Document:

EX-10.2 FORM OF DIRECTOR STOCK OPTION AGREEMENT

 

Exhibit
10.2

WORLD AIR HOLDINGS, INC.

AMENDED & RESTATED

1995 STOCK INCENTIVE PLAN

DIRECTOR STOCK OPTION AGREEMENT

     THIS AGREEMENT is made as of the ___ day of                     , 200___ (the “Grant Date”) by and
between World Air Holdings, Inc., a Delaware corporation (the “Company”), and                                         
(“Optionee”).

WITNESSETH:

RECITALS

     A. Optionee has been granted an Option under the World Air Holdings, Inc. Amended and
Restated 1995 Stock Incentive Plan (the “Plan”) to purchase shares of the Company’s common stock.
Capitalized terms used herein and not otherwise defined herein have the same meaning as the terms
used in the Plan.

     B. The Option granted to Optionee is not intended to be an incentive stock option under
Section 422 of the Internal Revenue Code.

NOW, THEREFORE, it is hereby agreed as follows:

     1. Grant of Option. Subject to the terms and conditions set forth in this Agreement
and the Plan, the Company hereby grants to Optionee, as of the Grant Date, a Nonqualified Stock
Option (the “Option”) to purchase up to                      shares of the Company’s common stock, $0.001 par
value (the “Option Shares”) from time to time during the term of the Option at an exercise price of
$                     per share (“Exercise Price”).

     2. Option Term. The Option will expire at the close of business on                     
(the “Expiration Date”), unless sooner terminated in accordance with the provisions of this
Agreement or the Plan.

     3. Option Nontransferable. The Option is not transferable or assignable by Optionee
other than by will or by the laws of descent and distribution; during the lifetime of Optionee, the
Option shall be exercisable only by Optionee.

     4. Dates of Exercise. So long as Optionee continues to serve as a member of the
Board of Directors of World Air Holdings, Inc. (the “Board”), the Option shall be exercisable as to
the Option Shares within the specified term of the Option and pursuant to the provisions of this
Agreement. Option Shares shall become exercisable in installments, as follows:
                                                                                .

     Notwithstanding the forgoing provisions of this Section 4, in the event (i) the Optionee
ceases to serve on the Board due to death or disability (as defined in Section 5 below); or (ii) of
the occurrence of any Change of Control following the Grant Date but prior

 

 

to the date the Optionee ceases to serve upon the Board (or upon the Board of a successor of
the Company immediately following a transaction of the type described in either Section 17(c)(i) or
Section 17(c)(ii)), any previously unvested Option Shares shall become immediately vested.

     5. Termination of Board Membership. Should Optionee cease for any reason (including
death or disability) to be a member of the Board, the Option may, subject to the provisions of
Section 4 hereof, be exercised (to the extent the Option was exercisable by Optionee at the time of
the termination of his Board membership) at any time within one (1) year after the termination of
his Board membership; provided, however, in no event shall the Option be exercisable after the
Expiration Date. The term “disability” means a physical or mental illness that will prevent
Optionee from doing substantial gainful work for at least twelve (12) months or is likely to result
in death. If Optionee became entitled to Social Security benefits payable on account of
disability, he will be conclusively deemed to be disabled for purposes of this Agreement.

     6. Privilege of Stock Ownership. The holder of the Option will have none of the
rights of a shareholder with respect to the option Shares until such individual has exercised the
option and has been issued a stock certificate for the Option Shares.

     7. Manner of Exercising Option. In order to exercise the Option with respect to all
or any part of the Option Shares for which the Option is at the time exercisable, Optionee (or in
the case of exercise after Optionee’s death, Optionee’s executor, administrator, heir or legatee,
as the case may be) must take the following actions.

          (a) Provide the Company written notice of such exercise in accordance with Section 14 hereof,
specifying the number of Option Shares with respect to which the Option is being exercised;

          (b) Pay the aggregate exercise price for the purchased shares in one or more of the following
alternative forms: (i) full payment, in cash or by check payable to the Company’s order, in the
amount of the exercise price for the Option Shares being purchased; (ii) full payment in shares of
Common Stock (held for at least six months if acquired pursuant to an option) and having a Fair
Market Value on the day of exercise (as determined under the terms of the Plan) equal to the
exercise price for the Option Shares being purchased; (iii) a combination of such shares of Common
Stock and cash or check payable to the Company’s order, equal in the aggregate to the exercise
price for the Option Shares being purchased; or (iv) delivery of a properly executed exercise
notice together with irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale or loan proceeds to pay the exercise price; and

          (c) Furnish the Company with appropriate documentation that the person (or persons)
exercising the Option, if other than Optionee, has the right to exercise the Option.

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     8. Compliance with Laws and Regulations.

     (a) The exercise of the Option and the issuance of Option Shares upon such exercise is
subject to compliance by the Company and Optionee with all applicable requirements of law relating
thereto and with all applicable regulations of any stock exchange on which shares of the Company’s
common stock may be listed at the time of such exercise and issuance.

     (b) In connection with the exercise of the Option, Optionee will execute and deliver to the
Company such representations in writing as may be requested by the Company so that it may comply
with the applicable requirements of federal and state securities laws.

     9. Liability of the Company.

     (a) If the Option Shares exceed, as of the Grant Date, the number of shares that may without
shareholder approval be issued under the Plan, then this Option will be void with respect to such
excess shares unless shareholder approval of an amendment sufficiently increasing the number of
shares issuable under the Plan is obtained in accordance with the provisions of the Plan.

     (b) The inability of the Company to obtain approval from any regulatory body having authority
deemed by the Company to be necessary to the lawful issuance and sale of any common stock pursuant
to the Option will relieve the Company of any liability with respect to the non-issuance or sale of
the common stock as to which such approval is not obtained.

     10. No Right to Remain on Board. Nothing in this Agreement or in the Plan confers
upon the Optionee any right to continued membership on the Board.

     11. Other Restrictions. Upon any exercise of the Option, the Committee may require
Optionee to represent to and agree with the Company in writing that the shares are being acquired
without a view to distribution thereof. The certificates for such shares may include any legend
which the Committee deems appropriate to reflect any restrictions on transfer determined by the
Committee to be necessary or appropriate under applicable securities laws.

     All certificates for shares of common stock delivered pursuant to exercise of the Option shall
be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable
under the rules, regulations, and other requirements of the Securities and Exchange Commission, any
stock exchange upon which the common stock is then listed, and any applicable federal or state
securities law, and the Committee may cause a legend or legends to be put on any such certificate
to make appropriate reference to such restrictions.

     12. Definitions. Capitalized terms not otherwise defined herein shall have the
meaning ascribed to such terms in the Plan.

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

     14. Notices. Any notice required to be given or delivered to the Company under the terms of
this Agreement will be in writing and addressed to the Company in care of its Secretary at HLH
Building, 101 World Drive, Peachtree City, Georgia 30269. Any notice required to be given or
delivered to Optionee will be in writing and addressed to Optionee at the address indicated below
Optionee’s signature line on this Agreement. All notices will be deemed to have been given or
delivered upon personal delivery or upon deposit in the U.S., mail, postage prepaid and properly
addressed to the party to be notified.

     15. Construction. This Agreement and the Option evidenced hereby are made and granted
pursuant to the Plan and are in all respects limited by and subject to the express terms and
provisions of the Plan. All decisions of the Committee with respect to any question or issue
arising under the Plan or this Agreement will be conclusive and binding on all persons having an
interest in the Option.

     16. Governing Law. The interpretation, performance, and enforcement of this
Agreement will be governed by the laws of the State of Georgia.

     17. Definition of Change in Control. For purposes of this Agreement, the term
“Change of Control” shall mean the occurrence of any one or more of the following events:

          (a) any Person, other than the Company, is or becomes the Beneficial Owner (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), directly or
indirectly, of securities of the Company representing more than 50% of the combined voting power of
the Company’s then outstanding securities; or

          (b) during any period of two (2) consecutive years (not including any period prior to the
Grant Date), individuals who at the beginning of such period constitute the Board of Directors of
the Company and any new director (other than a director designated by a Person who has entered into
an agreement with the Company to effect a transaction described in Subsections (a), (c) or (d) of
this Section 17) whose election by the Board of Directors of the Company or nomination for election
by the stockholders of the Company was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any reason to constitute
a majority of the Board of Directors of the Company (or of a successor of the Company immediately
following a transaction of the type described in clauses (i) or (ii) of Subsection 17(c) below); or

          (c) the shareholders of the Company approve a merger or consolidation of the Company with any
other corporation, other than (i) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or being converted into voting securities of the surviving entity), in
combination with the ownership of any trustee or other

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fiduciary holding securities under an employee benefit plan of the Company or any of its
affiliates, at least 50% of the combined voting power of the voting securities of the Company or of
such surviving entity outstanding immediately after such merger or consolidation, or (ii) a merger
or consolidation effected to implement a recapitalization of the Company (or similar transaction)
in which no Person acquires more than 50% of the combined voting power of the Company’s then
outstanding securities; or

          (d) the shareholders of the Company approve a plan of complete liquidation of the Company or
an agreement for the sale or disposition by the Company of all or substantially all of the
Company’s assets.

     For purposes of this Section 17, the term “Person” shall have the meaning given in Section
(3)(a)(9) of the Exchange Act, as modified and used in Section 13(d) and 14(d) thereof; however, a
Person shall not include (i) World Air Holdings, Inc. or any of their subsidiaries or affiliates;
(ii) a trustee or other fiduciary holding securities under an employee benefit plan of World Air
Holdings, Inc. or any of their subsidiaries; (iii) an underwriter temporarily holding securities of
the Company pursuant to an offering of such securities; or (iv) a corporation owned, directly or
indirectly, by the stockholders of World Air Holdings, Inc. in substantially the same proportions
as their ownership of stock of World Air Holdings, Inc.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in duplicate on its
behalf by its duly authorized officer and Optionee has also executed this Agreement in duplicate,
all as of the day and year indicated above.

	 	 	 	 	 
	 	WORLD AIR HOLDINGS, INC.

 	 
	 	By:  	 	 
	 	 	Randy J. Martinez 	 
	 	 	President and CEO 	 
	 
	 	OPTIONEE:

 	 
	 	 	 	 
	 	 	 
	 

5EX-10.21

 

MASTER SEPARATION AGREEMENT

between

SARA LEE CORPORATION

and

HANESBRANDS INC.

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	ARTICLE I SEPARATION	 	 	2	 
	     Section 1.1
	 	Separation Date	 	 	2	 
	     Section 1.2
	 	Closing of Transactions	 	 	2	 
	 
	 	 	 	 	 	 
	ARTICLE II DOCUMENTS AND ITEMS TO BE DELIVERED ON THE SEPARATION DATE	 	 	2	 
	     Section 2.1
	 	Documents to be Delivered by Sara Lee	 	 	2	 
	     Section 2.2
	 	Documents to be Delivered by HBI	 	 	3	 
	 
	 	 	 	 	 	 
	ARTICLE III THE DISTRIBUTION AND ACTIONS PENDING THE DISTRIBUTION	 	 	3	 
	     Section 3.1
	 	Transactions Prior to the Distribution	 	 	3	 
	     Section 3.2
	 	Conditions Precedent to Consummation of the Distribution	 	 	4	 
	     Section 3.3
	 	Distribution	 	 	5	 
	     Section 3.4
	 	Cooperation and Further Assurances Regarding the Distribution	 	 	6	 
	     Section 3.5
	 	Fractional Shares; Unclaimed Shares or Cash	 	 	6	 
	     Section 3.6
	 	Financing Arrangements	 	 	7	 
	 
	 	 	 	 	 	 
	ARTICLE IV CONTRIBUTION AND ASSUMPTION	 	 	7	 
	     Section 4.1
	 	Contribution of Assets and Assumption of Liabilities	 	 	7	 
	     Section 4.2
	 	HBI Assets	 	 	8	 
	     Section 4.3
	 	HBI Liabilities	 	 	10	 
	     Section 4.4
	 	Shared Contracts	 	 	13	 
	     Section 4.5
	 	Excluded Assets, Excluded Liabilities and Certain Other Matters	 	 	13	 
	     Section 4.6
	 	Methods of Transfer and Assumption	 	 	15	 
	     Section 4.7
	 	Documents Relating to Transfers of HBI Assets and Assumption of HBI Liabilities	 	 	17	 
	     Section 4.8
	 	Governmental Approvals and Third Party Consents	 	 	17	 
	     Section 4.9
	 	Nonrecurring Costs and Expenses	 	 	18	 
	     Section 4.10
	 	Novation of Assumed HBI Liabilities	 	 	19	 
	     Section 4.11
	 	No Representation or Warranty	 	 	20	 
	     Section 4.12
	 	Settlement of Intercompany Accounts	 	 	20	 
	 
	 	 	 	 	 	 
	ARTICLE V COVENANTS AND OTHER MATTERS	 	 	20	 
	     Section 5.1
	 	Other Agreements	 	 	20	 
	     Section 5.2
	 	Agreement For Exchange Of Information	 	 	21	 
	     Section 5.3
	 	Confidentiality	 	 	24	 
	     Section 5.4
	 	Privileged Matters	 	 	26	 
	     Section 5.5
	 	Payment Of Expenses	 	 	27	 
	     Section 5.6
	 	Release of Security Interest	 	 	28	 
	     Section 5.7
	 	Litigation	 	 	28	 
	     Section 5.8
	 	Employee Discounts	 	 	28	 
	     Section 5.9
	 	Termination Of Agreements	 	 	28	 
	     Section 5.10
	 	Cooperation In Obtaining New Agreements	 	 	29	 
	     Section 5.11
	 	Cooperation With Respect To Procurement Agreements	 	 	29	 

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	     Section 5.12
	 	Non-Solicitation Of Employees	 	 	30	 
	     Section 5.13
	 	Stockholder Actions	 	 	30	 
	     Section 5.14
	 	CTHL Employees	 	 	30	 
	 
	 	 	 	 	 	 
	ARTICLE VI MISCELLANEOUS	 	 	30	 
	     Section 6.1
	 	Entire Agreement; Incorporation Of Schedules And Exhibits	 	 	30	 
	     Section 6.2
	 	Amendment and Waiver	 	 	30	 
	     Section 6.3
	 	No Implied Waivers; Cumulative Remedies; Writing Required	 	 	31	 
	     Section 6.4
	 	Parties In Interest	 	 	31	 
	     Section 6.5
	 	Assignment; Binding Agreement	 	 	31	 
	     Section 6.6
	 	Limitation On Damages	 	 	31	 
	     Section 6.7
	 	Notices	 	 	31	 
	     Section 6.8
	 	Severability	 	 	32	 
	     Section 6.9
	 	Governing Law	 	 	32	 
	     Section 6.10
	 	Submission To Jurisdiction	 	 	32	 
	     Section 6.11
	 	Waiver Of Jury Trial	 	 	33	 
	     Section 6.12
	 	Amicable Resolution	 	 	33	 
	     Section 6.13
	 	Arbitration	 	 	34	 
	     Section 6.14
	 	Waiver of Bulk-Sales Laws	 	 	35	 
	     Section 6.15
	 	Construction	 	 	36	 
	     Section 6.16
	 	Counterparts	 	 	36	 
	     Section 6.17
	 	Delivery By Facsimile Or Other Electronic Means	 	 	36	 
	 
	 	 	 	 	 	 
	ARTICLE VII DEFINITIONS	 	 	36	 

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MASTER SEPARATION AGREEMENT

     This Master Separation Agreement (this “Agreement”) is dated as of August 31, 2006,
between Sara Lee Corporation, a Maryland corporation (“Sara Lee”), and Hanesbrands Inc., a
Maryland corporation (“HBI”).

     Capitalized terms used in this Agreement and not otherwise defined shall have the meanings
ascribed to such terms in Article VII below.

RECITALS

     WHEREAS, Sara Lee, through its branded apparel business in the Americas and Asia, is engaged
in the business of designing, manufacturing, sourcing and selling apparel essentials such as
t-shirts, bras, panties, men’s underwear, kids’ underwear, socks, hosiery, casualwear and
activewear, as described in the Registration Statement defined below (the “Branded Apparel
Business”);

     WHEREAS, the Board of Directors of Sara Lee has determined that it would be appropriate and
desirable to separate the Branded Apparel Business from Sara Lee;

     WHEREAS, Sara Lee has caused HBI to be incorporated in order to facilitate such separation;

     WHEREAS, Sara Lee currently owns all of the issued and outstanding shares of common stock of
HBI (the “HBI Common Stock”);

     WHEREAS, the Boards of Directors of Sara Lee and HBI have each determined that it would be
appropriate and desirable for Sara Lee and certain of its Subsidiaries to contribute and transfer
to HBI, and for HBI to receive and assume, directly or indirectly, certain assets and liabilities
associated with the Branded Apparel Business as further described herein (the
“Separation”);

     WHEREAS, Sara Lee and HBI currently contemplate that, following the Separation, Sara Lee will
distribute, on a pro rata basis, to the holders of the issued and outstanding shares of Sara Lee’s
common stock (the “Sara Lee Common Stock”) all of the issued and outstanding shares of HBI
Common Stock owned by Sara Lee as further described herein (the “Distribution”);

     WHEREAS, the HBI Common Stock to be distributed in the Distribution will be registered
pursuant to a registration statement on Form 10 filed under the Exchange Act (such registration
statement, together with all amendments and supplements thereto, the “Registration
Statement”); and

     WHEREAS, the parties intend in this Agreement to set forth the principal arrangements between
them regarding the Separation and the Distribution.

     NOW, THEREFORE, in consideration of the foregoing and the terms, conditions, covenants and
provisions of this Agreement, Sara Lee and HBI mutually covenant and agree as follows:

 

 

ARTICLE I

SEPARATION

     Section 1.1 Separation Date. Unless otherwise provided in this Agreement or in any Ancillary
Agreement, the effective time and date of each transfer of property, assumption of liability,
license, undertaking, or agreement in connection with the Separation shall be 12:01 a.m., Central
Time, on August 31, 2006, or such other date as may be determined by Sara Lee (the “Separation
Date”).

     Section 1.2 Closing of Transactions. Unless otherwise provided herein, the closing of
the transactions contemplated in Article II shall occur on the Separation Date.

ARTICLE II

DOCUMENTS AND ITEMS TO BE

DELIVERED ON THE SEPARATION DATE

     Section 2.1 Documents to be Delivered by Sara Lee. On the Separation Date, Sara Lee will
deliver, or will cause its appropriate Subsidiaries to deliver, to HBI all of the following
agreements, documents and instruments (collectively, together with all agreements, documents and
instruments contemplated hereby or thereby or executed in connection herewith or therewith, the
“Ancillary Agreements”):

          (a) A duly executed Employee Matters Agreement substantially in the form attached hereto as
Exhibit A (the “Employee Matters Agreement”);

          (b) A duly executed Tax Sharing Agreement substantially in the form attached hereto as
Exhibit B (the “Tax Sharing Agreement”);

          (c) A duly executed Master Transition Services Agreement substantially in the form attached
hereto as Exhibit C (the “Master Transition Services Agreement”);

          (d) A duly executed Real Estate Matters Agreement substantially in the form attached hereto as
Exhibit D (the “Real Estate Matters Agreement”);

          (e) A duly executed Indemnification and Insurance Matters Agreement substantially in the form
attached hereto as Exhibit E (the “Indemnification and Insurance Matters
Agreement”);

          (f) A duly executed Intellectual Property Matters Agreement substantially in the form attached
hereto as Exhibit F (the “Intellectual Property Matters Agreement”);

          (g) Resignations of each individual who is an officer or director of HBI and who is or will be
an employee, officer or director of Sara Lee or its Subsidiaries from and after the closing of the
transactions contemplated by this Agreement from any and all offices and directorships of HBI held
by such individual, such resignations to be effective on the day prior to the Distribution Date;

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          (h) Stockholder consents (or similar actions) to (i) remove each individual who is an officer
or director of any Subsidiary of Sara Lee which will be transferred to HBI in connection with the
Separation and who is or will be an employee, officer or director of Sara Lee or its Subsidiaries
from and after the closing of the transactions contemplated by this Agreement from any and all
offices and directorships of the Subsidiaries to be transferred to HBI, such removals to effective
as of the Separation Date, and (ii) remove each individual who is an officer or director of any
Subsidiary of Sara Lee which will not be transferred to HBI in connection with the Separation and
who is or will be an employee, officer or director of HBI or its Subsidiaries from and after the
closing of the transactions contemplated by this Agreement from any and all offices and
directorships of the Subsidiaries not being transferred to HBI, such removals to effective as of
the Separation Date; and

          (i) Such other agreements, documents or instruments as the parties may agree are necessary or
desirable in order to achieve the purposes hereof.

     Section 2.2 Documents to be Delivered by HBI. On the Separation Date, HBI will
deliver, or will cause its appropriate Subsidiaries to deliver, to Sara Lee all of the following
Ancillary Agreements:

          (a) In each case where HBI is a party to any Ancillary Agreement, a duly executed counterpart
of such Ancillary Agreement;

          (b) Resignations of each individual who is an officer or director of Sara Lee and who is or
will be an employee, officer or director of HBI or its Subsidiaries from and after the closing of
the transactions contemplated by this Agreement from any and all such offices and directorships of
Sara Lee held by such individual, such resignations to be effective upon the Distribution Date; and

          (c) Such other agreements, documents or instruments as the parties may agree are necessary or
desirable in order to achieve the purposes hereof.

ARTICLE III

THE DISTRIBUTION AND ACTIONS PENDING THE DISTRIBUTION

     Section 3.1 Transactions Prior to the Distribution. Subject to the conditions
specified in Section 3.2, Sara Lee and HBI shall use their reasonable best efforts to
consummate the Distribution. Such efforts shall include, without limitation, those specified in
this Section 3.1.

          (a) Registration Statement. Sara Lee and HBI shall cooperate in preparing and filing
the Registration Statement with the Securities and Exchange Commission (the “Commission”).
Subsequent to filing the Registration Statement, Sara Lee and HBI shall cooperate in the
preparation and filing of any amendments or supplements thereto as may be necessary in order to
cause the same to become and remain effective as required by law, including, without limitation,
filing such amendments or supplements to the Registration Statement as may be required by the
Commission or federal, state or foreign securities laws. Sara Lee and HBI shall also cooperate in
preparing, filing with the Commission and causing to become effective any registration statements
or amendments or supplements thereof which are

3

 

required to reflect the establishment of, or amendments or supplements to, any employee
benefit and other plans necessary or appropriate in connection with the Separation, the
Distribution, or the other transactions contemplated by this Agreement and the Ancillary
Agreements.

          (b) Other Securities Laws Matters. Sara Lee and HBI shall take all such actions as
may be necessary or appropriate under the securities or blue sky laws of any state of the United
States (and any comparable laws under any foreign jurisdiction) in connection with the
Distribution.

          (c) Preparation of Materials and Presentations. Sara Lee and HBI shall participate in
the preparation of materials and presentations as Sara Lee and its financial advisors shall deem
necessary or desirable from time to time.

          (d) Information Statement. Sara Lee shall, as soon as practicable after the
Registration Statement is declared effective under the Exchange Act (or, after consultation with
counsel, prior to such effectiveness) and the Board of Directors of Sara Lee has approved the
Distribution, cause the Information Statement to be mailed to the Record Holders.

          (e) Other Materials. Sara Lee and HBI shall prepare and mail, on or prior to the
Distribution Date, to the holders of Sara Lee Common Stock, such other information concerning HBI,
its business, operations and management, the Separation, the Distribution and such other matters as
Sara Lee in its sole and absolute discretion determines are necessary or desirable and as may be
required by law. Sara Lee and HBI will prepare, and Sara Lee or HBI (as applicable) will, to the
extent required under applicable law, file with the Commission any such documentation and any
requisite no action letters which Sara Lee in its sole and absolute discretion determines are
necessary or desirable to effectuate the Distribution and Sara Lee and HBI shall each use its
reasonable best efforts to obtain all necessary approvals from the Commission with respect thereto
as soon as practicable.

          (f) NYSE Listing. HBI shall prepare, file and use its reasonable best efforts to seek
to make effective, an application for listing of the HBI Common Stock on the New York Stock
Exchange (“NYSE”), subject to official notice of distribution.

     Section 3.2 Conditions Precedent to Consummation of the Distribution. The obligations
of the parties to use their reasonable best efforts to consummate the Distribution (the date of the
distribution as determined by Sara Lee in its discretion, is referred to as the “Distribution
Date”) shall be conditioned on the satisfaction of the following conditions and any other
conditions as are determined by Sara Lee, in its discretion:

          (a) Registration Statement. The Registration Statement shall have been declared
effective by the Commission, and there shall be no stop-order in effect with respect thereto, and
no proceeding for that purpose shall have been instituted by the Commission.

          (b) Blue Sky. The actions and filings with regard to applicable securities and blue
sky laws of any state of the United States (and any comparable laws of any foreign jurisdictions)
shall have been taken and, where applicable, have become effective or been accepted.

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          (c) NYSE Listing. The HBI Common Stock to be distributed pursuant to the Distribution
shall have been accepted for listing on the NYSE, on official notice of distribution.

          (d) No Legal Restraints. No order, injunction or decree issued by any court or agency
of competent jurisdiction or other legal restraint or prohibition preventing the consummation of
the Separation or the Distribution or any of the other transactions contemplated by this Agreement
and the Ancillary Agreements shall be in effect.

          (e) Separation. The Separation shall have become effective in accordance with the
terms of this Agreement and the Ancillary Agreements.

          (f) Financing. (i) HBI and HBI Branded Apparel Limited, Inc. (among others) shall
have entered into the Financing Agreements, (ii) HBI Branded Apparel Limited, Inc. shall have
repaid the $450 million in principal owing to Sara Lee or its assignee under that certain
promissory note dated as of August 29, 2006 plus any accrued but unpaid interest thereon, (iii) HBI
shall have declared and paid a cash dividend to Sara Lee in the amount of $1.95 billion and (iv)
Sara Lee shall be satisfied in its sole discretion that as of the Effective Time it will have no
obligation or other Liability whatsoever under the Financing Agreements.

          (g) Opinion. Sara Lee shall have received from an investment banking or valuation
firm a solvency opinion (or similar opinion) with regard to HBI, such opinion to be in form and
substance satisfactory to Sara Lee in its sole discretion.

          (h) IRS Private Letter Ruling or Opinion of Counsel. A private letter ruling from the
Internal Revenue Service or an opinion of counsel shall have been obtained, and shall continue in
effect, to the effect that, among other things, the Distribution will qualify as a tax-free
distribution for federal income tax purposes under Section 355 of the Code and the transfer to HBI
of the HBI Assets and the assumption by HBI of the HBI Liabilities in connection with the
contribution contemplated by Article IV will not result in recognition of any gain or loss to Sara
Lee, HBI or Sara Lee’s or HBI’s stockholders for federal income tax purposes, and such ruling or
opinion shall be in form and substance satisfactory to Sara Lee in its sole discretion.

          (i) No Termination. This Agreement shall not have been terminated.

     The foregoing conditions are for the sole benefit of Sara Lee and shall not give rise to or
create any duty on the part of Sara Lee or Sara Lee’s Board of Directors to waive or not to waive
any such conditions or in any way limit Sara Lee’s right to terminate this Agreement as set forth
in Section 3.3(d) or alter the consequences of any such termination from those specified in
Section 3.3(d). Any determination made by Sara Lee prior to the Distribution concerning
the satisfaction or waiver of any or all of the conditions set forth in this Section 3.2
shall be conclusive.

     Section 3.3 Distribution.

          (a) Distribution Generally. At any time after the Separation Date, if Sara Lee, in
its sole and absolute discretion, advises HBI that Sara Lee intends to pursue the Distribution, HBI
agrees to take all actions requested by Sara Lee to facilitate a Distribution.

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          (b) Sole Discretion. Sara Lee shall, in its sole and absolute discretion, determine
whether or not to proceed with all or part of the Distribution, determine the Distribution Date and
determine all terms of the Distribution, including, without limitation, the form, structure and
terms of any transaction(s) and/or offering(s) to effect the Distribution and the timing of and
conditions to the consummation of the Distribution. In addition, Sara Lee may at any time and from
time to time until the completion of the Distribution, modify or change the terms of the
Distribution, including, without limitation, by accelerating or delaying the timing of the
consummation of all or part of the Distribution. HBI shall cooperate with Sara Lee in all respects
to accomplish any such Distribution and shall, at Sara Lee’s direction, promptly take any and all
actions reasonably necessary or desirable in Sara Lee’s sole and absolute discretion to effect the
Distribution.

          (c) Actions in Connection with Distribution. Subject to Section 3.2 hereof,
on or prior to the Distribution Date, Sara Lee will instruct the Agent to distribute on the
Distribution Date the appropriate number of such shares of HBI Common Stock to each such Record
Holder. The Distribution shall be effective at 11:59 p.m., Central Time, on the Distribution Date
(the “Effective Time”). Subject to Section 3.2 and Section 3.5, each
Record Holder will be entitled to receive in the Distribution a number of shares of HBI Common
Stock equal to the number of shares of Sara Lee Common Stock held by such Record Holder on the
Record Date multiplied by the distribution ratio to be determined by Sara Lee’s Board of Directors
when it declares the Distribution (the “Distribution Ratio”). It is intended that the
Distribution Ratio will approximate a fraction the numerator of which is the number of shares of
HBI Common Stock beneficially owned by Sara Lee on the Distribution Date and the denominator of
which is the number of shares of Sara Lee Common Stock outstanding on the Record Date. Sara Lee
and HBI, as the case may be, will provide to the Agent all share certificates and any information
required in order to complete the Distribution on the basis specified above.

          (d) Termination. Without limiting the generality of Section 3.3(b), (i) this
Agreement and the Ancillary Agreements may be terminated or (ii) the Distribution may be amended,
modified or abandoned, in each case at any time prior to the Effective Time by and in the sole and
absolute discretion of Sara Lee without the approval of HBI. In the event of such termination,
neither party shall have any Liability of any kind to the other party.

     Section 3.4 Cooperation and Further Assurances Regarding the Distribution. In
addition to the actions specifically provided for elsewhere in this Agreement, if Sara Lee decides
to proceed with the Distribution, HBI shall, at Sara Lee’s direction, consult and cooperate with
Sara Lee in connection with the Distribution and use its reasonable best efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things desirable, necessary, proper
or expeditious in order to consummate and make effective the Distribution as promptly as reasonably
practicable as directed by Sara Lee. Without limiting the generality of the foregoing, HBI shall,
at Sara Lee’s direction, cooperate with Sara Lee, and execute and deliver, or cause to have
executed and delivered, all instruments, including instruments of conveyance, assignment and
transfer, and use its reasonable best efforts to make all filings with, and to obtain all consents,
approvals or authorizations of, any domestic or foreign governmental or regulatory authority
requested by Sara Lee in order to consummate and make effective the Distribution.

     Section 3.5 Fractional Shares; Unclaimed Shares or Cash.

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          (a) Fractional Shares. Sara Lee shall direct the Agent to (i) determine the number of
whole shares and fractional shares of HBI Common Stock allocable to each Record Holder, (ii)
aggregate all such fractional shares and sell the whole shares obtained thereby in open market
transactions as soon as practicable on or after the Distribution Date at then prevailing trading
prices and (iii) cause to be distributed to each such Record Holder or for the benefit of each such
beneficial owner, in lieu of any fractional share, such Record Holder’s or owner’s ratable share of
the proceeds of such sale, after making appropriate deductions of the amount required to be
withheld for federal income tax purposes and after deducting an amount equal to all brokerage
charges, commissions and transfer taxes attributed to such sale. Solely for purposes of computing
fractional share interests pursuant to this Section 3.5(a), the beneficial owner of Sara
Lee Common Stock held of record in the name of a nominee in any nominee account shall be treated as
the holder of record with respect to such shares.

          (b) Unclaimed Shares or Cash. Any HBI Common Stock or cash in lieu of fractional
shares with respect to HBI Common Stock that remain unclaimed by any Record Holder 180 days after
the Distribution Date shall be delivered to HBI. HBI shall hold all such HBI Common Stock and cash
for the account of such Record Holder and any such Record Holder shall look only to HBI for such
HBI Common Stock and cash, if any, in lieu of fractional share interests, subject in each case to
applicable escheat or other abandoned property laws. HBI shall indemnify the Sara Lee Group for
all claims relating to such HBI Common Stock and cash so delivered to HBI in accordance with the
Indemnification and Insurance Matters Agreement.

     Section 3.6 Financing Arrangements. Prior to the Effective Time, HBI and HBI Branded
Apparel Limited, Inc. shall enter into the Financing Agreements. HBI agrees to take, and to cause
its Subsidiaries to take, all necessary actions to borrow sufficient funds under the Financing
Agreements prior to the Effective Time to allow them to make the payments and distributions to Sara
Lee contemplated by Section 3.2(f) of this Agreement. Prior to the Effective Time, Sara
Lee and HBI shall cooperate in the preparation of all materials as may be necessary or advisable
for HBI to secure funding pursuant to the Financing Agreements.

ARTICLE IV

CONTRIBUTION AND ASSUMPTION

     Section 4.1 Contribution of Assets and Assumption of Liabilities.

          (a) Transfer of Assets. Effective as of the Separation Date, Sara Lee hereby assigns,
transfers, conveys and delivers (or will cause any applicable Subsidiary to assign, transfer,
convey and deliver) to HBI or an applicable Subsidiary of HBI, and HBI hereby accepts from Sara
Lee, or the applicable Subsidiary of Sara Lee, and agrees to cause the applicable Subsidiary of HBI
to accept, all of Sara Lee’s and its applicable Subsidiaries’ respective right, title and interest
in and to all HBI Assets, other than the Delayed Transfer Assets; provided, however, that any HBI
Assets that are specifically assigned or transferred pursuant to an Ancillary Agreement shall not
be assigned or transferred pursuant to this Section 4.1(a), and such HBI Assets shall be
assigned or transferred pursuant to such Ancillary Agreement.

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          (b) Assumption of Liabilities. Effective as of the Separation Date, Sara Lee hereby
assigns, transfers, conveys and delivers (or will cause any applicable Subsidiary to assign,
transfer, convey and deliver) to HBI or an applicable Subsidiary of HBI, and HBI hereby assumes and
agrees faithfully to perform and fulfill, and if applicable, comply with, or will cause any
applicable Subsidiary of HBI to assume, perform and fulfill, and if applicable, comply with, all of
the HBI Liabilities, other than the Delayed Transfer Liabilities, in accordance with their
respective terms. Thereafter, HBI shall be responsible (or will cause any applicable Subsidiary of
HBI to be responsible) for all HBI Liabilities, regardless of when or where such Liabilities arose
or arise, or whether the facts on which they are based occurred prior to, on or after the date
hereof, regardless of where or against whom such Liabilities are asserted or determined or whether
asserted or determined prior to the date hereof, and regardless of whether arising from or alleged
to arise from negligence, recklessness, violation of law, misrepresentation by any member of (i)
prior to the Distribution Date, the Sara Lee Group or any of its directors, officers, employees or
agents or (ii) prior to, on or after the Distribution Date, the HBI Group or any of its directors,
officers, employees or agents.

          (c) Delayed Transfer of Assets and Liabilities. Each of the parties hereto agrees
that the Delayed Transfer Assets will be assigned, transferred, conveyed and delivered, and the
Delayed Transfer Liabilities will be assumed, in accordance with the terms of the agreements
(including this Agreement and the Ancillary Agreements) that provide for such assignment, transfer,
conveyance and delivery, or such assumption, after the Separation Date. Following such assignment,
transfer, conveyance and delivery of any Delayed Transfer Asset, or such assumption of any Delayed
Transfer Liability, the applicable Delayed Transfer Asset or Delayed Transfer Liability shall be
treated for all tax and other purposes of this Agreement and the Ancillary Agreements as an HBI
Asset or as an HBI Liability, as the case may be. Each of the parties hereto agrees that until any
Delayed Transfer Asset is assigned, transferred, conveyed and delivered to HBI or a Subsidiary of
HBI, Sara Lee and HBI shall cooperate in any lawful and commercially reasonable arrangement agreed
to by the parties under which HBI or a Subsidiary of HBI shall obtain the economic claims, rights
and benefits under such Delayed Transfer Asset. Each of the parties hereto agrees that until a
Delayed Transfer Liability is assumed by HBI or a Subsidiary of HBI, HBI shall indemnify and hold
harmless the Sara Lee Group from such Delayed Transfer Liability.

          (d) Misallocated Assets. In the event that at any time or from time to time (whether
prior to, on or after the Separation Date), any party hereto (or any member of the Sara Lee Group
or the HBI Group, as applicable) shall receive or otherwise possess any Asset that is allocated to
any other Person pursuant to this Agreement or any Ancillary Agreement, such party shall promptly
transfer, or cause to be transferred, such Asset to the Person so entitled thereto. Prior to any
such transfer, the Person receiving or possessing such Asset shall hold such Asset in trust for any
such other Person.

     Section 4.2 HBI Assets.

          (a) Included Assets. For purposes of this Agreement, “HBI Assets” shall mean
(without duplication) the following Assets, except as otherwise provided for in any Ancillary
Agreement or other written agreement between Sara Lee and HBI executed as of or after the date of
this Agreement:

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          (i) all Assets reflected in the HBI Balance Sheet, subject to any dispositions of such
Assets subsequent to the date of the HBI Balance Sheet; provided, however, that such Assets
shall exclude (A) the amounts receivable from Sara Lee or its Subsidiaries that are
reflected in the HBI Balance Sheet but that, as disclosed in the Registration Statement,
will be capitalized into Sara Lee’s equity in HBI or repaid on or prior to the Distribution
Date and (B) all cash and cash equivalents in excess of the Pro Forma Cash Amount (as
defined in Section 4.2(a)(viii));

          (ii) all Assets that have been written off, expensed or fully depreciated that, had
they not been written off, expensed or fully depreciated, would have been reflected in the
HBI Balance Sheet in accordance with the principles and accounting policies under which the
HBI Balance Sheet was prepared;

          (iii) all Assets acquired by Sara Lee or its Subsidiaries after the date of the HBI
Balance Sheet that would be reflected in the balance sheet of HBI as of the Separation Date
if such balance sheet was prepared using the same principles and accounting policies under
which the HBI Balance Sheet was prepared; provided however, that such Assets shall exclude
(A) amounts receivable from Sara Lee or its Subsidiaries incurred after the date of the HBI
Balance Sheet but that, had they been incurred prior to the date of the HBI Balance Sheet,
would have been included in amounts receivable from Sara Lee or its Subsidiaries that, as
disclosed in the Registration Statement, will be capitalized into Sara Lee’s equity in HBI
or repaid on or prior to the Distribution Date and (B) all cash and cash equivalents in
excess of the Pro Forma Cash Amount (as defined in Section 4.2(a)(viii));

          (iv) all Assets that should have been reflected in the HBI Balance Sheet but are not
reflected in the HBI Balance Sheet due to mistake or unintentional omission (or Assets of
the type described in clause (iii) above which are not reflected in HBI’s interim balance
sheet due to mistake or unintentional omission); provided however that, except as otherwise
provided in the Ancillary Agreements and subject to Section 4.6(b), no Asset shall
be an HBI Asset requiring any transfer by Sara Lee unless HBI or Sara Lee has, on or before
the eighteen month anniversary of the Separation Date, given the other notice that it
believes that such Asset is a HBI Asset (and the Steering Committee agrees that such Asset
is an HBI Asset or it is determined that such Asset is an HBI Asset through an arbitration
conducted under Section 6.13 hereof);

          (v) all HBI Contingent Gains;

          (vi) all HBI Contracts;

          (vii) all of the issued and outstanding capital stock, partnership interest, limited
liability company interests or other equity interests of the Subsidiaries set forth in
Schedule 4.2(a)(vii) (such stock and other interests, the “HBI Entity
Interests”, and such Subsidiaries, the “HBI Entities”);

          (viii) cash and cash equivalents held by HBI and its Subsidiaries as of the
Distribution Date in the aggregate amount reflected in the “Pro Forma As Adjusted”

9

 

column of the Unaudited Pro Forma Combined and Consolidated Balance Sheet as of April
1, 2006 contained in the Registration Statement, which amount the parties acknowledge (1)
shall not be reduced by the amount of any checks written on and before the Distribution Date
that will clear and be paid by Sara Lee after the Distribution Date and (2) shall be
increased by the amount required to purchase the assets described in item 1 (Philippines
transaction) and item 3 (Hong Kong transaction) of Schedule 4.1(c) (the “Pro
Forma Cash Amount”);

          (ix) all Intellectual Property used exclusively in the Branded Apparel Business
(including the Intellectual Property held by the IP Subsidiaries, which will be transferred
to HBI upon the transfer of ownership of the IP Subsidiaries to HBI).

          (x) to the extent permitted by law and subject to the Indemnification and Insurance
Matters Agreement, all rights of any member of the HBI Group under any of Sara Lee’s
Insurance Policies or other insurance policies issued by Persons unaffiliated with Sara Lee;

          (xi) all Assets that are expressly contemplated by this Agreement or any Ancillary
Agreement or any Schedule hereto or thereto as Assets to be transferred to HBI or any member
of the HBI Group;

          (xii) the right to receive the distribution of HBI Common Stock payable on the Sara Lee
Common Stock held by Sara Lee Equity, L.L.C., a Delaware limited liability company;

          (xiii) those “GSI Company Prefixes” assigned by the Uniform Code Council, Inc. to Sara
Lee that are listed on Schedule 4.2(a)(xiii); and

          (xiv) except as otherwise expressly provided in this Agreement or any Ancillary
Agreement, all other Assets that are used exclusively by the HBI Group on or prior to the
Separation Date.

The parties acknowledge and agree that HBI and its Subsidiaries may acquire the HBI Assets, in part
and without duplication, through the transfer and assignment of the HBI Entity Interests of one or
more of the HBI Entities which own, lease or have the right to use such HBI Assets.
Notwithstanding the foregoing, the HBI Assets shall not include the Excluded Assets referred to in
Section 4.2(b) below.

          (b) Excluded Assets. For the purposes of this Agreement, “Excluded Assets”
shall mean any Assets that are expressly contemplated by this Agreement or any Ancillary Agreement
(or the Schedules hereto or thereto) as Assets to be retained by Sara Lee or any other member of
the Sara Lee Group, including the Assets (if any) set forth on Schedule 4.2(b). The
parties acknowledge and agree that neither HBI nor any of its Subsidiaries will acquire any right,
title and interest in any Excluded Assets through the transfer and assignment of the HBI Entity
Interests of one or more of the HBI Entities which own, lease or have the right to use such
Excluded Assets.

     Section 4.3 HBI Liabilities.

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          (a) Included Liabilities. For the purposes of this Agreement, “HBI
Liabilities” shall mean (without duplication) the following Liabilities, except as otherwise
provided for in any Ancillary Agreement or other written agreement between Sara Lee and HBI
executed as of or after the date of this Agreement:

          (i) all Liabilities reflected in the HBI Balance Sheet, subject to any discharge of
such Liabilities subsequent to the date of the HBI Balance Sheet; provided, however, that
such Liabilities shall exclude the amounts owed to Sara Lee and its Subsidiaries that are
reflected in the HBI Balance Sheet but that, as disclosed in the Registration Statement,
will be capitalized into Sara Lee’s equity in HBI or repaid on or prior to the Distribution
Date;

          (ii) all Liabilities of Sara Lee or its Subsidiaries that arise after the date of the
HBI Balance Sheet that would be reflected in the balance sheet of HBI as of the Separation
Date if such balance sheet was prepared using the same principles and accounting policies
under which the HBI Balance Sheet was prepared; provided, however, that such Liabilities
shall exclude amounts payable to Sara Lee or its Subsidiaries incurred after the date of the
HBI Balance Sheet but that, had they been incurred prior to the date of the HBI Balance
Sheet, would have been included in the amounts payable to Sara Lee or its Subsidiaries that,
as disclosed in the Registration Statement, will be capitalized into Sara Lee’s equity in
HBI or repaid on or prior to the Distribution Date;

          (iii) all Liabilities that should have been reflected in the HBI Balance Sheet but are
not reflected in the HBI Balance Sheet due to mistake or unintentional omission (or
Liabilities of the type described in clause (ii) above which are not reflected in HBI’s
interim balance sheet due to mistake or unintentional omission); provided however that,
except as otherwise provided in the Ancillary Agreements and subject to Section
4.6(b), no Liability shall be considered as a HBI Liability unless Sara Lee or HBI has,
on or before the earlier of the eighteen month anniversary of the Separation Date, has given
the other notice that it believes that such Liability is an HBI Liability (and the Steering
Committee agrees that such Liability is an HBI Liability or it is determined that such
Liability is an HBI Liability through an arbitration conducted under Section 6.13
hereof);

          (iv) all HBI Contingent Liabilities;

          (v) all Liabilities (other than Liabilities for Taxes), whether arising before, on or
after the Separation Date, substantially or exclusively relating to, arising out of or
resulting from:

          (A) the operation of the Branded Apparel Business or the ownership or use of
the HBI Assets at any time prior to, on or after the Separation Date, including any
Liability relating to, arising out of or resulting from any act or failure to act by
any director, officer, employee, agent or representative with respect to the Branded
Apparel Business (whether or not such act or failure to act is or was within such
Person’s authority) and any Liability relating to, arising out

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of or resulting from any unclaimed property (but excluding any financing
provided by Sara Lee to the Branded Apparel Business and any charges for corporate
level services from Sara Lee, except (1) to the extent such financing or charges are
included as HBI Liabilities elsewhere in this Section 4.3(a) and (2) the $450
million intercompany note payable by HBI Branded Apparel Limited, Inc.); or

          (B) the operation of any business conducted by any member of the HBI Group at
any time after the Separation Date (including any Liability relating to, arising out
of or resulting from any act or failure to act by any director, officer, employee,
agent or representative (whether or not such act or failure to act is or was within
such Person’s authority) and any Liability relating to, arising out of or resulting
from any unclaimed property);

          (vi) (A) all Liabilities, whether arising before, on or after the Separation Date,
relating to, arising out of, resulting from or under the HBI Contracts and (B) those
Liabilities set forth on Schedule 4.3(a)(vi);

          (vii) all Liabilities relating to, arising out of or resulting from the Financing
Agreements;

          (viii) any Liabilities arising out of claims made by Sara Lee’s or HBI’s (or their
Subsidiaries) respective directors, officers, employees, consultants, independent
contractors or agents against any member of the Sara Lee Group or the HBI Group, to the
extent such claims relate to the activities of any such Person on behalf of or relating to
the Branded Apparel Business; and

          (ix) all Liabilities that are expressly contemplated by this Agreement or any Ancillary
Agreement or any Schedule hereto or thereto as Liabilities to be assumed by HBI or any
member of the HBI Group (including, without limitation, for costs and expenses relating to
the Distribution or the Separation (except to the extent set forth in Section 5.5)),
and all agreements, obligations and Liabilities of any member of the HBI Group under this
Agreement or any of the Ancillary Agreements.

     Notwithstanding the foregoing, the HBI Liabilities shall not include the Excluded Liabilities
referred to in Section 4.3(b) below.

          (b) Excluded Liabilities. For the purposes of this Agreement, “Excluded
Liabilities” shall mean the following:

          (i) any and all agreements, obligations and Liabilities that are expressly contemplated
by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as
agreements, obligations or Liabilities to be retained or assumed by Sara Lee or any other
member of the Sara Lee Group;

          (ii) all agreements, obligations and Liabilities of any member of the Sara Lee Group
under this Agreement or any Ancillary Agreement;

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          (iii) all agreements, obligations and Liabilities set forth on Schedule 4.3(b);
and

          (iv) all Liabilities which are not (A) described in Section 4.3(a) above or (B) assumed
by the HBI Group under this Agreement or the Ancillary Agreements.

     Section 4.4 Shared Contracts.

          (a) With respect to Shared Contractual Liabilities pursuant to, under or relating to a given
Shared Contract, such Shared Contractual Liabilities shall be allocated between the parties as
follows:

          (i) First, if a Liability is incurred exclusively in respect of a benefit received by
one party or its Group, the party or Group receiving such benefit shall be responsible for
such Liability.

          (ii) Second, if a Liability cannot be exclusively allocated to one party or its Group
under clause (i) foregoing, such Liability shall be allocated among both parties and their
respective Groups based on the relative proportions of total benefit received (over the term
of the Shared Contract, measured as of the date of allocation) under the relevant Shared
Contract. Notwithstanding the foregoing, each party and its Group shall be responsible for
any or all Liabilities arising out of or resulting from such party’s or Group’s breach of
the relevant Shared Contract.

          (b) If Sara Lee or any member of the Sara Lee Group, on the one hand, or HBI or any member of
the HBI Group, on the other hand, receives any benefit or payment under any Shared Contract which
was intended for the other party or its Group, Sara Lee and any member of the Sara Lee Group, on
the one hand, or HBI and any member of the HBI Group, on the other hand, will use their respective
reasonable best efforts to deliver, transfer or otherwise afford such benefit or payment to the
other party.

     Section 4.5 Excluded Assets, Excluded Liabilities and Certain Other Matters

          (a) Transfer. Effective as of immediately prior to the Separation Date, (i) Sara Lee
will cause any applicable HBI Entity which owns, leases or has any right to use any Excluded Assets
to assign, transfer, convey and deliver to Sara Lee or a Subsidiary of Sara Lee, and Sara Lee will
accept from the applicable HBI Entity, and agrees to cause the applicable Subsidiary of Sara Lee to
accept, all such applicable HBI Entity’s respective right, title and interest in and to any and all
of such Excluded Assets, and (ii) Sara Lee will cause any applicable HBI Entity which is
responsible for any Excluded Liability to assign, transfer, convey and deliver to Sara Lee or a
Subsidiary of Sara Lee, and Sara Lee will assume, or will cause any applicable Subsidiary of Sara
Lee to assume, any and all of such Excluded Liabilities. In furtherance of the foregoing, the HBI
Entities shall execute and deliver such bills of sale, stock powers, certificates of title,
assignments of contracts and other instruments of transfer, conveyance and assignment as and to the
extent necessary to evidence the transfer, conveyance and assignment of all of their right, title
and interest in and to the Excluded Assets to Sara Lee and its Subsidiaries, and Sara Lee and any
applicable Subsidiary shall execute and deliver to HBI such assumptions of contracts and other
instruments of assumption as and to the extent necessary

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to evidence the valid and effective assumption of the Excluded Liabilities by Sara Lee or its
Subsidiaries, in each case, as determined by Sara Lee in its reasonable discretion.

          (b) Delivery of Period 2 Financial Statements; Cash True Up.

          (i) Notwithstanding anything in this Agreement to the contrary, Sara Lee shall be
entitled to withhold $30 million in cash from the HBI Assets delivered to HBI and its
Subsidiaries as of the Separation Date (the “Reserve Amount”), such amount to be
paid to HBI or retained by Sara Lee in accordance with this Section 4.5(b). Sara
Lee shall obtain the Reserve Amount on September 1, 2006 by withdrawing $30 million from the
netted accounts of HBI and its Subsidiaries maintained at JP Morgan Chase Bank, N.A.
(together with affiliates thereof, “JP Morgan”). The parties acknowledge that such
withdrawal will leave HBI and its Subsidiaries in an overdraft position, and that HBI shall
be responsible for repaying such overdraft to JP Morgan on such basis as HBI and JP Morgan
shall determine.

          (ii) HBI and Sara Lee shall use their reasonable best efforts to enable HBI to provide
to Sara Lee in a timely manner consolidated financial statements of HBI and its Subsidiaries
for Period 2 of fiscal year 2007 (ending on September 2, 2006), prepared in compliance with
all financial accounting and reporting rules, policies and directives of Sara Lee applicable
to Sara Lee’s Subsidiaries that are consolidated with Sara Lee for financial statement
purposes and on a basis consistent with financial statements provided by HBI to Sara Lee for
prior periods in accordance with such rules, policies and directives (the “Period 2
Financial Statements”), together with a calculation of cash and cash equivalents as of
September 2, 2006. HBI and Sara Lee shall use their reasonable best efforts to enable HBI
to provide to Sara Lee in a timely manner the KIT schedules relating to the Period 2
Financial Statements. For all purposes of this Agreement, the cash and cash equivalents of
HBI and its Subsidiaries shall equal the amounts recorded in the cash and short term
investments line items 1.0 and 2.0 of Sara Lee’s internal EO 100 balance sheet financial
reporting statement that are reflected in the balance sheet included in the Period 2
Financial Statements. HBI also shall provide to Sara Lee, upon request, financial
information with respect to the Period 2 Financial Statements as reasonably required by Sara
Lee to substantiate the information contained in the Period 2 Financial Statements and for
the preparation of consolidated financial statements and related public disclosures on a
basis consistent with prior periods.

          (iii) HBI represents and warrants to Sara Lee that the Branded Apparel Business was and
will be operated in the ordinary course of business during the period covered by the Period
2 Financial Statements, consistent with comparable periods in prior fiscal years (i.e.,
accounts payable were paid and accounts receivable were collected in accordance with
customary terms and conditions, and all purchases of raw materials and inventory were made
in the ordinary course) and that the Period 2 Financial Statements will reflect the
completion of all settlements outlined in Schedule 4.12. To the extent that the
Period 2 Financial Statements reflect that the Branded Apparel Business was not operated in
the ordinary course of business, consistent with comparable periods in prior fiscal years,
then Sara Lee shall be entitled to increase the amount of cash and cash equivalents shown on
the Period 2 Financial Statements to reflect a normalized level (i.e.,

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the amount of cash and cash equivalents which HBI and its Subsidiaries would have had
as of the Distribution Date if the business had been operated in the ordinary course of
business). Sara Lee shall also be entitled to make such adjustments as it deems reasonably
necessary for the completion of the intercompany account settlement in accordance with
Schedule 4.12. Sara Lee shall provide to HBI, within 5 business days following its
receipt of the Period 2 Financial Statements (and such supporting or additional materials as
Sara Lee may reasonably request), a reasonably detailed calculation of any adjustment to the
amount of cash and cash equivalents that Sara Lee believes is required under this
Section 4.5(b) (it being understood that the ultimate amount of any such adjustment
shall be subject to HBI’s agreement, not to be unreasonably withheld).

          (iv) If the cash and cash equivalents of HBI and its Subsidiaries as of September 2,
2006 (including the Reserve Amount) exceeds the Pro Forma Cash Amount (the amount of such
excess being referred to as the “Excess Cash Amount”), then Sara Lee shall be
entitled to deduct from the Reserve Amount and retain for its own benefit the Excess Cash
Amount. If the Excess Cash Amount is less than the Reserve Amount, then Sara Lee shall
promptly pay to HBI any portion of the Reserve Amount remaining after the deduction
contemplated by the preceding sentence. If the Excess Cash Amount exceeds the Reserve
Amount, then HBI shall promptly pay to Sara Lee the amount of such excess.

          (v) If the cash and cash equivalents of HBI and its Subsidiaries as of September 2,
2006 (including the Reserve Amount) is less than the Pro Forma Cash Amount (the amount of
such shortfall being referred to as the “Shortfall Cash Amount”), then Sara Lee
shall promptly pay to HBI the Reserve Amount plus the Shortfall Cash Amount.

          (vi) All payments owing under this Section 4.5(b) shall be made promptly
following completion of the final calculation of the amount of cash and cash equivalents as
of September 2, 2006, which the parties expect will occur prior to and in no event later
than September 30, 2006.

          (c) Delivery of Information to HBI. HBI and Sara Lee shall use their reasonable best
efforts to enable Sara Lee to provide to HBI (A) the push downs from the Sara Lee controller group
for the fourth quarter of Sara Lee’s 2006 fiscal year, and (B) the tax rate for such period, in
each case in a timely manner.

     Section 4.6 Methods of Transfer and Assumption.

          (a) Terms of Ancillary Agreements Govern. The parties shall enter into the Ancillary
Agreements, on or about the date of this Agreement. To the extent that the transfer of any HBI
Asset or Excluded Asset or the assumption of any HBI Liability is expressly provided for by the
terms of any Ancillary Agreement, the terms of such Ancillary Agreement shall effect, and determine
the manner of, the transfer or assumption. For example, and without limitation, transfers of
interests in real property used in the Branded Apparel Business shall be governed by the Real
Estate Matters Agreement. It is the intent of the parties that pursuant to Sections 4.1,

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4.2, 4.3 and 4.4, the transfer and assumption of all other HBI Assets
and HBI Liabilities, other than Delayed Transfer Assets and Delayed Transfer Liabilities, shall be
made effective as of the Separation Date.

          (b) Mistaken Assignments and Assumptions. In addition to those transfers and
assumptions accurately identified and designated by the parties to take place but which the parties
are not able to effect on or prior to the Separation Date, there may exist (i) Assets that the
parties discover were, contrary to the agreements between the parties, by mistake or unintentional
omission, transferred to HBI or retained by Sara Lee or (ii) Liabilities that the parties discover
were, contrary to the agreements between the parties, by mistake or unintentional omission, assumed
by HBI or not assumed by HBI. The parties shall cooperate in good faith to effect the transfer or
re-transfer of mis-allocated Assets, and/or the assumption or re-assumption of mis-allocated
Liabilities, to or by the appropriate party and shall not use the determination that remedial
actions need to be taken to alter the original intent of the parties hereto with respect to the
Assets to be transferred to or Liabilities to be assumed by HBI. Each party shall reimburse the
other or make other financial adjustments or other adjustments to remedy any mistakes or omissions
relating to any of the Assets transferred hereby or any of the Liabilities assumed hereby.

          (c) Transfer of Assets and Liabilities not Included in HBI Assets and HBI Liabilities.
In the event the parties discover Assets and Liabilities that are to be transferred to or assumed
by HBI under Section 4.2(a)(iv) or 4.3(a)(iii), respectively, the parties shall
cooperate in good faith to effect the transfer of such Assets at book value, or the assumption of
such Liabilities, to HBI or its Subsidiaries, and shall not use the determination of remedial
actions contemplated in this Agreement to alter the original intent of the parties hereto with
respect to the Assets to be transferred to or Liabilities to be assumed by HBI. Each party shall
reimburse the other or make other financial adjustments or other adjustments to remedy any mistakes
or omissions relating to any of the Assets transferred hereby or any of the Liabilities assumed
hereby.

          (d) Transfer of Certain Leased Equipment. Pursuant to the PHH Agreements, Sara Lee
operates an executive auto program under which certain employees obtain the personal use of leased
automobiles. To enable HBI to continue to participate in such executive automobile program for a
period of time after the Distribution Date, Sara Lee shall, subject to Section 4.8,
sublease all of the passenger vehicles leased by HBI or its Subsidiaries through the PHH Agreements
and covered by Sara Lee’s executive auto program as of the Separation Date (collectively, the
“Leased Vehicles”) to HBI or its applicable Subsidiary (the “Sublease”). To
implement the Sublease, HBI shall enter into (i) a sublease agreement with Sara Lee consistent with
the provisions of this Section 4.6(d), and (ii) a management agreement with PHH Fleet
America Corporation on terms substantially the same as the Management Agreement dated June 30, 1991
between PHH-CFC Leasing, Inc. and PHH Fleet America Corporation. With respect to any Leased
Vehicle used by an HBI employee who is an active employee as of the Separation Date, the Sublease
will continue in effect until the earlier of (A) the expiration of the existing lease term for such
vehicle, or (B) December 31, 2006; provided that PHH Fleet America Corporation, as manager of the
executive automobile program, may issue instructions or impose rules to ensure the orderly return
of the Leased Vehicles, which instructions or rules may require the return of some Leased Vehicles
earlier than December 31, 2006. With respect to any Leased

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Vehicle used by a former HBI employee pursuant to any severance agreement executed prior to
the Separation Date, the Sublease will continue in effect until the date specified in the
applicable severance agreement. After the Distribution Date, HBI and its Subsidiaries shall not
execute any severance agreement with any HBI employee that permits such employee to continue to use
a Leased Vehicle beyond December 31, 2006. Notwithstanding the foregoing, and for the avoidance of
doubt, from and after the Separation Date, the Leased Vehicles shall constitute HBI Assets. The
lease payment for each Leased Vehicle covered by the Sublease shall be equal to the lease payment
Sara Lee is obligated to pay from time to time under the PHH Agreements for such Leased Vehicle.
Unless otherwise expressly provided in this Section 4.6(d), the terms of the Sublease shall
be substantially the same as the terms and conditions of the PHH Agreements, except to that Sara
Lee shall have no obligation to perform any obligations of the lessor under the PHH Agreements. In
the event any active or former HBI Employee exercises his or her right, if any, to purchase a
Leased Vehicle from the third party lessor, Sara Lee shall, subject to the satisfaction of all
conditions required for such purchase by such employee and HBI, effect such purchase pursuant to
the terms of Sara Lee’s executive auto program and the PHH Agreements. Prior to the Separation
Date, HBI shall purchase all of the motor vehicle pool vehicles, trucks, forklifts and computer,
telephone and other equipment leased by HBI and its Subsidiaries through the PHH Agreements and
used in the Branded Apparel Business and that are part of the HBI Assets.

     Section 4.7 Documents Relating to Transfers of HBI Assets and Assumption of HBI
Liabilities. In furtherance of the assignment, transfer and conveyance of HBI Assets and the
assumption of HBI Liabilities set forth in Sections 4.2 and 4.3 and Sections
4.6(a), (b) and (c) and certain Ancillary Agreements, simultaneously with the
execution and delivery hereof or as promptly as practicable thereafter, (i) Sara Lee shall execute
and deliver, and shall cause its Subsidiaries to execute and deliver, such bills of sale, stock
powers, certificates of title, assignments of contracts and other instruments of transfer,
conveyance and assignment as and to the extent necessary to evidence the transfer, conveyance and
assignment of all of Sara Lee’s and its Subsidiaries’ right, title and interest in and to the HBI
Assets to HBI or its Subsidiaries and (ii) HBI shall execute and deliver, and shall cause its
Subsidiaries to execute and deliver, to Sara Lee and its Subsidiaries such assumptions of contracts
and other instruments of assumption as and to the extent necessary to evidence the valid and
effective assumption of the HBI Liabilities by HBI.

     Section 4.8 Governmental Approvals and Third Party Consents.

          (a) Obtaining Governmental Approvals and Third Party Consents. To the extent that the
Separation or Distribution requires any third party consents or Governmental Approvals, the parties
will use reasonable best efforts to obtain such consents or Governmental Approvals.

          (b) Transfer in Violation of Laws or Requiring Consent or Governmental Approval. If
and to the extent that the valid, complete and perfected transfer or assignment to the HBI Group of
any HBI Assets or to the Sara Lee Group of any Excluded Asset would be a violation of applicable
laws or require any Consent or Governmental Approval in connection with the Separation or the
Distribution, then the transfer or assignment to the HBI Group of such HBI Assets or the Sara Lee
Group of such Excluded Asset shall be automatically deemed deferred and any such purported transfer
or assignment shall be null and void until such time as

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all legal impediments are removed or such Consents or Governmental Approvals have been
obtained (provided that, Sara Lee may, in its reasonable discretion, elect to require the immediate
transfer or assignment of any HBI Asset or Excluded Asset notwithstanding any requirement that an
immaterial Consent or immaterial Governmental Approval be obtained). Notwithstanding the
foregoing, any such Asset shall still be considered an HBI Asset or Excluded Asset, as applicable,
and the Parties will use their reasonable best efforts to promptly develop and implement
arrangements to make such Asset available for use by (and the benefit of) the Party entitled to
receive it pending removal of such legal impediments or obtaining such Consents or Governmental
Approvals; provided, however, that if such legal impediments have not been removed or such Consents
or Governmental Approvals have not been obtained, as applicable, within twelve months of the
Separation Date, then the Parties will use their reasonable best efforts to achieve an alternative
solution in accordance with the Parties’ intentions under this Agreement and the Ancillary
Agreements. If and when the legal impediments the presence of which caused the deferral of
transfer of any Asset pursuant to this Section 4.8(b) are removed or any Consents and/or
Governmental Approvals the absence of which caused the deferral of transfer of any Asset pursuant
to this Section 4.8(b) are obtained, the transfer of the applicable Asset shall be effected
in accordance with the terms of this Agreement and/or such applicable Ancillary Agreement.

          (c) Transfers not Consummated Prior to Separation Date. If the transfer or assignment
of any Assets intended to be transferred or assigned hereunder is not consummated prior to or on
the Separation Date, whether as a result of the provisions of Section 4.8(b) or for any
other reason, then the Person retaining such Asset shall thereafter hold such Asset for the use and
benefit, insofar as reasonably possible, of the Person entitled thereto (at the reasonable expense
of the Person entitled thereto) until the consummation of the transfer or assignment thereof (or as
otherwise determined by Sara Lee and HBI, as applicable, in accordance with paragraph (b) above).
In addition, the Person retaining such Asset shall take such other actions as may be reasonably
requested by the Person to whom such Asset is to be transferred in order to place such Person,
insofar as reasonably possible, in the same position as if such Asset had been transferred as
contemplated hereby and so that all the benefits and burdens relating to such Asset, including
possession, use, risk of loss, potential for gain, and dominion, control and command over such
Asset, are to inure from and after the Separation Date to the Person to whom such Asset is to be
transferred.

          (d) Expenses. The Person retaining an Asset due to the deferral of the transfer and
assignment of such Asset shall not be obligated, in connection with the foregoing, to expend any
money in connection with the maintenance of the Asset or otherwise unless the necessary funds are
advanced by the Person to whom such Asset is to be transferred, other than reasonable out-of-pocket
expenses, attorneys’ fees and recording or similar fees, all of which shall be promptly reimbursed
by the Person to whom such Asset is to be transferred; provided, however, that the Person retaining
such Asset shall provide prompt notice to the Person to whom such Asset is to be transferred of the
amount of all such expenses and fees.

     Section 4.9 Nonrecurring Costs and Expenses. Notwithstanding anything herein to the
contrary, any nonrecurring costs and expenses incurred by the parties hereto to effect the
transactions contemplated hereby which are not allocated pursuant to the terms of this

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Agreement or any Ancillary Agreement shall be the responsibility of the party which incurs
such costs and expenses.

     Section 4.10 Novation of Assumed HBI Liabilities.

          (a) Reasonable Best Efforts. HBI, at the request of Sara Lee, shall use its
reasonable best efforts to obtain, or to cause to be obtained, any agreement, instrument, consent,
substitution, approval or amendment required to novate or assign all rights and obligations under
Contracts and other obligations or Liabilities (including Other Financial Liabilities) of any
nature whatsoever that constitute HBI Liabilities or to obtain in writing the unconditional release
of all parties to such arrangements other than any member of the HBI Group, so that, in any such
case, HBI and its Subsidiaries will be solely responsible for such Liabilities.

          (b) Inability to Obtain Novation. If HBI is unable to obtain, or to cause to be
obtained, any such required agreement, instrument, consent, approval, release, substitution or
amendment, the applicable member of the Sara Lee Group shall continue to be bound by such Contracts
and other obligations and Liabilities and, unless not permitted by law or the terms thereof (except
to the extent expressly set forth in this Agreement or any Ancillary Agreement), HBI shall, as
agent or subcontractor for Sara Lee or such other Person, as the case may be, pay, perform and
discharge fully, or cause to be paid, transferred or discharged all the obligations or other
Liabilities of any member of the Sara Lee Group thereunder from and after the Separation Date.
Notwithstanding the foregoing, any such Liability shall still be considered an HBI Liability;
provided, however, that Sara Lee shall not (and shall not permit any member of the Sara Lee Group
to) and HBI shall not (and shall not permit any member of the HBI Group to) amend, renew, change
the term of, modify the obligations under, or transfer to a third Person, any such Contract or
other obligation or other Liability without the written consent of HBI (in the case of any such
action by the Sara Lee Group) or Sara Lee (in the case of any such action by the HBI Group). Sara
Lee and HBI shall each use reasonable best efforts to provide prompt notice to the other of any
request they receive from the counterparty to any Contract for any such amendment, renewal, change,
modification or transfer. Sara Lee shall, without further consideration, pay and remit, or cause
to be paid or remitted, to HBI or its appropriate Subsidiary promptly all money, rights and other
consideration received by it or any member of its Group in respect of such performance (unless any
such consideration is an Excluded Asset). If and when any such agreement, instrument, consent,
approval, release, substitution or amendment shall be obtained or such Contract or other
obligations and Liabilities shall otherwise become assignable or able to be novated, Sara Lee shall
thereafter assign, or cause to be assigned, all its rights, obligations and other Liabilities
thereunder or any rights or obligations of any member of its Group to HBI without payment of
further consideration and HBI shall, without the payment of any further consideration, assume such
rights, obligations and Liabilities.

          (c) HBI Guarantees. HBI acknowledges that Sara Lee or members of the Sara Lee Group
have entered into various arrangements in which Sara Lee or members of the Sara Lee Group issued or
made available guarantees, sureties, bonds, letters of credit or similar instruments or are the
primary obligors on other agreements, in any such case to support or facilitate the business
transactions of members of HBI Group (the “Business Guarantees”). On or prior to the
Separation Date, HBI shall use reasonable best efforts to obtain replacements for such Business
Guarantees or will seek to either terminate the business transactions or programs

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of the HBI Group supported or facilitated by such Business Guarantees or arrange for itself or
one of its Subsidiaries to be substituted as the primary obligor thereto (collectively, the
“Substitute Guarantees”). If such replacement or termination is not effected by the
Separation Date, then (i) HBI shall indemnify and hold harmless the Sara Lee Group from any
Liability arising from or relating thereto (including by promptly reimbursing Sara Lee for any
payment made by any member of the Sara Lee Group on the HBI Group’s behalf), (ii) without the prior
written consent of Sara Lee, HBI shall not, and shall not permit any member of the HBI Group to,
amend, renew or extend the term of, increase its obligations under, or transfer to a third Person,
any loan, lease, contract or, other obligation for which any member of the Sara Lee Group is or may
be liable, unless all obligations of the Sara Lee Group with respect thereto are thereupon
terminated by documentation reasonably satisfactory in form and substance to Sara Lee and (iii)
Sara Lee shall not and shall not permit any member of the Sara Lee Group to amend, renew, change
the term of, terminate, modify the obligations under, or transfer to a third Person, any such loan,
lease, Contract or other obligation without the written consent of HBI.

     Section 4.11 No Representation or Warranty. Neither Sara Lee nor any member of its
Group, in this Agreement or any other agreement, instrument or document contemplated by this
Agreement, make any representation as to, warranty of or covenant with respect to: (a) the value of
any asset or thing of value to be transferred to or the amount of any liability to be assumed by
HBI; (b) the freedom from any Security Interest of any asset or thing of value to be transferred to
HBI; (c) the absence of defenses or freedom from counterclaims with respect to any claim to be
transferred to HBI; or (d) the legal sufficiency of any assignment, document or instrument
delivered hereunder to convey title to any asset or thing of value upon its execution, deliver and
filing. Without limiting the generality of the foregoing, neither Sara Lee nor any member of its
Group is representing or warranting as to the HBI Assets or the HBI Liabilities transferred or
assumed as contemplated hereby or thereby or as to any consents or approvals required in connection
therewith. Except as may expressly be set forth herein or in any Ancillary Agreement, all assets
to be transferred to HBI shall be transferred “AS IS, WHERE IS” and HBI shall bear the economic and
legal risk that any conveyance shall prove to be insufficient to vest in HBI good and marketable
title, free and clear of any Security Interest or any necessary Consents or Governmental Approvals
are not obtained or that any requirements of laws or judgments are not complied with.

     Section 4.12 Settlement of Intercompany Accounts. Intercompany accounts outstanding
between the Sara Lee Group and the HBI Group shall be settled in accordance with Schedule
4.12. The Sara Lee Group and the HBI Group shall cooperate with each other and take all
actions necessary to settle the intercompany accounts in accordance with Schedule 4.12.

ARTICLE V

COVENANTS AND OTHER MATTERS

     Section 5.1 Other Agreements. After the Distribution Date, Sara Lee and HBI agree to execute
or cause to be executed by the appropriate parties and deliver, as appropriate, such other
agreements, instruments and other documents as may be necessary or desirable in order to effect the
purposes of this Agreement and the Ancillary Agreements. Without limiting the generality of the
foregoing, at the request of HBI, and without further consideration, Sara Lee

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will execute and deliver, and will cause its applicable Subsidiaries to execute and deliver,
to HBI and its Subsidiaries such other instruments of transfer, conveyance, assignment,
substitution, confirmation or other documents and take such action as HBI may reasonably deem
necessary or desirable in order to more effectively transfer, convey and assign to HBI and its
Subsidiaries and confirm HBI’s and its Subsidiaries’ title to all of the assets, rights and other
things of value contemplated to be transferred to HBI and its Subsidiaries pursuant to this
Agreement, the Ancillary Agreements, and any documents referred to therein, to put HBI and its
Subsidiaries in actual possession and operating control thereof and to permit HBI and its
Subsidiaries to exercise all rights with respect thereto (including, without limitation, rights
under contracts and other arrangements as to which the consent of any third party to the transfer
thereof shall not have previously been obtained). Without limiting the generality of the
foregoing, at the request of Sara Lee and without further consideration, HBI will execute and
deliver, and will cause its applicable Subsidiaries to execute and deliver, to Sara Lee and its
Subsidiaries all instruments, assumptions, novations, undertakings, substitutions or other
documents and take such other action as Sara Lee may reasonably deem necessary or desirable in
order to have HBI fully and unconditionally assume and discharge the liabilities contemplated to be
assumed by HBI under this Agreement or any document in connection herewith and to relieve the Sara
Lee Group of any liability or obligation with respect thereto and evidence the same to third
parties. Neither Sara Lee nor HBI shall be obligated, in connection with the foregoing, to expend
money other than reasonable out-of-pocket expenses, attorneys’ fees and recording or similar fees,
unless reimbursed by the other party. Furthermore, each party, at the request of the other party
hereto, shall execute and deliver such other instruments and do and perform such other acts and
things as may be necessary or desirable for effecting completely the consummation of the
transactions contemplated hereby.

     Section 5.2 Agreement For Exchange Of Information.

          (a) Generally.

          (i) Except as provided in the Master Transition Services Agreement, in which event such
agreement shall control, each of Sara Lee and HBI, on behalf of its respective Group, agrees
to provide, or cause to be provided, to the other party’s Group, at any time after the
Distribution Date, as soon as reasonably practicable after written request therefor, (i) all
Information regularly provided by HBI to Sara Lee prior to the Distribution Date, and (ii)
any Information in the possession or under the control of such respective Group that the
requesting party reasonably needs (A) to comply with reporting, disclosure, filing or other
requirements imposed on the requesting party (including under applicable securities and tax
laws) by a Governmental Authority having jurisdiction over the requesting party, (B) for use
in any other judicial, regulatory, administrative or other proceeding or in order to satisfy
audit, accounting, claims, regulatory, litigation or other similar requirements, in each
case other than claims or allegations that one party to this Agreement has against the
other, (C) subject to the foregoing clause (B) above, to comply with its obligations under
this Agreement or any Ancillary Agreement, or (D) to the extent such Information and
cooperation is necessary to comply with such reporting, filing and disclosure obligations,
for the preparation of financial statements or completing an audit, and as reasonably
necessary to conduct the ongoing businesses of Sara Lee or HBI, as the case may be. Each of
Sara Lee and HBI

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agree to make their respective personnel available during regular business hours to
discuss the Information exchanged pursuant to this Section 5.2.

          (ii) As long as Sara Lee is directly or contingently liable for any HBI Liabilities,
HBI shall provide to Sara Lee, no later than fifteen (15) days after the end of each fiscal
quarter of Sara Lee, a certificate of HBI’s Chief Financial Officer that certifies the
accuracy of an attached schedule which lists the HBI Liabilities for which Sara Lee is
directly or contingently liable and shows (A) the categories of such Liabilities, (B) where
applicable, the annual future payments over the minimum contract term and any renewal terms
and (C) such other information as Sara Lee believes is reasonably necessary for Sara Lee to
prepare its financial statements and satisfy its public reporting obligations. The format
and information of such schedule shall be determined by Sara Lee in its reasonable
discretion.

          (b) Internal Accounting Controls; Financial Information. After the Distribution Date,
(i) each party shall maintain in effect at its own cost and expense adequate systems and controls
for its business to the extent reasonably necessary to enable the members of the other Group to
satisfy their respective reporting, accounting, audit and other obligations, and to comply with
such party’s obligations under this Section 5.2, and (ii) each party shall provide, or
cause to be provided, to the other party in such form as the requesting party shall request, at no
charge to such requesting party, all financial and other data and information as such requesting
party determines is reasonably necessary or advisable in order to prepare its financial statements
and reports or filings with any Governmental Authority. Notwithstanding the foregoing, Sara Lee
and HBI agree that the following provisions shall govern the retention and use of all Information
maintained by Sara Lee Business Services immediately prior to the Distribution Date, which
Information includes without limitation payroll, general ledger, foreign currency sub-ledger, fixed
asset ledger, accounts payable, accounts payable master file, sales by state and travel and
entertainment (Extensity) system regarding Sara Lee and Sara Lee’s Subsidiaries and Affiliates
(collectively, the “Lawson Information”). Effective as of the Distribution Date,
possession and control over the Lawson Information will be transferred to HBI, which will maintain
such Information on its servers. Each of Sara Lee and HBI acknowledges that it has, and it will
maintain in full force and effect until the expiration of the transition services set forth on
Schedule 2 to the Master Transition Services Agreement, a valid license to access, view and edit
the Lawson Information. During the effective period of such Schedule 2, HBI agrees to provide Sara
Lee with either web-based access or direct access through HBI’s computer network to the Lawson
Information. Within 45 days after the close of the fiscal quarter ending December 30, 2006 (or
such later quarter, if the term of Schedule 2 is extended), HBI will create and deliver to Sara Lee
a complete electronic copy of the database containing the Lawson Information, in the same file
format in which the Lawson Information is maintained on the Distribution Date. For 60 days after
receipt of such duplicate electronic file, Sara Lee will be entitled to review, utilize and test
the electronic copy of the database for accuracy and completeness and compare the Information
contained on the duplicate file to the original Lawson Information maintained on HBI’s servers, and
Sara Lee agrees to promptly notify HBI of any errors, discrepancies or bugs discovered by Sara Lee
during its review. HBI and Sara Lee agree to use their respective reasonable best efforts
(including, without limitation, creating a new duplicate electronic file) to remedy all such
errors, discrepancies or bugs. HBI agrees, to the extent relevant purge functions permit, that it
will purge from its systems and destroy all Lawson

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Information that both (1) relates exclusively to the Sara Lee Business and (2) relates to
Information for which HBI is not assuming any liability, including all live and backup copies
(other than an archival copy), no later than (x) 60 days after Sara Lee receives the electronic
copy, if Sara Lee has not given HBI written notice of any errors, discrepancies or bugs within such
60-day period, or (y) 20 days after HBI and Sara Lee mutually agree that all errors, discrepancies
or bugs identified by Sara Lee have been remedied. HBI will provide to Sara Lee written
confirmation that such purging and destruction has been completed. At any time prior to the date
that HBI purges information described in the preceding sentences, Sara Lee may request, and HBI
shall provide to Sara Lee within 30 days after Sara Lee’s request, a “flat file” containing Lawson
Information for any fiscal year from fiscal year 2001 (or the earliest date for which Lawson
Information was maintained by Sara Lee Business Services) through fiscal year 2006 and for fiscal
year 2007 up to and including the Distribution Date. A “flat file” is a CD flat file (annual
sequential file) in ASCII format with record layout and blocking information. For a period of 60
days after receipt of a flat file, Sara Lee will be entitled, at its expense, to have an
independent third party test and certify the accuracy and sufficiency of the flat file. If any
deficiencies are discovered, HBI promptly shall prepare and provide to Sara Lee a replacement flat
file that corrects such deficiencies.

          (c) Ownership of Information. Any Information owned by a party that is provided to
the other party pursuant to this Section 5.2 shall be deemed to remain the property of the
party that owned and provided such Information. Unless specifically set forth herein, nothing
contained in this Agreement shall be construed as granting or conferring rights of license or
otherwise in any Information owned by one party hereunder to the other party hereunder.

          (d) Record Retention. Except with respect to information for which a different
retention policy is specified in the Tax Sharing Agreement or in any other Ancillary Agreement, to
facilitate the possible exchange of Information pursuant to this Section 5.2 and other
provisions of this Agreement after the Distribution Date, each party agrees to use its reasonable
best efforts to retain all Information in its respective possession or control on the Distribution
Date in accordance with Sara Lee’s Finance Policy No. 151, “Records Retention and Disposal,” and
Schedule A thereto (or such longer periods of time as may be set forth in policies adopted by Sara
Lee or HBI and provided to the other in writing after the Distribution Date). No party will
destroy, or permit any of its Subsidiaries to destroy, any Information that exists on the
Distribution Date (other than Information that is permitted to be destroyed under the current
record retention policies of Sara Lee) and that falls under the categories listed in Section
5.2(a), without first using its reasonable best efforts to notify the other party of the
proposed destruction and giving the other party the opportunity to take possession or make copies
of such Information prior to such destruction. In furtherance and not in limitation of the
obligations set forth in this Section 5.2, each party shall, and shall cause members of
their respective Groups to, remove and destroy any hard drives or other electronic data storage
devices from any computer or server that is reasonably likely to contain Information that is
protected by this Section 5.2 and that is transferred or sold to a third party or otherwise
disposed of in accordance with this Section 5.2(d).

          (e) Limitation of Liability. Each party will use its reasonable best efforts to
ensure that Information provided to the other party hereunder is accurate and complete; provided,
however, except as otherwise provided in the Indemnification and Insurance Matters Agreement

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or any Ancillary Agreement, no party shall have any liability to any other party in the event
that any Information exchanged or provided pursuant to this Section 5.2 is found to be
inaccurate, in the absence of gross negligence or willful misconduct by the party providing such
Information.

          (f) Other Agreements Providing for Exchange of Information. The rights and
obligations granted under this Section 5.2 are subject to any specific limitations,
qualifications or additional provisions on the sharing, exchange or confidential treatment of
Information set forth in this Agreement and any Ancillary Agreement.

          (g) Compensation for Providing Information. Except as set forth in Section
5.2(b)(ii), the party requesting Information agrees to reimburse the other party for the
reasonable out-of-pocket costs, if any, of creating, gathering and copying such Information, to the
extent that such costs are incurred for the benefit of the requesting party.

          (h) Production of Witnesses; Records; Cooperation. After the Distribution Date,
except in the case of any Action by one party against another party, each party hereto shall use
its reasonable best efforts to make available to each other party, upon written request, the
former, current and future directors, officers, employees, other personnel and agents of the
members of its respective Group as witnesses and any books, records or other documents within its
control or which it otherwise has the ability to make available, to the extent that any such person
(giving consideration to business demands of such directors, officers, employees, other personnel
and agents) or books, records or other documents may reasonably be required in connection with any
Action in which the requesting party may from time to time be involved, regardless of whether such
Action is a matter with respect to which indemnification may be sought hereunder. Notwithstanding
Section 5.2(g), the requesting party shall reimburse the other party for its reasonable
out-of-pocket cost and expenses in connection with requests made under this Section 5.2(h)
(other than internal costs).

     Section 5.3 Confidentiality.

          (a) For a period (i) in the case of Confidential Information that is Confidential Business
Information, of seven years from the Separation Date and (ii) in the case of Confidential
Information that is Confidential Operational Information, ten years from the Separation Date, Sara
Lee and HBI shall hold and shall cause each of the members of their respective Groups to hold, and
shall each cause their respective officers, employees, agents, consultants and advisors to hold, in
strict confidence and not to disclose or release without the prior written consent of the other
party, any and all Confidential Information (as defined herein) of the other party; provided, that
the parties may disclose, or may permit disclosure of, Confidential Information (x) to their
respective auditors, attorneys, financial advisors, bankers and other appropriate consultants and
advisors who have a need to know such information and are informed of their obligation to hold such
information confidential to the same extent as is applicable to the parties hereto and in respect
of whose failure to comply with such obligations, HBI or Sara Lee, as the case may be, will be
responsible or (y) if the parties or any of the members of their respective Groups are compelled to
disclose any such Confidential Information by judicial or administrative process or, in the opinion
of independent legal counsel, by other requirements of law. Notwithstanding the foregoing, in the
event that any demand or request for disclosure of Confidential Information is made pursuant to
clause (y) above, Sara Lee or HBI, as

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the case may be, shall promptly notify the other of the existence of such request or demand
and shall provide the other a reasonable opportunity to seek an appropriate confidentiality
agreement, protective order or other remedy, which both parties will cooperate in obtaining. In
the event that such appropriate protective order or other remedy is not obtained, the party whose
Confidential Information is required to be disclosed shall or shall cause the other party to
furnish, or cause to be furnished, only that portion of the Confidential Information that is
legally required to be disclosed. As used in this Section 5.3:

          (i) “Confidential Information” shall mean Confidential Business Information and
Confidential Operational Information of one party which, prior to or following the
Distribution Date, has been disclosed by Sara Lee or its Group on the one hand, or HBI or
its Group, on the other hand, in written, oral (including by recording), electronic, or
visual form to, or otherwise has come into the possession of, the other, including pursuant
to the access provisions of Section 5.2 hereof or any other provision of this
Agreement (except to the extent that such Information can be shown to have been (x) in the
public domain through no fault of such party (or such party’s Group) or (y) later lawfully
acquired from other sources by the party (or such party’s Group) to which it was furnished;
provided, however, in the case of (y) that such sources did not provide such Information in
breach of any confidentiality obligations).

          (ii) “Confidential Operational Information” shall mean all proprietary, design
or operational information, data or material including, without limitation, (a)
specifications, ideas and concepts for products and services, (b) manufacturing
specifications and procedures, (c) design drawings and models, (d) materials and material
specifications, (e) quality assurance policies, procedures and specifications, (f) customer
information, (g) computer software and derivatives thereof relating to design development or
manufacture of products, (h) training materials and information and (i) all other know-how,
methodology, procedures, techniques and trade secrets related to design, development and
manufacturing.

          (iii) “Confidential Business Information” shall mean all proprietary
information, data or material other than Confidential Operational Information, including,
but not limited to (a) proprietary earnings reports and forecasts, (b) proprietary
macro-economic reports and forecasts, (c) proprietary business plans, (d) proprietary
general market evaluations and surveys and (e) proprietary financing and credit-related
information.

Notwithstanding the first sentence of this Section 5.3(a), with respect to any Confidential
Business Information that is disclosed after the Distribution Date (which shall be deemed to be
Confidential Information for the purposes of this Section), the obligations of this subsection
shall terminate seven years after the date of the first disclosure of such Confidential Business
Information to Sara Lee or its Group, on the one hand, or HBI or its Group, on the other hand.

          (b) Notwithstanding anything to the contrary set forth herein, (i) Sara Lee and its Group, on
the one hand, and HBI and its Group, on the other hand, shall be deemed to have satisfied their
obligations hereunder with respect to Confidential Information if they exercise the same degree of
care (but no less than a reasonable degree of care) as they take to preserve

25

 

confidentiality for their own similar Information and (ii) confidentiality obligations
provided for in any agreement between Sara Lee or any of the members of its Group, or HBI or any of
the members of its Group, on the one hand, and any employee of Sara Lee or any member of its Group,
or HBI or any member of its Group, on the other hand, shall remain in full force and effect.
Confidential Information of Sara Lee and its Group, on the one hand, or HBI and its Group, on the
other hand, in the possession of and used by the other as of the Distribution Date may continue to
be used by such Person in possession of the Confidential Information in and only in the operation
of the Sara Lee Business or the Branded Apparel Business, the case may be, and may be used only so
long as the Confidential Information is maintained in confidence and not disclosed in violation of
Section 5.3(a). Such continued right to use may not be transferred to any third party
unless the third party purchases all or substantially all of the business and Assets in one
transaction or in a series of related transactions for which or in which the relevant Confidential
Information is used or employed. In the event that such right to use is transferred in accordance
with the preceding sentence, the transferring party shall not disclose the source of the relevant
Confidential Information.

     Section 5.4 Privileged Matters.

          (a) Sara Lee and HBI agree that their respective rights and obligations to maintain, preserve,
assert or waive any or all privileges belonging to either corporation or their Subsidiaries with
respect to the Branded Apparel Business or the Sara Lee Business, including but not limited to the
attorney-client and work product privileges (collectively, “Privileges”), shall be governed
by the provisions of this Section 5.4. With respect to Privileged Information (as defined
below) of Sara Lee, Sara Lee shall have sole authority in perpetuity to determine whether to assert
or waive any or all Privileges, and HBI shall take no action (nor permit any member of its Group to
take action) without the prior written consent of Sara Lee that could result in any waiver of any
Privilege that could be asserted by Sara Lee or any member of its Group under applicable law and
this Agreement. With respect to Privileged Information of HBI arising after the Separation, HBI
shall have sole authority in perpetuity to determine whether to assert or waive any or all
Privileges, and Sara Lee shall take no action (nor permit any member of its Group to take action)
without the prior written consent of HBI that could result in any waiver of any Privilege that
could be asserted by HBI or any member of its Group under applicable law and this Agreement. The
rights and obligations created by this Section 5.4 shall apply to all Information as to
which Sara Lee or HBI or their respective Groups would be entitled to assert or have asserted a
Privilege without regard to the effect, if any, of the Separation or the Distribution
(“Privileged Information”). Privileged Information of Sara Lee and its Group includes but
is not limited to (i) any and all Information regarding the Sara Lee Business and its Group (other
than Information relating to the Branded Apparel Business (“Branded Apparel Information”)),
whether or not such Information (other than Branded Apparel Information) is in the possession of
HBI or any member of its Group; (ii) all communications subject to a Privilege between counsel for
Sara Lee (including any person who, at the time of the communication, was an employee of Sara Lee
or its Group in the capacity of in-house counsel, regardless of whether such employee is or becomes
an employee of HBI or any member of its Group) and any person who, at the time of the
communication, was an employee of Sara Lee, regardless of whether such employee is or becomes an
employee of HBI or any member of its Group and (iii) all Information generated, received or arising
after the Separation Date that refers or relates to Privileged Information of Sara Lee or its Group
generated, received or arising prior

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to the Separation Date. Privileged Information of HBI and its Group includes but is not
limited to (x) any and all Branded Apparel Information, whether or not it is in the possession of
Sara Lee or any member of its Group; (y) all communications subject to a Privilege occurring after
the Separation between counsel for the Branded Apparel Business (including in-house counsel and
former in-house counsel who are employees of Sara Lee) and any person who, at the time of the
communication, was an employee of HBI, any member of its Group or the Branded Apparel Business
regardless of whether such employee was, is or becomes an employee of Sara Lee or any of its
Subsidiaries and (z) all Information generated, received or arising after the Separation Date that
refers or relates to Privileged Information of HBI or its Group generated, received or arising
after the Separation Date.

          (b) Upon receipt by Sara Lee or HBI, or any of their respective Groups, as the case may be, of
any subpoena, discovery or other request from any third party that actually or arguably calls for
the production or disclosure of Privileged Information of the other or if Sara Lee or HBI, or any
of their respective Groups, as the case may be, obtains knowledge that any current or former
employee of Sara Lee or HBI, as the case may be, receives any subpoena, discovery or other request
from any third party that actually or arguably calls for the production or disclosure of Privileged
Information of the other, Sara Lee or HBI, as the case may be, shall promptly notify the other of
the existence of the request and shall provide the other a reasonable opportunity to review the
Information and to assert any rights it may have under this Section 5.4 or otherwise to
prevent the production or disclosure of Privileged Information. Sara Lee or HBI, as the case may
be, will not, and will cause their respective Groups not to, produce or disclose to any third party
any of the other’s Privileged Information under this Section 5.4 unless (i) the other has
provided its express written consent to such production or disclosure or (ii) a court of competent
jurisdiction has entered an order not subject to interlocutory appeal or review finding that the
Information is not entitled to protection from disclosure under any applicable privilege, doctrine
or rule.

          (c) Sara Lee’s transfer of books and records pertaining to the Branded Apparel Business and
other Information to HBI, Sara Lee’s agreement to permit HBI to obtain Information existing prior
to the Separation, HBI’s transfer of books and records pertaining to Sara Lee, if any, and other
Information and HBI’s agreement to permit Sara Lee to obtain Information existing prior to the
Separation are made in reliance on Sara Lee’s and HBI’s respective agreements, as set forth in
Section 5.3 and this Section 5.4, to maintain the confidentiality of such
Information and to take the steps provided herein for the preservation of all Privileges that may
belong to or be asserted by Sara Lee or HBI, as the case may be. The access to Information,
witnesses and individuals being granted pursuant to Sections 5.2 and the disclosure to HBI
and Sara Lee of Privileged Information relating to the Branded Apparel Business or the Sara Lee
Business pursuant to this Agreement in connection with the Separation shall not be asserted by Sara
Lee or HBI to constitute, or otherwise deemed, a waiver of any Privilege that has been or may be
asserted under this Section 5.4 or otherwise. Nothing in this Agreement shall operate to
reduce, minimize or condition the rights granted to Sara Lee and HBI in, or the obligations imposed
upon Sara Lee and HBI by, this Section 5.4.

     Section 5.5 Payment Of Expenses. Except as otherwise provided in this Agreement, the
Ancillary Agreements or any other written agreement between the parties relating to the Separation
or the Distribution, (i) all costs and expenses of the parties hereto in connection with

27

 

the Distribution (including, without limitation, costs associated with drafting this
Agreement, the Ancillary Agreements and the documents relating to the formation of HBI, costs
associated with the preparation and filing of the Registration Statement and costs associated with
the preparation, printing and mailing of the Information Statement) and (ii) all costs and expenses
of the parties hereto in connection with the Separation shall be paid by Sara Lee. Notwithstanding
the foregoing, (i) HBI and Sara Lee shall each be responsible for their own internal costs (i.e.,
salaries of personnel) incurred in connection with the Separation and the Distribution, and (ii)
HBI shall be responsible for the fees and expenses of its separate legal counsel (Covington &
Burling LLP) and of its independent accountants with respect to services such accountants otherwise
would provide in order for HBI comply with its SEC filings, bank facilities and other reporting
obligations after the Distribution.

     Section 5.6 Release of Security Interest. Upon HBI’s reasonable request, Sara Lee
shall use its reasonable best efforts to obtain from third parties the release of any Security
Interest granted by Sara Lee (or its Subsidiaries) on any HBI Asset.

     Section 5.7 Litigation. All matters relating to claims for Actions, including, but
not limited to, indemnification for such claims, shall be governed by the provisions of the
Indemnification and Insurance Matters Agreement.

     Section 5.8 Employee Discounts. For the period ending two (2) years from the
Separation Date, HBI will continue to offer all employees and directors of the Sara Lee Group on
the date of product purchase a discount on all HBI products purchased by such Sara Lee Group
employees or directors, which discount shall be equivalent to the HBI employee and director
discount programs in effect with respect to HBI products as of the Separation Date. If required
under the terms of the Master Separation Agreement dated October 2, 2000 between Sara Lee and
Coach, Inc., HBI will continue to offer employees and directors of Coach, Inc. the discount
contemplated by Section 4.18 thereof. For the period ending two (2) years from the Separation
Date, Sara Lee will continue to offer all employees and directors of the HBI Group on the date of
product purchase, a discount on all Sara Lee products purchased by such HBI Group employees or
directors, which discount shall be equivalent to the Sara Lee employee and director discount
programs in effect with respect to Sara Lee products as of the Separation Date.

     Section 5.9 Termination Of Agreements.

          (a) Termination of Agreements Between Sara Lee and HBI. Except as set forth in
subsection (b) below, HBI and each HBI Subsidiary, on the one hand, and Sara Lee and each Sara Lee
Subsidiary, on the other hand, hereby terminate and agree to cause to be terminated all agreements,
arrangements, commitments or understandings, whether or not in writing, entered into prior to the
Effective Time between or among HBI or any HBI Subsidiaries, on the one hand, and Sara Lee or any
Sara Lee Subsidiaries, on the other hand, effective as of immediately prior to the Effective Time;
provided that the provisions of this subsection (a) shall not terminate any rights or obligations
between Sara Lee and any Sara Lee Subsidiary or between any Sara Lee Subsidiaries.

          (b) Exceptions. The provisions of subsection (a) above shall not apply to any of the
following agreements, arrangements, commitments or understandings (or to any of the

28

 

provisions thereof): (i) this Agreement and the Ancillary Agreements; (ii) any agreement,
arrangement, commitment or understanding which is expressly contemplated by this Agreement or the
Ancillary Agreement to survive the Distribution Date (or is being entered into in connection with
this Agreement or the Ancillary Agreements); (iii) any agreements, arrangements, commitments or
understandings to which any Person other than the parties hereto and their respective Affiliates is
a party; (iv) any agreements, arrangements, commitments or understandings to which any non-wholly
owned Subsidiary of Sara Lee or HBI, as the case may be, is a party (it being understood that
directors’ qualifying shares or similar interests shall be disregarded for purposes of determining
whether a Subsidiary is wholly owned); and (v) as otherwise agreed to in good faith by the parties
in writing on or after the Effective Time. To the extent that the rights and obligations of Sara
Lee or any Sara Lee Subsidiaries under any agreements, arrangements, commitments or understandings
not terminated under this Section 5.9 constitute HBI Assets or HBI Liabilities, they shall
be assigned or assumed pursuant to this Agreement.

     Section 5.10 Cooperation In Obtaining New Agreements. Sara Lee understands that,
prior to the Separation Date, HBI has derived benefits under certain agreements and relationships
between Sara Lee and third parties, which agreements and relationships are not being assigned or
transferred to HBI in connection with the Separation. After the Separation Date, upon the request
of HBI, Sara Lee agrees to make introductions of appropriate HBI personnel to Sara Lee’s contacts
at such third parties, and agrees to provide reasonable assistance to HBI so that HBI, to the
extent possible, may enter into agreements or relationships with such third parties under
substantially equivalent terms and conditions, including financial terms and conditions, that apply
to Sara Lee. Such assistance may include, but is not limited to, (i) requesting and encouraging
such third parties to enter into such agreements or relationships with HBI and (ii) attending
meetings and negotiating sessions with HBI and such third parties.

     Section 5.11 Cooperation With Respect To Procurement Agreements.

          (i) Sara Lee and HBI have used their reasonable best efforts to extend certain
procurement agreements between Sara Lee and certain preferred third-party vendors to HBI so
that the economic benefits under such agreements would continue to be available to both Sara
Lee and HBI after the Separation Date. After the Separation Date, Sara Lee and HBI shall
continue to use their reasonable best efforts to purchase goods and services from each of
such vendors under such Shared Contracts in accordance with the terms of any agreement among
Sara Lee, HBI and any third party vendor entered into in connection with the Distribution so
as to maximize the discounts available and/or achieve the lowest prices available under such
Shared Contracts for both Sara Lee and HBI.

          (ii) To the extent that HBI or any of its Subsidiaries receives goods or services under
any Sara Lee purchasing agreement (other than the Shared Contracts) after the Separation
Date, then HBI shall reimburse Sara Lee for the cost of such goods and services on a prompt
basis (or, at Sara Lee’s request, make direct payments to the vendor).

29

 

     Section 5.12 Non-Solicitation Of Employees Sara Lee and HBI each agree, and each
shall cause its Subsidiaries and any employment agencies acting on their behalf, not to solicit,
recruit or hire, after the Distribution Date, without the other party’s express written consent,
the other party’s employees who are employed by such party immediately after the Distribution Date
for a period of one year following the Distribution Date. Either party hereto may seek a waiver of
this Section 5.12 by submitting a request to the Executive Vice President of Human
Resources (or similar officer) of the other party. Notwithstanding the foregoing, this prohibition
on solicitation, recruitment and hiring does not apply to actions taken by a party solely as a
result of an employee’s affirmative response to a general recruitment effort carried out through a
public solicitation or general solicitation.

     Section 5.13 Stockholder Actions. On or prior to the Distribution Date, Sara Lee and
HBI in their respective capacities as direct and indirect stockholders, managing members or
managing partners of their respective Subsidiaries, each shall take and ratify any actions that are
reasonably necessary or desirable to effectuate the transactions contemplated by this Agreement,
including all such actions necessary or desirable to approve HBI’s stock-based employee benefit
plans in order to satisfy the requirements of Rule 16b-3 under the Exchange Act and the applicable
rules and regulations of the NYSE.

     Section 5.14 CTHL Employees. As soon as reasonably practicable, and where applicable,
Sara Lee will initiate and complete a redundancy consultation process with respect to those
employees of Courtaulds Textile Holdings Limited listed on Schedule 5.14 (the “CTHL
Employees”), who provide research and design services to HBI. HBI will be liable to Sara Lee
for and will pay all continuing operating costs associated with the U.K. Embody operations and the
employment of the CTHL Employees prior to the redundancy determination, and all severance costs for
the CTHL Employees, including any redundancy pay and notice pay determined by Sara Lee to be due to
such employees as a result of the termination of their employment. Sara Lee will remain liable for
any pension benefits, including any pension enhancement payments, owing to these individuals under
any pension plan maintained by Sara Lee for which these employees are eligible, including the Sara
Lee UK Pension Plan.

ARTICLE VI

MISCELLANEOUS

     Section 6.1 Entire Agreement; Incorporation Of Schedules And Exhibits. This Agreement
(including all Schedules and Exhibits referred to herein) and the Ancillary Agreements constitute
the entire agreement among the parties with respect to the subject matter hereof and thereof and
supersede all prior agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof and thereof. All Schedules and Exhibits referred to herein
are hereby incorporated in and made a part of this Agreement as if set forth in full herein.

     Section 6.2 Amendment and Waiver. This Agreement may be amended and any provision of
this Agreement may be waived, provided that any such amendment or waiver shall be binding upon a
party only if such amendment or waiver is set forth in a writing executed by such party. No course
of dealing between or among any Persons having any interest in this

30

 

Agreement shall be deemed effective to modify, amend or discharge any part of this Agreement
or any rights or obligations of any party hereto under or by reason of this Agreement.

     Section 6.3 No Implied Waivers; Cumulative Remedies; Writing Required. No delay or
failure in exercising any right, power or remedy hereunder shall affect or operate as a waiver
thereof; nor shall any single or partial exercise thereof or any abandonment or discontinuance of
steps to enforce such a right, power or remedy preclude any further exercise thereof or of any
other right, power or remedy. The rights and remedies hereunder are cumulative and not exclusive
of any rights or remedies that any party hereto would otherwise have. Any waiver, permit, consent
or approval of any kind or character of any breach or default under this Agreement or any such
waiver of any provision of this Agreement must satisfy the conditions set forth in Section
6.2 and shall be effective only to the extent in such writing specifically set forth.

     Section 6.4 Parties In Interest. Nothing in this Agreement, express or implied, is
intended to confer on any Person other than the parties, their respective Groups and their
respective successors and permitted assigns, any rights or remedies of any nature whatsoever under
or by virtue of this Agreement.

     Section 6.5 Assignment; Binding Agreement. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written consent of the other
parties, and any instrument purporting to make such an assignment without prior written consent
shall be void; provided, however, either party may assign this Agreement to a successor entity in
conjunction with a merger effected solely for the purpose of changing such party’s state of
incorporation (but subject to any applicable requirements of the Tax Sharing Agreement). Subject
to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and permitted assigns.

     Section 6.6 Limitation On Damages. Each party irrevocably waives, and no party shall
be entitled to seek or receive, consequential, special, indirect or incidental damages (including
without limitation damages for loss of profits) or punitive damages, regardless of how such damages
were caused and regardless of the theory of liability; provided that the foregoing shall not limit
each party’s indemnification obligations set forth in the Ancillary Agreements.

     Section 6.7 Notices. All notices, demands and other communications given under this
Agreement must be in writing and must be either personally delivered, telecopied (and confirmed by
telecopy answer back), mailed by first class mail (postage prepaid and return receipt requested),
or sent by reputable overnight courier service (charges prepaid) to the recipient at the address or
telecopy number indicated below or such other address or telecopy number or to the attention of
such other Person as the recipient party shall have specified by prior written notice to the
sending party. Any notice, demand or other communication under this Agreement shall be deemed to
have been given when so personally delivered or so telecopied and confirmed (if telecopied before
5:00 p.m. Eastern Time on a business day, and otherwise on the next business day), or if sent, one
business day after deposit with an overnight courier, or, if mailed, five business days after
deposit in the U.S. mail.

     Sara Lee Corporation

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Three First National Plaza

Chicago, Illinois 60602-4260

Attention: General Counsel

Facsimile Number: (312) 419-3187

Hanesbrands Inc.

1000 East Hanes Mill Road

Winston-Salem, North Carolina 27105

Attention: General Counsel

Facsimile Number: (336) 714-7441

     Section 6.8 Severability. The parties agree that (a) the provisions of this Agreement
shall be severable in the event that for any reason whatsoever any of the provisions hereof are
invalid, void or otherwise unenforceable, (b) any such invalid, void or otherwise unenforceable
provisions shall be replaced by other provisions which are as similar as possible in terms to such
invalid, void or otherwise unenforceable provisions but are valid and enforceable, and (c) the
remaining provisions shall remain valid and enforceable to the fullest extent permitted by
applicable law.

     Section 6.9 Governing Law. All questions concerning the construction, validity and
interpretation of this Agreement shall be governed by and construed in accordance with the domestic
laws of the State of Illinois, without giving effect to any choice of law or conflict of law
provision (whether of the State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Illinois.

     Section 6.10 Submission To Jurisdiction. SUBJECT TO SECTION 6.13, EACH OF THE
PARTIES IRREVOCABLY SUBMITS (FOR ITSELF AND IN RESPECT OF ITS PROPERTY) TO THE JURISDICTION OF ANY
STATE OR FEDERAL COURT SITTING IN CHICAGO, ILLINOIS, FORSYTH COUNTY, NORTH CAROLINA, OR GUILDFORD
COUNTY, NORTH CAROLINA, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
AND AGREES THAT ALL CLAIMS IN RESPECT OF THE ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
ANY SUCH COURT; PROVIDED THAT THE PARTIES MAY BRING ACTIONS OR PROCEEDINGS AGAINST EACH OTHER IN
OTHER JURISDICTIONS TO THE EXTENT NECESSARY TO IMPLEAD THE OTHER PARTY IN ANY ACTION COMMENCED BY A
THIRD PARTY THAT IS RELATED TO THIS AGREEMENT. EACH PARTY ALSO AGREES NOT TO BRING ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY OTHER COURT OR IN OTHER
JURISDICTIONS UNLESS SUCH ACTIONS OR PROCEEDINGS ARE NECESSARY TO IMPLEAD THE OTHER PARTY IN ANY
ACTION COMMENCED BY A THIRD PARTY THAT IS RELATED TO THIS AGREEMENT. EACH OF THE PARTIES WAIVES
ANY DEFENSE OF INCONVENIENT FORUM TO THE MAINTENANCE OF ANY ACTION OR PROCEEDING SO BROUGHT AND
WAIVES ANY BOND, SURETY, OR OTHER SECURITY THAT MIGHT BE REQUIRED OF ANY OTHER PARTY WITH RESPECT
THERETO. ANY PARTY MAY MAKE SERVICE ON ANY OTHER PARTY BY SENDING OR DELIVERING A COPY OF THE
PROCESS TO THE PARTY TO BE SERVED AT THE ADDRESS AND IN THE MANNER PROVIDED FOR THE GIVING OF
NOTICES IN

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SECTION 6.7 ABOVE. NOTHING IN THIS SECTION 6.10, HOWEVER, SHALL AFFECT THE
RIGHT OF ANY PARTY TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AT EQUITY. EACH
PARTY AGREES THAT A FINAL NONAPPEALABLE JUDGMENT IN ANY ACTION OR PROCEEDING SO BROUGHT SHALL BE
CONCLUSIVE AND MAY BE ENFORCED BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW OR AT
EQUITY.

     Section 6.11 Waiver Of Jury Trial. AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR
EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT
WITH COUNSEL), EACH PARTY EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING
RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

     Section 6.12 Amicable Resolution.

          (a) The parties desire that friendly collaboration will develop between them. Accordingly,
they will try to resolve in an amicable manner all disputes and disagreements connected with their
respective rights and obligations under this Agreement or any of the Ancillary Agreements. In
furtherance thereof, in the event of any dispute or disagreement among the parties as to the
interpretation of any provision of this Agreement or any of the Ancillary Agreements or the
performance of obligations hereunder or thereunder, the matter, upon written request of any party,
shall be referred for resolution to a steering committee established pursuant to this Section
6.12(a) (the “Steering Committee”).

          (b) The Steering Committee shall have two members, one of whom shall be appointed by Sara Lee
and one of whom shall be appointed by HBI. Sara Lee’s initial member of the Steering Committee
shall be Roderick A. Palmore and HBI’s initial member of the Steering Committee shall be Richard A.
Noll. Each of Sara Lee and HBI shall use its reasonable best efforts to avoid replacing its
initial member of the Steering Committee with another representative for the first year after the
Distribution Date; provided, however, that HBI may replace its initial member of the Steering
Committee with any general counsel hired by HBI. Thereafter, Sara Lee and HBI shall consider in
good faith any reasonable objection to any individual being considered as a replacement for a
Steering Committee member. While any individual is serving as a member of the Steering Committee,
such individual shall not have the right to designate any substitute or proxy for purposes of
attending or voting at a Steering Committee meeting. Any replacement for a Steering Committee
member shall be an officer of the appointing party with authority to negotiate and resolve
disputes.

          (c) The Steering Committee shall use reasonable effort to promptly resolve all disputes or
disagreements referred to it. All discussions and negotiations conducted by, and all information
and materials shared by, the members of the Steering Committee (and Sara Lee and HBI) shall be
confidential and shall be treated as compromise and settlement negotiations for purposes of
applicable rules of evidence. Upon a unanimous vote, Steering Committee decisions shall be final
and binding on the parties. If the Steering Committee does not agree to a resolution of the
dispute or disagreement within 30 calendar days after the referral of the matter to it, each

33

 

of the parties shall be free to exercise the remedies available to it under this Agreement,
subject to Sections 6.13 and 6.6.

          (d) The Steering Committee shall be self-regulating. Between the Distribution Date and the
first anniversary of the Distribution Date, the Steering Committee shall hold meetings every six
weeks on dates to be established at the organizational meeting of the Steering Committee, which
will be held as promptly as practicable after the Distribution Date. Such meeting dates may be
rescheduled by the Steering Committee if it becomes impracticable to hold such meeting. Between
the first and second anniversary of the Distribution Date, the Steering Committee shall hold
meetings on a quarterly (or more frequent) basis, on dates to be established by the Steering
Committee. After the second anniversary of the Distribution Date, the Steering Committee shall
hold meetings on such basis, if any, as it may determine.

     Section 6.13 Arbitration.

          (a) Except for suits seeking injunctive relief or specific performance, or in the event of any
impleader action arising from any proceeding commended by a third party that it is related to this
Agreement in the event of any dispute, controversy or claim arising under or in connection with
this Agreement or any of the Ancillary Agreements (including any dispute, controversy or claim
relating to the breach, termination or validity thereof), the parties agree to submit any such
dispute, controversy or claim to binding arbitration in conformance with the CPR Institute for
Dispute Resolution Rules for Non-Administered Arbitration (the “CPR Rules”) then in effect,
and further provided that the parties hereby agree that the location of any such arbitration shall
be either Chicago, Illinois or Forsyth County, North Carolina; provided, however, that this
Section 6.13 shall not apply to any dispute, controversy or claim arising under Article
IV of the Tax Sharing Agreement (including any dispute, controversy or claim relating to the
breach, termination or validity thereof). Such arbitration shall be conducted in as expedited a
manner as is then permitted by such rules.

          (b) Subject to Section 6.12, any party may demand that any dispute, controversy or
claim be submitted to binding arbitration at any time. The demand for arbitration shall be in
writing, shall be served on the other party(ies) in the manner prescribed herein for the giving of
notices, and shall set forth a short statement of the factual basis for the dispute, controversy or
claim, specifying the matter or matters to be arbitrated. The arbitration shall be conducted by a
sole, independent and impartial arbitrator selected from the CPR Panel, except that if the amount
in controversy exceeds $5 million, then either party may opt for an arbitration conducted by three
independent and impartial arbitrators selected under Sections 5.1 and 5.2 of the CPR Rules then in
effect. With regard to any dispute that is governed by the Tax Sharing Agreement, the amount in
controversy shall be calculated to include the taxes in dispute plus any potential penalties and/or
interest on that tax amount. In the case of any arbitration to be conducted by three arbitrators,
if any party fails to appoint the arbitrator to be appointed by such party within 30 days after
delivery of a demand for arbitration, then the CPR Institute for Dispute Resolution shall appoint
such arbitrator. The parties agree to select as the sole arbitrator or, if applicable, as the
three arbitrators, a person or persons with significant experience and expertise in the subject
matter under dispute. For example, in a dispute relating to matters covered by the Tax Sharing
Agreement, the sole arbitrator or, if applicable, each of the three arbitrators shall be a tax
professional from a national law or accounting firm who is experienced in the issues under

34

 

dispute. The arbitrator(s) shall conduct such evidentiary or other hearings as the
arbitrator(s) deem necessary or appropriate and thereafter shall make a determination as soon as
practicable.

          (c) Each party to such arbitration shall bear its own “Costs and Fees,” which are
defined as all reasonable pre-award expenses of the arbitration, including travel expenses,
out-of-pocket expenses (including, but not limited to, copying and telephone), witness fees, and
attorney’s fees and expenses. The fees and expenses of the arbitrators and all other costs and
expenses incurred in connection with the arbitration (the “Arbitration Expenses”) shall be
borne equally by the parties to such arbitration. Notwithstanding the foregoing, the arbitrator(s)
shall be empowered to require any one or more of the parties to the arbitration to bear all or any
portion of such Costs and Fees and/or the Arbitration Expenses in the event that the arbitrator(s)
determine such party has acted unreasonably or in bad faith.

          (d) Except as otherwise provided in Section 6.6, the arbitrator(s) shall have the
authority to award any remedy or relief that a federal or state court sitting in the State of
Illinois or the State of North Carolina could order or grant, including, without limitation, the
issuance of an injunction or specific performance of any obligation created under this Agreement or
any of the Ancillary Agreements, or the imposition of sanctions for abuse or frustration of the
arbitration process.

          (e) The decision and award of the arbitrators shall be in writing and copies thereof shall be
delivered to each party to the arbitration. The decision and award of the arbitrators shall be
binding on all parties to the arbitration. In rendering such decision and award, the arbitrators
shall not add to, subtract from or otherwise modify the provisions of this Agreement or the
Ancillary Agreements and shall make their determinations in accordance therewith. The arbitration
shall be governed by the Federal Arbitration Act, 9 U.S.C. ¶¶ 1-16 to the exclusion of any state
laws inconsistent therewith, and any party to the arbitration may have judgment upon the award
rendered by the arbitrators entered in any court having jurisdiction thereof. Each party agrees
that it will not file any suit, motion, petition or otherwise commence any legal action or
proceeding for any matter which is required to be submitted to arbitration as contemplated herein
except in connection with the enforcement of an award rendered by the arbitrators. Upon the entry
of an order dismissing or staying any action or proceeding filed contrary to the preceding
sentence, the party which filed such action or proceeding shall promptly pay to the other party the
reasonable attorney’s fees, costs and expenses incurred by such other party prior to the entry of
such order.

          (f) The statute of limitations of the State of Illinois or North Carolina, as appropriate,
applicable to the commencement of a lawsuit shall apply to the commencement of an arbitration
hereunder.

     Section 6.14 Waiver of Bulk-Sales Laws. Each of Sara Lee and HBI hereby waives
compliance by each member of their respective Group with the requirements and provisions of the
“bulk-sale” or “bulk-transfer” Laws of any jurisdiction that may otherwise be applicable with
respect to the transfer or sale of any or all of the Assets to any member of the Sara Lee Group or
HBI Group, as applicable.

35

 

     Section 6.15 Construction. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be a substantive part of or to affect the
meaning or interpretation of this Agreement. Whenever required by the context, any pronoun used in
this Agreement shall include the corresponding masculine, feminine or neuter forms, and the
singular forms of nouns, pronouns, and verbs shall include the plural and vice versa. Reference to
any agreement, document, or instrument means such agreement, document, or instrument as amended or
otherwise modified from time to time in accordance with the terms thereof, and if applicable
hereof. The use of the words “include” or “including” in this Agreement shall be by way of example
rather than by limitation. The use of the words “or,” “either” or “any” shall not be exclusive.
The parties have participated jointly in the negotiation and drafting of this Agreement and the
Ancillary Agreements, and the Parties acknowledge that (i) HBI has been represented by Covington &
Burling LLP in connection with this Agreement and the Ancillary Agreements and (ii) Sara Lee has
been represented by Kirkland & Ellis LLP in connection with this Agreement and the Ancillary
Agreements (and Kirkland & Ellis LLP has not acted as counsel to HBI in connection therewith). In
the event an ambiguity or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement. The parties agree that prior drafts of this Agreement shall be deemed not to
provide any evidence as to the meaning of any provision hereof or the intent of the parties hereto
with respect hereto.

     Section 6.16 Counterparts. This Agreement may be executed in multiple counterparts
(any one of which need not contain the signatures of more than one party), each of which shall be
deemed to be an original but all of which taken together shall constitute one and the same
agreement.

     Section 6.17 Delivery By Facsimile Or Other Electronic Means. This Agreement, and any
amendments hereto, to the extent signed and delivered by means of a facsimile machine or other
electronic transmission, shall be treated in all manner and respects as an original contract and
shall be considered to have the same binding legal effects as if it were the original signed
version thereof delivered in person. At the request of any party, each other party shall
re-execute original forms thereof and deliver them to all other parties. No party shall raise the
use of a facsimile machine or other electronic means to deliver a signature or the fact that any
signature was transmitted or communicated through the use of facsimile machine or other electronic
means as a defense to the formation of a contract and each such party forever waives any such
defense.

ARTICLE VII

DEFINITIONS

     For purposes of this Agreement, the following terms shall have the following meanings:

     “Action” means any demand, action, suit, counter suit, arbitration, inquiry,
proceeding or investigation by or before any Federal, state, local, foreign or international
Governmental Authority or any arbitration or mediation tribunal.

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     “Affiliated Company” of any Person means any entity that controls, is controlled by,
or is under common control with such Person. As used herein, “control” means the possession,
directly or indirectly, of the power to direct or cause the direction of the management and
policies of such entity, whether through ownership of voting securities or other interests, by
contract or otherwise.

     “Agreement” shall have the meaning set forth in the preamble of this Agreement.

     “Agent” means the distribution agent to be appointed by Sara Lee to distribute to the
stockholders of Sara Lee pursuant to the Distribution all of the shares of HBI Common Stock.

     “Ancillary Agreements” shall have the meaning set forth in Section 2.1 of this
Agreement.

     “Arbitration Expenses” has the meaning set forth in Section 6.13(c) of this
Agreement.

     “Assets” means assets, properties and rights (including goodwill), wherever located
(including in the possession of vendors or other third parties or elsewhere), whether real,
personal or mixed, tangible, intangible or contingent, in each case whether or not recorded or
reflected or required to be recorded or reflected on the books and records or financial statements
of any Person, including the following: (i) all accounting and other books, records and files
whether in paper, microfilm, microfiche, computer tape or disc, magnetic tape or any other form;
(ii) all computers and other electronic data processing equipment, fixtures, machinery, equipment,
furniture, office equipment, motor vehicles and other transportation equipment, special and general
tools, prototypes and models and other tangible personal property; (iii) all inventories of
materials, parts, raw materials, supplies, work-in-process and finished goods and products; (iv)
all interests in real property of whatever nature, including easements, whether as owner or holder
of a Security Interest, lessor, sublessor, lessee, sublessee or otherwise; (v) all interests in any
capital stock or other equity interests of any Subsidiary or any other Person; all bonds, notes,
debentures or other securities issued by any Subsidiary or any other Person; all loans, advances or
other extensions of credit or capital contributions to any Subsidiary or any other Person; and all
other investments in securities of any Person; (vi) all license agreements, leases of personal
property, open purchase orders for raw materials, supplies, parts or services, unfilled orders for
the manufacture and sale of products and other contracts, agreements or commitments; (vii) all
deposits, letters of credit and performance and surety bonds; (viii) all written technical
information, data, specifications, research and development information, engineering drawings,
operating and maintenance manuals, and materials and analyses prepared by consultants and other
third parties; (ix) all Intellectual Property and licenses from third Persons granting the right to
use any Intellectual Property; (x) all computer applications, programs and other software,
including operating software, network software, firmware, middleware, design software, design
tools, systems documentation and instructions; (xi) all cost information, sales and pricing data,
customer prospect lists, supplier records, customer and supplier lists, customer and vendor data,
correspondence and lists, product literature, artwork, design, development and manufacturing files,
vendor and customer drawings, formulations and specifications, quality records and reports and
other books, records, studies, surveys, reports, plans and documents; (xii) all prepaid expenses,
trade accounts and other accounts and notes receivables; (xiii) all rights under contracts or
agreements, all claims or rights against any Person

37

 

arising from the ownership of any Asset, all rights in connection with any bids or offers and
all claims, choses in action or similar rights, whether accrued or contingent; (xiv) all rights
under insurance policies and all rights in the nature of insurance, indemnification or
contribution; (xv) all licenses (including radio and similar licenses), permits, approvals and
authorizations which have been issued by any Governmental Authority; (xvi) cash or cash
equivalents, bank accounts, lock boxes and other deposit arrangements; and (xvii) interest rate,
currency, commodity or other swap, collar, cap or other hedging or similar agreements or
arrangements.

     “Branded Apparel Business” shall have the meaning set forth in the preamble of this
Agreement.

     “Branded Apparel Information” shall have the meaning set forth in Section
5.4(a) of this Agreement.

     “Business Guarantees” shall have the meaning set forth in Section 4.10(c) of
this Agreement.

     “Code” means the Internal Revenue Code of 1986 (or any successor statute), as amended
from time to time, and the regulations promulgated thereunder.

     “Commission” shall have the meaning set forth in Section 3.1(a) of this
Agreement.

     “Confidential Business Information” shall have the meaning set forth in Section
5.3(a)(iii) of this Agreement.

     “Confidential Information” shall have the meaning set forth in Section
5.3(a)(i) of this Agreement.

     “Confidential Operational Information” shall have the meaning set forth in Section
5.3(a)(ii) of this Agreement.

     “Consents” means any consents, waivers or approvals from, or notification requirements
to, any third parties.

     “Contracts” means any contract, agreement, lease, license, sales order, purchase
order, instrument or other commitment, whether written or oral, that is binding on any Person or
any part of its property under applicable law.

     “Costs and Fees” has the meaning set forth in Section 6.13(c) of this
Agreement.

     “CPR Rules” has the meaning set forth in Section 6.13(a) of this Agreement.

     “Delayed Transfer Assets” means any HBI Assets that are identified in Schedule
4.1(c) of this Agreement or in any Ancillary Agreement as to be transferred after the
Separation Date.

     “Delayed Transfer Liabilities” means any HBI Liabilities that are identified in
Schedule 4.1(c) of this Agreement or in any Ancillary Agreement as to be transferred after
the Separation Date.

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     “Distribution” shall have the meaning set forth in the preamble of this Agreement.

     “Distribution Date” shall have the meaning set forth in Section 3.2 of this
Agreement.

     “Distribution Ratio” shall have the meaning set forth in Section 3.3(c) of
this Agreement.

     “Effective Time” has the meaning set forth in Section 3.3(c) of this
Agreement.

     “Employee Matters Agreement” has the meaning set forth in Section 2.1(a) of
this Agreement. From and after the Separation Date, the Employee Matters Agreement shall refer to
the agreement executed and delivered pursuant to such section, as amended and/or modified from time
to time in accordance with its terms.

     “Excess Cash Amount” has the meaning set forth in Section 4.5(b)(iv) of this
Agreement.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, together with
the rules and regulations promulgated thereunder.

     “Excluded Assets” has the meaning set forth in Section 4.2(b) of this
Agreement.

     “Excluded Liabilities” has the meaning set forth in Section 4.3(b) of this
Agreement.

     “Financing Agreements” means the credit facilities on terms substantially similar to
those contemplated by the commitment letter dated July 24, 2006 with Merrill Lynch Capital
Corporation and Morgan Stanley Senior Funding, Inc.

     “Governmental Approvals” means any notices, reports or other filings to be made, or
any consents, registrations, approvals, permits or authorizations to be obtained from, any
Governmental Authority.

     “Governmental Authority” shall mean any federal, state, local, foreign or
international court, government, department, commission, board, bureau, agency, official or other
regulatory, administrative or governmental authority.

     “Group” means the Sara Lee Group or the HBI Group, as the context requires.

     “HBI” shall have the meaning set forth in the preamble of this Agreement.

     “HBI Action” shall have the meaning set forth in Section 5.9(a) of this
Agreement.

     “HBI Assets” has the meaning set forth in Section 4.2(a) of this Agreement.

     “HBI Balance Sheet” means the unaudited balance sheet (including the notes thereto) of
the Branded Apparel Business as of April 1, 2006 that is included in the Registration Statement.

     “HBI Common Stock” shall have the meaning set forth in the preamble of this Agreement.

39

 

     “HBI Contingent Gain” means any claim or other right of a member of the Sara Lee Group
or the HBI Group that substantially or exclusively relates to the Branded Apparel Business,
whenever arising, against any Person other than a member of the Sara Lee Group or the HBI Group, if
and to the extent that (i) such claim or right arises out of the events, acts or omissions
occurring as of or before the Separation Date (based on then existing law) and (ii) the existence
or scope of the obligation of such other Person as of the Separation Date was not acknowledged,
fixed or determined in any material respect, due to a dispute or other uncertainty as of the
Separation Date or as a result of the failure of such claim or other right to have been discovered
or asserted as of the Separation Date. A claim or right meeting the foregoing definition shall be
considered an HBI Contingent Gain regardless of whether there was any Action pending, threatened or
contemplated as of the Separation Date with respect thereto. In the case of any claim or right a
portion of which arises out of events, acts or omissions occurring prior to the Separation Date and
a portion of which arises out of events, acts or omissions occurring on or after the Separation
Date, only that portion that arises out of events, acts or omissions occurring prior to the
Separation Date shall be considered an HBI Contingent Gain. For purposes of the foregoing, a claim
or right shall be deemed to have accrued as of the Separation Date if all the elements of the claim
necessary for its assertion shall have occurred on or prior to the Separation Date, such that the
claim or right, were it asserted in an Action on or prior to the Separation Date, would not be
dismissed by a court on ripeness or similar grounds. Notwithstanding the foregoing, none of (i)
any Insurance Proceeds (which term is defined in, and the treatment of which is governed by, the
Indemnification and Insurance Matters Agreement), (ii) any Excluded Assets, (iii) any reversal of
any litigation or other reserve, except to the extent that such reversal or reserve directly
relates to HBI Liabilities, or (iv) any matters relating to Taxes (which are governed solely by the
Tax Sharing Agreement) shall be deemed to be an HBI Contingent Gain.

     “HBI Contingent Liability” means any Liability, other than Liabilities for Taxes
(which are governed solely by the Tax Sharing Agreement), of a member of the Sara Lee Group or the
HBI Group that substantially or exclusively relates to the Branded Apparel Business, whenever
arising, to any Person other than a member of the Sara Lee Group or the HBI Group, if and to the
extent that (i) such Liability arises out of the events, acts or omissions occurring as of or
before the Separation Date and (ii) the existence or scope of the obligation of a member of the
Sara Lee Group or the HBI Group as of the Separation Date with respect to such Liability was not
acknowledged, fixed or determined in any material respect, due to a dispute or other uncertainty as
of the Separation Date or as a result of the failure of such Liability to have been discovered or
asserted as of the Separation Date (it being understood that the existence of a litigation or other
reserve with respect to any Liability shall not be sufficient for such Liability to be considered
acknowledged, fixed or determined). In the case of any Liability a portion of which arises out of
events, acts or omissions occurring prior to the Separation Date and a portion of which arises out
of events, acts or omissions occurring on or after the Separation Date, only that portion that
arises out of events, acts or omissions occurring prior to the Separation Date shall be considered
an HBI Contingent Liability. For purposes of the foregoing, a Liability shall be deemed to have
arisen out of events, acts or omissions occurring prior to the Separation Date if all the elements
necessary for the assertion of a claim with respect to such Liability shall have occurred on or
prior to the Separation Date, such that the claim, were it asserted in an Action on or prior to the
Separation Date, would not be dismissed by a court on ripeness or similar grounds. For purposes
of clarification of the foregoing, the parties agree that no Liability relating to, arising

40

 

out of or resulting from any obligation of any Person to perform the executory portion of any
contract or agreement existing as of the Separation Date, or to satisfy any obligation accrued
under any Plan (as defined in the Employee Matters Agreement) as of the Separation Date, shall be
deemed to be an HBI Contingent Liability.

     “HBI Contracts” means the following Contracts to which Sara Lee or any member of the
Sara Lee Group is a party or by which it or any of its Assets is bound, whether or not in writing,
except for any such Contract that is explicitly retained by Sara Lee or any member of the Sara Lee
Group pursuant to any provision of this Agreement or any Ancillary Agreement: (i) any contract or
agreement entered into in the name of, or expressly on behalf of, the Branded Apparel Business;
(ii) any contract or agreement that relates substantially or exclusively to the Branded Apparel
Business; (iii) any contract or agreement that is otherwise expressly contemplated pursuant to this
Agreement or any of the Ancillary Agreements to be assigned to HBI; (iv) any guarantee, indemnity,
representation, warranty or other Liability of any member of the HBI Group or the Sara Lee Group in
respect of any other HBI Contract, any HBI Liability or the Branded Apparel Business (including
guarantees of financing incurred by customers or other third parties in connection with purchases
of products or services from the Branded Apparel Business); (v) any Other Financial Liability
exclusively for or on behalf of the Branded Apparel Business (excluding any Excluded Liability),
together with all rights relating thereto; and (vi) any other Contract identified on Schedule
7.

     “HBI Entities” has the meaning set forth in Section 4.2(a)(vii) of this
Agreement.

     “HBI Entity Interests” has the meaning set forth in Section 4.2(a)(vii) of
this Agreement.

     “HBI Group” means the affiliated group (within the meaning of Section 1504(a) of the
Code), or similar group of entities as defined under corresponding provisions of the laws of other
jurisdictions, of which HBI will be the common parent corporation immediately after the Separation,
and any corporation or other entity which may become a member of such group from time to time, but
excluding any member of the Sara Lee Group.

     “HBI Liabilities” has the meaning set forth in Section 4.3(a) of this
Agreement.

     “Indemnification and Insurance Matters Agreement” has the meaning set forth in
Section 2.1(e) of this Agreement. From and after the Separation Date, the Indemnification
and Insurance Matters Agreement shall refer to the agreement executed and delivered pursuant to
such section, as amended and/or modified from time to time in accordance with its terms.

     “Information” means information, whether or not patentable or copyrightable, in
written, oral, electronic or other tangible or intangible forms, stored in any medium, including
studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts,
know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes,
samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other
software, marketing plans, customer names, communications by or to attorneys (including
attorney-client privileged communications), memos and other materials prepared by attorneys or
under their direction (including attorney work product), and other technical, financial, employee
or business information or data, but in any case excluding back-up tapes.

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     “Information Statement” means the information statement forming a part of the
Registration Statement.

     “Insurance Policies” means insurance policies pursuant to which a Person makes a true
risk transfer to an insurer.

     “Intellectual Property” means all domestic and foreign patents and patent
applications, together with any continuations, continuations-in-part or divisional applications
thereof, and all patents issuing thereon (including reissues, renewals and re-examinations of the
foregoing); design patents, invention disclosures; mask works; copyrights, and copyright
applications and registrations; Web addresses, trademarks, service marks, trade names, and trade
dress, in each case together with any applications and registrations therefor and all appurtenant
goodwill relating thereto; trade secrets, commercial and technical information, know-how,
proprietary or confidential information, including engineering, production and other designs,
notebooks, processes, drawings, specifications, formulae, and technology; computer and electronic
data processing programs and software (object and source code), data bases and documentation
thereof; inventions (whether patented or not); utility models; registered designs, certificates of
invention and all other intellectual property under the laws of any country throughout the world.

     “Intellectual Property Matters Agreement” has the meaning set forth in Section
2.1(f) of this Agreement. From and after the Separation Date, the Intellectual Property
Matters Agreement shall refer to the agreement executed and delivered pursuant to such section, as
amended and/or modified from time to time in accordance with its terms.

     “IP Subsidiaries” shall mean HBI Branded Apparel Limited, Inc. and HBI Branded Apparel
Enterprises LLC, each of which holds Intellectual Property used exclusively in the Branded Apparel
Business (and the stock of each of which is being contributed to HBI under Section 4.2(a)(vii)).

     “JP Morgan” shall have the meaning set forth in Section 4.5(b)(i) of this
Agreement.

     “Lawson Information” shall have the meaning set forth in Section 5.2(b) of
this Agreement.

     “Liabilities” means all debts, liabilities, guarantees, assurances, commitments and
obligations, whether fixed, contingent or absolute, asserted or unasserted, matured or unmatured,
liquidated or unliquidated, accrued or not accrued, known or unknown, due or to become due,
whenever or however arising (including, without limitation, whether arising out of any Contract or
tort based on negligence or strict liability) and whether or not the same would be required by
generally accepted principles and accounting policies to be reflected in financial statements or
disclosed in the notes thereto.

     “Leased Vehicles” has the meaning set forth in Section 4.6(d) of this
Agreement.

     “Master Transition Services Agreement” has the meaning set forth in Section
2.1(c) of this Agreement. From and after the Separation Date, the Master Transition Services
Agreement shall refer to the agreement executed and delivered pursuant to such section, as amended
and/or modified from time to time in accordance with its terms.

42

 

     “NYSE” shall have the meaning set forth in Section 3.1(c) of this Agreement.

     “Other Financial Liabilities” means all liabilities, obligations, contingencies,
instruments and other Liabilities of any member of the Sara Lee Group of a financial nature with
third parties existing on the date hereof or entered into or established between the date hereof
and the Separation Date, including any of the following: (i) foreign exchange contracts, (ii)
letters of credit, (iii) guarantees of third party loans to customers, (iv) surety bonds (excluding
surety for workers’ compensation self-insurance), (v) interest support agreements on third party
loans to customers, (vi) performance bonds or guarantees issued by third parties, (vii) swaps or
other derivatives contracts, and (viii) recourse arrangements on the sale of receivables or notes.

     “Period 2 Financial Statements” shall have the meaning set forth in Section
4.5(b)(ii) of this Agreement.

     “Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an unincorporated
organization or a Governmental Authority.

     “PHH Agreements” means the Operating Lease (Lease No. 122), dated June 25, 1998,
between PHH-CFC Leasing, Inc., Sara Lee and certain other parties identified therein, and the
Management Agreement, dated June 30, 1991, between PHH-CFC Leasing, Inc. and PHH Fleet America
Corporation.

     “Privileged Information” shall have the meaning set forth in Section 5.4(a) of
this Agreement.

     “Privileges” shall have the meaning set forth in Section 5.4(a) of this
Agreement.

     “Pro Forma Cash Amount” shall have the meaning set forth in Section
4.2(a)(viii) of this Agreement.

     “Real Estate Matters Agreement” has the meaning set forth in Section 2.1(d) of
this Agreement. From and after the Separation Date, the Real Estate Matters Agreement shall refer
to the agreement executed and delivered pursuant to such section, as amended and/or modified from
time to time in accordance with its terms.

     “Record Date” means the close of business on the date to be determined by Sara Lee’s
Board of Directors in its sole and absolute discretion as the record date for determining
stockholders of Sara Lee entitled to receive shares of HBI Common Stock in the Distribution.

     “Record Holders” mean the holders of record of Sara Lee Common Stock as of the close
of business on the Record Date.

     “Registration Statement” shall have the meaning set forth in the preamble of this
Agreement.

     “Reserve Amount” shall have the meaning set forth in Section 4.5(b)(i) of this
Agreement.

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     “Sara Lee” shall have the meaning set forth in the preamble of this Agreement.

     “Sara Lee Action” shall have the meaning set forth in Section 5.9 of this
Agreement.

     “Sara Lee Business” means all businesses and operations (whether or not such
businesses or operations are or have been terminated, divested or discontinued) conducted prior to
the Effective Time by Sara Lee, the Sara Lee Subsidiaries, HBI and the HBI Subsidiaries, in each
case that are not included in the Branded Apparel Business.

     “Sara Lee Common Stock” shall have the meaning set forth in the preamble of this
Agreement.

     “Sara Lee Group” means the affiliated group (within the meaning of Section 1504(a) of
the Code), or similar group of entities as defined under corresponding provisions of the laws of
other jurisdictions, of which Sara Lee is the common parent corporation, and any corporation or
other entity which may be, may have been or may become a member of such group from time to time,
but excluding any member of the HBI Group.

     “Security Interest” means any mortgage, security interest, pledge, lien, charge,
claim, option, right to acquire, voting or other restriction, right-of-way, covenant, condition,
easement, encroachment, restriction on transfer, or other encumbrance of any nature whatsoever.

     “Separation” shall have the meaning set forth in the preamble of this Agreement.

     “Separation Date” shall have the meaning set forth in Section 1.1 of this
Agreement.

     “Shared Contract” means Contracts with third parties which directly benefit both Sara
Lee or a member of the Sara Lee Group or HBI or a member of the HBI Group.

     “Shared Contractual Liabilities” means Liabilities with respect to Shared Contracts.

     “Shortfall Cash Amount” has the meaning set forth in Section 4.5(b)(v) of this
Agreement.

     “Steering Committee” has the meaning set forth in Section 6.12(a) of this
Agreement.

     “Sublease” has the meaning set forth in Section 4.6(d) of this Agreement.

     “Subsidiary” of any Person means a corporation or other organization whether
incorporated or unincorporated of which at least a majority of the securities or interests having
by the terms thereof ordinary voting power to elect at least a majority of the Board of Directors
or others performing similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such Person or by any one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries; provided, however, that no
Person that is not directly or indirectly wholly-owned by any other Person shall be a Subsidiary of
such other Person unless such other Person controls, or has the right, power or ability to control,
that Person.

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     “Substitute Guarantees” shall have the meaning set forth in Section 4.10(c) of
this Agreement.

     “Tax Sharing Agreement” has the meaning set forth in Section 2.1(b) of this
Agreement. From and after the Separation Date, the Tax Sharing Agreement shall refer to the
agreement executed and delivered pursuant to such section, as amended and/or modified from time to
time in accordance with its terms.

[SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, each of the parties has caused this Master Separation Agreement to be
executed on its behalf by its officers hereunto duly authorized on the day and year first above
written.

	 	 	 	 	 
	 	 	SARA LEE CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Diana S. Ferguson
	 

	 	 	 	 
	 

	 	 	 	Diana S. Ferguson

Senior Vice President
	 
	 	 	 	 
	 	 	HANESBRANDS INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Richard A. Noll
	 

	 	 	 	 
	 

	 	 	 	Richard A. Noll

Chief Executive Officer

 

 

EXHIBITS

	 	 	 
	Exhibit A

	 	Employee Matters Agreement
	 
	 	 
	Exhibit B

	 	Tax Sharing Agreement
	 
	 	 
	Exhibit C

	 	Master Transition Services Agreement
	 
	 	 
	Exhibit D

	 	Real Estate Matters Agreement
	 
	 	 
	Exhibit E

	 	Indemnification and Insurance Matters Agreement
	 
	 	 
	Exhibit F

	 	Intellectual Property Matters Agreement

 

 

EXHIBIT A

EMPLOYEE MATTERS AGREEMENT

 

 

EXHIBIT B

TAX SHARING AGREEMENT

 

 

EXHIBIT C

MASTER TRANSITION SERVICES AGREEMENT

 

 

EXHIBIT D

REAL ESTATE MATTERS AGREEMENT

 

 

EXHIBIT E

INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT

 

 

EXHIBIT F

INTELLECTUAL PROPERTY MATTERS AGREEMENT

 

 

SCHEDULE 4.1(c)

Delayed Transfer Assets and Liabilities

1. The purchase of assets and the assumption of liabilities in the Philippines, which will occur
following the Distribution Date pursuant to that certain Deed of Sale to be executed by Sara Lee
Philippines Inc. and Hanesbrands Philippines Inc. as soon as possible after approval from the
government of the Philippines has been obtained. HBI and Sara Lee agree that, when the applicable
governmental approvals have been obtained, Hanesbrands Philippines will pay to Sara Lee Philippines
127,000,000 Philippines Pesos (approximately $2.26 million) as consideration for such assets and
liabilities.

2. Transfer to HBI of all outstanding ownership interest of the following subsidiaries:

	 	•	 	HBI Sourcing Asia Limited
	 
	 	•	 	Sara Lee Apparel International (Shanghai) Co. Ltd. (to be renamed Hanesbrands
International (Shanghai) Co. Ltd.)
	 
	 	•	 	Sara Lee Apparel India Private Limited (to be renamed Hanesbrands India Private Limited)
	 
	 	•	 	SL Sourcing India Private Ltd. (to be renamed HBI Sourcing India Private Ltd.)

Transfer of the shares of each company to HBI are in process, but will not be completed prior to
the Distribution Date.

3. The purchase of assets and assumption of liabilities in Hong Kong relating to the Branded
Apparel Business, which are currently owned by SL Hong Kong Ltd. and are being sold to Hanesbrands
(HK), Limited for purchase consideration of $1.7 million.

4. The transfer to HBI Branded Apparel Enterprises, LLC of the 500 shares of Series A common stock
of Playtex Marketing Corporation that currently are owned by Sara Lee.

 

 

SCHEDULE 4.2(a)(vii)

HBI Entities

U.S. SUBSIDIARIES

	 	 	 
	Name of Subsidiary	 	Jurisdiction of Formation
	BA International, L.L.C.

	 	Delaware
	Caribesock, Inc.

	 	Delaware
	Caribetex, Inc.

	 	Delaware
	CASA International, LLC

	 	Delaware
	Ceibena Del, Inc.

	 	Delaware
	Hanes Menswear, LLC

	 	Delaware
	Hanes Puerto Rico, Inc.

	 	Delaware
	Hanesbrands Direct, LLC

	 	Colorado
	Hanesbrands Distribution, Inc.

	 	Delaware
	HBI Branded Apparel Limited, Inc.

	 	Delaware
	HBI Branded Apparel Enterprises, LLC

	 	Delaware
	HBI Playtex BATH LLC

	 	Delaware
	HbI International, LLC

	 	Delaware
	HBI Sourcing, LLC

	 	Delaware
	Inner Self LLC

	 	Delaware
	Jasper-Costa Rica, L.L.C.

	 	Delaware
	National Textiles, L.L.C.

	 	Delaware
	NT Investment Company, Inc.

	 	Delaware
	Playtex Dorado, LLC

	 	Delaware
	Playtex Industries, Inc.

	 	Delaware
	Playtex Marketing Corporation (50% owned)

	 	Delaware
	Seamless Textiles, LLC

	 	Delaware
	UPCR, Inc.

	 	Delaware
	UPEL, Inc.

	 	Delaware

NON-U.S. SUBSIDIARIES

	 	 	 
	Name of Subsidiary	 	Jurisdiction of Formation
	Allende Internacional S. de R.L. de C.V.

	 	Mexico
	Bali Dominicana, Inc.

	 	Panama/DR
	Bali Dominicana Textiles, S.A.

	 	Panama/DR
	Bal-Mex S. de R.L. de C.V.

	 	Mexico
	Canadelle LP

	 	Canada
	Canadelle Holdings Corporation Limited

	 	Canada
	Cartex Manufacturera S. A.

	 	Costa Rica
	Caysock, Inc.

	 	Cayman Islands

 

 

	 	 	 
	Caytex, Inc.

	 	Cayman Islands
	Caywear, Inc.

	 	Cayman Islands
	Ceiba Industrial, S. de R.L.

	 	Honduras
	Champion Products S. de R.L. de C.V.

	 	Mexico
	Choloma, Inc.

	 	Cayman Islands
	Confecciones Atlantida S. de R.L.

	 	Honduras
	Confecciones de Nueva Rosita S. de R.L. de C.V.

	 	Mexico
	Confecciones El Pedregal Inc.

	 	Cayman Islands
	Confecciones El Pedregal S.A. de C.V.

	 	El Salvador
	Confecciones del Valle, S. de R.L. de C.V.

	 	Honduras
	Confecciones Jiboa S.A. de C.V.

	 	El Salvador
	Confecciones La Caleta, Inc.

	 	Cayman Islands
	Confecciones La Herradura S.A. de C.V.

	 	El Salvador
	Confecciones La Libertad, S.A. de C.V.

	 	El Salvador
	DFK International Ltd.

	 	Hong Kong
	Dos Rios Enterprises, Inc.

	 	Cayman Islands
	Hanes Caribe, Inc.

	 	Cayman Islands
	Hanes Choloma, S. de R. L.

	 	Honduras
	Hanes Colombia, S.A.

	 	Colombia
	Hanes de Centro America S.A.

	 	Guatemala
	Hanes de El Salvador, S.A. de C.V.

	 	El Salvador
	Hanes de Honduras S. de R.L. de C.V.

	 	Honduras
	Hanes Dominican, Inc.

	 	Cayman Islands
	Hanesbrands Japan Inc.

	 	Japan
	Hanes Panama Ltd.

	 	Panama
	Hanes Brands Incorporated de Costa Rica, S.A.

	 	Costa Rica
	Hanesbrands Argentina S.A.

	 	Argentina
	Hanesbrands Brasil Textil Ltda.

	 	Brazil
	Hanesbrands Canada NSULC

	 	Canada
	Hanesbrands Dominicana, Inc.

	 	Cayman Islands
	Hanesbrands Europe GmbH

	 	Germany
	Hanesbrands Philippines Inc.

	 	Philippines
	Hanesbrands (HK) Limited

	 	Hong Kong
	Hanesbrands (Thailand) Ltd.

	 	Thailand
	HBI Alpha Holdings, Inc.

	 	Cayman Islands
	HBI Beta Holdings, Inc.

	 	Cayman Islands
	HBI Compania de Servicios, S.A. de C.V.

	 	El Salvador
	HBI Servicios Administrativos de Costa Rica, S.A.

	 	Costa Rica
	HBI Socks de Honduras, S. de R.L. de C.V.

	 	Honduras

 

 

	 	 	 
	HBI Sourcing Asia Limited

	 	Hong Kong
	Indumentaria Andina S.A.

	 	Argentina
	Industria Textileras del Este, S. de R.L.

	 	Costa Rica
	Industrias Internacionales de San Pedro S. de R.L. de C.V.

	 	Mexico
	J.E. Morgan de Honduras, S.A.

	 	Honduras
	Jasper Honduras, S.A.

	 	Honduras
	Jogbra Honduras, S.A.

	 	Honduras
	Madero Internacional S. de R.L. de C.V.

	 	Mexico
	Manufacturera Ceibena S. de R.L.

	 	Honduras
	Manufacturera Comalapa S.A. de C.V.

	 	El Salvador
	Manufacturera de Cartago, S.R.L.

	 	Costa Rica
	Manufacturera San Pedro Sula, S. de R.L.

	 	Honduras
	Monclova Internacional S. de R.L. de C.V.

	 	Mexico
	PT HBI Sourcing Indonesia

	 	Indonesia
	PTX (D.R.), Inc.

	 	Cayman Islands
	Rinplay S. de R.L. de C.V.

	 	Mexico
	Santiago Internacional Textil Limitada (in liquidation)

	 	Chile
	Sara Lee Apparel India Private Limited (to be renamed
Hanesbrands India Private Limited)

	 	India
	Sara Lee Apparel International (Shanghai) Co. Ltd. (to be
renamed Hanesbrands International (Shanghai) Co. Ltd.)

	 	China
	Sara Lee Knit Products Mexico S.A. de C.V. (to be renamed
Inmobilaria Rinplay S. de R.L. de C.V.)

	 	Mexico
	Sara Lee Moda Femenina, S.A. de C.V. (to be renamed
Servicios Rinplay, S. de R.L de C.V.)

	 	Mexico
	Servicios de Soporte Intimate Apparel, S de RL

	 	Costa Rica
	SL Sourcing India Private Ltd. (to be renamed HBI
Sourcing India Private Ltd.)

	 	India
	SN Fibers

	 	Israel
	Socks Dominicana S.A.

	 	Dominican Republic
	Texlee El Salvador, S.A. de C.V.

	 	El Salvador
	The Harwood Honduras Companies, S. de R.L.

	 	Honduras
	TOS Dominicana, Inc.

	 	Cayman Islands

 

 

SCHEDULE 4.2(a)(xiii)

GSI COMPANY PREFIXES

	 	 	 	 	 
	MFG-ID	 	Business Unit	 	UCC Account Name
	046029

	 	SLBA-SLA
	 	Sara Lee Activewear
	635424

	 	SLBA-SLA/SLU
	 	Shared
	015733

	 	SLBA-Champion
	 	Champion Products
	631308

	 	SLBA-Champion
	 	Champion Products
	631309

	 	SLBA-Champion
	 	Champion Products
	660408

	 	SLBA-Champion
	 	Champion Products
	719385

	 	SLBA-Champion
	 	Champion Products
	719386

	 	SLBA-Champion
	 	Champion Products
	720873

	 	SLBA-Champion
	 	Champion Products
	742466

	 	SLBA-Champion
	 	Champion Products
	756472

	 	SLBA-Champion
	 	Champion Products
	766369

	 	SLBA-Champion
	 	Printables
	781034

	 	SLBA-Champion
	 	Champion Products
	781036

	 	SLBA-Champion
	 	Champion Products
	781039

	 	SLBA-Champion
	 	Champion Products
	727271

	 	SLBA-Champion
	 	Champion Jogbra
	017326

	 	SLBA-SLI
	 	Playtex/Bali
	085447

	 	SLBA-SLI
	 	Playtex/Bali
	738994

	 	SLBA-SLI
	 	Playtex/Bali
	019585

	 	SLBA-SLI
	 	Playtex/Bali
	042714

	 	SLBA-SLI
	 	Playtex/Bali
	617914

	 	SLBA-SLI
	 	Playtex/Bali
	942714

	 	SLBA-SLI
	 	Playtex/Bali
	012036

	 	SLBA-SLH
	 	Sara Lee Hosiery/Hanes Hosiery/Legg’s
	074200

	 	SLBA-SLH
	 	Sara Lee Hosiery/Hanes Hosiery/Legg’s
	036541

	 	SLBA-SLH
	 	Sara Lee Hosiery/Hanes Hosiery/Legg’s
	077478

	 	SLBA-SLH
	 	Sara Lee Hosiery/Hanes Hosiery/Legg’s
	689425

	 	SLBA-SLH
	 	Sara Lee Hosiery/Hanes Hosiery/Legg’s
	043935

	 	SLBA-SLU Duofold
	 	JE Mogran Knitting Mills
	400001

	 	SLBA-SLU Duofold
	 	JE Mogran Knitting Mills (Private Label)
	400002

	 	SLBA-SLU Duofold
	 	JE Mogran Knitting Mills (Private Label)
	400003

	 	SLBA-SLU Duofold
	 	JE Mogran Knitting Mills (Private Label)
	400004

	 	SLBA-SLU Duofold
	 	JE Mogran Knitting Mills (Private Label)
	400078

	 	SLBA-SLU Duofold
	 	JE Mogran Knitting Mills (Private Label)
	400086

	 	SLBA-SLU Duofold
	 	JE Mogran Knitting Mills (Private Label)
	403829

	 	SLBA-SLU Harwood
	 	The Harwood Companies (Private Label)
	504648

	 	SLBA-SLU Harwood
	 	The Harwood Companies
	504658

	 	SLBA-SLU Harwood
	 	The Harwood Companies
	504675

	 	SLBA-SLU Harwood
	 	The Harwood Companies
	504681

	 	SLBA-SLU Harwood
	 	The Harwood Companies
	024106

	 	SLBA-SLU Host
	 	Host Apparel Inc.

 

 

	 	 	 	 	 
	MFG-ID	 	Business Unit	 	UCC Account Name
	091592

	 	SLBA-SLU Host Canada
	 	Host Apparel Inc.
	090563

	 	SLBA-SLU Host For Her
	 	Host Apparel Inc.
	628992

	 	SLBA-SLU Host For Her
	 	Host Apparel Inc.
	019718

	 	SLBA-SLU JE Mogran
	 	JE Mogran Knitting Mills (William Carter)
	490400

	 	SLBA-SLU JE Mogran
	 	JE Mogran Knitting Mills (Private Label)
	075338

	 	SLBA-SLU UW
	 	Sara Lee Activewear
	085447

	 	SLBA-SLU UW
	 	Sara Lee Activewear/Sara Lee Knit
	096619

	 	SLBA-SLU UW
	 	Sara Lee Activewear/Sara Lee Knit
	490360

	 	SLBA-SLU UW
	 	Sara Lee Activewear/Sara Lee Knit
	635424

	 	SLBA-SLU UW
	 	Sara Lee Activewear/Sara Lee Knit
	038257

	 	SLBA-SOCK
	 	Sara Lee Sock Company/Adams-Mills/Silver Knit
	078715

	 	SLBA-SOCK
	 	Sara Lee Sock Company
	721665

	 	SLBA-SOCK
	 	Sara Lee/Silver Knit Division
	723652

	 	SLBA-Outer Banks
	 	Outer Banks
	011919

	 	 	 	Sara Lee Bodywear
	768274

	 	 	 	Sara Lee Intimates De Mexico

 

 

SCHEDULE 4.2(b)

EXCLUDED ASSETS

1. Any deferred consideration or earn-out, amounts paid pursuant to the net debt/working capital
adjustment, loan repayment, deposit recovery or other payment to Sara Lee Corporation (or an
affiliate thereof) in connection with the disposition of the Sara Lee European Branded Apparel,
Courtaulds private label or Courtaulds International Fabrics businesses

2. Shares of Vatter GmbH

3. The $3,675,000 loan agreement between Courtaulds Textiles (Holdings) Limited and Dogi China

 

 

SCHEDULE 4.3(a)(vi)

CERTAIN HBI CONTRACTUAL LIABILITIES

The following shall be HBI Liabilities:

1. Obligation to comply with any and all non-compete, non-solicitation, confidentiality and IP
infringement covenants binding upon Sara Lee or other members of the Sara Lee Group under the
purchase and sale agreements identified in this item 1 below, as any such Contract is amended,
modified or restated from time to time prior to the Distribution Date, which obligations and
covenants become binding upon Sara Lee or other members of the Sara Lee Group after the
consummation of the closing of the transactions contemplated thereby, together with any Liability
arising out of or resulting from the HBI Group failing to comply therewith (including, without
limitation, any Liability for indemnification under any such agreement arising out of or resulting
from such failure to comply); provided, however, that (1) the Sara Lee Group shall retain the
obligation to indemnify the purchasers of the businesses or assets for breaches of representations
or warranties in the purchase and sale agreements and for liabilities not assumed by such
purchasers and (2) in no event shall the HBI Group incur any liability or obligation resulting from
a covenant breach or other agreement violation by Sara Lee or the Sara Lee Group after the
Distribution Date:

     (a) First Amended and Restated Purchase Agreement, dated February 3, 2006, among Sara Lee and
Branded Apparel France SAS, and any ancillary transaction agreements referenced therein;

     (b) Acquisition Agreement, dated March 19, 2001, between Sara Lee Corporation, and Champion
Europe S.p.A., and any ancillary transaction agreements referenced therein;

     (c) Share Purchase Agreement, signed on August 3, 2001, between Sara Lee Branded Apparel
Italia S.p.A and Eminence SAS, and any ancillary transaction agreements referenced therein; and

     (d) Stock Purchase Agreement, dated December 15, 1999, between Vlijmense Belegging
Maatschappij B.V., and Greenvale Holdings Limited, and any ancillary transaction agreements
referenced therein.

     (e) Purchase and Sale Agreement, dated December 10, 2003, among Sara Lee Branded Apparel
Italia S.p.A., Sara Lee/DE España, S.A. and Gilfin S.p.A., as such agreement is amended, modified
or restated from time to time.

     (f) Share Purchase Agreement, dated October 10, 2000, by and between Courtaulds Textiles
Holding S.A. and LCH, as amended, and any ancillary transaction agreements referenced therein.

     (g) Business Sale Agreement: Sale of Zorbit, dated 6 February 2001, between Courtaulds
Textiles (Holdings) Limited and Zorbit Babycare Limited, as amended, and any ancillary transaction
agreements referenced therein.

 

 

     (h) Business Sale Agreement: Sale of Lyle & Scott, dated 30 November 2000, between Courtaulds
Textiles (Holdings) Limited, Meaujo (506) Limited, Harris Watson Investments Limited and Liddesdale
Limited, as amended, and any ancillary transaction agreements referenced therein.

     (i) Sale Agreement, dated 29 July 2001, between Sara Lee International Corporation and Sotexim
S.A.

     (j) Business Sale Agreement: Sale of Penn Nyla, Dartex Coatings and Enterprise Coatings,
dated 6 July 2001, between Courtaulds Textiles (Holdings) Limited; Liberty Fabrics, Inc., Penn Nyla
Limited, Dartex Coatings Limited, Laminates USA Inc. and Harris Watson Investments Limited, as
amended, and any ancillary transaction agreements referenced therein.

     (k) Share Purchase Agreement, dated May 3, 2001, by and between Courtaulds Textiles Holdings
S.A.S. and S.D.G.P. 24, as amended, and any ancillary transaction agreements referenced therein.

     (l) Agreements for the sale of Zimbabwe Hosiery Company to Berkshire International on November
14, 2000.

     (m) Share Purchase Agreement dated August 15, 2005 by and between GMM Capital LLC and Sara Lee
International Corporation, as amended from time to time.

2. Liabilities under the purchase and sale agreements identified in this item 2 below, and any
related transaction Contract executed by any member of the Sara Lee Group in connection with such
agreement, as any such Contract is amended, modified or restated from time to time:

     (a) Stock Purchase Agreement, dated April 20, 2001, among Sara Lee Corporation, Champion
Products, Inc. and GFSI, Inc. (d/b/a GEAR for Sports), and any ancillary transaction agreements
referenced therein;

     (b) Agreement for the Sale of the Australia Business dated February 26, 2001, among Sara Lee
Apparel (Australasia) Pty Limited, Pacific Dunlop Limited, and Sara Lee Corporation, and any
ancillary transaction agreements referenced therein;

     (c) Agreement for the Sale and Purchase of Certain Companies, dated April 5, 2001, between
Sara Lee International Corporation, and DOGI S.A., and any ancillary transaction agreements
referenced therein; and

3. Liabilities relating to the business of Host Apparel Group prior to July 1, 2005.

 

 

SCHEDULE 4.3(b)

EXCLUDED LIABILITIES

For the avoidance of doubt, the following Liabilities shall be Excluded Liabilities:

1. Liabilities arising out of the operation of the following current or former Subsidiaries of Sara
Lee:

Sara Lee Branded Apparel Italia S.r.l.

South African Gossard (Proprietary) Limited

Sara Lee Intimates Nederland BV

Sara Lee Intimates Scandinavia AB

Sara Lee Intimates Scandinavia A/S

Sara Lee (Ireland) Ltd.

3. Liabilities relating to the Sara Lee U.K. Pension Plan, including Liabilities under Funding and
Guarantee Agreement between Sara Lee Corporation UK Holdings Limited, Sara Lee Corporation and Sara
Lee U.K. Pension Trustee Limited dated March 31, 2006.

4. Liabilities relating to Sara Lee’s European Branded Apparel business, except to the extent of
any Liabilities, covenants or agreements relating to such businesses that are specifically listed
in this Agreement or on any Schedule to this Agreement as being assumed by HBI.

 

 

SCHEDULE 4.12

INTERCOMPANY ACCOUNTS

A. Trade or Misc. Receivables and Payables

The following guidance applies to any payable or receivable that is reported on the following lines
of Sara Lee’s internal EO-100 financial reporting statements:

3.3 – Intercompany Receivables – Trade

21.03 – Intercompany Receivables – Misc

23.04 – Accounts Payable – Intercompany

31.03 – Intercompany Payable – Misc

Any member of the Sara Lee Group that has an intercompany payable balance to any member of the HBI
Group that is reported on one of these lines will repay those payables by August 29, 2006.

Any member of the HBI Group that has an intercompany payable balance to any member of the Sara Lee
Group that is reported on one of these lines will repay those payables by August 29, 2006.

B. Intercompany Royalties

Any member of the HBI Group that pays royalties to any member of the Sara Lee Group will estimate
the amount of royalties that would be due through the end of period 2 of fiscal year 2007 and pay
this amount to the applicable member of the Sara Lee Group in August 2006.

C. Intercompany Indebtedness

Any member of the HBI Group or the Sara Lee Group that has outstanding indebtedness owed to the
other party that is reported on the following lines of Sara Lee’s internal EO-100 financial
reporting statements will pay the outstanding amount to the applicable party by August 29, 2006:

21.0 Intercompany Receivable – Debt

21.02 Intercompany Receivable – Interest

31.01 Intercompany Payable – Debt

31.2 Intercompany Payable – Interest

D. Other Intercompany Amounts

Any amount that is payable to or receivable from any member of the Sara Lee Group, on the one hand,
and any member of the HBI Group, on the other hand, that is reported on the following lines of Sara
Lee’s internal EO-100 financial reporting statements will be capitalized/written off by August 29,
2006:

31.05 Intercompany Notes – CEO

31.06 Intercompany Notes – Prior Year

 

 

E. If any intercompany payables or receivables accrue between August 29, 2006 and September 2, 2006
pursuant to the accounts identified in categories A, B or D above, then the respective parties will
capitalize/write off such amounts as of the close of business on September 2, 2006.

 

 

SCHEDULE 5.14

CTHL EMPLOYEES

Martin Bentham

Vincent Fletcher

Miranda Frost

Julie Gifford

Glenn Logan

Kerry McIllrony

Roger Preston

Mike Starbuck

Aileen Webster

 

 

SCHEDULE 7

HBI CONTRACTS

The following Contracts shall also be HBI Contracts:

Agreements Relating to Sale of Sara Lee Branded Apparel – Europe:

1. Wonderbra Trademark License Agreement, dated February 3, 2006, among Sara Lee Trademark Holding
LLC and DBA Lux 1 S.a.r.l., as amended from time to time.

2. Wonderbra Usufruct Agreement dated February 3, 2006 between Sara Lee Trademark Holding LLC and
DBA Lux 2 S.a.r.l., as amended from time to time.

3. Wonderbra Manufacturing Side Letter dated February 3, 2006 between Sara Lee Trademark Holding
LLC, DBA Lux 1 S.a.r.l. and DBA Lux 2 S.a.r.l., as amended from time to time.

4. Playtex Trademark License Agreement, dated February 3, 2006, among Sara Lee Trademark Holding
LLC and DBA Lux 1 S.a.r.l., as amended from time to time.

5. Playtex Usufruct Agreement dated February 3, 2006 between Sara Lee Trademark Holding LLC and DBA
Lux 2 S.a.r.l., as amended from time to time.

6. Playtex Manufacturing Side Letter dated February 3, 2006 between Sara Lee Trademark Holding LLC,
DBA Lux 1 S.a.r.l. and DBA Lux 2 S.a.r.l., as amended from time to time.

7. Distribution and Customer Transition Side Letter dated February 3, 2006 between Sara Lee
Corporation and Branded Apparel France S.A.S., as amended from time to time.

8. Amended Trade Mark Licensed Agreement, dated November 19, 1991, among Playtex Apparel, Inc. (as
subsequently merged with Sara Lee Corporation) and Playtex Family Products Corporation (renamed
Playtex Products, Inc.) as further amended by exchange of letters between Sara Lee Corporation and
Playtex Products, Inc. dated as of November 23, 2005 and December 12, 2005.

9. DIM Trademark License Agreement, dated February 3, 2006, among DIM S.A. and Sara Lee, as amended
from time to time.

10. UNNO Trademark License Agreement, dated February 3, 2006, among DBA Lux 1 Sarl and Sara Lee, as
amended from time to time.

11. Patent License dated February 3, 2006 by and between Sara Lee Corporation and DBA Lux 1, as
amended from time to time.

12. Patent License dated February 3, 2006 by and between Pretty Polly Ltd. and DBA Lux 1, as
amended from time to time.

 

 

13. Patent License dated February 3, 2006 by and between Courtaulds Textile Holdings Ltd. and DBA
Lux 1 S.a.r.l., as amended from time to time.

14. Patent License Back dated February 3, 2006 by and between Playtex France S.A.S. and Sara Lee
Corporation, as amended from time to time.

15. Patent License Back dated February 3, 2006 by and between DBA Lux 1 and Sara Lee Corporation,
as amended from time to time.

16. Patent License Back dated February 3, 2006 by and between DIM S.A. and Sara Lee Corporation, as
amended from time to time.

17. Purchase Agreement Among Sara Lee Corporation and Branded Apparel France S.A.S., dated November
13, 2005, as amended from time to time (with respect to Sections 9(c) and 9(e) only).

Agreements Relating to Acquisition of National Textiles:

1. Purchase Agreement, dated September 15, 2005, among Sara Lee, National Textiles, L.L.C., NT
Investment Company, Inc., and certain other parties identified therein, as such Contract is
amended, modified or restated from time to time, provided that Section 3(b) of such
agreement and the associated Letter of Credit shall remain the responsibility of Sara Lee.

2. Guaranty of Sara Lee Corporation for the benefit of Keith G. Huskins, Jerry D. Rowland, Thomas
E. McBride and J. Byron Vines.

Agreements Relating to Sale of Sara Lee Direct Selling:

1. Sara Lee Knit Products Distributorship Agreement, dated December 5, 2005, among Sara Lee Knit
Products Mexico, S.A. de C.V., Sara Lee Branded Apparel, a division of Sara Lee, and House of
Fuller S. de R.L. de C.V.

2. Sara Lee Moda Distributorship Agreement, dated December 5, 2005, among Sara Lee Moda Femenina,
S.A. de C.V., Sara Lee Branded Apparel, a division of Sara Lee, and House of Fuller S. de R.L. de
C.V.

3. Trademark License Agreement — Fragrances & Accessories, dated June 28, 2006, among Sara Lee
Branded Apparel, a division of Sara Lee, and Dart Industries Inc.

4. License Agreement, dated June 28, 2006, among Sara Lee Branded Apparel, a division of Sara Lee,
and Dart Industries Inc.

5. License Agreement, dated June 28, 2006, among Canadelle Limited Partnership and Dart
Industries, Inc.

6. License Agreement, dated June 28, 2006, among Sara Lee Global Finance, L.L.C. and Dart
Industries, Inc.

 

 

7. License Agreement, dated June 28, 2006, among Sara Lee and Dart Industries, Inc.

Agreements
Relating to Acquisition of Assets of DFK Trading:

1. Asset Purchase Agreement dated November 22, 2004, among DFK International Trading Limited, DFK
Trading Corporation Limited, Daniel F. Keisman, Myrna I. Keisman and Tonny Kam Chung, as amended
from time to time.

2. Consulting Agreement dated as of June 3, 2005 by and between DFK International Limited and DFK
Trading Corp.

Agreements Relating to TOS2 Supply Initiative:

1. Strategic Relationship and Supply Agreement dated January 26, 2005 by and between Sara Lee
Corporation, acting through its Sara Lee Branded Apparel Division and Industrias Duraflex S.A. de
C.V.

2. Guarantee of Sara Lee Corporation dated April 28, 2005, on behalf of Confecciones La Libertad,
S.A. de C.V. for the benefit of The Fideicomiso Especial Para La Creacion de Empleos En Sectories
Estrategicos De El Salvador

Playtex Marketing Corporation:

1. The Amended Trademark License Agreement dated as of November 15, 1991 between Playtex Marketing
Corporation, Sara Lee Corporation (as successor to Playtex Apparel, Inc.) and Playtex Family
Products Corporation, as amended on December 12, 2005.

Supply Agreement:

1. Deed and Summary Terms dated June 6, 2006 between Sara Lee Branded Apparel, a division of Sara
Lee, and Robert Ng for and on behalf of PD Enterprise United.

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