuade  any
employee of the  Corporation  or of any  subsidiary of the  Corporation,  or any
person who was employed by the  Corporation or any subsidiary of the Corporation
within the preceding six months,  to leave the employ of the  Corporation or any
subsidiary of the Corporation  (but the foregoing shall not be deemed to prevent
the  Executive  in his  capacity  as Senior Vice  President--Administration  and
Finance, Chief Financial Officer and Treasurer of the Corporation from hiring or
dismissing any employee of the  Corporation or any subsidiary for the benefit of
the Corporation).  The provisions of clause (i) of the preceding  sentence shall
not apply in the case of a  termination  by the  Executive for Good Reason or by
the  Corporation  without  Cause.  Nothing in this Section 15 shall prohibit the
Executive from acquiring or holding not more than five percent (5%) of any class
of publicly traded securities of any business.

         16.  Expenses.  The  Corporation  shall reimburse the Executive for all
reasonable  expenses  incurred  by  the  Executive  in  the  performance  of the
Executive's duties hereunder;  provided,  however, that, in connection with such
reimbursement,  the Executive shall account to the Corporation for such expenses
in  the  manner  customarily  prescribed  by  the  Corporation  for  its  senior
executives.

                                      -9-
<PAGE>

         17. Directors' and Officers' Insurance;  Indemnification. The Executive
shall be provided with directors' and officers' insurance in connection with his
employment  hereunder with such coverage (including with respect to unpaid wages
and taxes not remitted  when done) as shall be  reasonably  satisfactory  to the
Executive and with  aggregate  limits of liability for all covered  officers and
directors of not less than Thirty-Five  Million Dollars  ($35,000,000),  and the
Corporation  shall  maintain  such  insurance  in effect  for the  period of the
Executive's   employment  hereunder  and  for  not  less  than  five  (5)  years
thereafter; provided, however, that, in the event that the Corporation shall not
have any publicly  traded  securities,  the Corporation may reduce the aggregate
limits of liability  for  subsequent  occurrences  for all covered  officers and
directors to Five Million Dollars  ($5,000,000);  and further provided,  that in
the event that the Corporation  shall not obtain such insurance (as applicable),
it shall  provide or cause the  Executive to be provided  with  indemnity  (or a
combination of indemnity and  directors' and officers'  insurance) in connection
with  his  employment  hereunder  with  substantially  equivalent  coverage  and
amounts,  and the  Corporation  shall maintain such indemnity (or combination of
indemnity and  directors'  and officers'  insurance) or cause such indemnity (or
such combination) to be maintained for the period of the Executive's  employment
hereunder and for not less than five (5) years thereafter.

         18. No Duty to Mitigate.  The Executive  shall have no duty to mitigate
the severance  amounts or any other amounts payable to the Executive  hereunder,
and such amounts shall not be subject to reduction for any compensation received
by the Executive from  employment in any capacity or other source  following the
termination of Executive's employment with the Corporation and its subsidiaries.

         19. Agreement with Three Cities.  The Executive,  Three Cities Fund II,
L.P.  and Three  Cities  Offshore II C.V.  have entered into an agreement in the
form annexed hereto as Exhibit A.

         20.  Amendments;  No Waiver.  This Agreement may not be changed orally,
but  only  by an  instrument  in  writing  signed  by  the  party  against  whom
enforcement  of any waiver,  change,  modification,  extension  or  discharge is
sought.  No failure  on the part of either  party to  exercise,  and no delay in
exercising, any right hereunder shall operate as a waiver thereof, nor shall any
partial exercise of any right hereunder preclude any further exercise thereof.

         21.  Survival of  Provisions.  The provisions of Sections 7, 9, 14, 15,
27, 29 and 30(a) shall survive the  termination  or expiration of this Agreement
as provided therein.  Such provisions are unique and  extraordinary,  which give
them a value peculiar to the Corporation  and/or the Executive,  as the case may
be, and cannot be reasonably or adequately  compensated  in damages for its loss
and any  breach  by  either  party of such  provisions  shall  cause  the  other
irreparable injury and damage.  Therefore, the Corporation and the Executive, in
addition  to all  other  remedies  available  to  them,  shall  be  entitled  to
injunctive  and other  available  equitable  relief  in any  court of  competent
jurisdiction  to prevent or otherwise  restrain a breach of such  provisions for
the purposes of enforcing such provisions.

                                      -10-
<PAGE>

         22. Withholding. The Corporation shall be entitled to withhold from any
and all amounts payable to the Executive hereunder such amounts as may from time
to time  be  required  to be  withheld  pursuant  to  applicable  tax  laws  and
regulations.

         23. Succession, Assignability and Binding Effect.
         -------------------------------------------------

            (a)  The  Corporation  will  require  any  successor  or  successors
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or  substantially  all of the  business  and/or  assets  of the  Corporation
expressly to assume and agree to perform  this  Agreement in the same manner and
to the same  extent that the  Corporation  would be required to perform it if no
such  succession  had taken  place.  Failure of the  Corporation  to obtain such
agreement prior to the  effectiveness  of any such succession  shall  constitute
Good Reason for resignation by the Executive.

            (b) This  Agreement  shall  inure  to the  benefit  of and  shall be
binding upon the Corporation  and its successors and permitted  assigns and upon
the Executive and his heirs,  executors,  legal representatives,  successors and
permitted assigns;  provided,  however, that neither party may assign, transfer,
pledge,  encumber,  hypothecate or otherwise dispose of this Agreement or any of
its or his  rights  hereunder  without  the prior  written  consent of the other
party,  and  any  such  attempted  assignment,  transfer,  pledge,  encumbrance,
hypothecation or other  disposition  without such consent shall be null and void
and without effect.

         24.  Headings.  The paragraph  headings  contained  herein are included
solely for  convenience of reference and shall not control or affect the meaning
or interpretation of any of the provisions of this Agreement.

         25. Notices.  Any notices or other  communications  hereunder by either
party  shall be in  writing  and shall be  deemed  to have  been  duly  given if
delivered  personally  to the other party or, if sent by registered or certified
mail,  upon  receipt,  to the other party at his or its address set forth at the
beginning  of this  Agreement  or at such other  address as such other party may
designate in conformity with the foregoing.

         26.  Governing Law. This Agreement  shall be governed by, and construed
and  enforced in  accordance  with,  the laws of the State of New York,  without
giving effect to the principles thereof relating to the conflict of laws.

         27. Legal Fees and Expenses.  In order to induce the Executive to enter
into this Agreement and to provide the Executive with reasonable  assurance that
the  purposes  of this  Agreement  shall  not be  frustrated  by the cost of its
enforcement,  the  Corporation  shall  pay  and be  solely  responsible  for any
attorneys'  fees and  expenses  and court  costs  incurred by the  Executive  in
connection with the negotiation of this Agreement and as a result of the failure
by the  Corporation  to perform  this  Agreement or any  provision  hereof to be
performed by it or in connection with any action which may be brought,  by or in
the name or for the benefit of the

                                      -11-
<PAGE>

Corporation or any subsidiary  contesting the validity or enforceability of this
Agreement or any  provision  hereof to be performed  by the  Corporation,  which
action shall have been dismissed by a final, nonappealable court order.

         28. Opportunity to Review. The Executive  acknowledged that he has been
given the opportunity to discuss this Agreement,  including Section 29, with his
private legal counsel and has availed himself of that  opportunity to the extent
he wishes to do so.

         29. Arbitration.
         ----------------

            (a)  Disputes  Subject  to  Arbitration.   In  the  event  that  the
Corporation  terminates the  Executive's  employment on the grounds set forth in
clause (iii) of the  definition of "Cause",  the  Corporation  and the Executive
mutually  consent to the resolution by  arbitration  of any dispute  between the
Corporation  and  the  Executive  as to  whether  such  Cause  has  occurred  (a
"Dispute").  Unless the Corporation and the Executive  otherwise agree, no other
disputes,  issues,  claims  or  controversies  arising  out of  the  Executive's
employment  (or its  termination),  or any  other  matter  whatsoever,  shall be
submitted to or resolved by arbitration.

            (b) Arbitration Procedures.
            ---------------------------

                  (i) The Corporation  and the Executive  agree that,  except as
         provided in this Agreement, any arbitration shall be in accordance with
         the then current  Model  Employment  Arbitration  Procedures of the AAA
         before an  arbitrator  who is licensed to practice  law in the state in
         which the arbitration is convened (the  "Arbitrator").  The arbitration
         shall take place in or near the city in which the  Executive  is or was
         last employed by the Corporation.

                  (ii) Upon  designation  as a Dispute,  the AAA shall give each
         party a list of eleven (11)  arbitrators  drawn from its panel of labor
         and  employment  arbitrators.  The  Corporation  and the  Executive may
         strike all names on the list which it or he deems unacceptable. If only
         one common name remains on the lists of both parties,  said  individual
         shall be  designated  as the  Arbitrator.  If more than one common name
         remains on the lists of both  parties,  the parties  shall strike names
         alternatively  until only one remains. If no common name remains on the
         lists of both parties, the AAA shall furnish an additional list and the
         parties  shall  alternate  striking  names on such second list until an
         arbitrator is selected.

                  (iii) The  Arbitrator  shall apply the law of the State of New
         York  applicable to contracts  made and to be performed  wholly in that
         state  (without  giving effect to the  principles  thereof  relating to
         conflicts  of law).  The Federal  Rules of Evidence  shall  apply.  The
         Arbitrator,  and not any federal, state or local court or agency, shall
         have  exclusive  authority  to  resolve  any  dispute  relating  to the
         interpretation,  applicability  or formation of the term  "Cause".  The
         Arbitrator  shall render a decision

                                      -12-
<PAGE>

         within  thirty  (30) days of the date  upon  which  the  Arbitrator  is
         selected pursuant to Section  29(b)(ii),  which decision shall be final
         and binding upon the parties.  In the event that the Arbitrator decides
         that Material  Insubordination  has (x) occurred,  then the Executive's
         employment  shall be deemed to have been  terminated for Cause pursuant
         to  Section  11(a)  hereof or (y) not  occurred,  then the  Executive's
         employment  shall be  deemed  to have  been  terminated  without  Cause
         pursuant to Section 13 hereof.

                  (iv) The Arbitrator  shall have  jurisdiction to hear and rule
         on prehearing disputes and is authorized to hold prehearing conferences
         by  telephone  or in  person as the  Arbitrator  deems  necessary.  The
         Arbitrator  shall have the  authority  to entertain a motion to dismiss
         and/or a motion for  summary  judgment by any party and shall apply the
         standards  governing  such  motions  under the  Federal  Rules of Civil
         Procedure.

                  (v) Either party,  at his or its expense,  may arrange for and
         pay the costs of a court reporter to provide a  stenographic  report of
         proceedings.

                  (vi) Either party, upon request at the close of hearing, shall
         be given leave to file a post-hearing brief. The time for filing such a
         brief shall be set by the Arbitrator.

                  (vii)  Either  party  may  bring  an  action  in any  court of
         competent  jurisdiction  to compel  arbitration  under this Section 29.
         Except as otherwise  provided in this Section 29, both the  Corporation
         and the  Executive  agree that  neither  such party  shall  initiate or
         prosecute  any lawsuit or  administrative  action in any way related to
         any Dispute covered by this Section 29.

                  (viii)  The  Arbitrator  shall  render an  opinion in the form
         typically rendered in labor arbitrations.

            (c)  Arbitration  Fees and Costs.  The Corporation and the Executive
shall  equally  share the fees and costs of the  Arbitrator.  Each  party  shall
deposit  funds or post other  appropriate  security  for his or its share of the
Arbitrator's fee, in an amount and manner determined by the Arbitrator, ten (10)
days  before the first day of  hearing.  Each party shall pay for his or its own
costs and attorneys' fees, if any. However, if any party prevails on a statutory
claim that affords the  prevailing  party  attorneys'  fees,  the Arbitrator may
award reasonable fees to the prevailing party.

            (d) Law Governing. The parties agree that the arbitration provisions
set forth in this Section 29 shall be governed by the Federal Arbitration Act, 9
U.S.C.ss.ss. 1-16, ("FAA"). The parties further agree that all Disputes, whether
arising under state or federal law, shall be subject to the FAA, notwithstanding
any state or local laws to the contrary.

                                      -13-
<PAGE>

         30.  Prior  Employment  Agreement.  The Prior  Employment  Agreement is
hereby  terminated as of the Effective Date,  except that such termination shall
not affect the right of  Executive to receive any accrued but unpaid Base Salary
and any other accrued but unpaid  amounts under Section 6 thereof as of the date
of termination.

                  IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and year first above written.

                                                    THE LESLIE FAY COMPANY, INC.


                                                     By: /s/ John A. Ward
                                                        ------------------------
                                                     Name:  John A. Ward
                                                     Title:    President

                                                           /s/ Warren T. Wishart
                                                     ---------------------------
                                                              Warren T. Wishart
                                                              Executive