Document:

EXHIBIT 10.7

 

MF ACQUISITION CORPORATION

 

2004 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS

 

1.                                      Purposes.

 

MF Acquisition Corporation (the “Company”)
desires to attract and retain the services of outstanding non-employee
directors by affording them an opportunity to acquire a proprietary interest in
the Company through an initial “one-time” award of options (“Options”)
exercisable to purchase shares of Common Stock (as defined below), and thus to
create in such directors an increased interest in and a greater concern for the
welfare of the Company and its subsidiaries.

 

The Options offered pursuant to this MF Acquisition
Corporation 2004 Stock Option Plan for Non-Employee Directors (the “Plan”)
are a matter of separate inducement and are not in lieu of any other
compensation for the services of any director.

 

The Options granted under the Plan are intended to be
options that do not meet the requirements for incentive stock options within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended
(the “Code”).

 

As used in the Plan, the term “parent corporation”
and “subsidiary corporation” shall mean a corporation coming within the
definition of such terms contained in Sections 424(e) and 424(f) of
the Code, respectively.

 

2.                                      Amount
of Stock Subject to the Plan.

 

Options granted under the Plan shall be exercisable
for shares of the Company’s common stock, par value $0.01 per share (the “Common
Stock”).

 

The total number of shares of Common Stock authorized
for issuance under the Plan upon the exercise of Options (the “Shares”),
shall not exceed, in the aggregate, 250,000 of the currently authorized shares
of Common Stock of the Company, such number to be subject to adjustment in
accordance with Section 13 of the Plan.

 

Shares which may be acquired under the Plan may be
either authorized but unissued Shares, Shares of issued stock held in the
Company’s treasury, or both.  If and to
the extent that Options granted under the Plan expire or terminate without
having been exercised, the Shares covered by such expired or terminated Options
may again be subject to a later-granted Option under the Plan.  In addition, if Common Stock has been
exchanged by an option holder as full or partial payment to the Company of the
exercise price or if the number of shares of Common Stock otherwise deliverable
has been reduced for full or partial payment to the Company of the exercise
price, the number of shares of Common Stock exchanged or reduced shall again be
available under the Plan.

 

 

3.                                      Effective
Date and Term of the Plan.

 

The Plan shall become effective on July 28, 2004
(the “Effective Date”); provided, however, that if the
Plan is not approved by a vote of the stockholders of the Company at an annual
meeting, any special meeting or by written consent of stockholders within
twelve (12) months after the Effective Date, the Plan and any Options granted
under the Plan shall terminate.  The Plan
shall terminate at the close of business on July 28, 2014, unless sooner
terminated in accordance with its terms.

 

4.                                      Administration.

 

The Plan shall be administered by the Board of
Directors of the Company (the “Board of Directors”), which may designate
from among its members a committee (or subcommittee) to exercise all power and
authority of the Board of Directors at any time and from time to time to
administer the Plan, provided that on or after the Registration Date (as
defined below), such committee or subcommittee shall consist solely of two or
more non-employee directors, each of whom is intended to be, to the extent required
by Rule 16b-3 promulgated under Section 16(b) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), a “non-employee
director” as defined in Rule 16b-3 and “independent” as defined under
applicable stock exchange rules.  References
herein to the Board of Directors shall be deemed to include references to any
such committee, except as the context otherwise requires.  Subject to the express provisions of the
Plan, the Board of Directors shall have authority to construe the Plan and the
Options granted hereunder, to prescribe, amend and rescind rules and
regulations relating to the Plan and to make all other ministerial
determinations necessary or advisable for administering the Plan.  Registration Date means the first date: (a) on
which the Company sells its Common Stock in a bona fide, firm commitment
underwriting pursuant to a registration statement under the Securities Act of
1933, as amended (“Securities Act”); or (b) any class of common
equity securities of the Company are registered under Section 12 of the
Exchange Act.

 

The Board of Directors may designate the Secretary of
the Company, other employees of the Company or competent professional advisors
to assist the Board of Directors in the administration of the Plan, and may
grant authority to such persons (other than professional advisors) to grant an
Option or to execute Option agreements or other documents on behalf of the
Board of Directors, provided that no Eligible Director may execute any Option
agreement granting Options to himself or herself.  The Board of Directors may employ such legal
counsel, consultants and agents as it may deem desirable for the administration
of the Plan, and may rely upon any opinion received from any such counsel or
consultant and any computation received from any such consultant or agent.  Expenses incurred by the Board of Directors
in the engagement of such counsel, consultant or agent shall be paid by the
Company.

 

To the maximum extent permitted by law, no officer,
member or former officer or member of the Board of Directors shall be liable
for any action or determination made in good faith with respect to the Plan or
any Option granted under it.  To the
maximum extent permitted by applicable law or the Certificate of Incorporation
or By-Laws of the Company and to the extent not covered by insurance, each
officer, member or former officer or member of the Board of Directors shall be
indemnified and

 

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held harmless by the
Company against any cost or expense (including reasonable fees of counsel
reasonably acceptable to the Company) or liability (including any sum paid in
settlement of a claim with the approval of the Company), and advanced amounts
necessary to pay the foregoing at the earliest time and to the fullest extent
permitted, arising out of any act or omission to act in connection with the
Plan, except to the extent arising out of such officer’s, member’s or former
officer’s or member’s own fraud or bad faith. 
Such indemnification shall be in addition to any rights of
indemnification the officers, members or former officers or members may have as
directors under applicable law or under the Certificate of Incorporation or
By-Laws of the Company or otherwise.

 

The determination of the Board of Directors on matters
referred to in this Section 4 shall be conclusive.

 

5.                                      Eligibility.

 

Each member of the Board of Directors elected on or
after the Effective Date of the Plan who is not an employee of the Company or
any subsidiary corporation or parent corporation of the Company shall be
eligible to be granted Options under the Plan (the “Eligible Directors”),
as determined by the Board of Directors in its sole discretion.

 

The Plan does not create a right in any person to
participate in, or be granted Options under, the Plan.

 

6.                                      Option
Grants.

 

On and after the Effective Date, following the
election or appointment of any additional Eligible Director to the Board of
Directors, the Board of Directors may make an initial “one-time” grant of an Option
to such new Eligible Director (subject to adjustment as provided in Section 13)
to purchase the number of Shares as determined by the Board of Directors,
subject to the limit provided in Section 2.  Each Option granted to an Eligible Director
pursuant to the Plan shall be evidenced by, and subject to, a written agreement
between the Company and such Eligible Director (the “Option Agreement”),
which may contain certain restrictions.

 

7.                                      Option
Price and Payment.

 

The exercise price for each Share purchasable upon
exercise of any Option granted hereunder shall be determined by the Board of
Directors at the date of grant, provided that on and after the Registration
Date the exercise price shall be no less than one hundred percent (100%) of the
Fair Market Value per Share on the date of grant.  For purposes of the Plan, “Fair Market
Value” per Share shall be the closing price for Common Stock on the date of
determination (or the last preceding trading date if Common Stock was not
traded on such date) if the Common Stock is readily tradeable on a national
securities exchange or other market system or if not traded on a national
securities exchange or other market system, as quoted on an automated quotation
system sponsored by the National Association of Securities Dealers, Inc.,
and if the Common Stock is not readily tradeable or quoted, Fair Market Value
per Share shall be determined in good faith by the Board of Directors.

 

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The option exercise price may be paid in cash or, in
the discretion of the Board of Directors, by the delivery of shares of Common
Stock of the Company then owned by the option holder (which have been held by
the option holder for such period as required by the Board of Directors), by
the withholding of shares of Common Stock for which an Option is exercisable or
by a combination of these methods.  In
the discretion of the Board of Directors, payment may also be made by
delivering a properly executed exercise notice to the Company together with a
copy of irrevocable instructions to a broker to deliver promptly to the Company
the amount of sale or loan proceeds to pay the exercise price.  The Board of Directors may prescribe any
other method of paying the exercise price that it determines to be consistent
with applicable law and the purpose of the Plan, including, without limitation,
in lieu of the exercise of an Option by delivery of shares of Common Stock of
the Company then owned by an option holder, providing the Company with a
notarized statement attesting to the number of shares owned, where upon
verification by the Company, the Company would issue to the option holder only
the number of incremental shares to which the holder is entitled upon exercise
of the Option.  In determining which
methods an option holder may utilize to pay the exercise price, the Board of
Directors may consider such factors as it determines are appropriate.

 

8.                                      Terms
of Options and Limitations on the Right of Exercise.

 

Any Option granted under the Plan shall vest in accordance
with the terms of the Option Agreement and shall also be subject to the terms
specified in the Option Agreement and the Plan. 
To the extent that an Option is not exercised within the exercise period
specified therein, it shall expire as to the then unexercised part.

 

In no event shall an Option granted hereunder be
exercised for a fraction of a Share or for less than one hundred Shares (unless
the number purchased is the total balance for which the Option is then
exercisable).

 

A person entitled to receive Shares upon the exercise
of an Option shall not have the rights of a stockholder with respect to such
Shares until the date of issuance of a stock certificate to him or her for such
Shares; provided, however, that until such stock certificate is issued,
any holder of an Option using previously acquired shares of Common Stock in
payment of an option exercise price shall continue to have the rights of a
stockholder with respect to such previously acquired shares of Common Stock.

 

In the event of an Acquisition Event (as
defined below), the Board of Directors may, in its discretion, and without any
liability to any option holder, terminate all outstanding Options as of the
consummation of the Acquisition Event by delivering notice of termination to each
option holder at least 20 days prior to the date of consummation of the
Acquisition Event; provided that, during the period from the date on which such
notice of termination is delivered to the consummation of the Acquisition
Event, each option holder shall have the right to exercise in full all of the
Options that are then outstanding (without regard to limitations on exercise
otherwise contained in the Options) but any such exercise shall be contingent
upon and subject to the occurrence of the Acquisition Event, provided that if
the Acquisition Event does not take place within a specified period after
giving such notice for any reason whatsoever, the notice and

 

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exercise pursuant thereto
shall be null and void.  If the
Acquisition Event does take place after giving such notice, any Option not
exercised prior to the date of the consummation of such Acquisition Event shall
be forfeited simultaneous with the consummation of the Acquisition Event.  If an Acquisition Event occurs and the Board
of Directors does not terminate the outstanding Options pursuant to the
foregoing provisions, then the provisions of Section 13 shall apply.

 

Acquisition Event means a merger or consolidation in
which the Company is not the surviving entity, or any transaction that results
in the acquisition of all or substantially all of the Company’s outstanding
Common Stock by a single person or entity or by a group of persons and/or
entities in concert, or the sale or transfer of all or substantially all of the
Company’s assets.

 

Notwithstanding
anything herein to the contrary, as a condition to the receipt of shares of
Common Stock pursuant to an Option granted under this Plan prior to the
Registration Date, to the extent required by the Board of Directors, the option
holder shall execute and deliver a stockholder’s agreement or such other
documentation which shall set forth certain restrictions on transferability of
the shares of Common Stock acquired upon exercise or purchase, a right of first
refusal of the Company with respect to shares, and such other terms or
restrictions as the Board of Directors shall from time to time establish.  Such stockholder’s agreement or other
documentation shall apply to the Common Stock acquired under the Plan and
covered by such stockholder’s agreement or other documentation.  The Company may require, as a condition of
exercise, the option holder to become a party to any other existing stockholder
agreement or other agreement.

 

9.                                      Option
Period and Exercise of Options.

 

Any Option granted to an Eligible Director shall be
exercisable for a period beginning on the date of grant and ending ten (10) years
from the date of grant of such Option, except to the extent such exercise is
further limited or restricted pursuant to the provisions hereof.

 

Each Eligible Director shall agree not to sell or
otherwise dispose of Shares acquired pursuant to an Option for a period of six (6) months
following the date of grant of such Option; provided, however,
that for purposes of this sentence only, any Option granted to an Eligible
Director on the Effective Date shall be deemed to have been granted on the date
the Plan is approved by the shareholders of the Company.

 

Subject to the express provisions of the Plan, Options
granted under the Plan shall be exercised by the optionee as to all or part of
the Shares covered thereby by the giving of written notice of the exercise
thereof to the Corporate Secretary of the Company at the principal business
office of the Company, specifying the number of Shares to be purchased, the
proposed form of payment and specifying a business day not more than ten (10) days
from the date such notice is given for the payment of the purchase price
against delivery of the Shares being purchased. 
Subject to the terms of Sections 15, 16 and 17 hereof, the Company shall
cause certificates for the Shares so purchased to be delivered at the principal
business office of the Company, against payment of the full purchase price, on
the date specified in the notice of exercise.

 

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10.                               Termination
of Directorship.

 

Unless otherwise provided in the Option Agreement, if
an Eligible Director’s service as a director of the Company is terminated for
any reason, any Option previously granted to such Eligible Director shall, to
the extent not theretofore exercised, terminate and become null and void; provided,
however, that:

 

(a)                                  If
an Eligible Director holding an outstanding Option dies, including during the
thirty (30) day or six (6) month period, whichever is applicable,
specified in clause (b) and (c) immediately below, such Option shall,
to the extent then exercisable, remain exercisable for twelve (12) months after
such Eligible Director’s death, by such Eligible Director’s legatee,
distributee, guardian or legal or personal representative;

 

(b)                                 If
the service of an Eligible Director holding an outstanding Option is terminated
by reason of such Eligible Director’s disability (as described in Section 22(e)(3) of
the Code) such Option shall, to the extent then exercisable, remain exercisable
at any time up to and including six (6) months after the date of
termination of service;

 

(c)                                  If
the service of an Eligible Director holding an outstanding Option is terminated
for any reason other than as provided in subsections (a), (b) and (d), such
Option shall, to the extent then exercisable, remain exercisable at any time up
to and including thirty (30) days after the date of such termination of service.

 

(d)                                 If
the service of an Eligible Director is terminated for Cause (as defined below),
all outstanding Options (whether vested or unvested) shall terminate and become
null and void.

 

For purposes of the Plan, “Cause” shall mean an
Eligible Director has engaged in any of the following while performing his
duties as an Eligible Director: (i) fraud or intentional misrepresentation
or (ii) embezzlement, misappropriation or conversion of assets or
opportunities of the Company.

 

If an Option granted hereunder shall be exercised by
the legal representative of a deceased Eligible Director or former Eligible
Director, or by a person who acquired an Option granted hereunder by bequest or
inheritance or by reason of the death of any Eligible Director or former
Eligible Director, written notice of such exercise shall be accompanied by a
certified copy of letters testamentary or equivalent proof of the right of such
legal representative or other person to exercise such Option.

 

Notwithstanding anything to the contrary contained in
this Section 10, in no event shall any person be entitled to exercise any
Option after the expiration of the original stated term of such Option, as
specified in Section 9.

 

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11.                               Use
of Proceeds.

 

The cash proceeds of the sale of Shares subject to the
Options granted hereunder are to be added to the general funds of the Company
and used for its general corporate purposes as the Board of Directors shall
determine.

 

12.                               Non-Transferability
of Options.

 

An Option granted hereunder shall not be transferable,
whether by operation of law or otherwise, other than by will or the laws of
descent and distribution.  Except to the
extent provided above, Options also may not be assigned, transferred, pledged,
hypothecated or disposed of in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar
process.  Notwithstanding the foregoing,
the Board of Directors may determine, in its sole discretion, at the time of
grant or thereafter that an Option that is otherwise not transferable pursuant
to this Section is transferable to a Family Member (as defined below) in
whole or in part and in such circumstances, and under such conditions, as
specified by the Board of Directors, provided that the option holder notifies
the Board of Directors in writing of such transfer.  An Option that is transferred to a Family
Member pursuant to the preceding sentence may not be subsequently transferred
otherwise than by will or by the laws of descent and distribution and remains
subject to the terms of this Plan and the applicable Option Agreement.  Family Member means solely to the extent
provided for in Rule 701 under the Securities Act, or following the filing
of a Securities Act Form S-8 with respect to the Plan, any “family member”
as defined in Section A.1.(5) of the general instructions of Form S-8.

 

13.                               Adjustment
of Shares.

 

(a)                                  Notwithstanding
any other provision contained herein, in the event of any change in the Shares
subject to the Plan or to any Option granted under the Plan, through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
reverse stock split, split up, spin-off, combination of shares, exchange of
shares, dividend in kind or other like change in capital structure of the
Company, or distribution (other than normal cash dividends) to stockholders of
the Company, an adjustment shall be made to each outstanding Option such that
each such Option shall thereafter be exercisable for such securities, cash and/or
other property as would have been received in respect of Shares subject to such
Option had such Option been exercised in full immediately prior to such change
or distribution, and such an adjustment shall be made successively each time
any such change shall occur.  The term “Shares”
after any such change shall refer to the securities, cash and/or property then
receivable upon exercise of an Option.

 

In addition, in the event of any such change or
distribution, in order to prevent dilution or enlargement of participants’
rights under the Plan, the Board of Directors will have authority to adjust, in
an equitable manner, the maximum number of Shares which may be acquired under
the Plan pursuant to the exercise of Options, the maximum number of shares for
which Options may be granted to any one Eligible Director and the number of
Shares and price per Share subject to outstanding Options,

 

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and the determination of
the Board of Directors as to these matters shall be conclusive and binding on
the optionee.

 

14.                               Right
to Terminate Service.

 

The Plan shall not impose any obligation on the
Company or on any subsidiary corporation or parent corporation thereof to
continue the service of any Eligible Directors holding Options and shall not
impose any obligation on the part of any Eligible Director holding Options to
remain in the service of the Company or of any subsidiary corporation or parent
corporation thereof.

 

15.                               Purchase
for Investment.

 

Except as hereinafter provided, the Board of Directors
may require the holder of an Option granted hereunder, as a condition to the
exercise of such Option in the event the Shares subject to such Option are not
registered pursuant to the Securities Act, and applicable state securities
laws, to execute and deliver to the Company a written statement, in form
satisfactory to the Board of Directors, in which such holder (a) represents
and warrants that such holder is purchasing or acquiring the Shares acquired
thereunder for such holder’s own account for investment only and not with a
view to the resale or distribution thereof in violation of any federal or state
securities laws and (b) agrees that any subsequent resale or distribution
of any of such Shares shall be made only pursuant to either (1) an
effective registration statement covering such Shares under the Securities Act
and applicable state securities laws or (2) specific exemptions from the
registration requirements of the Securities Act and any applicable state
securities laws, based on a written opinion of counsel, in form and substance
satisfactory to counsel for the Company, as to the application thereto of any
such exemptions.

 

Nothing herein shall be construed as requiring the
Company to register Shares subject to any Option under the Securities Act or
any state securities law and, to the extent deemed necessary by the Company,
Shares issued upon exercise of an Option may contain a legend to the effect
that registration rights have not been granted with respect to such Shares.

 

16.                               Issuance
of Stock Certificates; Legends; Payment of Expenses.

 

The Company may endorse such legend or legends upon
the certificates for Shares issued upon exercise of Options granted pursuant to
the Plan and may issue such “stop transfer” instructions to its transfer agent
in respect of such Shares as the Board of Directors in its discretion,
determines to be necessary or appropriate to (i) prevent a violation of,
or to perfect an exemption from, the registration requirements of the
Securities Act or (ii) implement the provisions of the Plan and any
agreement between the Company and the optionee or grantee with respect to such
Shares.

 

The Company shall pay all issue or transfer taxes with
respect to the issuance or transfer of Shares, as well as all fees and expenses
necessarily incurred by the Company in connection with such issuance or
transfer, except fees and expenses that may be necessitated by the filing or
amending of a registration statement under the Securities

 

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Act, which fees and
expenses shall be borne by the recipient of the Shares unless such registration
statement has been filed by the Company for its own corporate purpose (and the
Company so states) in which event the recipient of the Shares shall bear only
such fees and expenses as are attributable solely to the inclusion of the
Shares an optionee receives in the registration statement.

 

All Shares issued as provided herein shall be fully
paid and nonassessable to the extent permitted by law.

 

17.                               Listing
of Shares and Related Matters.

 

If at any time the listing, registration or
qualification of the Shares subject to such Option on any securities exchange
or under any applicable law, or the consent or approval of any governmental regulatory
body, is necessary as a condition of, or in connection with, the granting of an
Option, or the issuance of Shares thereunder, such Option may not be exercised
in whole or in part unless such listing, registration, qualification, consent
or approval shall have been effected or obtained.

 

18.                               Amendment
of the Plan.

 

The Board of Directors may, from time to time, amend
the Plan.  Rights and obligations under
any Option granted while the Plan is in effect shall not be impaired by any
Plan amendment, except upon the consent of the person to whom the Option was
granted.

 

19.                               Termination
or Suspension of the Plan.

 

The Board of Directors may at any time suspend or
terminate the Plan.  Options may not be
granted while the Plan is suspended or after it is terminated.  Rights and obligations under any Option
granted while the Plan is in effect shall not be altered or impaired by
suspension or termination of the Plan, except upon the consent of the person to
whom the Option was granted.  The
ministerial power of the Board of Directors to construe and administer any
Options under Section 4 that are granted prior to the termination or the
suspension of the Plan shall continue after such termination or during such
suspension.

 

20.                               Savings
Provision.

 

With respect to all participants in the Plan,
transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 (or any successor provision) under the Exchange
Act.  To the extent any provision of the
Plan or action by the Board of Directors fails to so comply, it shall be deemed
null and void to the extent permitted by law and deemed advisable by the Board
of Directors.

 

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21.                               Governing
Law.

 

The Plan, such Options as may be granted hereunder and
all related matters shall be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware from time to time in effect.

 

22.                               Partial
Invalidity.

 

The invalidity or illegality of any provision herein
shall not be deemed to affect the validity of any other provision.

 

10Exhibit 10.8

 

Maidenform, Inc.

2004 Incentive
Plan

for

Designated Key
Employees

 

ARTICLE I

 

Introduction

 

The purpose of
the Maidenform, Inc. 2004 Incentive Plan for Designated Key Employees (the
“Plan”) is to provide incentives to Designated Key Employees of the Company to
enhance the value of the Company and to permit the Company to attract and
retain the services of outstanding key employees upon whose judgment, interest
and special effort the successful conduct of the operations of the Company is
largely dependent.  Awards will generally
be based upon the financial and operating performance of the Company and the
individual performance of each Participant.

 

ARTICLE II

 

Definitions

 

2.1                                 “Actual
Operating Percentage” means, for any Participant during the Plan Year the sum
of the EBITDA Percentage and the Personal Goals Percentage actually achieved by
such Participant for such Plan Year, as determined by the Board, in its sole
discretion.  The applicable Actual
Operating Percentage for each Participant will be based upon the Operating
Targets reflected on the Annual Notice for such Participant.

 

2.2                                 “Annual
Notice” means the annual notice provided to each Employee who is selected as a
Participant for the Plan Year as soon as practicable after the beginning of the
Plan Year and which sets forth the Operating Targets and the Participant’s
Compensation Percentage.

 

2.3                                 “Award”
means the dollar amount of the incentive bonus determined by the Board, in its
sole discretion, to be payable to a Participant for the Plan Year pursuant to
the Plan.

 

2.4                                 “Board”
means the Board of Directors of the Company.

 

2.5                                 “Cause”
shall mean

 

(i)                                     conviction
of a Participant for committing a felony under federal law or the law of the
state in which such action occurred;

 

(ii)                                  perpetration
by the Participant of an illegal act which causes significant economic injury
to the Company, provided that the Participant shall be given notice and an
opportunity to effectuate a cure, or

 

(iii)                               continuing
willful and deliberate failure on the part of a Participant to perform his or
her employment duties in any material respect, provided that the Participant
shall be given notice and an opportunity to effectuate a cure.

 

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The Committee
shall have the sole discretion to determine whether “Cause” exists, and its
determination shall be final.

 

2.6                                 “Company”
means Maidenform, Inc. and its successors.

 

2.7                                 “Compensation”
means, for any Participant during the Plan Year, the Participant’s W-2 earnings
for calendar year 2004, less any prior or current year bonuses, commissions,
allowances or any imputed income and adding back any pre-tax contributions to
the Maidenform, Inc. Savings Plan or the Maidenform, Inc. Cafeteria
Plan.

 

2.8                                 “Compensation
Percentage” means, for any Participant during the Plan Year, the percentage set
forth in the Participant’s Annual Notice.

 

2.9                                 “Disability”
means the inability of a Participant to perform the duties of his position by
reason of a bodily injury, disease or illness for an aggregate of 180 days in
any twelve-month period.

 

2.10                           “EBITDA”
means, for the Plan Year, the sum of the earnings (or loss) of the Company and
subsidiaries before interest, taxes plus amortization and depreciation
(determined in accordance with generally accepted accounting principles) and
excluding restructuring charges for such Plan Year.

 

2.11                           “EBITDA
Goals” means, for any Participant during the Plan Year, the EBITDA goals for
the Company established by the Board in its sole discretion, based upon the recommendation
of the Chief Executive Officer of the Company, and set forth in Exhibit ”A”.

 

2.12                           “EBITDA
Percentage” means, for the Plan Year, depending on the EBITDA for such Plan
Year, the percentage set forth on Exhibit ”A” multiplied by the percentage
allocated for EBITDA as reflected on the Participant’s Annual Notice.  Unless the EBITDA for the Plan Year, as
defined in this Plan, is equal to $28,000,000 or more, then the EBITDA
Percentage shall be zero.

 

2.13                           “Effective
Date” means January 1, 2004.

 

2.14                           “Employee”
means any non-union exempt salaried employee of the Company or any of its
subsidiaries.

 

2.15                           “Operating
Targets” means, for any Participant during the Plan Year, the EBITDA Goal and
the Personal Goals for such Participant during such Plan Year.

 

2.16                           “Personal
Goals” means, for any Participant during the Plan Year, the individual
performance goals established by the Participant and the Participant’s
supervisor for such Participant during such Plan Year, subject to approval by
the Chief Executive Officer.

 

2.17                           “Personal
Goals Percentage” means, for any Participant during the Plan Year, a
percentage, as approved by the Board in its sole discretion, based upon the
recommendation of the Chief Executive Officer of the Company depending on the
portion of the Personal Goals which are satisfied for such Participant during
such Plan Year, up to the percentage reflected on

 

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the Participant’s Annual
Notice.  Unless the EBITDA for the Plan
Year, as defined in this Plan, is equal to $28,000,000 or more, then the
Personal Goals Percentage shall be zero.

 

2.18                           “Participant”
means, in the Plan Year, an Employee who participates in the Plan during such
Plan Year pursuant to Article IV.

 

2.19                           “Payment
Date” means, for the Plan Year, a date after the close of such Plan Year
selected by the Board for the payment of Awards, provided that such Payment
Date shall not be later than 15 days following the receipt by the Company of
its audited financial statements for such Plan Year.

 

2.20                           “Plan”
means the 2004 Maidenform, Inc. Incentive Plan for Designated Key
Employees.

 

2.21                           “Plan
Year” means the fiscal year of the Company, commencing December 28, 2003
and ending January 1, 2005.

 

ARTICLE III

 

Administration

 

3.1                                 Powers
and Duties of the Board.  The Board
shall interpret and construe any and all provisions of the Plan and shall have
discretionary authority to determine the basis upon which any Award is to be
made and whether or not the criteria have been satisfied.  The Board shall administer the Plan and
establish rules for such administration. 
The powers delegated to the Board under the terms of the Plan may be
exercised by the Board or any committee thereof to which the Board delegates
authority to act under the Plan.  Any
determination made by the Board (or any committee thereof) which is taken under
the Plan in good faith and which is neither arbitrary nor capricious shall be
final and conclusive.

 

3.2                                 Indemnification.  Each member of the Board (or any committee
thereof) and the employees of the Company and its affiliates who assist in the
administration and operation of the Plan shall be entitled to indemnification
and reimbursement by the Company to the maximum extent permitted by law and the
Company’s Articles of Incorporation and By-Laws in respect of any claim, loss,
damage or expense (including counsel’s fees) arising from their acts, omissions
and conduct in their official capacity with respect to the Plan except such
liability as may arise from their gross negligence or willful misconduct.  To the extent any member of the Board (or any
committee thereof) or any employee of the Company or its affiliates is found
liable or otherwise consents to such liability with respect to any claim
arising under the Plan, the amount of any indemnification or reimbursement paid
hereunder shall not be taken into account in calculating EBITDA for purposes of
this Plan.

 

3.3                                 Expenses
of Administration.  The Company shall
pay all expenses of administering the Plan, including, without limitation, all
expenses incurred by the Board (or any committee thereof) and all accounting
and legal fees and expenses related to the Administration of the Plan.

 

3

 

ARTICLE IV

 

Eligibility and Participation

 

4.1                                 An
Employee shall become a Participant in the Plan for the Plan Year upon the
recommendation of the Chief Executive Officer, subject to approval by the
Board.  Each Participant shall receive an
Annual Notice as soon as practicable after the beginning of each Plan
Year.  Selection for participation in the
Plan in the Plan Year shall not entitle any Employee to continue as a
Participant in any subsequent Plan Year or to receive an Award with respect to
any other Plan Year.

 

ARTICLE V

 

Awards

 

5.1                                 Amount
of Award.  Each Participant’s Award
for a Plan Year shall be equal to the product of (i) the Participant’s
Compensation for such Plan Year, times (ii) the participant’s Compensation
Percentage, times (iii) the Participant’s Actual Operating Percentage for
such Plan Year.  Notwithstanding any
other Plan provision, the Board’s calculation of any Awards to be made in the
Plan Year shall be final and binding on the Participant.

 

5.2                                 Payment
of Awards.  A Participant for the
Plan Year who is an Employee on the Payment Date for such Plan Year shall
receive a lump sum payment equal to his Award for such Plan Year.  Except as provided in Section 5.3, a
Participant whose employment terminates for any reason prior to the end of the
Plan Year shall not be eligible to receive an Award unless otherwise determined
by the Board, in its sole discretion.  If
a Participant’s employment terminates for reasons other than Cause after the
end of the Plan Year but before the Payment Date, the Participant will receive
his award for such Plan Year.

 

5.3                                 Death,
Disability and Retirement.  If a
Participant’s employment terminates before the end of the Plan Year due to the
Participant’s death, Disability or retirement, the Participant, or his
designated beneficiary (or estate), will receive on the Payment Date for such
Plan Year, an amount equal to the Award that would have been payable to such
Participant for such Plan Year had such Participant remained employed through
the Payment Date.

 

ARTICLE VI

 

Term and Amendment of the Plan

 

6.1                                 The
Plan shall be effective as of the Effective Date and shall continue until
terminated by action of the Board.  The
Board may amend or modify the Plan in any respect at any time, except that in
no event may any amendment or modification pursuant to this Article VI
adversely affect the rights of any Participant with regard to an Award for the
Plan Year.

 

4

 

ARTICLE VII

 

Miscellaneous

 

7.1                                 No
Right of Continued Employment. 
Nothing in this Plan shall be construed as conferring upon any
Participant any right to continue in the employment of the Company or its
affiliates.

 

7.2                                 No
Claim to Particular Assets.  The
obligations of the Company under this Plan shall not be construed as giving any
Participant or any other person any equity or other interest of any kind in the
assets of the Company or any of its affiliates or creating a trust or fiduciary
relationship between the Company or any of its affiliates and any such
person.  As to any claim for payment
under the Plan, a Participant or any other person having a claim for payment
hereunder shall be an unsecured general creditor of the Company.

 

7.3                                 No
Limitation on Corporate Actions. 
Nothing contained in the Plan shall be construed to prevent the Company
or any of its affiliates from taking any corporate action which is deemed by it
to be appropriate or in its best interest, whether or not such action would
have an adverse effect on the Plan or any Awards under the Plan.  No Participant or other person shall have any
claim against the Company or any of its affiliates as a result of any such
action.

 

7.4                                 Nonalienation
of Benefits.  No Participant shall
have the power or right to transfer, anticipate or otherwise encumber such
Participant’s interest in the Plan in advance of the time such interest is
payable hereunder.  The Company’s
obligations under this Plan are not assignable or transferable except that, if
any entity acquires all or substantially all of the Company’s assets or the
Company merges or is consolidated with any other corporation, such entity or
other corporation shall assume, honor, pay and perform all of the Company’s
obligations under the Plan.  The
provisions of the Plan shall inure to the benefit of each Participant and his
heirs, executors, administrators or successors in interest.

 

7.5                                 Withholding.  Any amount paid to a Participant or his
estate under this Plan shall be made after deduction for any applicable
Federal, state and local income and employment taxes and any other amounts that
the Company is required at law to deduct and withhold from such payment.

 

7.6                                 Governing
Law.  The Plan shall be construed in
accordance with and governed by the laws of the State of New York, without
references to the principles of conflict of laws.

 

7.7                                 Headings.
 Headings are inserted in this Plan for
convenience of reference only and are to be ignored in a construction of the
provisions of the Plan.

 

	
   

  	
  MAIDENFORM, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Thomas J. Ward

  	
   

  
	
   

  	
   

  	
    Thomas
  J. Ward

  
	
   

  	
   

  	
    President &
  Chief Executive Officer

  

 

5

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