Document:

EXHIBIT
10.3

 

EMPLOYMENT AGREEMENT

 

AGREEMENT
dated as of October 14, 2004 between MAIDENFORM, INC., a New York
corporation with a principal place of business at 154 Avenue E, Bayonne, NJ
07002 (the “Employer”), Dorvin Lively residing at [*  *  *]
(the “Employee”), and solely for purposes of Sections 3(c), 3(d), 4 and
19, MF Acquisition Corporation.

 

W I T N E S S E T H :

 

WHEREAS, the
Employer wishes to employ the Employee for the period provided in this
Agreement, and the Employee is willing to serve in the employ of the Employer
for such period, upon the terms and conditions hereinafter provided;

 

NOW,
THEREFORE, in consideration of the mutual covenants herein contained, the parties
agree as follows:

 

1.                                       Employment.  The Employer hereby employs the Employee and
the Employee hereby accepts employment upon the terms and conditions
hereinafter set forth.

 

2.                                       Term
of Employment.  (a)  The term of
the Employee’s employment under this Agreement shall commence on
November 8, 2004 and it shall continue for a period of one year thereafter
(the “Initial Term”), unless this Agreement shall be renewed for an additional
term or terms in accordance with paragraph (b) of this Section 2, or
unless earlier terminated as provided herein (such period of time, collectively
the “Term of Employment”).

 

(b)                                 This
Agreement shall automatically be renewed upon the expiration of the Initial
Term for successive periods of one year each (each an “Additional Term”),
unless either party notifies the

 

 

other party in writing at least
sixty (60) days prior to the expiration of the Initial Term or any such Additional
Term.

 

3.                                       Compensation.  (a)  Base.  During the Term of Employment, the Employer
shall pay the Employee a base salary at not less than an annual rate of Three
Hundred Fifty Thousand ($350,000.00) Dollars, in accordance with the Employer’s
normal payroll practices (as increased in accordance with this
Section 3(a), the “Base Salary”). 
Such Base Salary shall be reviewed at least annually by the Board of
Directors of MF Acquisition Corporation (the “Board”) and the Board may at any
time increase (but not decrease) the Employee’s Base Salary hereunder as the
Board may in its sole and absolute discretion deem reasonable and appropriate.

 

(b)                                 Incentive
Compensation.  The Employee shall be
a participant in the Maidenform, Inc. 2004 Incentive Plan for Designated
Key Employees and during the Term of Employment shall participate in all subsequent
annual incentive compensation plans for key employees, subject to the terms
(including, without limitation, eligibility requirements) of each applicable
plan, in an amount of up to Seventy-Five percent (75%) of his Base Salary
payable in each Plan Year, in each case based upon such goals and performance
standards as may be determined by the Board of Directors in its discretion.  More
specifically, the Employee’s incentive compensation shall be based upon a
Personal Goals Bonus, an EBITDA Target Level Bonus and an Extraordinary EBITDA
Target Level Bonus, each on the terms and subject to the conditions set forth
below.  The Personal Goals Bonus shall be
up to Fifteen percent (15%) of the Base Salary received for the year for which
the bonus is paid and shall be based upon personal goals set by the Chief
Executive Officer after consultation with the Employee, with the approval of
the Compensation Committee of the Board (the “Compensation Committee”) with the
level of such achievement

 

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determined by the Compensation
Committee, in its discretion.  The EBITDA
Target Level Bonus shall be up to Sixty percent (60%) of the Base Salary
received for the year for which the bonus is paid, and it shall be based on
achievement (as determined by the Compensation Committee) of a EBITDA target
set and structured by mutual agreement on an annual basis by the Compensation
Committee.  The Extraordinary EBITDA
Target Level Bonus shall be up to Thirty percent (30%) of the Base Salary as in
effect for the year for which the bonus is paid, and it shall be based on
achievement (as determined by the Compensation Committee) of a higher EBITDA
target set and structured on an annual basis by the Compensation
Committee.  It is understood that the
Plan Year for the annual incentive compensation plans will be the calendar year
and the EBITDA targets will be based upon the corresponding fiscal years of the
Employer.  Provided Employee is an
Employee of the Company through December 31, 2004, the incentive compensation
for Employee for calendar year 2004 shall be no less than $91,875.00 (which is
the equivalent of 100% 0f the maximum incentive compensation (105%) for one
calendar quarter at the initial Base Rate of Pay of the Employee), regardless
of the actual amount of Compensation as determined in accordance with the Plan
and whether or not any of such goals or performance standards are achieved
under the Maidenform, Inc. 2004 Incentive Plan for Designated Key
Employees.  The guaranteed portion of the
bonus for calendar year 2004 shall be paid at the time provided for such
incentive compensation payments for all participants in the
Maidenform, Inc. 2004 Incentive Plan for Designated Key Employees.  Provided Employee is an Employee of the
Company through December 31, 2005, the incentive compensation for Employee
for calendar year 2005 shall be no less than $220,500 (which is the equivalent
of 60% of the maximum incentive compensation (105%) for an entire year at the
initial Base Rate of Pay of the Employee), regardless of the actual amount of
Compensation as determined in accordance with the Plan and whether or not any
of such goals or performance standards are achieved under the Maidenform,

 

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Inc. 2004 Incentive Plan for
Designated Key Employees.  The guaranteed
portion of the bonus for calendar year 2004 shall be paid at the time provided
for such incentive compensation payments for all participants in the
Maidenform, Inc. 2004 Incentive Plan for Designated Key Employees.

 

(c)                                  Stock
Options.  (i) Subject to
approval by the Board (or the committee under the MF Acquisition Corporation
2004 Stock Option Plan (the “Parent’s Stock Option Plan”)), the Employee shall
receive a non-qualified stock option to purchase Eighty-Five Thousand Seven
Hundred Twenty-One (85,721) shares of the common stock of MF Acquisition
Corporation (the “Parent”), pursuant to the Parent’s Stock Option Plan”.  The exercise price per share for such options
shall be $1.82.  Subject to approval by
the Board (or the committee under the Parent’s Stock Option Plan), the Employee
will also receive a nonqualified option to purchase Eighty-Five Thousand Seven
Hundred Twenty-One (85,721) shares of common stock of the Parent pursuant to
the Parent’s Stock option Plan.  The exercise
price per share for such options shall be $3.64.  Each of the stock options granted pursuant to
this Section 3(c) will vest and become exercisable in equal annual
installments over a four year period (provided the Employee is continuously
employed by the Employer through the applicable vesting date), beginning on the date of grant, subject to 100%
acceleration of vesting upon a Change in Control (as defined below).  The provisions of this
Section 3(c) shall supersede any conflicting provision of the
Parent’s Stock Option Plan or the applicable stock option agreements between
the Parent and the Employee.

 

For purposes
of this Agreement, “Change in Control” shall mean consummation of (i) a
sale of all or substantially all of the consolidated assets of the Parent and
its subsidiaries to a person who is not either a member of, or an affiliate of
a member of, the Initial Investor Group (as defined below); or (ii) a sale
by the Parent, one or more members of the Initial Investor Group or any of
their respective affiliates

 

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resulting in
more than 50% of the capital stock of the Parent that ordinarily votes for
directors (“Voting Stock”) being held by a person or group (as such terms are
used in the Securities Exchange Act of 1934, as amended) that does not include
any member of the Initial Investor Group or any of their respective affiliates;
or (iii) a merger or consolidation of the Parent into another person as a
result of which a person or group acquires more than 50% of the Voting Stock of
the Parent that does not include any member of, or an affiliate of a member of,
the Initial Investor Group; provided, however, that a Change in
Control shall occur if and only if
after any such event listed in (i)-(iii) above the Initial Investor Group
is unable to elect a majority of the Board of the entity that purchased the
assets in the case of an event described in (i) above, the Parent in the
case of an event described in (ii) above, or the resulting entity in the
case of an event described in (iii) above, as the case may be.  The “Initial Investor Group” shall mean Ares
Corporate Opportunity Fund, L.P. and any other fund under the management of
Ares Management, L.P. or its affiliates and OCM Opportunities Fund II, L.P. and
any other fund under the management of Oaktree Capital Management or its
affiliates.

 

(d)                                 Initial
Bonus  In addition to any other
Compensation or Incentive Compensation due hereunder, Employer shall pay to
Employee a gross lump sum of Seventy-Five Thousand ($75,000) Dollars (subject
to normal tax withholdings and other required deductions) coincident with
payment of the first installment of Base Salary to Employee paid in accordance
with the Employer’s normal payroll practices. 
It is understood and agreed that this Initial Bonus is excluded from
Compensation for the purposes of the calculation of Incentive Compensation
pursuant to the Maidenform, Inc. 2004 Incentive Plan for Designated Key Employees
but treated as Compensation solely to the extent provided for in any other
employee benefit plan.

 

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4.                                       Duties.  During the Term of Employment, the Employee
shall be engaged as Executive Vice President and Chief Financial Officer of
Maidenform, Inc. and its subsidiary companies (hereinafter individually
and collectively along with the Parent called the “Employer’s Group”).  The Employee shall have the authority and
powers to perform all duties as are customary for such offices, subject to the
supervision of the Chief Executive Officer and the Boards of Directors of the Employer
and the Parent and the Audit Committees of the Boards of Directors of the
Employer and the Parent.  In addition,
the Employee shall have such other or more specific responsibilities or duties
with respect to the business of the Employer’s Group consistent with the
Employee’s position as Executive Vice President and Chief Financial Officer as
may be determined and assigned to the Employee from time to time by or upon the
authority of the Chief Executive Officer or the Board of Directors of the Employer
or the Parent.  The Employee shall report
to the Chief Executive Officer and to the Audit Committees of the Boards of
Directors of the Employer and the Parent. 
The Employee shall also serve as an Officer or Director of any member of
the Employer’s Group as requested by the Employer without any additional
compensation therefore other than as specified in this Agreement.  The Employer has Director’s and Officer’s
Liability Insurance in effect and will maintain Director’s and Officer’s
Liability Insurance Coverage uninterruptedly in effect during the Term of
Employment.

 

5.                                       Extent
of Service.  The Employee agrees to
devote his best efforts, energies and skills to the faithful discharge of the
duties and responsibilities attributable to his offices, and to this end will
devote his full working time and attention to the business and affairs of the
Employer’s Group.  Employee shall be
based at the Employer’s Bayonne, New Jersey office, but shall perform services
hereunder at other locations as shall be reasonably appropriate.  Notwithstanding the foregoing, it is
understood that

 

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the Employee may devote
reasonable time and attention consistent with the practice of other senior executives
similarly situated, to civic or community affairs.

 

6.                                       Expenses.  The Employee is authorized to incur
reasonable, ordinary and necessary expenses in the performance of his duties
hereunder consistent with the Employer’s existing expense reimbursement policy,
as it may be amended from time to time, and the Employer shall reimburse the
Employee for all such expenses upon the presentation by the Employee, from time
to time, of an account of such expenditures.

 

7.                                       Vacation.  The Employee shall be entitled to twenty (20)
days of paid vacation during each of the successive twelve (12) month periods
comprising the Term of Employment, or a pro rata portion thereof for any such
successive period which is less than twelve (12) months.  Vacation hereunder shall be taken at times
which are mutually determined by the Employer and the Employee not to
interfere, in any material respect, with the Employee’s performance of his
duties hereunder.

 

8.                                       Employee
Benefits.  The Employee shall be
entitled during the Term of Employment to participate in any employee benefit
program or arrangement maintained by the Employer which is generally available
to other senior employees of the Employer, including any qualified or
non-qualified retirement or deferred compensation arrangements or 401(k)
savings plan, life insurance, medical, long-term disability plans, severance
arrangements, or other allowances.  Such
participation shall be in accordance with all applicable terms and conditions
of such plans or programs, including, without limitation, provisions respecting
the satisfaction of any applicable eligibility periods for plan participation
and the modification or termination of such plans.

 

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9.                                       Termination
of Employment.  Notwithstanding any
other provision of this Agreement, the Employee’s employment under this
Agreement may be terminated at any time by the Employer in the event of:

 

(A)                              (i) The Employee’s
conviction for, or entry of a plea of guilty or nolo contendere with respect to
a felony or any crime that constitutes a misdemeanor involving moral turpitude
under foreign or federal law or the law of any state, (ii) the Employee’s
willful misappropriation of funds or property of the Employer’s Group or other
acts of fraud, dishonesty self-dealing, any significant violation of any
statutory or common law duty of loyalty to the Employer’s Group, (iii) the
Employee’s perpetration of an illegal act which causes material economic injury
to the Employer’s Group, (iv) a material breach of this Agreement or the
Employee’s failure to perform his employment duties in any material respect,
provided that as to this subsection (iv), the Employee shall be given
notice and an opportunity, not to exceed ten (10) days, to effectuate a
cure, provided that such breach or failure is susceptible to cure, (v) the
Employee’s willful misconduct or gross negligence with regard to the Employer’s
Group that has a material adverse effect on the Employer’s Group or
(vi) the Employee’s failure to follow the proper direction of the Board or
anyone the Employee reports to, in each case as determined by the Board, in its
sole discretion in good faith (hereinafter “Cause”).

 

(B)                                The Employee’s death;
or

 

(C)                                The Employee’s
inability due to any physical or mental condition of the Employee, to perform
his duties hereunder for a period of ninety (90) consecutive days or one hundred

 

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twenty (120) days (whether or not
consecutive) within any twelve (12) month period (hereinafter “Disability”),
upon thirty (30) days prior written notice to the Employee;

 

(D)                               The Employee’s
resignation for Good Reason (as defined below) upon thirty (30) days prior
written notice;

 

(E)                                 The Employer’s
termination of the Employee’s employment without Cause upon fifteen (15) days
prior written notice; or

 

(F)                                 The Employee’s
termination of employment with the Employer as a result of non-renewal of the
Term of Employment in accordance with Section 2(b) of this Agreement
effective at the end of the then Term of Employment,

 

by written
notice to the Employee (except that notice of termination shall not be required
in the case of the Employee’s death) specifying the event relied upon for such
termination and the effective date of such termination in accordance with this
Agreement (the effective date of any termination of employment hereunder is
referred to as the “Termination Date”).

 

10.                                 Payments
Upon Termination of Employment. 
(a)  In the event the Employee’s employment under this Agreement is
terminated for any reason specified in Section 9 above, the Employer shall
be under no obligation hereunder either to continue the Employee’s employment
or to provide the Employee with any payment or benefit of any kind whatsoever,
except as otherwise provided below and for the Employee’s unpaid and earned
Base Salary through the Termination Date and such vested benefits or rights
which the Employee may have accrued and earned through the Termination Date
hereunder or under any benefit plan of Employer (other than any severance pay
plan maintained by the

 

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Employer) and reimbursement for
any unreimbursed business expenses properly incurred through the Termination
Date.  In addition, in the event of
termination pursuant to 9(B) or (C) above, the Employer shall also
pay the amount of any incentive compensation to which the Employee would have
been entitled for the year of termination had the Employee’s employment not
terminated, prorated to the Termination Date based on the number of days
employed by the Employer during the applicable year, payable when such
incentive compensation would be payable to other employees for that year and
based upon the Employer’s financial performance for the full applicable
year.  In addition, in the event of
termination pursuant to 9(B) or (C) above, the Employee shall be
entitled to benefits under any group life insurance or disability insurance
benefits provided in accordance with the Employer’s welfare benefit plans.

 

(b)                                 In
the event that the Employee’s employment with the Employer is terminated by the
Employer without Cause, the Employee’s termination of employment with the
Employer as a result of the Employer’s giving notice to the Employee of
non-renewal of the Term of Employment in accordance with Section 2(b) of
this Agreement effective at the end of the then Term of Employment or the Employee
resigns for Good Reason, then, in addition to the Employee’s unpaid and earned
Base Salary through the Termination Date and such vested benefits or rights
which the Employee may have accrued and earned through the Termination Date
hereunder or under any benefit plan of the Employer (other than any severance
pay plan maintained by the Employer) and reimbursement for any unreimbursed
expenses properly incurred through the Termination Date, subject to the
Employee’s execution and delivery of a release, to the fullest extent permitted
by law in favor of the Employer in substantially the form attached hereto as
Exhibit A, as may be modified to take into account changes in applicable
law, the Employee will be entitled to the following.

 

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(1)                                  Payment of a lump sum
equal to his Base Salary (as in effect on the Termination Date).  This amount shall be subject to tax and other
required withholdings and be payable within ten days of the Termination Date
(but not prior to the end of the Revocation Period (as defined in
Exhibit A hereto)).

 

(2)                                  In addition, if the
Employee or his dependents are otherwise eligible for COBRA continuation of group
health plan coverage and timely elect to receive it, the Employer shall pay the
cost of such COBRA coverage in an amount equal to 100% of the monthly premium
for such coverage for twelve (12) months, except to the extent that such
coverage may be terminated earlier pursuant to COBRA.

 

Notwithstanding
the foregoing, nothing in this Agreement shall be construed to require the
Employee to seek other employment following the termination of his employment
hereunder.

 

(c)                                  For
the purposes of this Agreement “Good Reason” shall mean:

 

(1)                                  The assignment to the
Employee of duties inconsistent in any material way with his position
(including title and reporting requirements), authority, duties, or
responsibilities;

 

(2)                                  Reduction in the
Employee’s Base Salary or annual bonus opportunity; or

 

(3)                                  Relocation of the
Employee to a location outside a radius of 50 miles of the Employer’s Bayonne,
New Jersey office and its New York, NY office;

 

provided that,
as to (1) and (2), the Employer shall be given notice and an opportunity,
not to exceed ten (10) days, to effectuate a cure for such asserted “Good
Reason” by the Employee.

 

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11.                                 Confidentiality.  The Employee recognizes and acknowledges that
the Proprietary Information (as hereinafter defined) is a valuable, special and
unique asset of the Employer.  As a
result, during the Term of Employment and thereafter, the Employee shall not,
without the prior written consent of the Board, for any reason, either directly
or indirectly, divulge to any third party (except as may be required to further
the interests of the Employer) or use for his own benefit, or for any purpose
other than the exclusive benefit of the Employer, any and all confidential,
proprietary, business and technical information or trade secrets of the Employer’s
Group (“Proprietary Information”) revealed, obtained or developed in the course
of his employment with the Employer’s Group. 
Such Proprietary Information shall include but shall not be limited to,
marketing and development plans, confidential cost and pricing information,
identities of customers and suppliers, the relationship of the Employer’s Group
with actual or prospective customers who are engaged in discussions with the
Employer’s Group, the needs and requirements of any such customers, and any
other confidential information relating to the business of the Employer’s
Group, provided that nothing herein contained shall restrict the Employee’s
ability to make such disclosures during the course of his employment as may be
necessary or appropriate to the effective and efficient discharge of his duties
hereunder or such disclosures as may be required by law; and further provided
that nothing herein contained shall restrict Employee from divulging or using
for his own benefit or for any other purpose any Proprietary Information which
is readily available to the general public so long as such information did not
become available to the general public as a direct or indirect result of
Employee’s breach of this Section 11. 
In the event the Employee is compelled by order of a court or other governmental
or legal body to communicate or divulge any Proprietary Information to anyone
other than the foregoing, the Employee shall promptly notify the Employer of any
such order so it may seek a protective order.

 

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12.                                 Property.  All Proprietary Information shall be and
remain the sole property of the Employer. 
During the Term of Employment, and thereafter, Employee shall not remove
from the Employer’s Group offices or premises any documents, records,
notebooks, files, correspondence, reports, memoranda or similar materials of or
containing information of the type identified in Section 11 hereof, or
other materials or property of any kind unless necessary or appropriate in
accordance with his duties and responsibilities hereunder and, in the event
that such materials or property are removed, all of the foregoing shall be
returned to their proper files or places of safekeeping as promptly as
reasonably possible after the removal shall serve its specific purpose.  Employee shall not make, retain, remove
and/or distribute any copies of any of the foregoing for any reason whatsoever
except as may be necessary in the discharge of his assigned duties; and upon
the termination of his employment with the Employer, he shall leave with or
promptly return to the Employer all originals and copies of the foregoing then
in his possession, whether prepared by Employee or by others.

 

13.                                 Covenant
not to Compete.  In consideration for
the Employer’s covenants set forth in Section 3(c)(ii) and
Section 10(b) hereof, the Employee shall not, during the Term of
Employment and for a period of one (1) year after his employment
terminates for any reason (including, without limitation, as a result of
non-renewal of the Term of Employment) engage in any of the following, directly
or indirectly, without the prior written consent of the Board:

 

(a)                                  engage or participate
in any business activity directly competitive with the business of the
Employer’s Group as conducted upon the termination of the Employee’s employment
with the Employer;

 

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(b)                                 become interested in
(as owner, stockholder, lender, partner, co-venturer, director, officer,
employee, agent, consultant or otherwise) any person, firm, corporation,
association or other entity engaged in any business that is, taken as a whole,
directly competitive with the business of the Employer’s Group as conducted
upon the termination of the Employee’s employment with the Employer, or become
interested in (as owner, stockholder, lender, partner, co-venturer, director,
officer, employee, agent, consultant or otherwise) any subsidiary or division
of the business of any person, firm, corporation, association or other
affiliate where such portion of such business is directly competitive with the
business of the Employer’s Group as conducted upon termination of the
Employee’s employment with the Employer. 
Notwithstanding the foregoing, nothing contained in this Section 13
shall prohibit the Employee from (i) holding not more than five percent
(5%) of the outstanding securities of any class of any publicly-traded company,
or (ii) after the Term of Employment engaging or participating in or
having an interest in (as owner, stockholder, lender, partner, co-venturer,
director, officer, employee, agent, consultant or otherwise) any subsidiary or
division of the business of any person, firm, corporation, association or other
affiliate where such portion of such business is not directly competitive with
the business of the Employer’s Group as conducted upon termination of the
Employee’s employment with the Employer, provided Employee does not breach the
provisions of Section 13 (c) or (d) or (e), hereof;

 

(c)                                  solicit either
directly or indirectly any customer of the Employer’s Group with whom the
Employer’s Group shall have dealt regularly at any time during the one
(1) year period immediately preceding the termination of the Employee’s
employment with the Employer for the

 

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purpose of offering or selling any products
or services which are identical, substantially similar or comparable to the
products or services then offered to the customer by the Employer’s Group;

 

(d)                                 influence or attempt
to influence any supplier, customer, or potential customer of the Employer’s
Group to terminate or modify any written or oral agreement or course of dealing
with the Employer’s Group; or

 

(e)                                  (i) influence or
attempt to influence any person to terminate or modify his employment with the
Employer’s Group, or (ii) employ directly or indirectly, any person
employed by the Employer’s Group as an employee at any time during the six
(6) month period preceding the effective date of the Employee’s
termination.

 

14.                                 Specific
Performance.  The Employee
acknowledges that the services to be rendered by the Employee are of a special,
unique and extraordinary character and, in connection with such services, the
Employee will have access to confidential information vital to the Employer’s
business and the business of its subsidiaries and affiliates.  By reason of this, the Employee acknowledges
consents and agrees that if the Employee violates any of the provisions of
Sections 11, 12 or 13 hereof, the Employer would sustain irreparable
injury and that money damages would not provide adequate remedy to the Employer
and that, in addition to any other remedies the Employer might have, including
money damages, the Employer shall be entitled to have Sections 11, 12 and
13 specifically enforced by any court having jurisdiction by means of any and
all equitable remedies.  The provisions
of Sections 11, 12, 13, 14 and 19 shall survive the termination of this
Agreement.

 

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15.                                 Notices.  Any notice required or permitted to be given
under this Agreement shall be sufficient if in writing, and shall be delivered
personally by telecopier or by courier providing for next day delivery or sent
by registered or certified mail return receipt requested to the following
addresses:

 

To the
Employer:

 

Maidenform, Inc.

154 Avenue E

Bayonne, New Jersey  07002

Attention:

Steven N. Masket

Telecopier:  201-436-9506

 

To the
Employee:

 

Dorvin Lively

[*  * 
*]:

 

With a copy
to:

 

Any such
notices shall be deemed given, if personally, upon delivery; if sent by
certified or registered mail, 3 days after deposit (postage pre-paid) with
the U.S. Mail Service; if by courier service providing for next day delivery,
the next day following deposit with such courier; and, if telecopied, when
telecopied.  Any party may change the
address for notices by sending written notice of such change of address in
accordance with this Section 15.

 

16.                                 Benefits.  This Agreement shall inure to the benefit of
and shall be binding upon the Employer and its successors and assigns, and upon
the Employee, his heirs and legal representatives.  This Agreement and all rights and obligations
hereunder are personal to the Employee and shall not be assignable.

 

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17.                                 Entire
Agreement.  This Agreement embodies
the entire agreement of the parties concerning the subject matter hereof and
supersedes any prior or contemporaneous agreements or understandings in
connection therewith.  The Agreement may
be amended or modified only by a written instrument executed by both parties
hereto.

 

18.                                 Severability.  If any term or provision of this Agreement is
held by a court of competent jurisdiction to be invalid or unenforceable, the
remainder of the terms and provisions of this Agreement shall remain in full
force and effect and shall in no way be affected or invalidated.  To the extent required to enforce any
provision of this Agreement, such provision may be reformed in order to
preserve its validity to the maximum extent permitted by law if it would
otherwise be held unenforceable.

 

19.                                 Indemnification.  The indemnification provisions in the
Parent’s Amended and Restated Certificate of Incorporation covering officers of
the Parent and the Employer shall apply to the Employee in his capacity as an
employee (or former employee), such indemnification to be in addition to any
other indemnification right in favor of the Employee.

 

20.                                 Withholding.  The Employer may deduct and withhold from any
amounts which it is otherwise obligated to pay hereunder any amount which it
may determine it is required to deduct or withhold pursuant to any applicable
statute, law, regulation or order of any jurisdiction whatsoever.

 

21.                                 Governing
Law.  This Agreement shall be subject
to, and governed, 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.

 

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22.                                 Assignment.  This Agreement is personal to each of the
parties hereto.  Except as provided
below, no party may assign or delegate any rights or obligations hereunder
without first obtaining the written consent of the other party hereto.  The Employer may assign this Agreement to any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Employer.  As used in this Agreement,
“Employer” shall mean the Employer and any successor to its business and/or
assets, which assumes and agrees to perform this Agreement by operation of law,
or otherwise.

 

23.                                 Representation.  The Employee represents and warrants to the
Employer that the Employee has the legal right to enter into this Agreement and
to perform all of the obligations on the Employee’s part to be performed
hereunder in accordance with its terms and that the Employee is not a party to
any agreement or understanding, written or oral, which could prevent the
Employee from entering into this Agreement or performing all of the Employee’s
obligations hereunder.

 

24.                                 Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instruments.

 

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

 

 

	
  MAIDENFORM, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Thomas Ward

  	
   

  	
   

  	
  /s/ Dorvin D. Lively

  
	
   

  	
  Name: Thomas Ward

  	
   

  	
  Dorvin
  Lively

  
	
   

  	
  Title: Chief Executive Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Solely with respect to Sections 3(c), 3(d),

  4 and 19:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  MF ACQUISITION CORPORATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Thomas Ward

  	
   

  	
   

  	
   

  
	
   

  	
  Name: Thomas Ward

  	
   

  	
   

  
	
   

  	
  Title: Chief Executive Officer

  	
   

  	
   

  

 

19EXHIBIT 10.4

 

EMPLOYMENT
AGREEMENT

 

AGREEMENT
dated as of November 1, 1999 between MAIDENFORM, INC., a New York
corporation (the “Employer”), and Steven N. Masket (the “Employee”).

 

W I T N E S S
E T H :

 

WHEREAS, the
Employer wishes to employ the Employee for the period provided in this
Agreement, and the Employee is willing to serve in the employ of the Employer
for such period, upon the terms and conditions hereinafter provided;

 

NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties agree as follows:

 

1.                                                                                       Employment.  The Employer hereby employs the
Employee and the Employee hereby accepts employment upon the terms and
conditions hereinafter set forth.

 

2.                                                                                       Term of Employment.  (a) 
The term of the Employee’s employment under this Agreement shall be deemed to
have commenced as of the date first above written and shall continue for a
period of eighteen months thereafter, to expire on April 30, 2001 (the “Initial
Term”) unless this Agreement shall be extended in accordance with paragraph (b) of
this Section 2, or unless earlier terminated as provided herein (such
period of time, collectively the “Term of Employment”).

 

(b)                                 Commencing
May 1, 2000, and on each day thereafter, the Term of Employment shall be
automatically extended one day, until such day upon which either party notifies
the other party in writing that the Agreement shall no longer be so
extended.  It is understood that upon any
such notice, the remaining Term of Employment shall be one year.

 

3.                                                                                       Compensation.  (a)  Base.  During the Term of Employment, the Employer
shall pay the Employee a base salary at not less than an annual rate of
$200,000.00 Dollars, payable in equal weekly installments and in accordance
with the Employer’s normal payroll practices (as increased in accordance with
this Section 3(a), the “Base Salary”). 
Such Base Salary shall be reviewed at least annually at the beginning of
each calendar year by the Employer and the Employer may at any time increase
(but not decrease) the Employee’s Base Salary hereunder as the Employer may in
its sole and absolute discretion deem reasonable and appropriate.

 

(b)                                 Incentive
Compensation.  The Employee shall be
a participant in the Maidenform, Inc. 1999 Incentive Plan for Designated
Key Employees and during the Term of Employment shall participate in all
subsequent annual incentive compensation plans for key employees at a level
commensurate with his position.  The
Employee shall be a participant in the Maidenform, Inc. 1999 Stock Option
Plan upon its adoption and be granted options in accordance with its terms, if
so adopted.  In addition, during the Term
of Employment shall participate in all subsequent stock option or other equity
participation plans for key employees at a level commensurate with his
position.

 

 

4.                                                                                       Duties.  During the Term of Employment,
the Employee shall be engaged as the Executive Vice President-Chief Legal
Officer and Secretary of MAIDENFORM, INC. and its subsidiary companies
(hereinafter individually and collectively called the “Employer’s Group”).  The Employee shall have the authority and
powers to perform all duties as are customary for such offices.  The Employee shall report to the Chief
Executive Officer of the Employer.

 

5.                                                                                       Extent of Service.  The
Employee agrees to devote his best efforts, energies and skills to the
discharge of the duties and responsibilities attributable to his offices, and
to this end will devote his full working time and attention to the business and
affairs of the Employer’s Group. 
Employee shall be based at the Employer’s Bayonne, New Jersey office,
but shall perform services hereunder at other locations as appropriate.

 

6.                                                                                       Expenses.  The Employee is authorized to
incur reasonable, ordinary and necessary expenses in the performance of his
duties hereunder, and the Employer shall reimburse the Employee for all such
expenses upon the presentation by the Employee, from time to time, of an
account of such expenditures.

 

7.                                                                                       Vacation.  The Employee shall be entitled to
twenty (20) days of paid vacation during each of the successive twelve (12)
month periods comprising the Term of Employment, or a pro rata portion thereof
for any such successive period which is less than twelve (12) months.  Vacation hereunder shall be taken at times
which are mutually determined by the Employer and the Employee not to interfere
with the Employee’s performance of his duties hereunder.

 

8.                                                                                       Employee Benefits.  The
Employee shall be entitled during the Term of Employment to participate in any
employee benefit program or arrangement maintained by the Employer which is
generally available to other senior employees of the Employer, including any
qualified or non-qualified retirement or deferred compensation arrangements or
401(k) savings plan, life insurance, medical, long-term disability plans,
severance arrangements, or other allowances. 
Such participation shall be in accordance with all applicable terms and
conditions of such plans or programs, including, without limitation, provisions
respecting the satisfaction of any applicable eligibility periods for plan
participation.

 

9.                                                                                       Termination of Employment. 
Notwithstanding any other provision of this Agreement, the Employee’s
employment under this Agreement may be terminated at any time by the Employer
in the event of:

 

(A)                              The
Employee’s conviction for a felony under federal law or the law of any state, (ii) the
Employee’s perpetration of an illegal act which causes significant economic
injury to the Employer, provided that the Employee shall be given notice and an
opportunity to effectuate a cure, or (iii) the Employee’s continuing
willful and deliberate failure to perform his employment duties in any material
respect, provided that the Employee shall be given notice and an opportunity to
effectuate a cure (hereinafter “Cause”);

 

(B)                                The
Employee’s death; or

 

2

 

(C)                                The
Employee’s inability, due to any physical or mental condition of the Employee,
to perform his duties hereunder for a period of ninety (90)
consecutive days;

 

by written
notice to the Employee (except that notice of termination shall not be required
in the case of the Employee’s death) specifying the event relied upon for such
termination and the effective date of such termination (the “Termination
Date”).

 

10.                                                                                 Payments Upon Termination of Employment.  (a) 
In the event the Employee’s employment under this Agreement is terminated for
any reason specified in Section 9 above, this Agreement shall terminate
and be deemed cancelled and the Employer shall be under no obligation hereunder
either to continue the Employee’s employment or to provide the Employee with
any payment or benefit of any kind whatsoever, except for the Employee’s Base
Salary through the Termination Date and such vested benefits or rights which
the Employee may have accrued through the Termination Date.  In addition, in the event of termination
pursuant to 9B or C above, the Employer shall also pay the amount of any
incentive compensation to which the Employee would have been entitled for the
year of termination had the Employee’s employment not terminated, prorated to
the Termination Date.

 

(b)                                 Except
to the extent provided in Section 11 below, in the event that the Employee’s
employment with the Employer is terminated without Cause; or the Employee
resigns employment with the Employer for Good Reason then, in addition to
accrued benefits under any other employee benefit plan (other than any
severance pay plan maintained by the Employer), the Employee will be entitled
to the payment of the greater of (i) his Base Salary for the otherwise
remaining duration of the Term of Employment, reduced (but not below zero) by
the amount of earned income, if any, from other employment (including
self-employment) of the Employee following termination of his employment
hereunder, for the same periods; or (ii) the severance pay to which the
Employee would otherwise be entitled pursuant to any applicable severance pay
plan but for the existence of this Agreement. 
All payments to the Employee under this Section 10 (b) shall
be made in accordance with the regular payroll practices of the Employer.  In addition, in either case, if the Employee
or his dependents are otherwise eligible for COBRA continuation of group health
plan coverage and timely elect to receive it, the Employer shall pay the cost
of such COBRA coverage in an amount equal to 75% of the monthly premium for
such coverage for a period of one year. 
In such case, the remaining cost of such monthly premium will be
deducted from any payments to which the Employee may be entitled under this Section 10(b).  Notwithstanding the foregoing, nothing in
this Agreement shall be construed to require the Executive to seek other
employment following the termination of his employment hereunder.

 

(c)                                  For
the purposes of this Agreement “Good Reason”
shall mean

 

1.     The
assignment to the Employee of duties inconsistent in any material way with his
position (including title and reporting requirements); authority, duties, or
responsibilities;

 

2.               Reduction
in the Employee’s overall compensation or benefits; or

 

3

 

3.               Relocation
of the Employee to a location outside a radius of 50 miles of the Employer’s
Bayonne, New Jersey office.

 

11.                                                                                 Change-in Control.  (a) 
If there is a Change in Control Event during the Term of Employment, then,
subject to the terms and conditions of this Agreement, Employee will be
entitled to the Change in Control Termination Benefits set forth below if
within the one year period beginning on the date of the Change in Control Event,
one of the following events occurs;

 

(i)                                     The
Employee’s employment with the Employer is terminated without Cause; or

 

(ii)                                  The
Employee resigns employment with the Employer for Good Reason.

 

For the
purposes of this Section, termination pursuant to (i) or (ii), above is
hereinafter referred to as the “Termination.”

 

(b)                                 Definitions:

 

(A)                              “Change in Control Termination Benefits” means:

 

(i)                                     The
amount of any Base Salary and Incentive payments prorated to the date of
Termination; and

 

(ii)                                  All
benefits accrued to the date of Termination; and

 

(iii)                               The
aggregate amount of the benefits described in l and 2, below:

 

1.                                       The
greater of (i) his Base Salary for the otherwise remaining duration of the
Term of Employment, payable in accordance with the regular payroll practices of
the Employer; or (ii) an amount equal to the sum of (A) one year’s
Base Salary (at the highest annual rate of base salary paid to the Employee
from the date of this Agreement to the date immediately prior to the
Termination) plus (B) the average of the incentive compensation payable to
the Employee for the two most recent full calendar years preceding the calendar
year in which the Termination occurs. The amount in (ii), if applicable, shall
be payable in 52 equal weekly installments subject to required tax deductions
and other required withholdings;

 

2.                                       COBRA
– If the Employee or his dependents are otherwise eligible (other than the
maximum duration of availability) for COBRA continuation of group health plan
coverage and timely elect to receive it, the Employer shall pay the cost of
such COBRA coverage in an amount equal to 75% of the monthly premium for such
coverage for a period of one year.  In
such case, the remaining cost of such monthly premium will be deducted from any
payments to which the Employee may be entitled under paragraph 1 above.

 

(B)                                “Change in Control Event” shall mean the happening of any of
the following events:

 

(i)   An
acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership

 

4

 

(within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of more than 50% of either (1) the then outstanding shares of common
stock of the Employer (the “Outstanding Corporation Common Stock”) or (2) the
combined voting power of the then outstanding voting securities of the Employer
entitled to vote generally in the election of directors (the “Outstanding
Corporation Voting Securities”); excluding, however, the following: (1) any
acquisition directly from the Employer, other than an acquisition by virtue of
the exercise of a conversion privilege unless the security being so converted
was itself acquired directly from the Employer, (2) any acquisition by the
Employer, (3) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Employer or any corporation controlled by
the Employer, or (4) any acquisition by any corporation pursuant to a
transaction which complies with clauses (1), (2) and (3) of subsection (iii) of
this definition of Change in Control Event or (5) any acquisition by an
individual, entity or group that beneficially owns more than 50% of the
Outstanding Corporation Common Stock or the Outstanding Corporation Voting
Securities on July 29, 1999; or

 

(ii)   A
change in the composition of the Board of Directors of the Employer (the “Board”)
such that the individuals who, as of the effective date of the Agreement,
constitute the Board (such Board shall be hereinafter referred to as the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for
purposes of the Agreement, that any individual who becomes a member of the
Board subsequent to the effective date of the Agreement, whose election, or
nomination for election by the Employer’s stockholders, was approved by a vote
of at least a majority of those individuals who are members of the Board and
who were also members of the Incumbent Board (or deemed to be such pursuant to
this proviso) shall be considered as though such individual were a member of
the Incumbent Board; but, provided further,
that any such individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board shall not be so considered as a member of the Incumbent
Board; or

 

(iii)  
The consummation by the Employer of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Employer (“Corporate Transaction”), excluding however, such a
Corporate Transaction pursuant to which (1) all or substantially all of
the individuals and entities who are the beneficial owners, respectively, of
the Outstanding Corporation Common Stock and Outstanding Corporation Voting
Securities immediately prior to such Corporate Transaction will beneficially
own, directly or indirectly, more than 50% of, respectively, the outstanding
shares of common stock, and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Corporate Transaction
(including, without limitation, a corporation which as a result of such
transaction owns the Employer or all or substantially all of the Employer’s
assets either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such Corporate
Transaction, of the Outstanding Corporation Common Stock and Outstanding
Corporation Voting Securities, as the case may be, (2) no Person (other
than

 

5

 

the Employer, any employee benefit plan (or related trust) of the
Employer or such corporation resulting from such Corporate Transaction) will
beneficially own, directly or indirectly, more than 50% of, respectively, the
outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the outstanding voting
securities of such corporation entitled to vote generally in the election of
directors except to the extent that such ownership existed prior to the
Corporate Transaction, and (3) individuals who were members of the
Incumbent Board will constitute at least a majority of the members of the board
of directors of the corporation resulting from such Corporate Transaction; or

 

i.                                          The
approval by the stockholders of the Employer of a complete liquidation or
dissolution of the Employer.

 

(c)                                  This
Section 11 will survive the expiration of this Agreement.

 

12.                                                                                 Confidentiality.  The Employee recognizes and
acknowledges that the Proprietary Information (as hereinafter defined) is a
valuable, special and unique asset of the Employer.  As a result, during the Term of Employment
and thereafter, the Employee shall not, without the prior written consent of
the Board, for any reason, either directly or indirectly, divulge to any third
party (except as may be required to further the interests of the Employer) or
use for his own benefit, or for any purpose other than the exclusive benefit of
the Employer, any and all confidential, proprietary, business and technical
information or trade secrets of the Employer’s Group (“Proprietary Information”)

revealed, obtained or developed in the course of his employment with the
Employer.  Such Proprietary Information
shall include but shall not be limited to, marketing and development plans,
confidential cost and pricing information, identities of customers and
suppliers, the relationship of the Employer’s Group with actual or prospective
customers who are engaged in discussions with the Employer’s Group, the needs
and requirements of any such customers, and any other confidential information
relating to the business of the Employer’s Group; provided, that nothing herein
contained shall restrict Employee’s ability to make such disclosures during the
course of his employment as may be necessary or appropriate to the effective
and efficient discharge of his duties hereunder or such disclosures as may be
required by law; and further provided, that nothing herein contained shall
restrict Employee from divulging or using for his own benefit or for any other
purpose any Proprietary Information which is readily available to the general
public so long as such information did not become available to the general
public as a direct or indirect result of Employee’s breach of this Section 12.

 

13.                                                                                 Property.  All Proprietary Information shall
be and remain the sole property of the Employer.  During the Term of Employment, and
thereafter, Employee shall not remove from the Employer’s Group offices or
premises any documents, records, notebooks, files, correspondence, reports,
memoranda or similar materials of or containing information of the type
identified in Section 12 hereof, or other materials or property of any
kind unless necessary or appropriate in accordance with his duties and
responsibilities hereunder and, in the event that such materials or property
are removed, all of the foregoing shall be returned to their proper files or
places of safekeeping as promptly as reasonable possible after the removal
shall serve its specific purpose. 
Employee shall not make, retain, remove and/or distribute any copies of
any of the foregoing for any reason whatsoever except as may be necessary in
the discharge of his

 

6

 

assigned duties and shall not divulge to any third person the nature of
and/or contents of any of the foregoing or of any other oral or written
information to which he may have access or with which for any reason he may
become familiar, except as disclosure shall be necessary in the performance of
his duties; and upon the termination of his employment with the Employer, he
shall leave with or return to the Employer all originals and copies of the
foregoing then in his possession, whether prepared by Employee or by others.

 

14.                                                                                 Covenant not to Compete.  The
Employee shall not, during the Term of Employment and for a period of one (1) year
thereafter (unless the Employee is terminated without Cause or resigns
employment with the Employer for Good Reason), do any of the following directly
or indirectly without the prior written consent of the Board:

 

(a)                                  engage
or participate in any business activity directly competitive with the business
of the Employer’s Group as conducted upon the termination of the Employee’s
employment with the Employer;

 

(b)                                 become
interested in (as owner, stockholder, lender, partner, co-venturer, director,
officer, employee, agent, consultant or otherwise) any person, firm,
corporation, association or other entity engaged in any business that is, taken
as a whole, directly competitive with the business of the Employer’s Group as
conducted upon the termination of the Employee’s employment with the Employer,
or become interested in (as owner, stockholder, lender, partner, co-venturer,
director, officer, employee, agent, consultant or otherwise) any portion of the
business of any person, firm, corporation, association of other affiliate where
such portion of such business is directly competitive with the business of the
Employer’s Group as conducted upon termination of the Employee’s employment
with the Employer.  Notwithstanding the
foregoing, nothing contained herein shall prohibit the Employee from holding
not more than five percent (5%) of the outstanding securities of any class of
any publicly-traded company;

 

(c)                                  solicit
either directly or indirectly any customer of the Employer’s Group with whom
the Employer’s Group shall have dealt regularly at any time during the one (1) year
period immediately preceding the termination of the Employee’s employment with
the Employer for the purpose of offering or selling any services which are
identical, substantially similar or comparable to the services then offered to
the Customer by the Employer’s Group.

 

(d)                                 influence
or attempt to influence any supplier, customer, or potential customer of the
Employer’s Group to terminate or modify any written or oral agreement or course
of dealing with the Employer’s Group; or

 

(e)                                  (i) influence
or attempt to influence any person to terminate or modify his employment with
the Employer’s Group, or (ii) employ directly or indirectly, any person
employed by the Employer’s Group as an employee at any time during the six (6) month
period preceding the effective date of Employee’s termination.

 

15.                                 Notices.  Any notice required or permitted
to be given under this Agreement shall be sufficient if in writing, and if sent
by registered or certified mail to his residence in the case of the Employee,
or to 154 Avenue E, Bayonne, New Jersey 07002 in the case of the Employer,
subject to written notice of change of address given by any party to any other
party.

 

7

 

16.                                                                                 Benefits.  This Agreement shall inure to the
benefit of and shall be binding upon the Employer and its successors and
assigns, and upon the Employee, his heirs and legal representatives.  This Agreement and all rights and obligations
hereunder are personal to the Employee and shall not be assignable.

 

17.                                                                                 Entire Agreement.  This Agreement embodies the
entire agreement of the parties concerning the subject matter hereof and
supersedes any prior or contemporaneous agreements or understandings in
connection therewith.  The Agreement may
be amended or modified only by a written instrument executed by both parties
hereto.

 

18.                                                                                 Severability.  If any term or provision of this
Agreement is held by a court of competent jurisdiction to be invalid or
unenforceable, the remainder of the terms and

 

provisions of this Agreement shall remain in full force and effect and
shall in no way be affected or invalidated. 
To the extent required to enforce any provision of this Agreement, such
provision may be reformed in order to preserve its validity if it would
otherwise be held unenforceable.

 

19.                                                                                 Withholding.  The Employer may deduct and
withhold from any amounts which it is otherwise obligated to pay hereunder any
amount which it may determine it is required to deduct or withhold pursuant to
any applicable statute, law, regulation or order of any jurisdiction
whatsoever.

 

20.                                                                                 Governing Law.  This Agreement shall be subject
to, and governed, 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.

 

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

 

	
   

  	
  MAIDENFORM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul Mischinski

  	
   

  
	
   

  	
   

  	
  Paul Mischinski

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Steven N. Masket

  	
   

  
	
   

  	
  Steven N. Masket

  

 

8

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