Court File No. CV- 13-10009-O0CL S I S SUPERIORi ... Record - Part 1.pdf · Court File No. CV- 13-10009-O0CL S I F'J- S SUPERIORi COMMERCIAL LIST I •THE MATTEROF AND I *F THE JOHN

Court File No. CV- 13-10009-O0CL

S I F'J- S SUPERIORi

COMMERCIAL LIST

I •THE MATTEROF

AND I *F THE JOHN FORSYTH SHIRT COMPANY LTD., FORSYTH HOLDINGS, INC.

and FORSYTH OF CANADA, INC.

APPLICATION 1UNDER]

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AIRD & BERLIS LLP Barristers and Solicitors Brookfield Place 181 Bay Street, Suite 1800 Toronto, Ontario M5J 2T9

D. Robb English (LSUC # 19862F1B) Tel: 416.865.4748 Fax: 416.863.1515 Email: rengli shgairdberlis.com

Ian Aversa (LSUC # 55449N) Tel: 416.865.3082 Fax: 416.863.1515 Email: [email protected]

Lawyers for The John Forsyth Shirt Company Ltd., Forsyth Holdings, Inc. and Forsyth of Canada, Inc.

1aIt4!1O1DUUIU

TO: AIRD & BERLIS LLP Brookfield Place 181 Bay Street, Suite 1800 Toronto, ON M5J 2T9

D. Robb English Tel: 416-865-4748 Fax: 416-863-1515 Email: reng1ish(airdber1is.corn

Ian Aversa Tel: 416-865-3082 Fax: 416-863-1515 Email: iaversa(dairdberlis.com


AND TO: BDO CANADA LIMITED 123 Front Street, Suite 1200 Toronto, ON M5J 2M2

Blair Davidson / Steven Welker / Gary Cerrato Tel: 416-865-0210 / 416-775-7812 / 416-369-6058 Fax: 416-865-0904 Email: [email protected] / [email protected] / gcerrato(bdo .ca

Monitor

AND TO: DAVIS LLP 100 King Street West, Suite 6000 Toronto, ON M5X 1E2

Bruce Darlington / Susan Friedman I Rebecca Gosevitz Tel: 416-365-3529 / 416-365-3503 / 416-365-3402 Fax: 416-369-5210 / 416-777-7415 / 416-777-7408 Email: bdarIington(2idavis.ca / [email protected] / rgosevitz(davis.ca

Lawyers for the Monitor

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AND TO: RICHARDS, LAYTON & FINGER One Rodney Square 920 North King Street Wilmington, Delaware 19801 U.S.A.

Russell C. Silberglied / L. Katherine Good / Robert C. Maddox Tel: 302-651-7545 / 302-651-7640 / 302-651-7551 Fax: 302-498-7545 Email: Silberglied(r1f corn / [email protected] / maddox@rlf corn

U.S. lawyers for the Monitor

AND TO: GOODMANS LLP Bay Adelaide Centre 333 Bay Street, Suite 3400 Toronto, ON M5H 2S7

Joe Latham Tel: 416-597-4211 Fax: 416-979-1234 Email: [email protected]

Jean Anderson Tel: 416-597-4297 Fax: 416-979-1234 Email: j anderson(goodmans.ca

Caroline Descours Tel: 416-597-6275 Fax: 416-979-1234 Email: cdescoursc2igoodmans.ca

Lawyers for Wells Fargo Capital Finance Corporation Canada and Wells Fargo Capital Finance, LLC

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AND TO: OTTERBOURG, STEINDLER, HOUSTON & ROSEN, P.C. 23 0 Paiic. tenuc New York, New York 10169-0075 U.S.A.

Daniel Fiorillo / James Cretella Tel: 212-905-3616 / 212-905-3611 Fax: 212-682-6104 Email: dfiorilloç2i),oshr. corn / jç[email protected]

U.S. lawyers for Wells Fargo Capital Finance Corporation Canada and Wells Fargo Capital Finance, LLC

AND TO: BLAKE, CASSELS & GRAYDON LLP Commerce Court West 199 Bay Street, Suite 4000 Toronto, ON M5L 1A9

Pamela L. J. Huff! Jenna Willis Tel: 416-863-2958 / (312) 739-3610 Fax: 416-863-2653 /(312) 739-3611 Email: [email protected] / jpna.wilIis@blakes .com

Lawyers for Manunion Investments Limited, 2414394 Ontario Inc., 2414395 Ontario Inc. and Forsyth US. Acquisition Company Inc.

AND TO: MCKENNA LONG & ALDRIDGE LLP 303 Peachtree Street, NE Suite 5300 Atlanta, GA 30308

Wayne Bradley / Jonathan Picard Tel: (404) 527-4044 / (404) 527-8522 Fax: (404) 527-3644 / (404) 527-4198 Email: wbrad1ey(mckenna1ong.com / jpicard(d/mckennalong.com

U.S. Lawyers for Manunion Investments Limited, 2414394 Ontario Inc., 2414395 Ontario Inc. and Forsyth US. Acquisition Company Inc.

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AND TO: DENTONS CANADA LLP 77 King Street West, Suite 400 Toronto-Dominion Centre Toronto, ON M5K OA1

John Salmas / Ryan Middleton Tel: (416) 863-4737 / (416) 361-2367 Fax: (416) 863-4592 Email: [email protected] / ryan.middleton@dentons. corn

Lawyers for Salus Capital Partners, LLC

AND TO: WATSON JACOB McCREARY LLP Barristers and Solicitors 509 - 4711 Yonge Street Toronto, ON M2N 6K8

J. David Watson / Amy Stein / David P. Jacobs Tel: (416) 226-0055 Fax: (416) 226-0910 Email: dwatson@wj rn-law. ca / astein@wj rn-law.ca / dj acobs@wj rn-law.ca

Lawyers for Workers United Canada Council and its Local 1058C

AND TO: TORYSLLP Barristers and Solicitors 79 Wellington Street West Toronto, ON M5K 1N2

Scott A. Bomhof Tel: (416) 865-7370 Fax: (416) 865-7380 Email: [email protected]

Lawyers for Richard Pearlman

AND TO: MAGRATH'S LAW CHAMBERS 20 Carlton Street, #126 Toronto, ON M5B 2H5

Gavin Magrath Tel: (416) 931-0463 Fax: (888) 816-8861 Email: gavin(magraths .ca

Lawyer for Hellmann Worldwide Logistics Inc.

AND TO: DEPARTMENT OF JUSTICE The Exchange Tower 130 King Street West, Suite 3400 Toronto, ON M5X 1K6

Diane Winters Tel: (416) 973-3172 Fax: (416) 973-0810 Email: diane.winters(j ustice. gc .ca

Kevin J. O'Hara Email: [email protected]

AND TO: WORKERS UNITED ONTARIO COUNCIL, and its LOCAL 2643 317 Adelaide Street West, Suite 1005 Toronto, ON M5V 1P9

Tel: (416) 510-0887 Fax: (416) 510-0891 Email: info @workersunitedunion.ca

AND TO: GE VFS CANADA LIMITED PARTNERSHIP 2300 Meadowvale Boulevard, Suite 200 Mississauga, ON L5N 5P9

AND TO: OLIVER MORANTE c/o 6789 Airport Road Mississauga, ON L4V 1N2

AND TO: HARRIS HESTER c/o 6789 Airport Road Mississauga, ON L4V 1N2

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AND TO: ORLANDO CORPORATION 6205 Airport Road, Suite 500 Building E Mississauga, ON L4V 1B3

David Stewart Tel: (905) 677-5480 ext. 354 Fax: (905) 677-1851 Email: stewartdorlandocorp.com

AND TO: IBM CANADA LIMITED 3600 Steeles Avenue East, F4 Markham, ON L3R 9Z7

AND TO: 6789 AIRPORT ROAD IIOLDINGS LTD. 2005 Sheppard Avenue East, Suite #500 Toronto, ON M2J 5B4

AND TO: STEVRON HOLDINGS LIMITED 6205 Airport Road, Suite 500 Mississauga, ON L4V 1E3

Larry Parent - Insolvency Officer Tel: 1-866-668-8297 ext: 18562 Fax: 905-436-4524 Email: 1arry.parent(fin.gov.on.ca

AND TO: INTERNAL REVENUE SERVICE P.O. Box 7346 Philadelphia, Pennsylvania 19101-7346

AND TO: GEORGIA DEPARTMENT OF REVENUE Bankruptcy Section P.O. Box 161108 Atlanta, Georgia 30321

11

ATTN: Office of Counsel Building 9 W A Harriman Campus Albany, New York 12227

AND TO: CRISP COUNTY TAX COMMISSIONER 210 S. 7th Street South Cordele, Georgia 31015

AND TO: CITY OF CORDELE, GA 501 North 7th St. Cordele, Georgia 31015

AND TO: HILCO CAPITAL LP 5 Revere Drive, Suite 510 Northbrook, Illinois 60062

17760980.3

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VLJ*Z1

Court File No, CV-13-10009-OOCL

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COMPROMISE1. .. 1

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Notice of Motion 1

Draft Approval and Vesting Order 2

Draft Approval and Vesting Order blacklined to Model Approval and Vesting Order 3

Draft Discharge Order 4

Affidavit of Harris Hester sworn May 5, 2014 5

Exhibit "A" - Initial Order dated February 22, 2013 A

Exhibit "B" - Affidavit of Harris Hester sworn February 20, 2013 B (without exhibits)

Exhibit "C" - U.S. Recognition Orders dated March 18, 2013 C

Exhibit "D" - Stay Extension Order dated March 21, 2013 D

Exhibit "E" - Stay Extension Order dated May 27, 2013 E

Exhibit "F" - Creditors' Meeting Order, Claims Process and Bar Order F and Stay Extension and DIP Credit Agreement Order, each dated May 31, 2013

Exhibit "G" - Sanction Order dated July 11, 2013 G

Exhibit "H" - U.S. Order Recognizing and Enforcing Canadian Court H Sanction Order dated August 21, 2013

Exhibit "I" - Stay Extension Order dated September 26, 2013

Exhibit "J" - Monitor's Certificate dated October 10, 2013

Exhibit "K" - Letter from Monitor dated January 14, 2014 K

Exhibit "L" - Letter from Monitor dated February 4, 2014 L

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Court File No. CV-13-10009-00CL

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The John Forsyth Shirt Company Ltd., Forsyth Holdings, Inc. and Forsyth of Canada,

Inc. (collectively, the "Applicants") will make a motion to a judge presiding over the

Commercial List on Tuesday, May 13, 2014 at 10:00 a.m., or as soon after that time as the

motion can be heard, at 330 University Avenue, Toronto, Ontario.

PROPOSED METHOD OF HEARING: The motion is to be heard orally.

1. THE MOTION IS FOR an Order, including, among other things:

(a) if necessary, abridging the time for service and filing of this notice of motion and

the motion record or, in the alternative, dispensing with same;

(b) approving the asset purchase agreement among The John Forsyth Shirt Company

Ltd. and Forsyth of Canada, Inc. (collectively, the "Vendors"), as vendors, and

2414395 Ontario Inc. (the "Canadian Purchaser") and Forsyth U.S. Acquisition

Company Inc. (the "US Purchaser" and, together with the Canadian Purchaser,

the "Purchasers"), as purchasers, dated May 5, 2014 (the "APA"), and vesting

the Vendors' right, title and interest in and to the Purchased Assets (as defined in

2

the APA) in the Purchasers, upon the filing by BDO Canada Limited ( "BDO"), in

its capacity as the Court-appointed monitor of the Applicants (in such capacity,

the "Monitor"), of a certificate with this Court (the "Monitor's Certificate ")

certifying, among other things, that the transaction contemplated by the APA (the

"Transaction") has been completed to the satisfaction of the Monitor;

(c) authorizing and directing the Monitor to establish, hold and maintain certain

reserves (the "Reserves") as cash collateral from the proceeds from the sale of the

Purchased Assets to satisfy claims secured by the Administration Charge and the

D&O Charge (as such terms are defined in the Initial Order granted by the

Honourable Justice Wilton-Siegel on February 22, 2013 in these proceedings (the

"Initial Order")) ;

(d) authorizing and empowering the Monitor to make distributions from the Reserves

to the beneficiaries of the Administration Charge and the D&O Charge;

(e) discharging the Administration Charge once the Monitor determines that all

claims secured by such charge have been fully and finally determined and all

applicable payments have been made;

(f) discharging the D&O Charge upon the earlier of: (A) the date on which the

Monitor determines that all claims secured by such charge have been fully and

finally determined and all applicable payments have been made; and (B) six

months from the date of the Monitor's Certificate;

(g) discharging the DIP Charge (as defined in the Initial Order);

(h) following the completion of the Transaction, authorizing the Applicants to

execute, deliver and file any document, including, without limitation, any articles

of reorganization, required in order to effect a change of the corporate name of

each of the Applicants;

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(i) approving the Fifth Report of the Monitor (the "Fifth Report"), and the

Confidential Supplement to the Fifth Report of the Monitor (the "Confidential

Supplement"), and approving the actions of the Monitor described therein;

(j) sealing the Confidential Supplement to the Fifth Report until further order of this

Court;

(k) approving the fees and disbursements of the Monitor and its counsel, including an

accrual for fees and disbursements to be incurred to the completion of these

proceedings (the "CCAA Proceedings ");

(1) discharging BDO as Monitor and releasing BDO from any and all liability that

BDO has or may hereafter have by reason of, or in any way arising out of, the acts

or omissions of BDO while acting in its capacity as Monitor, upon the filing by

the Monitor of a certificate (the "Monitor's Discharge Certificate ") with this

Court certifying that all matters to be attended to in connection with the CCAA

Proceedings have been completed to the satisfaction of the Monitor;

(m) terminating the CCAA Proceedings, upon the filing of the Monitor's Discharge

Certificate with this Court; and

(n) such further and other relief as counsel may advise and this Court may permit.

(a) the Applicants are collectively in the business of manufacturing, distributing and

selling apparel in both Canada and the United States of America;

(b) on February 22, 2013, this Court issued the Initial Order granting the Applicants

protection from their creditors under the Companies' Creditors Arrangement Act,

R.S.C. 1985, c. C-36, as amended (the "CCAA") in the CCAA Proceedings;

4

(c) pursuant to the Initial Order, the Applicants obtained debtor-in-possession

financing under the terms of the DIP Commitment Letter dated February 20, 2013

among Wells Fargo Capital Finance Corporation Canada and Wells Fargo Capital

Finance, LLC (together, "Wells Fargo ") and the Applicants (the "DIP

Commitment Letter ") ;

(d) on March 18, 2013, orders were entered by the United States Bankruptcy Court

for the Southern District of New York (the "US Court") in Case No. 13-10526

(the "US Recognition Proceedings "), among other things, recognizing the Initial

Order and these CCAA Proceedings as foreign main proceedings;

(e) on March 21, 2013, upon a motion by the Applicants, this Court granted an order,

among other things: (i) extending the Stay Period (as defined in the Initial Order)

to and including May 29, 2013; and (ii) approving the First Report of the Monitor

dated March 18, 2013 and the actions of the Monitor described therein;

(f) on May 27, 2013, upon a motion by the Applicants, this Court granted an order

extending the Stay Period to and including May 31, 2013. The balance of the

Applicants' relief was adjourned to May 31, 2013;

(g) on May 31, 2013, upon a motion by the Applicants, this Court granted, among

other things:

(i) the Creditors' Meeting Order, which established the process by which the

Applicants' creditors would meet on June 26, 2013 and vote on the

Consolidated Plan of Compromise and Arrangement of the Applicants

dated May 16, 2013 (as restated, supplemented or amended from time to

time, the "Plan");

(ii) the Claims Process and Bar Order, which established a claims bar date of

June 21, 2013 and a process to solicit: (i) claims arising before February

22, 2013; and (ii) certain claims arising after February 22, 2013 but which

arise in connection with the restructuring or repudiation by the Applicants

5

of contracts, leases or other arrangements to which the Applicants were

party; and

(iii) an order: (i) extending the Stay Period to and including July 12, 2013; (ii)

approving the Second Report of the Monitor dated May 17, 2013 and the

Supplementary Report of the Second Report dated May 30, 2013, and the

actions of the Monitor described therein; and (iii) approving the

Amendment to the DIP Commitment Letter dated May 17, 2013;

(h) at the meeting of creditors on June 26, 2013, 95% of the Applicants' creditors

holding 98% of the value of votes cast voted in favour of the Plan;

(i) on July 11, 2013, upon a motion by the Applicants, this Court granted an order

(the "Sanction Order"), among other things: (i) extending the Stay Period to and

including September 30, 2013; (ii) sanctioning and approving the Plan; (iii)

approving the Second Amending Agreement to the DIP Commitment Letter dated

July 9, 2013; and (iv) approving the Third Report of the Monitor dated July 4,

2013 and the Supplement to the Third Report dated July 9, 2013, and the actions

of the Monitor described therein;

(j) on August 21, 2013, the US Court entered an order, among other things,

recognizing and enforcing the Sanction Order;

(k) on September 26, 2013, upon a motion by the Applicants, this Court granted an

order, among other things: (i) extending the Stay Period to and including October

18, 2013; (ii) approving the Fourth Report of the Monitor dated September 24,

2013 and the Supplementary Report to the Fourth Report dated September 25,

2013, and the actions of the Monitor described therein; and (iii) approving the

Third DIP Extension Agreement to the DIP Commitment Letter dated September

24, 2013;

0

l the rear

(1) the Plan was structured such that the Applicants':

(i) unsecured creditors (other than Employee Claimants (as defined in the

Plan)) with Proven Distribution Claims (as defined in the Plan) of $5,000

or less, or those who elected to reduce their claims to $5,000 or less,

would receive a fixed distribution based on a formula in the Plan in a

specific time frame;

(ii) unsecured creditors (other than Employee Claimants) with Proven

Distribution Claims exceeding $5,000 but less than $3,000,000 would

receive two separate distributions on or before the Interim Distribution

Date and the Second Distribution Date (each as defined in the Plan),

respectively, each equal to 10% of such creditor's Proven Distribution

Claim;

(iii) unsecured creditors (other than Employee Claimants) with Proven

Distribution Claims exceeding $3,000,000 would receive a distribution

equal to 10% of their Proven Distribution Claim on the Interim

Distribution Date and a promissory note issued by the Applicants on the

Plan Implementation Date, which provides payment tranches based on

formulae set out in section 4.2(c)(ii) of the Plan;

(iv) Employee Claimants with Proven Distribution Claims of $1,000 or less

would receive the amount of their Proven Distribution Claims on the

Interim Distribution Date;

(v) Employee Claimants with Proven Distribution Claims greater than $1,000

but less than $3,250 would receive $1,000 on the Interim Distribution

Date, an additional payment equal to the lesser of $1,000 or the balance of

such Proven Distribution Claim on or before the Second Distribution Date,

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and the balance, if any, of such Proven Distribution Claim on or before

January 15, 2016, to a maximum of $3,250;

(vi) Employee Claimants with Proven Distribution Claims greater than $3,250

but less than or equal to $16,250 would receive payments on each of the

Initial Distribution Date, the Second Distribution Date and January 15,

2016, as applicable, pursuant to formula set out in section 4.3(c) of the

Plan; and

(vii) Employee Claimants with Proven Distribution Claims exceeding $16,250

would receive two payments equal to 10% of such Proven Distribution

Claim paid on the Interim Distribution Date and the Second Distribution

Date, respectively;

Replacement Lender

(m) paragraph 7.2(j) of the Plan required the Applicants to establish funding

arrangements to repay the amounts owing to Wells Fargo under the DIP

Commitment Letter;

(n) on October 10, 2013, the Vendors entered into a credit agreement (the "Salus

Credit Agreement ") with Salus Capital Partners, LLC ( "Salus") which, among

other things, provided the financing required to repay the Applicants'

indebtedness to Wells Fargo under the DIP Commitment Letter;

(o) the Applicants' indebtedness to Wells Fargo under the DIP Commitment Letter

was repaid from a portion of the credit facilities provided under the Salus Credit

Agreement on October 10, 2013;

(p) on October 10, 2013, the Monitor filed a certificate with this Court certifying: (i)

that the conditions precedent set out in section 7.2 of the Plan have been satisfied

or waived in accordance with the Plan; and (ii) that the Plan Implementation Date

(as defined in the Plan) is October 11, 2013;

Post Plan Implementation Date

(q) the Stay Period expired on October 18, 2013;

(r) in the Fall of 2013, the Applicants' managed their operations with the lending

arrangements provided by Salus, however, sales did not meet expectations in the

fourth quarter, which resulted in operating losses and decreased availability;

(s) late in 2013, Salus commissioned an inventory appraisal by Gordon Brothers

Group, which appraisal presented orderly liquidation values for the Applicants'

inventory that were significantly lower than past appraisals and resulted in a

reduction of the Vendors' availability under the Salus Credit Agreement in

January, 2014;

(t) the combination of the two factors described above created a situation wherein the

Applicants could not fund the first distribution of $600,000 due on January 15,

2014, as required under the Plan;

(u) on February 4, 2014, the Monitor provided a material adverse change notice (the

"Material Adverse Change Notice ") to the Applicants' creditors indicating that

the distributions owing to creditors pursuant to the Plan would unlikely be made

due to insufficient funds;

(v) to date, neither the Applicants nor the Monitor have made any distributions under

the Plan;

Sale Process and APA

(w) since the date of the Material Adverse Change Notice, the Applicants, with the

assistance of the Monitor, have been seeking entities interested in: (a) refinancing

the Applicants' debt; (b) investing in the Applicants' business; or (c) purchasing

the Applicants' assets;

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(x) on May 5, 2014, the Vendors and the Purchasers entered into the APA, which

remains subject to, among other things, approval by this Court and recognition by

the US Court;

(y) the Monitor has filed with the Court its Fifth Report outlining, among others

things: (i) the actions of the Monitor since its Fourth Report dated September 24,

2013 and its Supplementary Report to the Fourth Report dated September 25,

2013; (ii) the status of the Plan; (iii) the details of the APA and the basis for the

Monitor's recommendation that the Court approve the APA; and (iv) the

professional fees and disbursements of the Monitor and its counsel, including an


proceedings;

(z) a sealing order is required because the Confidential Supplement contains certain

commercially sensitive information, the release of which could prejudice the

stakeholders of the Applicants, particularly if the Transaction does not close;

(aa) the Monitor and its counsel, Davis LLP, have accrued fees and expenses in their

capacity as Monitor and counsel thereto, respectively, which fees and expenses

require the approval of this Court pursuant to the Initial Order;

(bb) the Initial Order authorizes the Monitor to pass its accounts from time to time, and

to include any necessary solicitor fees and disbursements in the passing of the

accounts;

(cc) the other grounds set out in the Fifth Report, the Confidential Supplement and the

affidavit of Harris Hester sworn May 5, 2014;

(dd) the provisions of the CCAA and, in particular, section 36;

(ee) rules 1.04, 2.03, 3.02, 37 and 39 of the Rules of Civil Procedure, R.R.O. 1990,

Reg. 194, as amended; and

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(ff) such further and other grounds as counsel may advise and this Court may permit.

3.

THE FOLLOWING DOCUMENTARY EVIDENCE will be used at the hearing of the

motion:

(a) the affidavit of Harris Hester sworn May 5, 2014;

(b) the Fifth Report;

(c) the Confidential Supplement;

(d) the affidavit of Blair Davidson, to be sworn;

(e) the affidavit of Bruce Darlington, to be sworn; and

(f) such other evidence as counsel may advise and this Court may permit.

Date: May 6, 2014 AIRD & BERLIS LLP Barristers & Solicitors Brookfield Place 181 Bay Street, Suite 1800 Toronto, Ontario M5J 2T9

D. Robb English (LSUC # 19862F1B) Tel: 416.865.4748 Fax: 416.863.1515 Email: renglishçllairdber1is,com

Ian Aversa (LSUC # 55449N) Tel: 416.865.3082 Fax: 416.863.1515

Email: [email protected]


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Court File No. CV-13-10009-OOCL

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Proceedings commenced at Toronto

I _ IJiISII II)I0

AIRD & BERLIS LLP Barristers and Solicitors

Brookfield Place 181 Bay Street, Suite 1800 Toronto, Ontario M5J 2T9

D. Robb English (LSUC # 19862F1B) Tel: 416.865.4748 Fax: 416.863.1515 Email: ren lish ,.a airdberlis.com

Ian Aversa (LSUC # 55449N) Tel: 416.865.3082 Fax: 416.863.1515 Email: iaversaLwairdberlis.eom


17760982.3

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THIS MOTION, made by The John Forsyth Shirt Company Ltd., Forsyth Holdings, Inc.

and Forsyth of Canada, Inc. (collectively, the "Applicants"), for an order, inter alia, approving

the sale transaction (the "Transaction") contemplated by the asset purchase agreement among

The John Forsyth Shirt Company Ltd. and Forsyth of Canada, Inc. (collectively, the "Vendors"),

as vendors, and 2414395 Ontario Inc. (the "Canadian Purchaser") and Forsyth U.S.

Acquisition Company Inc. (the "US Purchaser" and, together with the Canadian Purchaser, the

"Purchasers "), as purchasers, dated May 5, 2014 (the "APA"), a copy of which is appended, in

redacted form, to the Fifth Report of BDO Canada Limited, in its capacity as the Court-

appointed monitor of the Applicants (in such capacity, the "Monitor"), dated May <*>, 2014

(the "Fifth Report"), filed, and appended, in unredacted form, to the Confidential Supplement to

the Fifth Report of the Monitor dated May <*>, 2014 (the "Confidential Supplement "), filed,

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and vesting in the Purchasers the Vendors' right, title and interest in and to the Purchased Assets

(as defined in the APA), was heard this day at 330 University Avenue, Toronto, Ontario.

ON READING the affidavit of Harris Hester sworn May 5, 2014, the Fifth Report and

the Confidential Supplement, and on hearing the submissions of counsel for the Applicants,

counsel for the Monitor, counsel for the Purchasers, counsel for Salus Capital Partners, LLC and

counsel for Manunion Investments Limited, no one appearing for any other person on the service

list, although properly served as appears from the affidavit of Susy Moniz sworn May 6, 2014,

filed,

1. THIS COURT ORDERS that the time for service and filing of the notice of motion and

the motion record is hereby abridged and validated so that this motion is properly returnable

today and hereby dispenses with further service thereof.

2. THIS COURT ORDERS AND ECLA S that the Transaction is hereby approved,

and the execution of the APA by the Vendors is hereby authorized and approved, with such

minor amendments as the Vendors and the Purchasers, with the consent of the Monitor, may

deem necessary. The Vendors are hereby authorized and directed to take such additional steps

and execute such additional documents as may be necessary or desirable for the completion of

the Transaction and for the conveyance of the Purchased Assets to the Purchasers.

3. THIS COURT ORDERS AND DECLARES that upon the delivery of a certificate by

the Monitor to the Purchasers substantially in the form attached as Schedule "A" hereto (the

"Monitor's Certificate "), all of the Vendors' right, title and interest in and to: (i) the Canadian

Purchased Assets (as defined in the APA) shall vest absolutely in the Canadian Purchaser; and

(ii) the US Purchased Assets (as defined in the APA, including without limitation the US

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Purchased Assets described on Schedule "B" hereto (the "Real Property ")) shall vest

absolutely in the US Purchaser, in each case free and clear of and from any and all security

interests (whether contractual, statutory, or otherwise), hypothecs, mortgages, trusts or deemed

trusts (whether contractual, statutory, or otherwise), liens, executions, levies, charges, or other

financial or monetary claims, whether or not they have attached or been perfected, registered or

filed and whether secured, unsecured or otherwise (collectively, the "Claims"), including,

without limiting the generality of the foregoing: (i) any encumbrances or charges created by the

Initial Order of the Honourable Justice Wilton-Siegel dated February 22, 2013 (the "Initial

Order"); (ii) all charges, security interests or claims evidenced by registrations pursuant to the

Personal Property Security Act (Ontario), the Uniform Commercial Code, as adopted in any state

in the United States, or any other personal property registry system; and (iii) those Claims listed

on Schedule "C" hereto (all of which are collectively referred to as the "Encumbrances" which

term shall not include the permitted liens, encumbrances, easements and restrictive covenants

listed on Schedule "D") and, for greater certainty, this Court orders that all of the Encumbrances

affecting or relating to the Purchased Assets are hereby expunged and discharged as against the

Purchased Assets.

4. THIS COURT O ERS that, upon the delivery of the Monitor's Certificate to the

Purchasers, if any person or entity that has filed financing statements, mortgages, lis pendens or

other documents, instruments, notices or agreements evidencing any Encumbrances against or in

the Real Property has not delivered to the Vendors, in proper form for filing and executed by the

appropriate parties, termination statements, releases or instruments of satisfaction that the person

or entity has with respect to the Real Property, then with regard to the Real Property: (a) the

Vendors and/or the US Purchaser are authorized to execute and file such termination statements,

releases, instruments of satisfaction or other documents on behalf of the person or entity with

respect to the Real Property; and (b) the Vendors and/or the US Purchaser are authorized to file,

register or otherwise record a certified copy of this Order which, once filed, registered or

otherwise recorded, shall constitute conclusive evidence of the release of all Encumbrances

against the Real Property. This Order is deemed to be in recordable form sufficient to be placed

in the filing or recording system of each and every federal, state, local, tribal or foreign

government agency, department or office.

5. THIS COURT ORDERS that each and every filing agent, filing officer, title agent,

recording agency, governmental department, secretary of state, federal, state and local official,

and any other persons and entity who may be required by operation of law, the duties of their

office or contract, to accept, file, register or otherwise record or release any documents or

instruments or who may be required to report or insure any title in or to the Real Property, is

hereby authorized and directed to accept any and all documents and instruments necessary and

appropriate to consummate the Transaction and this Order. All such entities described above in

this paragraph are authorized and specifically directed to strike all recorded Encumbrances

against the Real Property from their records, official and otherwise.

6. THIS COURT ORDERS AND DIRECTS that upon delivery of the Monitor's

Certificate to the Purchasers, the Monitor shall be authorized and directed to establish, hold and

maintain the following reserves as cash collateral from the proceeds from the sale of the

Purchased Assets (the "Sale Proceeds "):

(a) the sum of $177,424.00 or such other amount as may be required pursuant to the

APA (the "Administration Charge Reserve ") to which the Administration

-5-

Charge (as defined in the Initial Order) shall attach with the priority provided by

the Initial Order; and

(b) the sum of $50,000.00 (the "D&O Charge Reserve" and, together with the

Administration Charge Reserve, the "Reserves ") to which the D&O Charge (as

defined in the Initial Order) shall attach with the priority provided by the Initial

Order.

7. THIS COURT ORDERS that the Monitor is hereby authorized and empowered, without

further order of the Court, to make distributions from the Administration Charge Reserve to the

beneficiaries of the Administration Charge upon delivery by such beneficiary to the Applicants,

the Monitor and the Purchasers of an invoice detailing the fees and disbursements it has incurred

in connection with these proceedings, free and clear of all Encumbrances other than those in

favour of such beneficiary, to be applied against the indebtedness, liabilities and obligations

owing by the Applicants to such beneficiary.

8. THIS COURT ORDERS that once the Monitor determines that all claims to the

Administration Charge Reserve have been fully and finally determined and all applicable

payments have been made, or a further Order of the Court so holds, (i) the Administration

Charge shall be fully and finally discharged, and (ii) the Monitor is hereby authorized and

directed, without further Order of the Court, to distribute all amounts remaining in the

Administration Charge Reserve to the Purchasers, free and clear of all Encumbrances.


further order of the Court, to make distributions from the D&O Charge Reserve to the

beneficiaries of the D&O Charge on account of claims made to such D&O Charge Reserve that

-6-

the Monitor determines are valid claims for indebtedness, liabilities or obligations owing by the

Applicants to such beneficiary pursuant to the indemnity provided in paragraph 20 of the Initial

Order, free and clear of all Encumbrances other than those in favour of such beneficiary, to be

applied against the indebtedness, liabilities and obligations owing by the Applicants to such

beneficiary.

10. THIS COURT ORDERS that upon the earlier of: (A) the date on which the Monitor

determines that all claims to the D&O Charge Reserve have been fully and finally determined

and all applicable payments have been made, or a further Order of the Court so holds; and (B)

six months from the date of the Monitor's Certificate, (i) the D&O Charge shall be fully and

finally discharged, and (ii) the Monitor is hereby authorized and directed, without further Order

of the Court, to distribute all amounts remaining in the D&O Charge Reserve to the Purchasers,

free and clear of all Encumbrances.

11. THIS COURT ORDERS that for the purposes of determining the nature and priority of

Claims, the Sale Proceeds (less the Reserves) (the "Remaining Sale Proceeds ") shall stand in

the place and stead of the Purchased Assets, and that from and after the delivery of the Monitor's

Certificate all Claims and Encumbrances shall attach to the Remaining Sale Proceeds with the

same priority as they had with respect to the Purchased Assets immediately prior to the sale, as if

the Purchased Assets had not been sold and remained in the possession or control of the person

having that possession or control immediately prior to the sale, except that the Administration

Charge and D&O Charge shall not attach to the Remaining Sale Proceeds.


further order of the Court, to distribute the Remaining Sale Proceeds on account of certain

-7-

indebtedness, liabilities and obligations owing by the Applicants for the Priority Claims (as

defined in the APA).

13. THIS COURT ORDERS AND DIRECTS that the DIP Charge (as defined in the Initial

Order) is hereby fully and finally discharged.

14. THIS COURT ORDERS that the Monitor may rely on written notice from the Vendors

and the Purchasers regarding fulfillment of conditions to closing under the APA and shall incur

no liability with respect to the delivery of the Monitor's Certificate based on such reliance.

15. THIS COURT ORDERS AND I CTS the Monitor to file with the Court a copy of

the Monitor's Certificate, forthwith after delivery thereof.

16. THIS COURT ORDERS that, pursuant to clause 7(3)(c) of the Canada Personal

Information Protection and Electronic Documents Act, the Applicants are authorized and

permitted to disclose and transfer to the Purchasers all human resources and payroll information

in the Applicants' records pertaining to the Applicants' past and current employees. The

Purchasers shall maintain and protect the privacy of such information and shall be entitled to use

the personal information provided to it in a manner which is in all material respects identical to

the prior use of such information by the Applicants.

17. THIS COURT ORDERS that, notwithstanding:

(a) the pendency of these proceedings;

(b) any applications for a bankruptcy order now or hereafter issued pursuant to the

Bankruptcy and Insolvency Act (Canada) in respect of any of the Applicants and

any bankruptcy order issued pursuant to any such applications; and

(c) any assignment in bankruptcy made in respect of any of the Applicants,

the APA, the Transaction and the vesting of the Purchased Assets in the Purchasers pursuant to

this Order shall be binding on any trustee in bankruptcy that may be appointed in respect of any

of the Applicants and shall not be void or voidable by creditors of the Applicants, nor shall it

constitute nor be deemed to be a fraudulent preference, assignment, fraudulent conveyance,

transfer at undervalue or other reviewable transaction under the Bankruptcy and Insolvency Act

(Canada) or any other applicable federal, state or provincial legislation, nor shall it constitute

oppressive or unfairly prejudicial conduct pursuant to any applicable federal, state or provincial

legislation.

18. THIS COURT ORDERS AND DECLARES that the Transaction is exempt from the

application of the Bulk Sales Act (Ontario) and any other equivalent federal, state or provincial

legislation.

19. THIS COURT ORDERS that the Applicants are authorized, following the completion

of the Transaction, to execute, deliver and file any document, including, without limitation, any

articles of reorganization, required in order to effect a change of the corporate name of each of

the Applicants, and this Court waives any third party requirement or required consent pursuant to

any Canadian federal or provincial legislation relating to same.

S

20. THIS COURT HEREBY REQUESTS the aid and recognition of any court, tribunal,

regulatory or administrative body having jurisdiction in Canada or in the United States to give

effect to this Order and to assist the Applicants, the Monitor and their respective agents in

carrying out the terms of this Order. All courts, tribunals, regulatory and administrative bodies

are hereby respectfully requested to make such orders and to provide such assistance to the

Applicants and to the Monitor, as an officer of this Court, as may be necessary or desirable to

give effect to this Order or to assist the Applicants, the Monitor and their respective agents in

carrying out the terms of this Order.

21. THIS COURT R E S that each of the Applicants and the Monitor be at liberty and is

hereby authorized and empowered to apply to any court, tribunal, regulatory or administrative

body, wherever located, for the recognition of this Order and for assistance in carrying out the

terms of this Order, and that the Monitor is authorized and empowered to act as a representative

in respect of the within proceedings for the purpose of having these proceedings recognized in a

jurisdiction outside Canada.

Schedule "A" Form of Monitor's Certificate


s _! _ ONTARIO

• ,.

1I!. I ,,

A. Pursuant to an Order of the Honourable Mr. Justice Wilton-Siegel of the Ontario Superior

Court of Justice (Commercial List) (the "Court") dated February 22, 2013 (the "Initial Order"),

The John Forsyth Shirt Company Ltd., Forsyth Holdings, Inc. and Forsyth of Canada, Inc.

(collectively, the "Applicants") were declared companies to which the Companies' Creditors

Arrangement Act applied and BDO Canada Limited ("BDO") was appointed as the Court-

appointed Monitor of the Applicants (in such capacity, the "Monitor").

B. Pursuant to an Order of the Court dated May 13, 2014 (the "Approval and Vesting

Order"), the Court approved the asset purchase agreement among The John Forsyth Shirt

Company Ltd. and Forsyth of Canada, Inc. (collectively, the "Vendors"), as vendors, and

2414395 Ontario Inc. (the "Canadian Purchaser") and Forsyth U.S. Acquisition Company Inc.

(the "US Purchaser" and, together with the Canadian Purchaser, the "Purchasers"), as

purchasers, dated May 5, 2014 (the "APA"), and provided for the vesting in the Purchasers of

the Vendors' right, title and interest in and to the Purchased Assets, which vesting is to be

effective with respect to the Purchased Assets upon the delivery by the Monitor to the Purchasers

of a certificate confirming: (i) the Purchasers have satisfied the Purchase Price for the Purchased

Assets pursuant to the APA; (ii) the conditions to Closing as set out in the APA have been

satisfied or waived by the Vendors and the Purchasers; and (iii) the Transaction has been

completed to the satisfaction of the Monitor.

C. Unless otherwise indicated herein, capitalized terms shall have the meanings ascribed to

them in the APA.

THE MONITOR CERTIFIES the following:

1. the Purchasers have satisfied the Purchase Price for the Purchased Assets pursuant to the

AA

2. the conditions to Closing as set out in the APA have been satisfied or waived by the

Vendors and the Purchasers;

3. the Transaction has been completed to the satisfaction of the Monitor; and

4. this Certificate was delivered by the Monitor at on , 2014.

BDO CANADA LIMITED, in its capacity as the Court-appointed Monitor of The John Forsyth Shirt Company Ltd., Forsyth Holdings, Inc. and Forsyth of Canada, Inc., and not in its personal capacity

Per: Name: Blair Davidson Title: President

Schedule "B" Purchased Assets

All that tract or parcel of land, situate lying and being in Land Lot 41 of the Eleventh (11th) Land District of Crisp County, Georgia, containing 7.5 acres, more or less, as shown on plat of survey made by Earl D. Raines, Surveyor, dated July 16, 1968 and further described as follows: Beginning at the point of intersection of the south right-of-way line of 13th Avenue with the east right-of-way line of Harris Street, proceed thence South 85 degrees 25 minutes East for a distance of 651.37 feet to a point which is on the west right-of-way line of any easement for a street; thence proceed South 00 degrees 46 minutes West for a distance of 445.6 feet; thence proceed North 88 degrees 55 minutes West for a distance of 650 feet; thence proceed North 00 degrees 46 minutes East for a distance of 488 feet to the point of beginning of the tract herein described together with all and singular the rights, members and appurtenances thereof.

Schedule "C" Claims to be deleted and expunged from title to Real Property

(1) Deed To Secure Debt, Security Agreement and Assignment OF Leases and Rents from Forsyth of Canada, Inc. to Hilco Capital LP, dated May 12, 2003, filed and recorded at Deed Book 563, Page 153, Crisp County, Georgia records; as affected by Lien Subordination Agreement from Forsyth of Canada, Inc. to Hilco Capital, LP, filed April 6, 2007, filed and recorded at Deed Book 750, Page 40, aforesaid records; and re-recorded at Deed Book 787, Page 43, aforesaid records.

(2) UCC Financing Statement between Forsyth of Canada, Inc. (Debtor) and Hilco Capital LP (Secured Party), filed May 12, 2003, and recorded at Deed Book 563, Page 188, Crisp County, Georgia records.

(3) 1988 City of Cordele Taxes in the name of Clinton Marine Products, Inc., FiFa No. 0047760, entered on GED Tax Document 1-1 Addendum, Clerk's Office, Crisp Superior Court.

1

(1) Deed To Secure Debt, Security Agreement and Assignment OF Leases and Rents from Forsyth of Canada, Inc. to Congress Financing Corporation (Canada), dated May 12, 2003, filed and recorded at Deed Book 563, Page 119, Crisp County, Georgia records; as affected by Lien Subordination Agreement by and among Wells Fargo Capital Finance Corporation Canada, successor in interest by merger to Wachovia Capital Finance Corporation (Canada), successor in interest by merger to Congress Financial Corporation (Canada) (Subordinating Creditor), by Forsyth of Canada, Inc. (Debtor) and Wells Fargo Bank, National Association, successor in interest by merger to Wachovia Bank, National Association, filed April 24, 2013 at Deed Book 936, Page 106, aforesaid records.

(2) Deed to Secure Debt and Assignment of Rents between from Forsyth of Canada, Inc. and Wachovia Bank, National Association dated March 23, 2007, filed April 6, 2007 and recorded at Deed Book 750, Page 42, aforesaid records; as affected by Lien Subordination Agreement by and among Wells Fargo Capital Finance Corporation Canada, successor in interest by merger to Wachovia Capital Finance Corporation (Canada), successor in interest by merger to Congress Financial Corporation (Canada) (Subordinating Creditor), by Forsyth of Canada, Inc. (Debtor) and Wells Fargo Bank, National Association, successor in interest by merger to Wachovia Bank, National Association, filed April 24, 2013 at Deed Book 936, Page 106, aforesaid records.

(3) UCC Financing Statement between Forsyth of Canada, Inc. (Debtor) and Wachovia Bank, National Association (Secured Party), filed April 6, 2007, and recorded at Deed Book 750, Page 51, Crisp County, Georgia records; as affected by UCC Financing Statement Amendment by Wachovia Bank, National Association (Secured Party), filed and recorded October 1, 2010, filed and recorded at Deed Book 863, Page 89, aforesaid records; as affected by UCC Financing Statement Amendment (Continuation), filed and recorded February 10, 2012 at Deed Book 898, Page 92, aforesaid records.

(4) Eighty (80) foot right of way for Harris Street given to Crisp County by document of record recorded in Deed Book 63, Page 522, Crisp County, Georgia records.

I ••.


," I• I •




D. Robb English (LSUC # 19862FIB) Tel: 416.865.4748 Fax: 416.863.1515 Email: renglish(a airdberlis.com

Ian Aversa (LSUC # 55449N) Tel: 416.865.3082 Fax: 416.863.1515 Email: iaversaa)airdberlis.com


17904961.4

mIt t

Court File No. C- 13-1 0009-OOCL

IH J i f1U[SJ

re THE — ----' ) THE _ ) |)/\Y-

) '

JUSTICE

Ii! 1IP

Pebte~ IhJohn Forsyth Shirt Company Ltd.. Forsyth Holdings. Inc. and Forsyth of Canada,

-2-

Inc. (collectively. the "Ai niieants"1 for an order . inter ilia, approving the sale transaction (the

~ ralYSaetl® nrr n n

Pur, haserthe-Pets") contemplated by the asset purchase agreement among The John Forsyth

Shirt ompanv Ltd. and Forsyth f Canada Inc (collectively, "Vendors"). as vendors. and

2414395 Ontario Inc (the "Canadian Purchaser") and Forsyth U.S. Acquisition Company Inc

(the "US Purchaser" and together with the Canadian Purchaser. the "Purchasers"1 as

purchasers dated May 5 2014 (the "APA" . a copy of which is appended, in redacted form, to

the Fifth Report of BDO Canada Limited .Jn i: . j c monitor of the

Applicants (in such capacity, the "Monitor"). dated May <* >. 2014 (the "Fifthepor filed.

and appended in unredacted form to the Confidential Supplement to the Fifth Report of the

Monitor dated May <*> 2014 (the "Confidential Supplement"1 filed and vesting in the

Purchasers the Vendors' right, title and interest in and to the assets deseribe the

Agree+ -nI44 "''Purchased Assets'-' (as defined in the APA ), was heard this day at 330 University

Avenue, Toronto, Ontario.

ON READING the affidavit of Harris Hester sworn May 5 2014 the Fifth Report and

the ConfidentialSupplemenl and on hearing the submissions of counsel for the Re—c =ter -

fYYV1T~C.7'E "C7T1T~L~ 1 T1-L\~T~b~%-Y- LTTTCLI V'\~"~' counsel for the Monitor counsel for

the Purchasers counsel for Salus Capital Partners LLC and counsel for Manunion Investments

DXSTOR I......120192.7:~.a4

-3-

Limited , no one appearing for any other person on the service list, although properly served as

appears from the affidavit of f 4li Susv Moniz sworn fDATTi ay 6. 2014.. filed_,


today and hereby dispenses with further service thereof .

2_ 4-7--THIS COURT ORDERS AND DECLARES that the Transaction is hereby

approved,2 and the execution of the -,W e--~ ^greemen APA by the Reeei-ve Vendors is hereby

authorized and approved, with such minor amendments as the Ree4ver Vendors and the

Purchasers. with the consent of the Monitor may deem necessary. The 14eee4ve4sVendors are

hereby authorized and directed to take such additional steps and execute such additional

documents as may be necessary or desirable for the completion of the Transaction and for the

conveyance of the Purchased Assets to the rrsee Purchasrs .

I 2-T IS COURT ORDERS AND DECLARES that upon the delivery of a

certificate by the Monitor to the 1'uie•hPurchasers substantially in the form attached as

Schedule "A" hereto (the 4 e ' 'Monitor' s Certificate), all of the De Vendors ,

right, title and interest in and to the (i) the Canadian Purchased Assets (as defined in the APAI

shall vest absolutely in the Canadian Purchaser: and (ii l the US Purchased Assets (as defined in

the APA including without limitation the US Purchased Assets described in-thelh- -Agreement--

FHcl~r-sl~c>tttct-tai-;~~r-~ #f~n-~ttl

warr-a31t-a...4i#'#Z,t ~c~aat apt a~UTa lr.-_£ <3aia>-,e-4-s}~ k --ec}n €i --att; c;}-)iaag-r}ae—a-tYicttir ~ EAf se4wioe-tia...fl+i-s'-Or-dt 7.~~u;;~c°-cn-n-"s~?~~ netel~31~-w'r'c°re t'~;r_ -a~rE~r—n3,."~° "~ Ip6H-f• jy~.7•, , +a~~

i -~~-iti:-rrcw--~i'roui- ~ °~-.-elzcr-S ° "~ °'~' "c~~~TCCTrniar~--vvmt -rcn-4n'ricirir~z'n-c • il, ~ .. i.° ... ':l e: . l v t-4..~ !".,.,v-tic

crrcro r~+-rrcvrr~

3 4 set e ees ,the -0c E ~~rwiN ~e t} urt fur ter T z~}c t e k cat tti a i e a ti ~cl} itw€ c # a ~ t]ae. ~=1~c~n ~•;ti~art:--}~-tl~ar~-ease-~~at=~la~~ tatC-1 1~€;-#ak-eat--tm ~-~ra~ larc*-N~t~-t}~-L~r€l~a~trt~~ t-t zcs-e~#~r-ta>*l~«t k~-~-N~<~--l~~tsa~

aril-t4~e-I~~c-~i~ c-r-#~--~~eaat€~-aatc~-cl~livkar el~sc ,-at~c#-tai~~r-std:

Ix)E STo1R:......1204 zT44

L 'zc4i ,te-d on Schedule "B" heretof 4 (the "Real Prolrtv~11 shall vest absolutely in the US

Purchaser, iin each case free and clear of and from any and all security interests (whether

contractual, statutory, or otherwise), hypothecs, mortgages, trusts or deemed trusts (whether

contractual, statutory, or otherwise), liens, executions, levies, charges, or other financial or

monetary claims, whether or not they have attached or been perfected, registered or filed and

whether secured, unsecured or otherwise (collectively, the ""Claims'"_'). including, without

limiting the generality of the foregoing: (i) any encumbrances or charges created by the InitiaL

Order of the Honourable Justice fNAME jflon- S1egg dated fl Tf February 22. 2013. (the

"Initial Order") ; (ii) all charges, security interests or claims evidenced by registrations pursuant

to the Personal Property Security Act (Ontario) the Uniform Commercial Code as adopted in

any state in the United States. or any other personal property registry system; and (iii) those

Claims listed on Schedule "C" hereto (all of which are collectively referred to as the

"Encumbrances2 which term shall not include the permitted liens encumbrances, easements

and restrictive covenants listed on Schedule "D) and, for greater certainty, this Court orders

that all of the Encumbrances affecting or relating to the Purchased Assets are hereby expunged

and discharged as against the Purchased Assets.

2 -THIS COURT ORDERS € that ~ ~ etl--legist~y- , ---f&r-l€-

~31-~4:'"'zrrnc°--crTm~-na-i-ur"'i; c-c'ria;sc"~. ~s<°-c~c,~.ip"'l'-`u-r"nr",-cczrrv-cR°.-Sc-irw`crm-cr-vc,.cccnc~

~1~E

.~'s+l~~€a+sa-rrra ~ict's-~~-tlataE ttca~Er~i~rla~ :

I DU(STO R: 2O•r s.27\1.4

-5-

upon the delivery of the Monitor's

Certificate to the Purchasers, if any person or entity that has filed financing statements,

mortgages, i s vendens or other documents, instruments, notices or agreements evidencing any

Encumbrances against or in the Real Property has not delivered to the Vendors. in proper form

for filing and executed by the appropriate parties. termination statements, releases or instruments

MUM

the Real Property: (a) the Vendors and/or the US Purchaser are authorized to execute and file

such termination statements, releases, instruments of satisfaction or other documents on behalf of

UFATM

Purchaser are authorized to file. register or otherwise record a certified copy of this Order which.

once filed, registered or otherwise recorded, shall constitute conclusive evidence of the release of

sufficient to be placed in the filing or recording system of each and every federal, state, local.

tribal or foreign government agency, department or office

office or contract, to accept, file, register or otherwise record or release any documents or

P€)€ST•QR. 42-04P2711-14

instruments or who may be required to report or insure any title in or to the Real Propev, is

appropriate to consummate the Transaction and this Order. All such entities described above in

this paragraph are authorized and specifically directed to strike all recorded Encumbrances

i:. i1Iiu s1tiu wuJ fi Wo- Ell

maintain the following reserves as cash collateral from the proceeds from the sale of the

the sum of177424.00 or such other amount as may be reouired pursuant to the

Charge as defined in the Initial Order) shall attach with the priority provided by

the sum of $50,000-00 (the "D&O Charge Reserve" and together with the

Administration Charge Reserve. the "Reserves" to which the D&O charge As

defined in theInitial Order) shall attach with the priority provided by the Initial

Order.

FL tii1IiiUItIiiP]

further order of the Court. to make distributions from the Administration Charge Reserve to the

I ATfl U sth sit a itfli

~~Im~wmmvlww- Lino

in connection with these proceedings, free and clear of all Encumbrances other than those in

DOCS1OR: 1204927A4

- 7-

favour of such beneficiary, to be applied against the indebtedness, liabilities and obligations

owing by the Applicants to such beneficiary.

8. THIS—CO -URT ORDERS that once the Monitor determines that all claims to the

payments have been made, or a further Order of the Court so holds. the Administration Charge

In - WINEW 40

without further Order of the Court, to distribute all amounts remaining in the Administration

Charge Reserve to the Purchasers, free and clear of all Encumbrances.

9. THIS COURT ORDERS that the Monitor is hereby authorized and empowered. without

further order of the Court, to make distributions from the D&O Charge Reserve to the

ft In

the Monitor determines are valid claims for indebtedness, liabilities or obligations owing by the

Applicants to such beneficiary pursuant to the indemnity provided in paragraph 20 of the Initial

Order, free and clear of all Encumbrances other than those in favour of such beneficiary, to be

beneficiary.

:10 THIS COURT ORDERS that upon the earlier of: (A) the date on which the Monitor

determines that all claims to the D&O Charge Reserve have been fully and finally determined

and all applicable payments have been made, or a further Order of the Court so holds: and (B) six

months from the date of the Monitor's Certificate, (i) the D&O Charge shall be fully and finally

discharged. and (ii' the Monitor is hereby authorized and directed, without further Order of the

P)(STOR:• 1201927\14

:

Court, to distribute all amounts remaining in the D&O Charge Reserve to the Purchasers, free

nd clear of all Encumbrances,

11.. 4-;-THIS COURT ORDERS that for the purposes of determining the nature and priority

of Claims, the n -pro-ed from4he—ale--o4T-41e-Threhase4-AssetsSale Proceeds (less the

Reserves) (the "Remainiiw Sale Proceeds" shall stand in the place and stead of the Purchased

Assets, and that from and after the delivery of the 1eee-i-vedMonitor's Certificate all Claims and

Encumbrances shall attach to thene4m-the-s',-the--Pu+&ase4-AsetsRern jail in

Sale Proceeds with the same priority as they had with respect to the Purchased Assets

immediately prior to the sales, as if the Purchased Assets had not been sold and remained in the

possession or control of the person having that possession or control immediately prior to the

sale, except that the Administration Charge and D&O Charge shall not attach to the Remaining

I2. THIS COURT ORDERS that the Monitor is hereby authorized and empowered, without

indebtedness, liabilities and obligations owing by the Applicants for the Priority Claims (as

IL I 1I11L.Iii!I I 1 [iJ!.T1'JID.

Order is hereby fully and finally discharged.

3'sa4i ~1ept

1)X;.J OF 92....14

-9-

14. T IS COURT ORDERS that the Monitor may rely on written notice from the Vendome

and the Purchasers re ar ing fulfillment of conditions to closing under the APA and shall incur

naiiabilitv with respect to t delivery of the Monitor's Certificate based on such reliance

15 THIS COURT ORDERS AND DIRECTS the Ree erMcrnjtor to file with the Court

a copy of the -ever i is Certificate, forthwith after delivery thereof.

1_6.. 6-T IS COURT ORDERS that, pursuant to clause 7(3)(c) of the Canada Personal

Information Protection and Electronic Documents Act, the R ci Aplicants are authorized

and permitted to disclose and transfer to the P easerBiirchasers all human resources and payroll

information in the t:ny A licants' records pertaining to the Dex'sApplicants' past and

current employees-idin st;1-i _ €

the-Sa4Te- g --he--Prehaser. The Purchasers shall maintain and protect the privacy of

such information and shall be entitled to use the personal information provided to it in a manner

which is in all material respects identical to the prior use of such information by the

DrApplicants .

L7- 7-THIS COURT ORDERS that, notwithstanding:

(a) the pendency of these proceedings;

(b) any applications for a bankruptcy order now or hereafter issued pursuant to the

Bankruptcy and Insolvency Act (Canada) in respect of any of the

De Applicants and any bankruptcy order issued pursuant to any such

applications; and

(c) any assignment in bankruptcy made in respect of ~f the . i a

DOL STOR..:.....•1•21)19.277\,1.4

the APA. the Transaction and the vesting of the Purchased Assets in the PafehaserPurchasers

pursuant to this Order shall be binding on any trustee in bankruptcy that may be appointed in

respect of the _ lA _ icants and shall not be void or voidable by creditors of the

l e btcar c_anis , nor shall it constitute nor be deemed to be a fraudulent preference,

assignment, fraudulent conveyance, transfer at undervalue, or other reviewable transaction under

the Bankruptcy and Insolvency Act (Canada) or any other applicable federalt or provincial

legislation, nor shall it constitute oppressive or unfairly prejudicial conduct pursuant to any

applicable federal or provincial legislation.

18. - -.-THIS COURT ORDERS AND ECL,ARES that the Transaction is exempt from the

application of the Bulk Sales Act (Ontario) nd any other equivalent federal, state or provincial

legislation.

19.; THIS COURT ORDERS that the Applicants are authorized, following the completion

of the Transaction, to execute. deliver and file any document. including, without limitation, any

articles of reorganization required in order to effect a change of the corporate name of each of

th Applcnts, and this Court waives any third party re uirement or required consent pursuant to

any Canadian federal or provincial legislation relating to same .

2Q~ 9--THIS COURT HEREBY REQUESTS the aid and recognition of any court, tribunal,


effect to this Order and to assist the -1 e -i -an4-itsApplicants. the Monitor and their respective

agents in carrying out the terms of this Order. All courts, tribunals, regulatory and administrative

bodies are hereby respectfully requested to make such orders and to provide such assistance to

the Re-eeberApp1icants and to the Monitor , as an officer of this Court, as may be necessary or

DO(',&:T.OR {_2O. ~...92.7:.,.{.4

-ll __

desirable to give effect to this Order or to assist the

their resnective agents in carrying out the terms of this Order.

2L THIS COURT ORDERS that each of the Applicants and the Monitor be at liberty and is

body. wherever located, for the recognition of this Order and for assistance in carrying out the

terms of this Order. and that the Monitor is authorized and empowered to act as a representative

in respect of the within proceedings for the puose of having these proceedings recognized in a


Schedule A—

.F'.. T1 . 4-4 - roful of iteeiwiviOIiuOz s Certificate

Court File No. CV13-100O9-00CL

ONTARIO in au I[S1

• u : uMATTER OF TH 4NIES ' CREDITORS ARRA m v II1J

iIh1 Ji u :1 au ri I ID! tIJ J WILIJ EIA I (iWAITJIS) ri i DkU Dihi • al I .ii 1 U.i&h74irI .1111W! I] I1.1I..k7I k.iJIII pI I[J.

U • [W i[•]Uh1 II D1I II IAMENDED

Rt!flMIX IIi]4k'iSi DI II [WiIU

Pursuant to an Order of the Honourable f A4Vt&O-l-U4XiE4Mr. Justice

Wilton-Siegel of the Ontario Superior Court of Justice (Commercial ListUthe Court-date4-

&fe--4ertal-•pe-€m4-a&st-øf-B4-OR-: H-" dated February 22. 2013 the "Initial

Order". The John Forsyth Shirt Company Ltd., Forsyth Holdings. Inc. and Forsyth of Canada.

p(.çI.R ,,1,2.0IO2..7.\14

Inc.(collectively, the "Applicants") were declared companies to which_ the Companies

court-appointed Monitor of the Applicants (in such capacity. the " _ ").

B. B: Pursuant to an Order of the Court dated {T€4Mav 13.2014 ( the "Approval

and Vesting Order" , the Court approved the asset purchase agreement of l n =

s--of [ g ^ri a Tr r A~ry M~ ~ ~cen csze n1elt0~~n—te ce ,~9, b- fTl ~~

The John Forsyth Shirt Com any Ltd.

and Forsyth of Canada. Inc (collectively, the "Vendors") as vendors and 2414395 Ontario Inc

(the "Canadian Purchaser") and Forsyth U.S. Acquisition Company Inc the "US Purchaser"

and, together with the Canadian Purchaser. the "Purchasers"), as purchasers dated May 5 2014

(the "APA"). and provided for the vesting in the P+w aserPurchasrs of the -1 -s i r '

right, title and interest in and to the Purchased Assets, which vesting is to be effective with

respect to the Purchased Assets upon the delivery by the Reeei=o r-Monitor to the

P+reh-ase-rPurchasers of a certificate confirming . (i) the he Prr e Purchasers

have satisfied the Purchase Price for the Purchased Assets pursuant to the APA ; (ii) that-the

conditions to Closing as set out in s ti the &Me Ag er e-ntAPA have been satisfied or

waived by the Reeai-ver Vendor and theP we h—asurPurchasers ; and (iii) the Transaction has been

completed to the satisfaction of the Iir Monitor .

C. C. Unless otherwise indicated herein, capitali c. terms wi• i ia1-apital-sshall have

the meanings a cribed to them in the Sa''e `gee„,e-nAA .

>O{_;,`TOR..;_.12f)1.9 .7t.}.4

THE M €-14 14MONIIQR CERTIFIES the following:

__Purchasers e-r ` _Purchasers have satisfied

the Purchase Price for the Purchased Assets t a3 -e z -he C?.es r te* pursuant to the me

g€i 1A

2 2 Theih conditions to Closing as set out in s4n-- the 1k tAPA

have been satisfied or waived by the Reeei and the ., aud Purchasers:

Theth Transaction has been completed to the satisfaction of the

R e-e-ir.Mn i r° and

_ ;,. ~r 4. 4: Thi-stl Certificate was delivered ~~e c- by the ~- mt r at

on fA 1 2014.

M

I D)GST()R:1-201 99 744

M'

Court File No. CV-13-10009-0OCL

11T I

r t1 ' ,

THE HONOURABLE ) TUESDAY, THE 13TH DAY

JUSTICE ) OF MAY, 2014

•

flT! I 1 ~ . 1 . 1 •,,


and Forsyth of Canada, Inc. (collectively, the "Applicants") for an order, among other things:

(a) approving the Fifth Report of BDO Canada Limited ("BDO") , in its capacity as

the Court-appointed monitor (in such capacity, the "Monitor") of the Applicants,

dated May <*>, 2014 (the "Fifth Report") and the Confidential Supplement to

the Fifth Report of the Monitor dated May <*>, 2014 (the "Confidential

Supplement"), and the actions of the Monitor described therein;

(b) sealing the Confidential Supplement until further order of this Court;

(c) approving the fees and disbursements of the Monitor and its counsel, including an


proceedings (the "CCAA Proceedings");

-2-

(d) discharging BDO as Monitor and releasing BDO from any and all liability that


or omissions of BDO while acting in its capacity as Monitor, upon the filing of

the Monitor's Discharge Certificate (as defined herein) with this Court; and

(e) terminating the CCAA Proceedings, upon the filing of the Monitor's Discharge

Certificate with this Court,

was heard this day at 330 University Avenue, Toronto, Ontario.

ON READING the Fifth Report, the Confidential Supplement, the affidavit of Harris

Hester sworn May 5, 2014, the affidavit of Blair Davidson sworn May <*>, 2014, and the

affidavit of Bruce Darlington sworn May <*>, 2014, and on hearing the submissions of counsel

for the Applicants, counsel for the Monitor, counsel for Salus Capital Partners, LLC and counsel

for Manunion Investments Limited, 2414395 Ontario Inc. and Forsyth U.S. Acquisition

Company Inc., no one appearing for any other person on the service list, although properly

served as appears from the affidavit of Susy Moniz sworn May 6, 2014, filed,




2. THIS COURT ORDERS that the Fifth Report and the Confidential Supplement be and

are hereby approved and the actions of the Monitor described therein be and are hereby

approved.

-3-

3. THIS COURT ORDERS that, subject to further order of this Court, the Confidential

Supplement shall be sealed, kept confidential and not form part of the public record, but, rather,

shall be placed, separate and apart from all other contents of the Court file, in a sealed envelope

attached to a notice that sets out the title of these proceedings and a statement that the contents

are subject to a sealing order and shall only be opened upon further order of this Court.

4. THIS COURT O ERS that, upon the filing by the Monitor of a certificate with this

Court substantially in the form attached as Schedule "A" hereto (the "Monitor's Discharge

Certificate ") certifying that all matters to be attended to in connection with the CCAA

Proceedings have been completed to the satisfaction of the Monitor:

(a) BDO be and is hereby discharged and relieved from any further obligations,

liabilities, responsibilities or duties in its capacity as Monitor pursuant to the

Order of the Honourable Mr. Justice Wilton-Siegel granted on February 22, 2013

in the CCAA Proceedings (the "Initial Order"), any other Order of this Court in

the CCAA Proceedings, the Companies' Creditors Arrangement Act, R.S.C.

1985, c. C-36, as amended (the "CCAA") or otherwise, provided, however, that

notwithstanding its discharge herein, the Monitor shall remain Monitor for the

performance of such incidental duties as may be required to complete the

administration of the CCAA Proceedings; and

(b) the CCAA Proceedings be and are hereby terminated.

5. THIS COURT ORDERS that, in addition to the protections in favour of the Monitor as

set out in the Initial Order, any other Order of this Court or reasons provided by this Court in the

CCAA Proceedings or the CCAA, the Monitor shall not be liable for any act or omission on the

-4-

part of the Monitor, including with respect to any reliance thereof, including, without limitation,

with respect to any information disclosed, any act or omission pertaining to the discharge of the

Monitor's duties in the CCAA Proceedings or with respect to any other duties or obligations of

the Monitor under the CCAA or otherwise, save and except for any claim or liability arising out

of any gross negligence or wilful misconduct on the part of the Monitor. Subject to the

foregoing and in addition to the protections of the Monitor as set out in the Orders of this Court

or any reasons provided by this Court in the CCAA Proceedings, any claims against the Monitor

in connection with the performance of its duties as Monitor are hereby released, stayed,

extinguished and forever barred and the Monitor shall have no liability in respect thereof.

6. THIS COURT ORDERS that no action or other proceeding shall be commenced against

the Monitor in any way arising from or related to its capacity or conduct as Monitor except with

prior leave of this Court and on prior written notice to the Monitor and such further order

securing, as security for costs, the full indemnity costs of the Monitor in connection with any

proposed action or proceeding as the Court hearing the motion for leave to proceed may deem

just and appropriate.

7. THIS COURT ORDERS that, notwithstanding any provision of this Order, nothing

contained in this Order shall affect, vary, derogate from or amend any of the rights, approvals

and protections in favour of the Monitor pursuant to the Initial Order, any other Order of this

Court or reasons provided by this Court in the CCAA Proceedings, the CCAA or otherwise, all

of which are expressly continued and confirmed.

8. THIS COURT ORDERS that the fees and disbursements of the Monitor for the period

of <*> to and including <*>, in the amount of $<*>, inclusive of applicable HST, be and are

hereby approved.

-5-

9. THIS COURT ORDERS that the fees and disbursements of the Monitor's legal counsel,

Davis LLP, for the period of <*> to and including <*>, in the amount of $<*>, inclusive of

applicable HST, be and are hereby approved.

10. THIS COURT ORDERS that the Fee Accrual (as defined in the Fifth Report) be and is

hereby approved.







give effect to this Order or to assist the Applicants, the Monitor and their respective agents in

carrying out the terms of this Order.

12. THIS COURT ORDERS that each of the Applicants and the Monitor be at liberty and is






SCHEDULE "A" FORM OF MONITOR'S DISCHARGE CERTIFICATE


I' 4 ' JS

1

• 1 , ,

IJ!.1 I

1 1 .V31

I. D• Iw

A. Pursuant to an Order of the Honourable Mr. Justice Wilton-Siegel of the Ontario Superior

Court of Justice (Commercial List) (the "Court") dated February 22, 2013, The John

Forsyth Shirt Company Ltd., Forsyth Holdings, Inc. and Forsyth of Canada, Inc.

(collectively, the "Applicants") were declared companies to which the Companies'

Creditors Arrangement Act applied and BDO Canada Limited ("BDO") was appointed as

the Court-appointed Monitor of the Applicants (in such capacity, the "Monitor")

B. Pursuant to an Order of this Court dated May 13, 2014 (the "Discharge Order"), BDO

was discharged as Monitor of the Applicants to be effective upon the filing by the

Monitor of a certificate with this Court certifying that all matters to be attended to in

connection with the CCAA Proceedings have been completed to the satisfaction of the

Monitor, provided, however, that (i) notwithstanding its discharge, the Monitor shall

remain Monitor for the performance of such incidental duties as may be required to

complete the administration of the CCAA Proceedings; and (ii) the Monitor will continue

to have the benefit of the provisions of all Orders made in these proceedings, including

all approvals, protections and stays of proceeding in favour of BDO, in its capacity as

Monitor.

C. Unless otherwise indicated herein, capitalized terms have the meanings set out in the

Discharge Order.

THE MONITOR CERTIFIES that all matters to be attended to in connection with the

CCAA Proceedings have been completed to the satisfaction of the Monitor.

DATED at Toronto, Ontario, this day of , 2014

BDO CANADA LIMITED, in its capacity as the Court-appointed Monitor of The John Forsyth Shirt Company Ltd., Forsyth Holdings, Inc. and Forsyth of Canada, Inc., and not in its personal capacity

C Name: Blair Davidson Title: President

1 1,

1,,, . Ii 1 1 ~ •1 • 1•.

Court File No. CV-13-10009-000L

/

1 '


I1 1:1



D. Robb English (LSUC # 19862F1B) Tel: 416.865.4748 Fax: 416.863.1515 Email: renglish;a)airdberlis.com

Ian Aversa (LSUC # 55449N) Tel: 416.865.3082 Fax: 416.863.1515 Email: iaversa!dairdberlis.com


17761257.3

1


ONTARIO j SUPERIOR 4

1N [f

I I• N H DU ri I U ai Ui

ANDfl!.i MATTER


APPLICATION UNDER

AFFIDAVIT OF HARRIS R. HESTER (sworn May 5, 2014)

I, Harris R. Hester, of the Town of Darien, in the State of Connecticut, MAKE OATH

FRO1IL'WDIb'IX11JR111M

1. I am the President and a director of each of The John Forsyth Shirt Company Ltd.

("Forsyth Canada"), Forsyth Holdings, Inc. ("Forsyth Holdings") and Forsyth of Canada, Inc.

("Forsyth USA" and, together with Forsyth Canada and Forsyth Holdings, the "Applicants").

As such, I have personal knowledge of the matters to which I hereinafter depose in this Affidavit.

Where I do not have personal knowledge of the matters set out herein, I have stated the source of

my information and, in all such cases, believe it to be true.

I I.0 1 I] [SI N (I]WI 1 1 aIUTM i'iiiii,i : NI

2. This Affidavit is sworn in support of a motion by the Applicants under the Companies'

Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended (the "CCAA"), for an order,

among other things:

(a) if necessary, abridging the time for service and filing of this notice of motion and

the motion record or, in the alternative, dispensing with same;

Affidavit of Harris R. Hester Page 2

(b) approving the asset purchase agreement among The John Forsyth Shirt Company

Ltd. and Forsyth of Canada, Inc. (collectively, the "Vendors "), as vendors, and

2414395 Ontario Inc. (the "Canadian Purchaser ") and Forsyth U.S. Acquisition

Company Inc. (the "US Purchaser" and, together with the Canadian Purchaser,

the "Purchasers"), as purchasers, dated May 5, 2014 (the "APA"), and vesting

the Vendors' right, title and interest in and to the Purchased Assets (as defined in

the APA) in the Purchasers, upon the filing by BDO Canada Limited ("BDO"), in

its capacity as the Court-appointed monitor of the Applicants (in such capacity,

the "Monitor"), of a certificate with this Court (the "Monitor's Certificate ")

certifying, among other things, that the transaction contemplated by the APA (the

"Transaction") has been completed to the satisfaction of the Monitor (as defined

below);

(c) authorizing and directing the Monitor to establish, hold and maintain certain

reserves (the "Reserves") as cash collateral from the proceeds from the sale of the

Purchased Assets to satisfy claims secured by the Administration Charge and the

D&O Charge (as such terms are defined in the Initial Order granted by the

Honourable Justice Wilton-Siegel on February 22, 2013 in these proceedings (the

"Initial Order")) ;

(d) authorizing and empowering the Monitor to make distributions from the Reserves

to the beneficiaries of the Administration Charge and the D&O Charge;

(e) discharging the Administration Charge once the Monitor determines that all

claims secured by such charge have been fully and finally determined and all

applicable payments have been made;

(f) discharging the D&O Charge upon the earlier of: (A) the date on which the

Monitor determines that all claims secured by such charge have been fully and

finally determined and all applicable payments have been made; and (B) six

months from the date of the Monitor's Certificate;

(g) discharging the DIP Charge (as defined in the Initial Order);


(h) following the completion of the Transaction, authorizing the Applicants to

execute, deliver and file any document, including, without limitation, any articles

of reorganization, required in order to effect a change of the corporate name of

each of the Applicants;

(i) approving the Fifth Report of the Monitor (the "Fifth Report"), and the

Confidential Supplement to the Fifth Report of the Monitor (the "Confidential

Supplement"), and approving the actions of the Monitor described therein;

(j) sealing the Confidential Supplement to the Fifth Report until further order of this

Court;

(k) approving the fees and disbursements of the Monitor and its counsel, including an


proceedings (the "CCAA Proceedings ");

(1) discharging BDO as Monitor and releasing BDO from any and all liability that


or omissions of BDO while acting in its capacity as Monitor, upon the filing by

the Monitor of a certificate (the "Monitor's Discharge Certificate ") with this

Court certifying that all matters to be attended to in connection with the CCAA

Proceedings have been completed to the satisfaction of the Monitor; and

(m) terminating the CCAA Proceedings, upon the filing of the Monitor's Discharge

Certificate with this Court.

I I.. : t IttI111U11

3. The Applicants are collectively in the business of manufacturing, distributing and selling

apparel in both Canada and the United States of America. Through their collective distribution

channels, the Applicants sell apparel in various retail stores, through catalogues and through the

Internet. Additionally, the Applicants sell uniform apparel to certain large organizations in

North America.


4. On February 22, 2013, this Court issued the Initial Order granting the Applicants

protection from their creditors under the CCAA in the CCAA Proceedings. A copy of the Initial

Order is attached as Exhibit "A" to this Affidavit.

5. Pursuant to the Initial Order, the Applicants obtained debtor-in-possession financing

under the terms of the DIP Commitment Letter dated February 20, 2013 among Wells Fargo

Capital Finance Corporation Canada and Wells Fargo Capital Finance, LLC (together, "Wells

Fargo") and the Applicants (the "DIP Commitment Letter").

6. I swore an affidavit on February 20, 2013 (the "February 20 Affidavit ") in support of

the Initial Order. The February 20 Affidavit sets out the background of the CCAA Proceedings,

including the collective business of the Applicants and their financial difficulties and an

overview of the Applicants' major stakeholders. A copy of the February 20 Affidavit (without

exhibits) is attached as Exhibit "B" to this Affidavit.

7. On March 18, 2013, orders (the "US Recognition Orders ") were entered by the United

States Bankruptcy Court for the Southern District of New York (the "US Court") in Case No.

13-10526 (the "US Recognition Proceedings "), among other things, recognizing the Initial

Order and these CCAA Proceedings as foreign main proceedings. Copies of the US Recognition

Orders are collectively attached as Exhibit "C" to this Affidavit.

8. On March 21, 2013, upon a motion by the Applicants, this Court granted an order (the

"March 21 Order"), among other things: (i) extending the Stay Period (as defined in the Initial

Order) to and including May 29, 2013; and (ii) approving the First Report of the Monitor dated

March 18, 2013, and approving the actions of the Monitor described therein. A copy of the

March 21 Order is attached as Exhibit "D" to this Affidavit.

9. On May 27, 2013, upon a motion by the Applicants, this Court granted an order (the

"May 27 Order") extending the Stay Period to and including May 31, 2013. The balance of the

Applicants' relief was adjourned to May 31, 2013. A copy of the May 27 Order is attached as

Exhibit "E" to this Affidavit.

10. On May 31, 2013, this Court granted orders (the "May 31 Orders"), among other things:

(i) extending the Stay Period to and including July 12, 2013; (ii) approving the Second Report of


the Monitor dated May 17, 2013 and the Supplementary Report of the Second Report dated May

30, 2013, and the actions of the Monitor described therein; (iii) approving a claims process and

bar date for claims of creditors of the Applicants; and (iv) authorizing and establishing the

procedure for the Applicants to call, hold and conduct a meeting of their creditors to consider

and vote on the Consolidated Plan of Compromise and Arrangement of the Applicants dated

May 16, 2013 (as restated, supplemented or amended from time to time, the "Plan"). Copies of

the May 31 Orders are collectively attached as Exhibit "F" to this Affidavit.

11. At the meeting of creditors on June 26, 2013, 95% of the Applicants' creditors holding

98% of the value of votes cast voted in favour of the Plan

12. On July 11, 2013, upon a motion by the Applicants, this Court granted an order (the

"Sanction Order"), among other things: (i) extending the Stay Period to and including

September 30, 2013; (ii) sanctioning and approving the Plan; (iii) approving the Second

Amending Agreement to the DIP Commitment Letter dated July 9, 2013; and (iv) approving the

Third Report of the Monitor dated July 4, 2013 and the Supplement to the Third Report dated

July 9, 2013, and the actions of the Monitor described therein. A copy of the Sanction Order is

attached as Exhibit "G" to this Affidavit.

13. On August 21, 2013, the US Court entered an order, among other things, recognizing and

enforcing the Sanction Order, a copy of which is attached as Exhibit "H" to this Affidavit.

14. On September 26, 2013, upon a motion by the Applicants, this Court granted an order

(the "September 26 Order"), among other things: (i) extending the Stay Period to and including

October 18, 2013; (ii) approving the Fourth Report of the Monitor dated September 24, 2013 and

the Supplementary Report to the Fourth Report dated September 25, 2013, and the actions of the

Monitor described therein; and (iii) approving the Third DIP Extension Agreement to the DIP

Commitment Letter dated September 24, 2013. A copy of the September 26 Order is attached as

Exhibit "I" to this Affidavit.

III. THE REPLACEMENT LENDER

15. Paragraph 7.2(j) of the Plan required the Applicants to establish funding arrangements to

repay the amounts owing to Wells Fargo under the DIP Commitment Letter.


16. On October 10, 2013, the Vendors entered into a credit agreement (the " Salus Credit

Agreement") with Salus Capital Partners, LLC ( "Salus") which, among other things, provided

the financing required to repay the Applicants' indebtedness to Wells Fargo under the DIP

Commitment Letter.

17. The Applicants' indebtedness to Wells Fargo under the DIP Commitment Letter was

repaid from a portion of the credit facilities provided under the Salus Credit Agreement on

October 10, 2013. Accordingly, there are no longer any amounts secured by the DIP Charge and

the Applicants request that the DIP Charge be discharged.

18. On October 10, 2013, the Monitor filed a certificate with this Court certifying: (i) that the

conditions precedent set out in section 7.2 of the Plan have been satisfied or waived in

accordance with the Plan; and (ii) that the Plan Implementation Date (as defined in the Plan) is

October 11, 2013. A copy of this Monitor's certificate is attached as Exhibit "J" to this

Affidavit.

f► UNall l

19. The Plan was structured such that the Applicants':

(a) unsecured creditors (other than Employee Claimants (as defined in the Plan)) with

Proven Distribution Claims (as defined in the Plan) of $5,000 or less, or those

who elected to reduce their claims to $5,000 or less, would receive a fixed

distribution based on a formula in the Plan in a specific time frame;

(b) unsecured creditors (other than Employee Claimants) with Proven Distribution

Claims exceeding $5,000 but less than $3,000,000 would receive two separate

distributions on or before the Interim Distribution Date and the Second

Distribution Date (each as defined in the Plan), respectively, each equal to 10% of

such creditor's Proven Distribution Claim;

(c) unsecured creditors (other than Employee Claimants) with Proven Distribution

Claims exceeding $3,000,000 would receive a distribution equal to 10% of their

Proven Distribution Claim on the Interim Distribution Date and a promissory note


issued by the Applicants on the Plan Implementation Date, which provides

payment tranches based on formulae set out in section 4.2(c)(ii) of the Plan;

(d) Employee Claimants with Proven Distribution Claims of $1,000 or less would

receive the amount of their Proven Distribution Claims on the Interim

Distribution Date;

(e) Employee Claimants with Proven Distribution Claims greater than $1,000 but less

than $3,250 would receive $1,000 on the Interim Distribution Date, an additional

payment equal to the lesser of $1,000 or the balance of such Proven Distribution

Claim on or before the Second Distribution Date, and the balance, if any, of such

Proven Distribution Claim on or before January 15, 2016, to a maximum of

$3,250;

(f) Employee Claimants with Proven Distribution Claims greater than $3,250 but less

than or equal to $16,250 would receive payments on each of the Initial

Distribution Date, the Second Distribution Date and January 15, 2016, as

applicable, pursuant to formula set out in section 4.3(c) of the Plan; and

(g) Employee Claimants with Proven Distribution Claims exceeding $16,250 would

receive two payments equal to 10% of such Proven Distribution Claim paid on the

Interim Distribution Date and the Second Distribution Date, respectively.

, I S )JAI N

20. The Stay Period expired on October 18, 2013.

21. In the Fall of 2013, the Applicants' managed their operations with the lending

arrangements provided by Salus. Unfortunately, sales did not meet expectations in the fourth

quarter, which resulted in operating losses and decreased availability. For the year ended

December 31, 2013, sales of approximately $24.5 million and losses of approximately $1.9

million were incurred by the Applicants.

22. In addition, late in 2013, Salus commissioned an inventory appraisal by Gordon Brothers

Group, a copy of which is appended to the Confidential Supplement. This new appraisal


presented orderly liquidation values for the Applicants' inventory that were significantly lower

than past appraisals, which resulted in a reduction of the Vendors' availability under the Salus

Credit Agreement in January, 2014.

23. The combination of the two factors described above created a situation wherein the

Applicants could not fund the first distribution of $600,000 due on January 15, 2014, as required

under the Plan.

24. The Monitor advised the creditors of this disappointing development in a letter dated

January 14, 2014. A copy of this letter is attached as Exhibit "K" to this Affidavit.

25. During January and early February, 2014, the Applicants made efforts to source

additional or new financing to fund the planned distributions. However, these efforts were

ultimately unsuccessful.

26. On February 4, 2014, the Monitor provided a material adverse change notice (the

"Material Adverse Change Notice ") to the Applicants' creditors indicating that the

distributions owing to creditors pursuant to the Plan would unlikely be made due to insufficient

funds. A copy of the Material Adverse Change Notice is attached as Exhibit "L" to this

Affidavit.

27. To date, neither the Applicants nor the Monitor have made any distributions under the

Plan.

28. Since the date of the Material Adverse Change Notice, the Applicants, with the assistance

of the Monitor, have been seeking entities interested in: (a) refinancing the Applicants' debt; (b)

investing in the Applicants' business; or (c) purchasing the Applicants' assets.

29. Given my knowledge of market competitors and other potential strategic buyers, I led this

informal sale and investment process with the assistance of the Monitor.

30. I approached several parties which I believed would be interested in a potential

investment in or purchase of the Applicants. These efforts led to formal meetings with three


parties, namely: (i) Tharanco Lifestyles, LLC ( "Tharanco"); (ii) Robert Talbott ( "Talbott"); and

(iii) Weatherproof Garment Co., a division of David Peyser Sportswear, Inc. ("Weatherproof'),

all of whom are in the clothing distribution business.

31. Tharanco, a Massachusetts company that distributes golf-inspired sportswear and

accessories, and Weatherproof, a leading apparel manufacturer located in New York, were

primarily interested in the Applicants' U.S. customers and were not interested in purchasing the

substantial assets located in Canada.

32. Talbott, a high end men's shirt manufacturer and distributor located in California,

expressed a serious interest in the Applicants' business, but its interest was conditional upon:

(a) Salus providing 100% financing for the transaction;

(b) Talbott not assuming any of the Applicants' liabilities; and

(c) Manunion Investments ("Manunion"), Forsyth's largest supplier located in

China, providing extended creditor terms for future inventory purchases.

33. Manunion was Forsyth's largest unsecured trade creditor affected by the CCAA

Proceedings. Manunion is owed approximately US$7 million and represented approximately

70% of the Applicants' unsecured claims at the date of the CCAA filing. During the CCAA

process, Manunion continued its role as the Applicants' largest supplier but on effectively "cash

on delivery" terms.

34. Manunion considered the possibility of acquiring the Applicants' business as it was

effectively being asked to finance another purchaser and risk future non-payment. If Manunion

purchased the Applicants' business, it would ensure an on-going customer for its products and

provide an opportunity to possibly recoup a portion of its past losses out of future profits.

35. Manunion and Oliver Morante, Forsyth's Executive Vice-President, formed an

acquisition vehicle for the purpose of acquiring substantially all of the Applicants' assets.

36. On May 5, 2014, the Vendors and the Purchasers entered into the APA, which remains

subject to, among other things, approval by this Court and recognition by the US Court. A


redacted copy of the APA is appended to the Fifth Report and an unredacted copy of the APA is

appended to the Confidential Supplement.

37. The primary terms of the APA are summarized in detail in the Fifth Report. The APA

provides that the Applicants are to change their corporate names following closing and the

Applicants request specific authorization from this Court to do so.

38. The consideration provided pursuant to the APA is mainly the assumption of the

Applicants' secured debt, including the secured debt owed to Salus. In addition, as a component

of the purchase price, the Purchasers have agreed to post with the Monitor certain amounts to

fund claims that have priority over such secured debt on the terms reflected in the orders being

sought. Accordingly, it is proposed that the Monitor will hold and maintain an Administration

Charge Reserve and a D&O Charge Reserve on the terms of the orders being sought. I am

advised by counsel that all beneficiaries of the Administration Charge have agreed to the amount

and terms of the proposed Administration Charge Reserve. All beneficiaries of the D&O Charge

(being myself and Oliver Morante) have agreed to the amount and terms of the proposed D&O

Charge Reserve. In the event that there are surplus monies in the proposed Administration

Charge Reserve or D&O Charge Reserve, all parties have agreed that such surplus monies are to

be returned to the Purchasers.

39. The Monitor has reviewed the sales process and recommends that this Court approve the

APA having regard to: (i) the Applicants' current financial position; (ii) the benefits of the

proposed going concern sale, including the continued employment for many of the Applicants'

employees; and (iii) the limited prospects for recovery for the Applicants' unsecured creditors if

the APA is not approved and the Transaction is not completed.

40. I believe that the APA is the only going concern solution available to the Applicants

which would be acceptable to the Applicants' largest stakeholders (Salus and Manunion) and,

accordingly, I believe that the Transaction is in the best interests of the Applicants' and their

stakeholders.


41. A sealing order is required because the Confidential Suppleme.t contains certain

commercially sensitive information, the release of which could prejudice the stakeholders of the

Applicants, particularly if the Transaction does not close.

42. Assuming the Transaction closes, I believe that the CCAA Proceedings will no longer be

needed and the Monitor can be discharged.

43,. This Affidavit is sworn in support of the relief requested by the Applicants and for no

other or improper purposes.

. ; .

Attached is Exhibit "A"

Referred to in the

Affidavit of Harris R. Hester

Sworn before me

this 5 th day of May, 2414

'ommissioner for taking Affidavits, etc

Court File No, CV-13-10009-00CL

,., ,,

THE HONOURABLE MR. ) FRIDAY, THE 22ND DAY

JUSTICE WILTON-SIEGEL ) OF FEBRUARY, 2013

~!.

.

THIS APPLICATION, made by The John Forsyth Shirt Company Ltd., Forsyth

Holdings, Inc. and Forsyth of Canada, Inc. (collectively, the "Applicants"), pursuant to the

Companies Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended (the "CCAA"), was

heard this day at 330 University Avenue, Toronto, Ontario.

ON READING the affidavit of Harris R. Hester sworn February 20, 2013 and the

exhibits thereto (the "Hester Affidavit"), the affidavit of Ian Aversa sworn February 21, 2013

and the exhibits thereto, the pre-filing report of BDO Canada Limited ("BDO"), in its capacity as

the intended Monitor in these proceedings, dated February 20, 2013, and the consent of BDO to

act as the Monitor, and on being advised that the secured creditors who are likely to be affected

by the charges created herein were given notice, and on hearing the submissions of counsel for

the Applicants, counsel for BDO, and counsel for Wells Fargo Capital Finance Corporation

Canada and Wells Fargo Capital Finance, LLC (collectively, "Wells Fargo"), no one appearing

for any other person on the service list, although duly served as appears from the affidavit of

Eunice Baltkois sworn February 20, 2013, filed,

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1. THIS COURT ORDERS that the time for service of the Notice of Application and the

Application Record is hereby abridged and validated so that this Application is properly

returnable today and hereby dispenses with further service thereof.

APPLICATION

2. THIS COURT ORDERS AND DECLARES that each of the Applicants is a company

to which the CCAA applies.

3. THIS COURT ORDERS that the Applicants shall have the authority to file and may,

subject to further Order of this Court, file with this Court a plan of compromise or arrangement

(hereinafter referred to as the "Plan") between the Applicants and one or more of their secured

and/or unsecured creditors as the Applicants deem appropriate.

4. THIS COURT ORDERS that each of the Applicants shall remain in possession and

control of its current and future assets, undertakings and properties of every nature and kind

whatsoever, and wherever situate including all proceeds thereof (collectively, the "Property").

Subject to further Order of this Court, each of the Applicants shall continue to carry on business

in a manner consistent with the preservation of its business (collectively, the "Business ") and

Property. Each of the Applicants shall be authorized and empowered to continue to retain and

employ the employees, consultants, agents, experts, accountants, counsel and such other persons

(collectively, "Assistants ") currently retained or employed by it, with liberty to retain such

further Assistants as it deems reasonably necessary or desirable in the ordinary course of

business or for the carrying out of the terms of this Order.

5. THIS COURT ORDERS that each of the Applicants shall be entitled to continue to

utilize the cash management system currently in place as described in the Hester Affidavit or

replace it with another substantially similar cash management system (the "Cash Management

System") and that any present or future bank or service provider providing the Cash

Management System shall not be under any obligation whatsoever to inquire into the propriety,

-3-

validity or legality of any transfer, payment, collection or other action taken under the Cash

Management System, or as to the use or application by the Applicants of funds transferred, paid,

collected or otherwise dealt with in the Cash Management System, shall be entitled to provide

the Cash Management System without any liability in respect thereof to any Person (as

hereinafter defined) other than the Applicants, pursuant to the terms of the documentation

applicable to the Cash Management System, and shall be, in its capacity as provider of the Cash

Management System, an unaffected creditor under the Plan with regard to any claims or

expenses it may suffer or incur in connection with the provision of the Cash Management

System.

6. THIS COURT ORDERS that each of the Applicants, either on its own behalf or on

behalf of another one of the Applicants, shall be entitled but not required to pay the following

expenses or honour the following obligations whether incurred prior to or after the date of this

Order:

(a) all outstanding and future wages, salaries, employee and pension benefits,

vacation pay and expenses payable on or after the date of this Order, in each case

incurred in the ordinary course of business and consistent with existing

compensation policies and arrangements;

(b) the fees and disbursements of any Assistants retained or employed by the

Applicants, or any one of them, in respect of these proceedings, at their standard

rates and charges; and

(c) with the prior consent of the Monitor and subject to compliance with the DIP

Credit Agreement (as hereinafter defined), all or part of outstanding amounts

owing for goods and services actually supplied to the Applicants (or, where

acceptable to the supplier, return of supplied goods in lieu of such payments), or

amounts necessary to obtain the release of goods contracted for prior to the date

of this Order, by suppliers, if, in the opinion of the Applicants and the Monitor,

such payments are necessary in order to ensure an uninterrupted supply of goods

and services to the Applicants which are material to the continued operation of the

Business.

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7. THIS COURT ORDERS that, except as otherwise provided to the contrary herein, each

of the Applicants shall be entitled but not required to pay all reasonable expenses incurred by it

in carrying on the Business in the ordinary course on and after the date of this Order, and in

carrying out the provisions of this Order, which expenses shall include, without limitation:

(a) all expenses and capital expenditures reasonably necessary for the preservation of

the Property or the Business, including, without limitation, payments on account

of insurance (including directors and officers insurance), maintenance and

security services; and

(b) payment for goods received by or services actually supplied to the Applicants, or

any one of them, on or after the date of this Order.

8. THIS COURT ORDERS that each of the Applicants shall remit, in accordance with

legal requirements, or pay:

(a) any statutory deemed trust amounts in favour of the Crown in right of Canada or

of any Province thereof or any other taxation authority, including, United States

of America federal or state taxes, which are required to be deducted from

employees' wages, including, without limitation, amounts in respect of: (i)

employment insurance; (ii) Canada Pension Plan; (iii) Quebec Pension Plan; and

(iv) income taxes;

(b) all goods and services or other applicable sales taxes (collectively, "Sales Taxes ")

required to be remitted by the Applicants in connection with the sale of goods and

services by the Applicants, but only where such Sales Taxes are accrued or

collected after the date of this Order, or where such Sales Taxes were accrued or

collected prior to the date of this Order but not required to be remitted until on or

after the date of this Order; and

(c) any amount payable to the Crown in right of Canada or of any Province thereof or

any political subdivision thereof or any other taxation authority, including, United

States of America federal or state taxes, in respect of municipal realty, municipal

business or other taxes, assessments or levies of any nature or kind which are

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entitled at law to be paid in priority to claims of secured creditors and which are

attributable to or in respect of the carrying on of the Business by the Applicants.

9. THIS COURT ORDERS that until a real property lease is disclaimed in accordance

with the CCAA, each of the Applicants shall pay all amounts constituting rent or payable as rent

under real property leases (including, for greater certainty,, common area maintenance charges,

utilities and realty taxes and any other amounts payable to the landlord under the lease) or such

amount as otherwise may be negotiated between the Applicants, or any one of them, and the

landlord from time to time ( "Rent"), for the period commencing from and including the date of

this Order, twice-monthly in equal payments on the first and fifteenth day of each month, in

advance (but not in arrears). On the date of the first of such payments, any Rent relating to the

period commencing from and including the date of this Order shall also be paid.

10. THIS COURT ORDERS that, except as specifically permitted herein, each of the

Applicants is hereby directed, until further Order of this Court: (a) to make no payments of

principal, interest thereon or otherwise on account of amounts owing by the Applicants to any of

their creditors as of this date except in respect of scheduled payments of principal, interest and

costs to be remitted to Wells Fargo under the Wells Fargo Loan Agreement (as such term is

defined in the Hester Affidavit); (b) to grant no security interests, trust, liens, charges or

encumbrances upon or in respect of any of its Property; and (c) to not grant credit or incur

liabilities except in the ordinary course of the Business.

L1 iNt4IIN 11111 PXI

11. THIS COURT ORDERS that each of the Applicants shall, subject to such requirements

as are imposed by the CCAA and such covenants as may be contained in the DIP Credit

Agreement, have the right to:

(a) permanently or temporarily cease, downsize or shut down any of its business or

operations, and to dispose of non-profitable, redundant or non-material assets and

operations not exceeding $250,000 in any one transaction or $500,000 in the

aggregate;

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(b) terminate the employment of such of its employees or temporarily or indefinitely

lay off such of its employees as it deems appropriate on such terms as may be

agreed upon between the Applicants and such employee, or failing such

agreement, to deal with the consequences thereof in the Plan; and

(c) pursue all avenues of restructuring, including, without limitation, the sale of all or

any parts of its Business or the Property, subject to prior approval of this Court

being obtained (except as permitted in this Order),

all of the foregoing to permit the Applicants to proceed with an orderly restructuring, sale or

winding down of the Business (the "Restructuring")

12. THIS COURT ORDERS that the Applicants shall provide each of the relevant landlords

and the Monitor with notice of the Applicants' intention to remove any fixtures from any leased

premises at least seven (7) days prior to the date of the intended removal. The relevant landlord

shall be entitled to have a representative present in the leased premises to observe such removal

and, if the landlord disputes the Applicants' entitlement to remove any such fixture under the

provisions of the lease, such fixture shall remain on the leased premises and shall be dealt with as

agreed between any applicable secured creditors, such landlord and the Applicants, or by further

Order of this Court upon application by the Applicants on at least two (2) days notice to such

landlord and any such secured creditors. If the Applicants disclaim the lease governing such

leased premises in accordance with section 32 of the CCAA, they shall not be required to pay

Rent under such lease pending resolution of any such dispute (other than Rent payable for the

notice period provided for in subsection 32(5) of the CCAA), and the disclaimer of the lease

shall be without prejudice to the Applicants' claim to the fixtures in dispute.

13. THIS COURT ORDERS that if a notice of disclaimer is delivered pursuant to section

32 of the CCAA, then: (a) during the notice period prior to the effective time of the disclaimer,

the landlord may show the affected leased premises to prospective tenants during normal

business hours, on giving the Applicants and the Monitor 24 hours' prior written notice; and (b)

at the effective time of the disclaimer, the relevant landlord shall be entitled to take possession of

any such leased premises without waiver of or prejudice to any claims or rights such landlord

may have against the Applicants in respect of such lease or leased premises and such landlord

-7-

shall be entitled to notify the Applicants of the basis on which it is taking possession and to gain

possession of and re-lease such leased premises to any third party or parties on such terms as

such landlord considers advisable, provided that nothing herein shall relieve such landlord of its

obligation to mitigate any damages claimed in connection therewith.

14. THIS COURT ORDERS that until and including March 22, 2013, or such later date as

this Court may order (the "Stay Period"), no proceeding or enforcement process in any court or

tribunal (each, a "Proceeding") shall be commenced or continued against or in respect of the

Applicants, or any one of them, or the Monitor, or affecting the Business or the Property, except

with the written consent of the Applicants and the Monitor, or with leave of this Court, and any

and all Proceedings currently under way against or in respect of the Applicants, or any one of

them, or affecting the Business or the Property are hereby stayed and suspended pending further

Order of this Court.

15. THIS COURT ORDERS that during the Stay Period, all rights and remedies of any

individual, firm, corporation, governmental body or agency, or any other entities (all of the

foregoing, collectively being "Persons" and each being a "Person") against or in respect of the

Applicants, or any one of them, or the Monitor, or affecting the Business or the Property, are

hereby stayed and suspended except with the written consent of the Applicants and the Monitor,

or leave of this Court, provided that nothing in this Order shall: (i) empower the Applicants to

carry on any business which the Applicants are not lawfully entitled to carry on; (ii) affect such

investigations, actions, suits or proceedings by a regulatory body as are permitted by section 11.1

of the CCAA; (iii) prevent the filing of any registration to preserve or re-perfect an existing

security interest; or (iv) prevent the registration of a claim for lien.

16. THIS COURT ORDERS that during the Stay Period, no Person shall discontinue, fail to

honour, alter, interfere with, repudiate, terminate or cease to perform any right, renewal right,

contract, agreement, lease, sub-lease, licence or permit in favour of or held by any of the

Applicants except with the written consent of the Applicants and the Monitor, or leave of this

Court.

CONTINUATION OF SERVICES

17. THIS COURT ORDERS that during the Stay Period, all Persons having oral or written

agreements with any of the Applicants or statutory or regulatory mandates for the supply of

goods and/or services, including, without limitation, all computer software, communication and

other data services, centralized banking services, payroll services, insurance, transportation

services, utility, leasing or other services to the Business or the Applicants, are hereby restrained

until further Order of this Court from discontinuing, altering, interfering with or terminating the

supply of such goods or services as may be required by the Applicants, and that the Applicants

shall be entitled to the continued use of their current premises, telephone numbers, facsimile

numbers, internet addresses and domain names, provided in each case that the normal prices or

charges for all such goods or services received after the date of this Order are paid by the

Applicants in accordance with normal payment practices of the Applicants or such other

practices as may be agreed upon by the supplier or service provider, the Applicants and the

Monitor, or as may be ordered by this Court.

NON-DEROGATION OF RIGHTS

18. THIS COURT ORDERS that, notwithstanding anything else in this Order, no Person

shall be prohibited from requiring immediate payment for goods, services, use of leased or

licensed property or other valuable consideration provided on or after the date of this Order, nor

shall any Person be under any obligation on or after the date of this Order to advance or re-

advance any monies or otherwise extend any credit to the Applicants. Nothing in this Order

shall derogate from the rights conferred and obligations imposed by the CCAA.

PROCEEDINGS AGAINST DIRECTORS AND OFFICERS

19. THIS COURT ORDERS that during the Stay Period, and except as permitted by

subsection 11.03(2) of the CCAA, no Proceeding may be commenced or continued against any

of the former, current or future directors or officers of the Applicants with respect to any claim

against the directors or officers that arose before the date hereof and that relates to any

obligations of the Applicants whereby the directors or officers are alleged under any law to be

S

liable in their capacity as directors or officers for the payment or performance of such

obligations, until a compromise or arrangement in respect of the Applicants, if one is filed, is

sanctioned by this Court or is refused by the creditors of the Applicants or this Court.

20, THIS COURT ORDERS that each of the Applicants shall indemnify its directors and

officers against obligations and liabilities that they may incur as directors or officers of the

Applicants after the commencement of the within proceedings, except to the extent that., with

respect to any officer or director, the obligation or liability was incurred as a result of the

director's or officer's gross negligence or wilful misconduct.

21. THIS COURT ORDERS that the directors and officers of the Applicants shall be

entitled to the benefit of and are hereby granted a charge (the "DO Charge") on the Property,

which charge shall not exceed an aggregate amount of $300,000, as security for the indemnity

provided in paragraph 20 of this Order. The D&O Charge shall have the priority set out in

paragraphs 38 and 40 of this Order.

22. THIS COURT ORDERS that, notwithstanding any language in any applicable

insurance policy to the contrary, (a) no insurer shall be entitled to be subrogated to or claim the

benefit of the D&O Charge, and (b) each of the Applicants' directors and officers shall only be

entitled to the benefit of the D&O Charge to the extent that they do not have coverage under any

directors' and officers' insurance policy, or to the extent that such coverage is denied or

insufficient to pay amounts indemnified in accordance with paragraph 20 of this Order.

21S]k'l S; S

23. THIS COURT ORDERS. that BDO is hereby appointed pursuant to the CCAA as the

Monitor, an officer of this Court, to monitor the business and financial affairs of the Applicants

with the powers and obligations set out in the CCAA or set forth herein and that the Applicants

and their shareholders, officers, directors, and Assistants shall advise the Monitor of all material

steps taken by the Applicants pursuant to this Order, and shall co-operate fully with the Monitor

in the exercise of its powers and discharge of its obligations and provide the Monitor with the

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assistance that is necessary to enable the Monitor to adequately carry out the Monitor's

functions.

24. THIS COURT ORDERS that the Monitor, in addition to its prescribed rights and

obligations under the CCAA, is hereby directed and empowered to:

(a) monitor the Applicants' receipts and disbursements;

(b) report to this Court at such times and intervals as the Monitor may deem

appropriate with respect to matters relating to the Property, the Business, and such

other matters as may be relevant to the proceedings herein;

(c) assist the Applicants, to the extent required by the Applicants, in its dissemination

to the DIP Lender (as defined in paragraph 32 below) and its counsel on a

periodic basis of financial and other information as agreed to between the

Applicants and the DIP Lender which may be used in these proceedings,

including reporting on a basis to be agreed with the DIP Lender;

(d) advise the Applicants in their preparation of the Applicants' cash flow statements

and reporting required by the DIP Lender, which information shall be reviewed

with the Monitor and delivered to the DIP Lender and its counsel on a periodic

basis, but not less than weekly, or as otherwise agreed to by the DIP Lender;

(e) provide information to the DIP Lender with respect to the Applicants'

Restructuring and these proceedings as the Monitor deems appropriate in its

discretion;

(f) advise the Applicants in their development of the Plan and any amendments to the

Plan;

(g) assist the Applicants with the Restructuring;

(h) assist the Applicants, to the extent required by the Applicants, with the holding

and administering of creditors' or shareholders' meetings for voting on the Plan;

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(1) have full and complete access to the Property, including, the premises, books,

records, data, including data in electronic form, and other financial documents of

the Applicants, to the extent that is necessary to adequately assess the Applicants'

business and financial affairs or to perform its duties arising under this Order;

(j) be at liberty to engage independent legal counsel or such other persons as the

Monitor deems necessary or advisable respecting the exercise of its powers and

performance of its obligations under this Order, including being at liberty to retain

and utilize the services of entities related to BDO as may be necessary to perform

the Monitor's duties hereunder;

(k) consider and prepare a report and assessment of the Plan;

(1) assist the Applicants with their continuing restructuring activities and in the

conduct of any sale process or processes to sell the Property and Business or any

part thereof;

(m) advise and assist the Applicants in their negotiation with suppliers, customers and

other stakeholders; and

(n) perform such other duties as are required by this Order or by this Court from time

to time.

25. THIS COURT ORDERS that the Monitor shall not take possession of the Property and

shall take no part whatsoever in the management or supervision of the management of the

Business and shall not, by fulfilling its obligations hereunder, be deemed to have taken or

maintained possession or control of the Business or Property, or any part thereof.

26. THIS COURT ORDERS that nothing herein contained shall require the Monitor to

occupy or to take control, care, charge, possession or management (separately and/or

collectively, "Possession") of any of the Property that might be environmentally contaminated,

might be a pollutant or a contaminant, or might cause or contribute to a spill, discharge, release

or deposit of a substance contrary to any federal, provincial or other law respecting the

protection, conservation, enhancement, remediation or rehabilitation of the environment or

-12-

relating to the disposal of waste or other contamination, including, without limitation, the

Canadian Environmental Protection Act, the Ontario Environmental Protection Act, the Ontario

Water Resources Act, or the Ontario Occupational Health and Safety Act and regulations

thereunder (the "Environmental Legislation''), provided however that nothing herein shall

exempt the Monitor from any duty to report or make disclosure imposed by applicable

Environmental Legislation. The Monitor shall not, as a result of this Order or anything done in

pursuance of the Monitor's duties and powers under this Order, be deemed, to be in Possession of

any of the Property within the meaning of any Environmental Legislation, unless it is actually in

possession.

27. THIS COURT O ERS that the Monitor shall provide any creditor of the Applicants

and the DIP Lender with information provided by the Applicants in response to reasonable

requests for information made in writing by such creditor addressed to the Monitor. The Monitor

shall not have any responsibility or liability with respect to the information disseminated by it

pursuant to this paragraph. In the case of information that the Monitor has been advised by the

Applicants is confidential, the Monitor shall not provide such information to creditors unless

otherwise directed by this Court or on such terms as the Monitor and the Applicants may agree.

28. THIS COURT ORDERS that, in addition to the rights and protections afforded the

Monitor under the CCAA or as an officer of this Court, the Monitor shall incur no liability or

obligation as a result of its appointment or the carrying out of the provisions of this Order, save

and except for any gross negligence or wilful misconduct on its part. Nothing in this Order shall

derogate from the protections afforded the Monitor by the CCAA or any applicable legislation.

29. THIS COURT ORDERS that the Monitor, counsel to the Monitor and counsel to the

Applicants shall be paid their reasonable fees and disbursements incurred both before and after

the making of this Order, in each case at their standard rates and charges, by the Applicants as

part of the costs of these proceedings. The Applicants are hereby authorized and directed to pay

the accounts of the Monitor, counsel for the Monitor and counsel for the Applicants on a weekly

basis and, in addition, the retainer previously paid by the Applicants to the Applicants' counsel

in the amount of $20,000, which is to be held as security for payment of its fees and

disbursements outstanding from time to time, is authorized and approved.

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30, THIS COURT ORDERS that, if requested by the DIP Lender, the Applicants, any

interested party or this Court, the Monitor and its legal counsel shall pass their accounts from

time to time, and for this purpose the accounts of the Monitor and its legal counsel are hereby

referred to a judge of the Commercial List of the Ontario Superior Court of Justice.

31. THIS COURT ORDERS that the Monitor, counsel to the Monitor and counsel to the

Applicants shall be entitled to the benefit of and are hereby granted a charge (the

"Administration Charge") on the Property, which charge shall not exceed an aggregate amount

of $400,000 as security for their professional fees and disbursements incurred at the standard

rates and charges of the Monitor and such counsel, both before and after the making of this Order

in respect of these proceedings, The Administration Charge shall have the priority set out in

paragraphs 38 and 40 of this Order.

32. T S COURT ORDERS that the Applicants are hereby authorized and empowered to

obtain and borrow under a credit facility from Wells Fargo (in such capacity, the "DIP Lender")

in order to finance the Applicants' working capital requirements and other general corporate

purposes and capital expenditures, provided that borrowings under such credit facility shall not

exceed the principal amount of CDN$10,000,000 unless permitted by further Order of this Court.

33. THIS COURT ORDERS that such credit facility shall be on the terms and subject to the

conditions set forth in the DIP Commitment Letter between the Applicants and the DIP Lender

dated February 20, 2013 (the "DIP Credit Agreement"), filed, and that the Applicants are

hereby authorized and directed to comply with the terms and conditions of the DIP Credit

Agreement and to perform their obligations thereunder, including the application of funds

received after the date of this Order in reduction of the Pre-Filing Credit Facility (as defined in

the DIP Credit Agreement).

34. THIS COURT ORDERS that the Applicants are hereby authorized and empowered to

execute and deliver such credit agreements, mortgages, charges, hypothecs and security

documents, guarantees and other definitive documents (collectively, the "Definitive

Documents"), as are contemplated by the DIP Credit Agreement or as may be reasonably

-14-

required by the DIP Lender pursuant to the terms thereof, and the Applicants are hereby

authorized and directed to pay and perform all of its indebtedness, interest, fees, liabilities and

obligations to the DIP Lender under and pursuant to the DIP Credit Agreement and the

Definitive Documents as and when the same become due and are to be performed,

notwithstanding any other provision of this Order.

35. THIS COURT ORDERS that the DIP Lender shall be entitled to the benefit of and is

hereby granted a charge (the "DIP Charge") on the Property, which DIP Charge shall not secure

an obligation that exists before this Order is made, The DIP Charge shall have the priority set

out in paragraphs 38 and 40 hereof.

36. THIS COURT ORDERS that, notwithstanding any other provision of this Order:

(a) the DIP Lender may take such steps from time to time as it may deem necessary

or appropriate to file, register, record or perfect the DIP Charge or any of the

Definitive Documents;

(b) upon the occurrence of an event of default under the DIP Credit Agreement, the

Definitive Documents or the DIP Charge, the DIP Lender may cease making

advances to the Applicants and set off and/or consolidate any amounts owing by

the DIP Lender to the Applicants against the obligations of the Applicants to the

DIP Lender under the DIP Credit Agreement, the Definitive Documents or the

DIP Charge, and make demand, accelerate payment or give other notices and,

upon 5 days' notice to the Applicants and the Monitor may exercise any and all of

its other rights and remedies against the Applicants or the Property under or

pursuant to the DIP Credit Agreement, the Definitive Documents and the DIP

Charge, including, without limitation, by applying to this Court for the

appointment of a receiver, receiver and manager or interim receiver, or for a

bankruptcy order against the Applicants and for the appointment of a trustee in

bankruptcy of the Applicants;

_15_

(c) upon receipt of any notice referenced in paragraph 36(b) of this Order, the

Monitor shall forthwith advise the Court in a Monitor's Report that such notice

was received; and

(d) the foregoing rights and remedies of the DIP Lender shall be enforceable against

any trustee in bankruptcy, interim receiver, receiver or receiver and manager of

the Applicants or the Property.

37, THIS COURT ORDERS AND DECLARES that the DIP Lender shall be treated as

unaffected in any plan of arrangement or compromise filed by the Applicants under the CCAA,

or any proposal filed by the Applicants under the Bankruptcy and Insolvency Act (Canada), as

amended (the "BIA"), with respect to any advances made under the DIP Credit Agreement or the

Definitive Documents.

38. THIS COURT ORDERS that the priorities of the Administration Charge, the DIP

Charge and the D&O Charge (collectively, the "Charges"), as among them, shall be as follows:

First — Administration Charge (to the maximum amount of $100,000);

Second -- DIP Charge;

Third — Administration Charge (to the maximum amount of $300,000); and

Fourth — D&O Charge (to the maximum amount of $300,000),

39. THIS COURT ORDERS that the filing, registration or perfection of the Charges shall

not be required, and that the Charges shall be valid and enforceable for all purposes, including as

against any right, title or interest filed, registered, recorded or perfected subsequent to the

Charges coming into existence, notwithstanding any such failure to file, register, record or

perfect.

40. THIS COURT ORDERS that each of the Charges shall constitute a charge on the

Property and such Charges shall rank in priority to all other security interests, trusts, liens,

charges and encumbrances, claims of secured creditors, statutory or otherwise (collectively,

- 16 -

"Encumbrances ") in favour of any Person with the exception that both the Administration

Charge (to the extent that it secures amounts over $100,000) and the D&O Charge shall be

subordinate to any valid, enforceable and perfected Encumbrances in favour of Wells Fargo

existing as of the date of this Order.

41. THIS COURT ORDERS that except as otherwise expressly provided for herein, or as

may be approved by this Court, the Applicants shall not grant any Encumbrances over any

Property that rank in priority to, or pari passu with, any of the Charges.

42. THIS COURT ORDERS that the Charges, the DIP Credit Agreement and the Definitive

Documents shall not be rendered invalid or unenforceable and the rights and remedies of the

chargees entitled to the benefit of the Charges (collectively, the "Chargees") thereunder shall not

otherwise be limited or impaired in any way by: (a) the pendency of these proceedings and the

declarations of insolvency made herein; (b) any application(s) for bankruptcy order(s) issued

pursuant to the BIA, or any bankruptcy order made pursuant to such applications; (c) the filing of

any assignments for the general benefit of creditors made pursuant to the BIA; (d) the provisions

of any federal or provincial statutes; or (e) any negative covenants, prohibitions or other similar

provisions with respect to borrowings, incurring debt or the creation of Encumbrances, contained

in any existing loan documents, lease, sublease, offer to lease or other agreement (collectively,

an "Agreement") which binds the Applicants, or any one of them, and notwithstanding any

provision to the contrary in any Agreement:

(a) neither the creation of the Charges nor the execution, delivery, perfection,

registration or performance of the DIP Credit Agreement or the Definitive

Documents shall create or be deemed to constitute a breach by the Applicants of

any Agreement to which they are a party;

(b) none of the Chargees shall have any liability to any Person whatsoever as a result

of any breach of any Agreement caused by or resulting from the Applicants

entering into the DIP Credit Agreement, the creation of the Charges or the

execution, delivery or performance of the Definitive Documents; and

- 17-

(c) the payments made by the Applicants pursuant to this Order, the DIP Credit

Agreement or the Definitive Documents, and the granting of the Charges do not

and will not constitute preferences, fraudulent conveyances, transfers at

undervalue, oppressive conduct, or other challengeable, reviewable, void or

voidable transactions under any applicable law,

43. THIS COURT ORDERS that any Charge created by this Order over leases of real

property in Canada shall only be a Charge in the Applicants' interest in such real property leases.

44. THIS COURT O ERS that the Monitor shall (i) without delay, publish a notice

containing the information prescribed under the CCAA, (ii) within five days after the date of this

Order, (A) make this Order publicly available in the manner prescribed under the CCAA, (B)

send, in the prescribed manner, a notice to every known creditor who has a claim against the

Applicants of more than $1000, and (C) prepare a list showing the names and addresses of those

creditors and the estimated amounts of those claims, and make it publicly available in the

prescribed manner, all in accordance with subsection 23(1)(a) of the CCAA and the regulations

made thereunder.

45. TIllS COURT ORDERS that the Applicants and the Monitor be at liberty to serve this

Order, any other materials and orders in these proceedings, any notices or other correspondence,

by forwarding true copies thereof by prepaid ordinary mail, courier, personal delivery or

electronic transmission to the Applicants' creditors or other interested parties at their respective

addresses as last shown on the records of the Applicants and that any such service or notice by

courier, personal delivery or electronic transmission shall be deemed to be received on the next

business day following the date of forwarding thereof, or if sent by ordinary mail, on the third

business day after mailing.

46. THIS COURT ORDERS that the Applicants, the Monitor, and any party who has filed a

Notice of Appearance may serve any court materials in these proceedings by e-mailing a PDF or

other electronic copy of such materials to counsels' email addresses as recorded on the Service

List from time to time, and the Monitor may post a copy of any or all such materials on its

web site at www.bdo.ca/forsyth.

GENERAL

47. TillS COURT ORDERS that the Applicants or the Monitor may from time to time

apply to this Court for advice and directions in the discharge of its powers and duties hereunder.

48. THIS COURT ORDERS that nothing in this Order shall prevent the Monitor from

acting as an interim receiver, a receiver, a receiver and manager, or a trustee in bankruptcy of the

Applicants, or any one or more of them, the Business or the Property.


regulatory or administrative body having jurisdiction in Canada or in the United States, to give





give effect to this Order, to grant representative status to the Monitor in any foreign proceeding,

or to assist the Applicants and the Monitor and their respective agents in carrying out the terms

of this Order.

50. THIS COURT ORDERS that each of the Applicants and the Monitor be at liberty and is






51. THIS COURT ORDERS that any interested party (including the Applicants and the

Monitor) may apply to this Court to vary or amend this Order on not less than seven (7) days'

notice to any other party or parties likely to be affected by the order sought or upon such other

notice, if any, as this Court may order, provided, however, that the DIP Lender shall be entitled

to rely on this Order as issued for all advances made under the DIP Credit Agreement and the

Definitive Documents.

19-

52. THIS COURT ORDERS that, notwithstanding the immediately preceding paragraph,

no order shall be made varying, rescinding or otherwise affecting the provisions of this Order

with respect to the DIP Credit Agreement or the Definitive Documents unless notice of a motion

is served on the Monitor, the Applicants and the DIP Lender returnable on or before March 15,

2013.

53. TIllS COURT ORDERS that this Order and all of its provisions are effective as of

12:01 a.m. Eastern Standard Time on the date of this Order.

ENTERED PT f INSCRiT A TORONTO ON I BOOK NO: LE DAMS LE i lEGISTPi . NC).;

FEB722013

& BERLIS LLP Barristers and Solicitors


D. Robb English (LSUC # 19862F1B) TeL 416.865.4748 Fax: 416.863.1515 Email: renglish(2iairdberlis.com

Ian Aversa (LSUC # 55449N) Tel: 416.865.3 082 Fax: 416.863.1515 Email: [email protected]

James A. Desjardins (LSUC # 62493E) Tel: 416.865.4641 Fax: 416.863.1515 Email: jdesiardins( airdberlis.com


13933630.3

C C

Attached is Exhibit "B"

Referred to in the

Affidavit of Harris R., Hester

ONTARIO t,J S (Ii I

I i U:. LU U 1S1

AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF THE JOHN FORSYTH SHIRT COMPANY LTD., FORSYTH HOLDINGS, INC.


APPLICATIONtUNDER

AFFIDAVIT OF HARRIS R. HESTER (sworn February 20, 2013)

I, Harris R. Hester, of the Town of Darien, in the State of Connecticut, MAKE OATH

ni is'i ru] muw&s

1. I am the President and a director of each of The John Forsyth Shirt Company Ltd.

("Forsyth Canada"), Forsyth Holdings, Inc. ("Forsyth Holdings") and Forsyth of Canada, Inc.

("Forsyth USA" and, together with Forsyth Canada and Forsyth Holdings, the "Applicants" or

the "Companies"). As such, I have personal knowledge of the matters to which I hereinafter

depose in this Affidavit, Where I do not have personal knowledge of the matters set out herein, I

have stated the source of my information and, in all such cases, believe it to be true,

2, This Affidavit is sworn in support of an application by the Applicants under the

Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended (the "CCAA"), for

an order, among other things:

(a) declaring that each of the Applicants is a company to which the CCAA applies;


(b) staying all proceedings and remedies taken or which might be taken in respect of

the Applicants or any of their property, except upon the leave of the Court being

granted, or as otherwise provided;

(c) authorizing the Applicants to prepare and file with the Court a plan of

compromise or arrangement with their creditors (the "Plan");

(d) appointing BDO Canada Limited ("BDO") as monitor of the Applicants (in such

capacity, the "Monitor");

(e) approving a debtor-in-possession financing facility (the "DIP Facility") with

Wells Fargo Capital Finance Corporation Canada and Wells Fargo Capital

Finance, LLC (collectively, "Wells Fargo'') in the principal amount of

CDN$10,000,000 and granting a priority charge over the assets, properties and

undertakings of the Applicants (collectively, the "Property") to secure repayment

of the amounts borrowed by the Applicants under the DIP Facility;

(f) granting a priority charge over all of the Property in the principal amount of

$400,000 to secure the fees and disbursements of the Applicants' counsel, the

Monitor and the Monitor's counsel; and

(g) granting a priority charge over the Property in the principal amount of $300,000

in order to protect the Applicants' directors and officers from certain potential

liabilities.

3. The most likely outcome of this proceeding is a restructuring of the Applicants' business.

However, there is also the possibility that there will be a going concern sale with respect to

certain or all of the Applicants' assets. Protection under the CCAA will allow for the

restructuring to happen under the supervision of the Court for the benefit of all of the Applicants'

stakeholders and also allow for the prospect of a going concern sale of the Applicants' business.

Iu

4. The Applicants are collectively in the business of manufacturing, distributing and selling

apparel in both Canada and the United States of America. Through its collective distribution


channels, the Applicants sell apparel in various retail stores, through catalogues and though the

Internet in both Canada and the United States of America. Additionally, the Applicants sell

uniform apparel to certain large organizations in North America.

5. Forsyth Canada is a corporation incorporated pursuant to the laws of the Province of

Ontario. Its registered office is located at 6789 Airport Road, Mississauga, Ontario. Forsyth

Canada is the operational company for the manufacture, distribution and sale of apparel in

Canada. Forsyth Canada is a wholly-owned subsidiary of Forsyth Holdings. Forsyth Canada's

directors are myself and Oliver Morante (together, the "Forsyth Canada Directors "), Forsyth

Canada's officers are myself as President and Secretary, and Oliver Morante as Vice President

(together, the "Forsyth Canada Officers "). A copy of the corporation profile report for Forsyth

Canada is attached as Exhibit "A" to this Affidavit.

6. Forsyth USA is a corporation incorporated pursuant to the laws of the State of Delaware

and is registered to conduct business in the State of New York. Its principal executive office is

located at 1071 Avenue of the Americas, 8th Floor, New York, New York. Forsyth USA is the

operational company for the distribution and sale of apparel in the United States of America. Its

books and records are kept at the Administration Location (as defined herein). Forsyth USA is a

wholly-owned subsidiary of Forsyth Holdings. I am the sole director (the "Forsyth USA

Director") and officer of Forsyth USA, holding the offices of President, Secretary and Treasurer

(in such capacities, the "Forsyth USA Officer"). Forsyth USA's corporate profile report is

attached hereto as Exhibit "B".

7. Forsyth Holdings is a corporation incorporated pursuant to the laws of the State of

Delaware. Its principal office is located at 1071 Avenue of the Americas, 8 th Floor, New York,

New York, Forsyth Holdings is not engaged in any form of manufacturing, distributing or

selling of any goods or services. Its books and records are kept at the Administration Location. I

am the sole director (the "Forsyth Holdings Director", and, together with the Forsyth Canada

Directors and the Forsyth USA Director, the "Directors") and officer of Forsyth Holdings,

holding the offices of President, Secretary and Treasurer (in such capacities, the "Forsyth USA

Officer", and, together with the Forsyth Canada Officers and the Forsyth USA Officer, the

"Officers"). Forsyth Holdings' corporate profile report is attached hereto as Exhibit "C".

Affidavit of Harris R. Hester Page4

8, PremiumWear, Inc. ("PremiumWear"), a corporation incorporated pursuant to the 'Laws

of the state of Delaware, is a wholly-owned subsidiary of Forsyth Holdings. Its registered office

is 1071 Avenue of the Americas, 8 th Floor, New York, New York. A manufacturer and seller of

apparel, PremiumWear was acquired by Forsyth Holdings in 2007 and ceased operations on or

around January, 2010. It does not have any material assets and is a dormant company.

Accordingly, it is not currently contemplated that PremiumWear will be an applicant in these

proceedings.

9. The Applicants' ownership structure is set out in the organizational chart which is

attached as Exhibit "I)" to this Affidavit.

10. The vast majority of the Applicants' business operations, including, without limitation,

their manufacturing, warehousing, distribution and administrative operations, are conducted in

Canada by and through Forsyth Canada. The Applicants' collective books and records are kept

and maintained in Ontario at the Administration Location and their cash management system is

primarily conducted by and through various bank accounts in Canada, as discussed below.

Additionally, the Applicants' executive management operates from the Administration Location

in Ontario. I further understand that the Applicants' largest secured creditor, Wells Fargo,

recognizes the Applicants' Canadian operations as being the centre of their collective operations.

The Applicants' business in the United States is presently limited to a sales office in the State of

New York and a distribution centre in the State of Georgia, which, as discussed below, are

anticipated to be downsized and closed, respectively.

Iii

11. As of the date of this Affidavit, the Applicants' collective business is operating at a loss.

12. The failure of the anticipated financial benefits of the acquisition of PremiumWear to

materialize initiated the Applicants' financial hardship. As a result of various circumstances, the

acquisition caused significant financial harm to the Applicants that was never fully recovered.

13. The Applicants' collective financial position, cash flow and profit margins further eroded

in 2012 due to, among other things, increased competition in the apparel industry, increased raw

input and distribution costs, and increased wage and salary expenses.


14. Prior to 2013, Forsyth Canada was a beneficiary of the Tailored Collar Shirts Remission

Order, 1997, SOR/97-291 (the "Duty Remission Program"), which granted certain remission

discounts regarding duties payable under the Customs Tariff to prescribed manufacturers of

tailored collar shirts, including Forsyth Canada, Forsyth Canada's duty remission entitlement for

2011 was $1,884,508.60.

15. Suddenly, in late 2012, the Government of Canada decided not to renew the Duty

Remission Program and, accordingly, Forsyth Canada became ineligible for the Duty Remission

Program. Such ineligibility imposed an immediate, unforeseen and significant cash requirement

on Forsyth Canada, which, as discussed above, is the chief operating company of the Applicants.

Given the Applicants' already diminished financial state, the loss of revenue from the Duty

Remission Program was a major factor in the Applicants' becoming insolvent in that they are

currently, collectively and individually, unable to pay their obligations as they become due,

16. Attached as Exhibit "E" to this Affidavit is a copy of the Applicants' consolidated

audited financial statements for the fiscal year ended 2011 and copy of the Applicants'

consolidated unaudited financial statements for the period ended December 31, 2012

(collectively, the "Financials"). The Financials reflect a cash deficit of approximately

$3,932,000 in 2011, a negative EBIT of approximately $2,111,000 in 2012 and a net loss of

approximately $1,863,000 in 2012. The Applicants' gross sales have decreased by

approximately 1.1% from 2011 to 2012 while its cost of goods sold has increased by

approximately 7.9% for the same period.

17. The Applicants' collective liabilities total approximately $17.1 million, approximately $9

million of which are secured (including capital lease and mortgage obligations).

(a) Wells Fargo

18. The Applicants and Congress Financial Corporation (Canada), as agent ( "Congress"),

entered into a loan agreement dated June 23, 1997 (the "Initial Loan Agreement") pursuant to

which Congress agreed to make certain loans to Forsyth Canada and Forsyth USA. Congress

was subsequently acquired by Wells Fargo. The Initial Loan Agreement has since been amended


several times, the most recent of which being the fifth amended and restated loan agreement

dated October 20, 2012 (the "Wells Fargo Loan Agreement ") among the Applicants and Wells

Fargo. Pursuant to the Wells Fargo Loan Agreement, Wells Fargo agreed to provide a revolving

credit facility to Forsyth Canada and a revolving credit facility to Forsyth USA in the combined

maximum principal amount of CDN$12,000,000 (collectively, the "Wells Fargo Facilities "). A

copy of the Wells Fargo Loan Agreement is attached as Exhibit "F" to this Affidavit.

19. Forsyth Canada executed and delivered a general security agreement dated July 23, 1997

(the "Forsyth Canada GSA") in favour of Congress, registration in respect of which was made

against Forsyth Canada pursuant to the Personal Property Security Act (Ontario) (the "PPSA")

over "Inventory", "Equipment", "Accounts", "Other" and "Motor Vehicle Included" on June 30,

1997 pursuant to financing statement number 19970630 1147 3037 1596 and reference file

number 832198851, as amended. PPSA financing change statement number 20100929 0923

1590 9196, as amended, was registered against Forsyth Canada to reflect Wells Fargo as the

secured creditor and remove reference to Congress. This PPSA registration currently expires on

June 30, 2016. A copy of the Forsyth Canada GSA is attached as Exhibit "G" to this Affidavit,

20. The Forsyth Canada GSA was also registered in the District of Columbia pursuant to the

Uniform Commercial Code on September 19, 2005, pursuant to registration number

20051345375, as amended, and expires April 15, 2015.

21. Forsyth USA executed and delivered a general security agreement dated July 23, 1997

(the "Forsyth USA GSA") in favour of Congress, registration in respect of which was made

against Forsyth USA pursuant to the PPSA over "Inventory", "Equipment", "Accounts", "Other"

and "Motor Vehicle Included" on April 25, 2000 pursuant to financing statement number

20000425 1443 9065 7813 and reference file number 861168105, as amended. PPSA financing

change statement number 20100929 0923 1590 9197, as amended, was registered against

Forsyth USA to reflect Wells Fargo as the secured creditor and remove reference to Congress.

This PPSA registration currently expires on April 25, 2019. A copy of the Forsyth USA GSA is

attached as Exhibit "H" to this Affidavit.

22. The Forsyth USA GSA was also registered in the State of Delaware pursuant to the

Uniform Commercial Code on March 13, 2002, pursuant to registration number 20650394, as


amended, and expires March 13, 2017. Similar registrations were made with the New York

Secretary of State (registration number 154554 on July 25, 1997), the Erie (New York) County

Clerk's Office (registration number Q36-7272 on July 25, 1997), the New York City Register,

NY County (registration number 97PN36425 on July 25, 1997) and the Crisp County Clerk of

the Superior Court in Georgia (registration number 040-1999-1234 on August 23, 1999). In

connection with the Cordele Mortgage transaction noted below, Wells Fargo made a further

Uniform Commercial Code registration against Forsyth USA in the State of Georgia on April 6,

2007, pursuant to the registration at Book 750 Page 051, as amended, regarding the fixtures,

equipment and accessions related to the real property known municipally as 301 S. Harris Street,

Cordele, GA, which registration expires February 10, 2017.

23. Forsyth Holdings executed and delivered a general security . agreement dated May 12,

2003 (the "Forsyth Holdings GSA") in favour of Congress, registration in respect of which was

made against Forsyth Holdings pursuant to the PPSA over "Inventory", "Equipment",

"Accounts", "Other" and "Motor Vehicle Included" on November 29, 2000 pursuant to financing

statement number 20001129 1032 9065 4398 and reference file number 867929751, as amended.

PPSA financing change statement number 20100929 0925 1590 9200, as amended, was

registered against Forsyth Holdings to reflect Wells Fargo as the secured creditor and remove

reference to Congress. A second and identical registration was made in favour of Congress on

September 16, 2005 pursuant to financing statement number 20050916 1106 1862 6056 and

reference file number 618926337, as amended. Again, PPSA financing change statement

number 20100929 0925 1590 9199, as amended, was registered against Forsyth Holdings to

reflect Wells Fargo as the secured creditor and remove reference to Congress. This PPSA

registration currently expires on November 29, 2016. A copy of the Forsyth Holdings GSA is

attached as Exhibit "I" to this Affidavit.

24. The Forsyth Holdings GSA was also registered in the State of Delaware pursuant to the

Uniform Commercial Code on April 17, 2003, pursuant to registration number 31017816, as

amended, and expires April 17, 2018.

25. The Applicants are currently in default of certain of their obligations under the Wells

Fargo Loan Agreement.


26. The total cumulative indebtedness of the Applicants owing to Wells Fargo as at the date

hereof is approximately CDN$8,300,000.

(b) Oliver Morante

27. Forsyth Canada executed and delivered a demand promissory note in the principal

amount of CDN$200,000 and dated September 20, 2011 (the " Morante Note") in favour of

Oliver Morante in connection with a $200,000 loan provided by Oliver Morante to Forsyth

Canada, A copy of the Morante Note is attached as Exhibit "J" to this Affidavit.

28. In connection with the Morante Note, Forsyth Canada executed and delivered a general

security agreement dated September, 2011 in favour of Oliver Morante (the " Morante GSA").

Registration in respect to the Morante GSA was made against Forsyth Canada on September 22,

2011 pursuant to the PPSA over "Consumer Goods", "Inventory", "Equipment", "Accounts" and

"Other" pursuant to financing statement number 20110922 1012 1862 9387 and reference file

number 673111539. A copy of the Morante GSA is attached as Exhibit "K" to this Affidavit.

29. Oliver Morante executed and delivered a subordination and postponement agreement in

favour of Wells Fargo, as agent, dated September 15, 2011 (the "Subordination Agreement "),

pursuant to which the debts owing by Forsyth Canada to Oliver Morante are subordinated in

favour of Wells Fargo, as agent.

30. The total cumulative indebtedness of the Applicants owing to Oliver Morante as of the

date hereof is approximately CDN$217,300, including interest and costs.

(c) Harris Hester

31. Forsyth Canada executed and delivered a demand promissory note in the principal

amount of USD$200,000 and dated September 20, 2011 (the "Hester Note") in favour of myself

in connection with a USD$200,000 loan provided by me to Forsyth Canada. A copy of the

Hester Note is attached as Exhibit "L" to this Affidavit,

32. In connection with the Hester Note, Forsyth Canada executed and delivered a general

security agreement dated September 20, 2011 in favour of myself (the "Hester GSA").

Registration in respect to the Hester GSA was made against Forsyth Canada on September 22,

.... --....... ..-.


20 1 the PPSA Goods" , "inventory", 77 "T' " " " zo i ~ pursuant to the PPSA over "Consumer Goods , ,~rveixtory , ~quipznent , Accounts and

"Other" pursuant to financing statement number 20110922 1012 1862 9387 and reference file

number 673111539. A copy of the Hester GSA is attached as Exhibit "M" to this Affidavit.

33. I am also a party to the Subordination Agreement, pursuant to which the debts owing by

Forsyth Canada to myself are subordinated in favour of Wells Fargo, as agent.

34. The total cumulative indebtedness of the Applicants owing to myself as of the date hereof

is approximately USD$217,300, including interest and costs.

(d) Other Secured Creditors

35. Orlando Corporation ("Orlando"), the landlord of the Distribution Location (as defined

below), has made a PPSA registration against Forsyth Canada with respect to "Inventory",

"Equipment" and "Other" pursuant to PPSA financing statement number 20090522 1003 1862

7403 and reference file number 653606721, which registration does not appear to be related to

specific equipment.

36. Each of GE VFS Canada Limited Partnership and IBM Canada Limited has made PPSA

registrations against Forsyth Canada with respect to specific equipment.

37. A summary of the PPSA registrations made against the Applicants is attached as Exhibit

"N" to this Affidavit.

38. Other than the creditors described above, I am not aware of any other creditors with

general security over the Applicants' assets.

(e) Cash Management System

39. As of the date hereof, Forsyth Canada maintains the following bank accounts with Royal

Bank of Canada (66 C") in Ontario:

(a) a Canadian currency account used for disbursements;

(b) a Canadian currency blocked account under the dominion of Wells Fargo;


(c) a USA currency account used for disbursements; and

(d) a USA currency blocked account under the dominion of Wells Fargo.

40. As of the date hereof, Forsyth USA maintains the following bank accounts:

(a) a Canadian currency account with RBC in Ontario used for disbursements;

(b) a USA currency account with RBC in Ontario used for disbursements;

(c) a USA currency blocked account with RBC in Ontario under the dominion of

Wells Fargo; and

(d) an account with Bank of America in the United States of America used for

disbursements related to payroll.

41. As of the date hereof, Forsyth Holdings maintains a Canadian currency bank account

with RBC in Ontario which is used for disbursements.

42. In connection with the Wells Fargo Loan Agreement, Forsyth Canada, Wells Fargo and

RBC are parties to a blocked account agreement dated March 23, 2011 (the "Blocked Account

Agreement"), pursuant to which Wells Fargo has dominion over Forsyth Canada's bank

accounts maintained by the Applicants at RBC. The Blocked Account Agreement does not

apply to any of bank accounts of either Forsyth USA or Forsyth Holdings.

(f) Landlords

43. The Applicants have existing lease agreements with the following landlords:

(a) PFS GTA Industrial Inc., in respect to the premises known municipally as 6789

Airport Road, Mississauga, Ontario (the "Administration Location");

(b) Savage Holdings Inc., in respect to the premises known municipally as 111

Savage Drive, Cambridge, Ontario (the "Cambridge Location");

(c) Orlando, in respect to the premises known municipally as 6471 Northwest Drive,

Mississauga, Ontario (the "Distribution Location "); and

Affidavit of Harris R. Hester Page Ii

(d) Adams & Company Real Estate, LLC, in respect to the premises known

municipally as 1071-1079 Avenue of the Americas, #801, New York, New York

(the "New York Location").

(g) Mortgage with Wachovia Bank, N,A., which was assumed by Wells Fargo

44. Forsyth USA owns the real property located at the addresses known municipally as 301

Harris Street, Cordele, Georgia, USA and 2810 East 13 th Avenue, Cordele, Georgia, USA

(together, the "Cordele Location").

45. Wachovia Bank, N.A. ("Wachovia") provided a $1,300,000 construction mortgage loan

to Forsyth USA (the "Wachovia Loan") in respect to the Cordele Location pursuant to a term

sheet dated December 7, 2006, and a real estate loan commitment letter dated February 14, 2007,

unexecuted copies of which are attached as Exhibit "O" to this Affidavit.

46. In connection with the Wachovia Loan, Forsyth USA executed and delivered a

promissory note in the principal amount of $1,300,000 in favour of Wachovia dated March,

2007, as amended (the "Wachovia Note"). An unexecuted copy of the Wachovia Note is

attached as Exhibit ``P" to this Affidavit.

47. In connection with the Wachovia Note, Forsyth USA executed and delivered a deed to

secure debt and assignment of rents with respect to the Cordele Location in favour of Wachovia

dated March, 2007 (the "Wachovia Deed"), a copy of which is attached as Exhibit "Q" to this

Affidavit.

48. Wachovia was subsequently acquired by Wells Fargo.

49. As of the date hereof, the total amount outstanding under the Wachovia Loan is

approximately $700,000.

(h) Employees and the Unions

50. Forsyth Canada presently employs 160 full-time employees in Ontario (the "Ontario

Employees"). Forsyth USA currently employs 9 full-time employees in the United States of


America the"USA Employees", and, together with the Ontario Employees, the "Employees"

Wages and benefits total approximately $450,000 per month.

51. As of the date hereof, all source deductions related to Employees were current, including,

without limitation, income tax withholdings, employee health tax, worker's compensation,

Canada Pension Plan and employment insurance.

52. The Applicants have no pension plans.

53. 89 of the Ontario Employees worked at the Cambridge Location (collectively, the

"Cambridge Union Members ") and are members of the union known as Workers United

Ontario Council, Local 2643 (the "Cambridge Union"). The relationship between the

Cambridge Union Members, Forsyth Canada and the Cambridge Union are set out in a collective

agreement dated January 1, 2010 (the "Cambridge Union Agreement"), a copy of which is

attached as Exhibit "R" to this Affidavit. An additional ii of the Ontario Employees worked at

the Cambridge Location who were not unionized (the "Non-Union Cambridge Employees ",

and, together with the Cambridge Union Members, the "Cambridge Employees").

54. As of the date hereof, all 100 Cambridge Employees have been terminated pursuant to

and in compliance with the Employment Standards Act, 2000 (Ontar.io) and the Labour Relations

Act, 1995 (Ontario), as applicable.

55. 14 of the Ontario Employees work at the Distribution Location (collectively, the "Distribution Union Members") and are members of the union known as Workers United

Canada Council, Local 1058C (the "Distribution Union"). The relationship between the

Distribution Union Members, Forsyth Canada and the Distribution Union are set out in a

collective agreement dated April 4, 2011 (the "Distribution Union Agreement"), a copy of

which is attached as Exhibit "S" to this Affidavit. An additional 7 of the Ontario Employees

work at the Distribution Location who are not unionized (the "Non-Union Distribution

Employees ", and, together with the Distribution Union Members, the "Distribution

Employees").


56. As of the date hereof, 1 Distribution Employee has been terminated pursuant to and in

compliance with the Employment Standards Act, 2000 (Ontario) and the Labour Relations Act,

1995 (Ontario), as applicable.

57. 39 of the Ontario Employees work at the Administration Location (the "Administration

Employees ") and are not unionized. As of the date hereof, 15 of the Administration Employees

have been terminated pursuant to and in compliance with the Employment Standards Act, 2000

(Ontario).

58. 3 of the USA Employees work at the New York Location and are paid via commission.

The balance of the USA Employees work at the Cordele Location.

59. There are insufficient funds to satisfy the future anticipated amounts owing to the

Employees based on the Applicants' current consolidated cash position and their pro-forma cash

flows. Accordingly, and in conjunction with the other anticipated restructuring steps, further

terminations or temporary or indefinite layoffs of the remaining Employees may be required

throughout these CCAA proceedings.

o-eiiiu. um

60. As at the date of this Affidavit, the Applicants' federal and outstanding provincial sales

tax obligations and goods and services tax obligations are all current, as well as their source

deduction remittances.

61. I am not aware of any actual or threatened environmental claims or investigations by any

government or similar authority in respect to the Cordele Property.

(l) Trade Creditors

62. As at February 15, 2013, the Applicants' other unsecured liabilities, including trade debt,

totalled approximately $8,100,000.

63. Of the Applicant's total unsecured liabilities, $7,100,000 is attributable to Manunion

Investments Limited ("Manunion"), a Hong Kong company. Manunion is the chief

manufacturer of the Applicants' imported apparel product line, which line accounts for the


majority of the Applicants' total annual sales. As such, Manunion's supply of goods to the

Applicants is critical to their continued operation.

64. The relationship between the Applicants and Manunion began 20 years ago and has

continued amicably since that time without any written agreements. Orders are made by Forsyth

Canada via telephone where the price, quantity and delivery time are negotiated and reduced to a

purchase order. Payment is made to Manunion by Forsyth USA 30 days after receipt of goods.

65. The Applicants have had discussions with Manunion in respect to the Applicants'

financial position and contemplation of these CCAA proceedings. These discussions culminated

in Manunion expressing its support to the Applicants' proposed steps to restructure.

V. RESTRUCTURING STRUCT'U NG UNDIH R CCAA PROTECTION

66. The Applicants are insolvent. The aggregate value of their assets at a fair valuation or if

disposed of in a fairly conducted sale under legal process would not be sufficient to enable them

to pay all of their obligations. As well, the Applicants are not able to pay their liabilities as they

become due. The Applicants' current lenders are no longer willing to continue to fund the

Applicants' ongoing losses in the existing business structure without substantial change to the

Applicants' structure, operations and, perhaps, business model, given the Applicants' place in the

market and the changing dynamics of the apparel industry. I believe the same would be true of

any other lenders, so a simple refinancing would not solve the Applicants' issues.

67. In order for the Applicants to ensure the best possible recovery for their stakeholders,

including, without limitation, suppliers, vendors, employees and landlords, management of the

Applicants has determined that a restructuring or a sale of its business is required.

68. The anticipated steps in the Applicants' restructuring plan are, in order of anticipated

completion and without limitation:

(a) to relocate the administrative function carried out at the Administration Location

to the Distribution Location, followed closely by the closure of the Administration

Location;

(b) to cease operations at the Cambridge Location and vacate the premises;


(c) to terminate the employment of such of the Employees or temporarily or

indefinitely lay off such of the Employees as the Applicants deem appropriate on

such terms as may be agreed upon between the Applicants and such Employee(s)

or, failing such agreement, to deal with the consequences thereof in the Plan;

(d) to list the Cordele Property for sale and cease operations thereat;

(e) to relocate the operations from the New York Location to an alternative and less

costly location in the same geographical region; and

(f) to seek out alternative, long-term suppliers of goods in order to diminish the

Applicants' dependence on Manunion.

69. The Applicants have every intention of preparing and presenting the Plan to their

creditors, including, without limitation, current and former employees, landlords in respect of

repudiated leases, trade creditors and, perhaps, their remaining secured creditors.

70. A CCAA stay is needed to ensure that the Applicants' business can be restructured and/or

sold in an efficient and orderly way under the protection of the Court without the threat of

proceedings.

71. A CCAA stay of proceeding is needed to ensure that the Applicants, with the support of

the Monitor, can restructure their collective business or sell certain or all of their assets as a

going concern in an efficient and orderly way under the protection of the Court without the threat

of proceedings or discontinuation of essential services. A stay of proceedings will restrain

temporarily the exercise of rights and remedies under the various agreements to which the

Applicants are a party, preserve the status quo, and restrain existing creditors from taking unfair

advantage in the circumstances. In so doing, the Applicants, with the aid of the Monitor, will be

in a position to, among other things, determine the validity of creditors' claims and understand

the priority of such claims, all of which is an important step in the Applicant's formulation of the

Plan.


72. The Applicants believe that a stay of proceedings will not materially prejudice any of the

existing creditors when compared to the consequences if a stay of proceedings is not granted.

On certain terms, Wells Fargo has agreed to provide the Applicants with the DIP Facility and to

fund necessary post-filing expenses during the CCAA proceedings, the details of which are set

out below. I believe that the alternative to a stay of proceedings is the forced sale and/or

liquidation of the Applicants and their assets, respectively.

73. BDO has assisted the Applicants in preparing for this CCAA application, including,

without limitation, reviewing the cash flow projections of the Applicants for the next 13 weeks,

assuming the relief sought is granted (the "Cash Flow Projection"). The amounts set out in the

Cash Flow Projection reflect, among other things, the minimum payments required to maintain

the Applicants' business during an initial thirty day stay period, as well as professional fees. A

copy of the 13 week Cash Flow Projection together with a report containing the prescribed

representations of the Applicants regarding the preparation of the Cash Flow Projection is

attached as Exhibit "T" to this Affidavit.

74. Management believes that it is in the best interests of all stakeholders if this Court

appoints BDO as the Court-appointed monitor of the Applicants. As a result of BDO's

involvement with the Applicants in advance of and in preparation for this filing, BDO has gained

insight into the Applicants' business and will be in a position to perform the monitoring duties

effectively and without delay.

75. BDO has consented to act as monitor of the Applicants in accordance with the

requirements of the CCAA, subject to the Court's approval. A copy of BDO's consent is

included in the Application Record in these proceedings.

1 1I VJ'(IISJ

76. Wells Fargo is prepared to provide the Applicants with the financing they will need to

have available to them during these proceedings through the DIP Facility, a new credit facility in

the maximum principal amount of CDN$10,000,000 pursuant to a DIP Commitment Letter (the

"DIP Term Sheet"), a draft copy of which is attached as Exhibit "U". Under the DIP Term


Sheet, each of Forsyth Canada and Forsyth USA are borrowers, and each of the Applicants

guarantees payment of the obligations of the others under the DIP Facility. As provided in the

DIP Term Sheet, such funding is conditional on Wells Fargo, as the DIP Lender, being granted

security over the Property, ranking in priority to any existing security except for the First

Administration Charge (as such term is defined below), pursuant to the terms an order

substantially in the form filed in these proceedings (the "DIP Charge"). Recognizing the nature

of the asset based lending arrangements in place at this time, while the DIP Term Sheet

contemplates the establishment and funding of a new credit facility to fund the Applicants'

expenses post-filing, the DIP Facility is also conditional on the Applicants' receipts after the

CCAA filing being deposited into the existing Wells Fargo controlled bank accounts and being

applied in reduction of the amounts outstanding under the Wells Fargo Facilities.

77. Under the DIP Term Sheet, the interest rate is 1% per annum higher than under the Wells

Fargo Facilities, and the only new fee for the establishment of the DIP Facility is a fee of

$50,000. In our view, the terms of the DIP Facility are better than we would likely receive from

a lender unfamiliar with the business and assets, who would likely charge a substantially higher

interest rate and/or fee for the provision of the credit facilities. Also, it is unlikely that another

lender could react and be in a position to provide credit in these circumstances.

78. The Applicants believe that the terms of the DIP Facility are reasonable and favourable to

them having regard to the circumstances. Among other things, Wells Fargo has an existing

relationship with the Applicants and is familiar with their business and assets. Also, Wells Fargo

has an economic interest in preserving and developing the Applicants' business.

79. The Applicants believe that the amount of the DIP financing being sought is necessary

and reasonable in the circumstances to ensure that the Applicants have a prudent and responsible

level of liquidity so that they can meet post-filing obligations as they become due for the period

of the initial stay. The Applicants will not be able to continue their operations and initiate any

restructuring efforts without access to the DIP Facility.

80. Each of the Applicants' legal counsel, the Monitor and the Monitor's legal counsel, as a

condition of their continued involvement with the Applicants, has indicated that its ongoing

involvement is conditional upon the granting of an order under the CCAA which grants the

administration charge in the aggregate maximum amount of $400,000 on the Property, which

charge shall be allotted, subject to the approval of this Court, according to the following tranches

and priorities pursuant to the terms of an order substantially in the form filed in these

proceedings:

(a) $100,000 ranking first in priority (the "First Administration Charge"); and

(b) $300,000 ranking fourth in priority behind the First Administration Charge, the

DIP Charge and the pre-filing secured claims of Wells Fargo, respectively (the

"Second Administration Charge" and, together with the First Administration

Charge, the "Administration Charge")

81. I believe that that the following factors support the granting of the Administration

Charge:

(a) the beneficiaries of the Administration Charge will provide essential legal and

financial advice and support to the Applicants throughout the CCAA proceedings;

(b) the roles of the Applicants' legal counsel, the Monitor and the Monitor's legal

counsel are distinct and there is no anticipated unwarranted duplication; and

(c) the Administration Charge does not purport to prime any secured party who has

not received notice of this motion.

82. Accordingly, I believe that this is an appropriate case in which to grant the

Administration Charge. Each of the proposed beneficiaries of the Administration Charge will

play a critical role in the Applicants' restructuring, and it is unlikely that the above-noted

advisors will participate in these CCAA proceedings unless the Administration Charge is granted

to secure their fees and disbursements.


X. DIRECTORS' r ND OFFICERS' CHARGE

83. The Directors and Officers, as a condition of their continued involvement with the

respective Applicants, have indicated that their respective ongoing involvement is conditional

upon the granting of an order under the CCAA which grants a charge on the Property in the

maximum amount of $300,000 (the "D&O Charge") as security for the Applicants'

indemnification for possible liabilities which may be incurred by such Directors and Officers,

which would be subordinate to the Administration Charge, the DIP Charge, and the pre-filing

secured claims of Wells Fargo.

84. The Applicants maintained an Executive Insurance policy with Liberty Mutual Insurance

Company (the "Liberty Policy"). The Liberty Policy provides coverage to the Applicant, any

subsidiary or joint-venture of the Applicant and the Directors and Officers. The aggregate limit

of liability coverage provided for under the Liberty Policy is $5,000,000. The Liberty Policy

expired on February 17, 2013.

85. The Applicants also maintained an Executive Liability & Indemnification insurance

policy with Chartis Insurance Company of Canada (the "Chartis Policy", and, together with the

Liberty Policy, the "Policies"). The aggregate limit of liability coverage provided for under the

Chartis Policy was $5,000,000. The Chartis Policy expired on December 31, 2012.

86. Management of the Applicant has made inquiries with the Applicant's current insurance

broker and I am advised that a comparable level of insurance coverage will not likely be

available to the Applicants after the Policies expire or, if such policies are available, they will be

cost-prohibitive for the Applicants, due to the Applicants' poor financial health.

87. The Policies contains several exclusions and limitations to the coverage they provide and

there is a potential for there to be insufficient coverage in respect of the potential liabilities for

which the Directors and Officers may be found responsible.

88. The D&O Charge is required in order to provide a level of protection to the Directors and

Officers with respect to the possible liabilities imposed on individuals in their capacity as

directors and officers of a corporation. I believe that the request of the Directors and Officers to

receive adequate protection in the form of the D&O Charge is fair and reasonable and advances

Affidavit of Harris K Hester Page 20

the integral need of the Applicants to have fully functional, experienced and qualified advisors,

boards of directors and officers.

1_EthYSi Itik1

89. It is in the best interests of all stakeholders of the Applicants for this Court to grant the

relief sought by the Applicants. It will allow the Applicants, with the support of the Monitor, to

restructure or realize the collective business in a way to maximize value for all stakeholders. I

believe this is preferable to the Applicants' assets becoming subject to bankruptcy or

receivership proceedings.

90. This Affidavit is sworn in support of the relief requested by the Applicants and for no

other or improper purposes.


. r 4iJ ~

Proceeding commenced at Toronto

& BERLIS LLP Barristers and Solicitors


D. Robb English (LSUC # 19862F1B) Tel: 416.865.4748 Fax: 416.863.1515 Email: ren lish(cr~,airdberlis.com

Ian Aversa (LSUC # 55449N) Tel: 416.865.3082 Fax: 416.863.1515 Email: iaversa(a~airdberlis.com

James A. Desjardins (LSUC # 62493E) Tel: 416.865.4641 Fax: 416.863.1515 Email: [email protected]

Lawyers for The John Fosyth Shirt Company Ltd., Forsyth Holdings, Inc. and Forsyth of Canada, Inc.

13933635.5

.;

Attached is Exhibit "C"

Referred to in the

Affidavit of Harris R, Hester

Sworn before me 45 I day of May, 2014

y®

Commissioner for taking Affidavits, etc

13-10526-scc Doc 24 Filed 03/18/13 Entered 03/18/13 14:21:23 Main Document Pg 1 of 6

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK

----------------------------------------------- x

In re: Chapter 15

THE JOHN FORSYTH SHIRT COMPANY LTD., et al. 1 Case No. 13-10526 (SCC)

Debtors in Foreign Proceeding. Jointly Administered

---------------------------------------------------------------x

ORDER GRANTING RECOGNITION AND RELATED RELIEF

Upon the request of BDO Canada Limited, the court-appointed monitor (the

"Monitor") and authorized foreign representative of the proceedings (the " Canadian

Proceedings ") of The John Forsyth Shirt Company Ltd. (" Forsyth Canada"), Forsyth Holdings,

Inc, ("Forsyth Holdings") and Forsyth of Canada, Inc. (" Forsyth USA" and together with Forsyth

Canada and Forsyth Holdings, the " Forsyth Entities ") under Canada's Companies Creditors

Arrangement Act, R.S.C. 1985, c. C-36 (as amended, the " CCAA") pending before the Ontario

Superior Court of Justice (Commercial List) (the " Ontario Court"), seeking an order recognizing

the Canadian Proceedings as foreign main proceedings and enforcing pursuant to section 1507,

1520, 1521, 363, 364 and 105 of the Bankruptcy Code the Initial Order of the Ontario Court,

dated February 22, 2013 (the " Initial Order"); due and timely notice of the filing of the Chapter

15 Petitions having been given in accordance with this Court's order dated February 22, 2013,

approving the form and manner of service thereof (the " Service Order"), which notice is deemed

adequate for all purposes such that no other or further notice thereof need be given; and the

Court having considered and reviewed the other pleadings and exhibits submitted by the Monitor

The debtors in these cases and the last four digits of each debtor's tax identification number are as follows: The John Forsyth Shirt Company Ltd. (RC0001), Forsyth Holdings, Inc. (7524), and Forsyth of Canada, Inc. (7526).

RLF1 8321798v.1


pp of t Chapter " and the Court having determined that the relief requested in support f he Cha per 15 Petitions; a. .e „u.

by the Monitor is in the best interests of the Forsyth Entities, their creditors and other parties in

interest; and any objections to the Chapter 15 Petitions that have not been withdrawn or resolved

having been or are hereby overruled.

Therefore, after due deliberation and sufficient cause appearing therefor, the Court

finds and concludes as follows:

(A) This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and

1334 and section 1501 of the Bankruptcy Code.

(B) This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(P).

(C) Venue is proper in this District pursuant to 28 U.S.C. §§ 1410 (1) and (3).

(D) The Monitor is a person within the meaning of section 101(41) of the Bankruptcy

Code and is the duly appointed foreign representative of each of the Forsyth Entities within the

meaning of section 101(24) of the Bankruptcy Code.

(E) The Chapter 15 Cases were properly commenced pursuant to sections 1504 and

1515 of the Bankruptcy Code.

(F) The Chapter 15 Petitions meet, and the Monitor has satisfied, the requirements of

section 1515 of the Bankruptcy Code.

(G) The Canadian Proceedings are foreign proceedings within the meaning of section

101(23) of the Bankruptcy Code.

(H) The Canadian Proceedings are entitled to recognition by this Court pursuant to

section 1517 of the Bankruptcy Code.

(I) The Canadian Proceedings are pending in Ontario, Canada, and Canada is the

center of main interests of each of the Forsyth Entities. As such, the Canadian Proceedings

2 RLFI 8321798v.1

13-10526-scc Doc 24 Filed 03/18/13 Entered 03/18/13 14:21:23 Main Document Pg 3of6

constitute foreign main proceedings pursuant to section 1502(4) of the Bankruptcy Code and are

entitled to recognition as foreign main proceedings pursuant to section 1517(b)(1) of the

Bankruptcy Code.

(J) The Monitor is entitled to all the relief provided by sections 1520, 1521(a) and

1521(b) of the Bankruptcy Code, without limitation.

(K) The relief granted hereby is necessary and appropriate, in the interests of the

public and international comity, consistent with the public policy of the United States, warranted

pursuant to section 1521 of the Bankruptcy Code, and will not cause any hardship to any party in

interest that is not outweighed by the benefits of granting that relief.

(L) The interest of the public will be served by this Court granting the relief requested

by the Monitor.

(M) Time is of the essence in the Canadian Proceedings and cause has been shown as

to why this Order should not be subject to the stay provided by Rule 6004 of the Federal Rules of

Bankruptcy Procedure (the " Bankruptcy Rules ") or any other stay of effectiveness

NOW, THEREFORE, IT IS HEREBY ORDERED AS FOLLOWS:

1. The Chapter 15 Petitions are granted.

2. The Canadian Proceedings are hereby recognized and granted recognition as

foreign main proceedings pursuant to section 1517 of the Bankruptcy Code.

3. All provisions of section 1520 of the Bankruptcy Code apply in these Chapter 15

Cases, including, without limitation, the stay under section 362 of the Bankruptcy Code and the

ability to obtain financing under Section 364 of the Bankruptcy Code, throughout the duration of

these Chapter 15 Cases or until otherwise ordered by this Court.

3 RLF 1 8321798v,1


4. The Initial Order, including any extensions, amendments or modifications thereto,

is hereby given full force and effect within the territorial jurisdiction of the United States. The

transactions already consummated or authorized by the Initial Order but not yet consummated,

including without limitation, the entry into the DIP Facility (as defined in the Initial Order), also

are and shall be recognized and granted comity and given full force and effect in the United

States to the same extent that they are given effect in Canada, and each is binding on all creditors

of the Forsyth Entities and any of their successors or assigns.

5. The Forsyth Entities and the Monitor are authorized and empowered to cause to

be filed with the secretary of state of any state or other applicable officials of any applicable

governmental units any and all certificates, agreements, or amendments necessary or

appropriate to effectuate the provisions of this Order, as any officer of the Forsyth Entities or

the Monitor may determine are necessary or appropriate. Consistent with 8 Del. C. § 303, the

execution of any such document or the taking of any such action is deemed conclusive evidence

of the authority of such person to so act on behalf of Forsyth USA and Forsyth Holdings.

Without limiting the generality of the foregoing, this Order shall constitute all approvals and

consents, if any, required by the corporation law of the state of Delaware for Forsyth USA and

Forsyth Holdings with respect to the implementation of this Order, and the transactions

contemplated thereby and hereby.

6. Notwithstanding Bankruptcy Rules 6004, 7062, and 9021,. this Order shall be

effective and enforceable immediately upon entry and its provisions shall be self-executing.

7. This Court shall retain jurisdiction with respect to the enforcement, amendment or

modification of this Order, any request for additional relief or any adversary proceeding brought

in and through these Chapter 15 Cases, and any request by an entity for relief from the provisions

4 RLF 1 8321798v.1


of this Order, for cause shown, that is properly commenced and within the jurisdiction of this

Court.

8. This Order shall be served on or before March 21, 2013,. in accordance with the

Service Order and shall constitute adequate and sufficient service and notice of this Order.

9. The Chapter 15 Petitions and related filings shall be made available by the

Monitor through its website at http://www.bdo.ca/forsyth or upon request at the offices of its

counsel: Richards, Layton & Finger, One Rodney Square, 920 North King Street, Wilmington,

Delaware 19801, Attention: Russell C. Silberglied.

5 RLF 1 8321798v.1


10. Notwithstanding Bankruptcy Rule 7062, made applicable to these Chapter 15

Cases by Bankruptcy Rule 1018, the terms and conditions of this Order shall be immediately

effective and enforceable upon its entry, and upon its entry, this Order shall become final and

appealable.

Dated: March 18, 2013 New York, New York

/s/ Shelley C. Chapman HONORABLE SHELLEY C. CHAPMAN UNITED STATES BANKRUPTCY JUDGE

6 RLF 1 8321798v.1


---------------------------------------------------------------x In re:

Chapter 15 THE JOHN FORSYTH SHIRT COMPANY LTD., et al. 1 : Case No. 13-10526 (SCC)

Debtors in Foreign Proceeding. Jointly Administered

x

Iii, I I

This matter was brought upon by the motion (the " Motion")2 of BDO Canada Limited

(the "Monitor"), as the court-appointed monitor and authorized foreign representative for The

John Forsyth Shirt Company Ltd. (" Forsyth Canada"), Forsyth Holdings, Inc. ("Forsyth

Holdings") and Forsyth of Canada, Inc. (" Forsyth USA" and together with Forsyth Canada and

Forsyth Holdings, the "Forsyth Entities "), pursuant to sections 1519 and 1521 of title 11 of the

United States Code (the " Bankruptcy Code "), for (i) entry of an emergency order (the

"Provisional Order") which imposes a stay of all proceedings in the United States against the

Monitor or the Forsyth Entities, and the Forsyth Entities' business, property or assets located in

the United States and any attempt to collect thereon or any attempt to terminate executory

contracts and recognizes the Initial Order on an interim basis, and grants certain relief under

section 364 of the Bankruptcy Code on an interim basis and (ii) concurrently with or after entry

of a recognition order under section 1517 of the Bankruptcy Code, the entry of a final order (the

' The debtors in these cases and the last four digits of each debtor's tax identification number are as follows: The John Forsyth Shirt Company Ltd. (RC0001), Forsyth Holdings, Inc. (7524), and Forsyth of Canada, Inc. (7526).

2 Capitalized terms not otherwise defined herein shall have the meanings given to them in the Motion.

RLF 1 8321801v.1


Filial Order") recognizing the 'initial Order, and extending the stay granted in the Provisional

Order on a permanent basis.

This Court entered the Provisional Order on February 27, 2013 and scheduled a hearing

for March 18, 2013 at 2:00 p.m. to consider the Monitor's request for the relief set forth in the

Final Order. The Court has considered and reviewed the Motion, the Verified Petition for

Recognition of Foreign Proceedings and Related Relief filed by the Monitor under chapter 15 of

the Bankruptcy Code (the "Petition"), and the Memorandum of Law filed in support of the

Petition and the Motion. The Court also has considered any objections thereto and held a

hearing in connection with the request for a Final Order. Based on the foregoing, this Court

finds and concludes as follows:

(A) This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and

1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(P), Venue is proper in this

District pursuant to 28 U.S.C. § 1410(1) and (3).

(B) Notice of the hearing on the Motion was sufficient under the circumstances and

no further notice of, or hearing on, the Motion is necessary or required.

(C) The relief sought by the Monitor is authorized under sections 1520(a) and

1521(a)(7) of the Bankruptcy Code.

(D) The Monitor has demonstrated that the extension of the Provisional Order on a

permanent basis is justified because:

(i) pursuant to the Order Granting Recognition [Docket No. 24], the

Canadian Proceedings are foreign main proceedings within the meaning of section 1502(4) of the

Bankruptcy Code; and

2 RLF 1 8321801v.1


(ii) the Monitor has demonstrated that the Forsyth Entities will be irreparably

harmed in the absence of the relief requested in that the Monitor has demonstrated that unless the

Provisional Order is extended on a permanent basis, there is a material risk that one or more

parties in interest will take action against the Monitor or the Forsyth Entities, or the Forsyth

Entities' business, assets or property, thereby interfering with the jurisdictional mandate of this

Court under chapter 15 of the Bankruptcy Code, interfering with and causing harm to the

Monitor's efforts to administer the Forsyth Entities' estates pursuant to the Canadian

Proceedings, and undermining the Monitors' effort to reorganize the Forsyth Entities' business.

As a result, the Monitor and the Forsyth Entities will suffer immediate and irreparable harm for

which they will have no adequate remedy at law.

(E) In addition, the Monitor has demonstrated that this Court's recognition of the

Initial Order of the Ontario Court (i) is in the best interests of the Forsyth Entities, their estates,

their creditors and other parties in interest, and (ii) is in the public interest because it will further

the public policy of the United States as articulated in, inter alia, section 1501 of the Bankruptcy

Code.

NOW, THEREFORE, IT IS HEREBY ORDERED AS FOLLOWS:

1. The Motion is granted.

2. The Initial Order is hereby recognized and given full force and effect within the

territorial jurisdiction of the United States. The Forsyth Entities shall be permitted to utilize the

DIP Facility in accordance with paragraphs 32-37 of the Initial Order, including, without

limitation, to incur secured indebtedness, to grant the DIP Charge and to execute, deliver and

perform under the DIP Credit Agreement and Definitive DIP Documents

3 RLF 1 8321801v.1


3. Without limitation of the foregoing, the relief granted in paragraphs 2-5 of the

Provisional Order are hereby authorized on a final basis.

4. The stay imposed by the Provisional Order is hereby made permanent subject to

any further order of the court on any motion by a non-debtor party.

5. No litigation, proceeding, enforcement process or collection action in any court or

tribunal shall be commenced or continued against or in respect of the officers and directors of

any of the Forsyth Entities, except with the written consent of the Monitor, or with leave of this

Court or the Ontario Court.

6. Nothing herein shall enjoin a police or regulatory act of a governmental unit,

including a criminal action or proceeding.

7. Notice of the entry of this Order shall be served in accordance with Rule 2002 of

the Federal Rules of Bankruptcy Procedure.

8. This Court shall retain jurisdiction with respect to the enforcement of this Order.

Dated: March 18, 2013 New York, New York

/s/ Shelley C. Chapman HONORABLE SHELLEY C. CHAPMAN UNITED STATES BANKRUPTCY JUDGE

4 RLF 18321801 v.1

1.

Attached is Exhibit "D"

Referred to in the

Affidavit of Harris R. Hester

Sworn before me

this 5' day of May, 20 a

Commissioner for taking Affidavits, etc

Court 111e No. V- 13 - 10007° LL

S'

THURSDAY, THE 21 ST DAY

1

u , • .. ~ .

1

ORDER (Stay Extension)


and Forsyth of Canada, Inc. (collectively, the "Applicants"), for an order, inter alia: (a)

extending the Stay Period (as defined in the Initial Order of the Honourable Mr. Justice Wilton-

Siegel granted on February 22, 2013 in these proceedings (the "Initial Order")) to and including

May 24, 2013; and (b) approving the First Report of BDO Canada Limited, in its capacity as the

Court-appointed monitor of the Applicants (in such capacity, the "Monitor") dated March 18,

2013 (the "First Report") and approving the actions of the Monitor described therein, was heard

this day at 330 University Avenue, Toronto, Ontario.

ON READING the affidavit of Harris R. Hester sworn. March 14, 2013 and the exhibits

thereto and the First Report, and on hearing the submissions of counsel for the Applicants,

1)

' cv 4 counsel for the Monitor, counsel for Workers United Qn±ario Council Local 2643 and counsel

for Wells Fargo Capital Finance Corporation, no one appearing for any other person on the

service list, although duly served as appears from the affidavit of Christine Doyle sworn March

14, 2013, filed,




2. THIS COURT ORDERS that the Stay Period, as defined in paragraph 14 of the Initial

Order, be and is hereby extended to and including May , 2013.

3. THIS COURT ORDERS that the First Report and the actions of the Monitor described

therein be and are hereby approved.

TGROINTG

ON 1 BOOK NO: LE ! DNS LE ;EGS IRE

MAR 21 2Q13

r + 1 1>

•; •• •• I • • liii'• F. Court File No. CV-13-10009-OOCL

ONTARIO SUPERIOR COURT OF JUSTICE

COMMERCIAL LIST


•i



D. Robb English (LSUC # 19862FIB) Tel: 416.865.4748 Fax: 416.863.1515 Email: renglish(iairdberlis.com

Ian Aversa (LS€JC # 55449N) Tel: 416.865.3082 Fax: 416.863.1515 Email: iaversa(ci,airdberlis_com

James A. Desjardins (LSUC # 62493E) Tel: 416.865.4641 Fax: 416.863.1515 Email: [email protected]


wu

Attached is Exhibit "E"

Referred to in the

Affidavit of Harris R, Hester a~a4oelraereers~~r~

®~~'® ~us~t~• °"®~® Sworn before me

is 5'f' day of May, 14

'4

~®e0dog Commissioner for taking Affidavits, etc

Court File No. CV-13-10009-OOCI,

/ •' I

THE HONOURABLE MR. ) MONDAY, THE 27TH DAY

JUSTICE NEWBOULD ) OF MAY, 2013

IN THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED

u, •

1 r

ORDER (Re: Stay Extension)


and Forsyth of Canada, Inc. (collectively, the "Applicants "), for an order, inter alia, extending

the Stay Period (as defined in the Initial Order of the Honourable Mr. Justice Wilton-Siegel

granted on February 22, 2013 in these proceedings (the "Initial Order")) to and including May

31, 2013, was heard this day at 330 University Avenue, Toronto, Ontario,

ON READING the affidavit of Harris R, Hester sworn May 20, 2013 and the exhibits

thereto and the Second Report of BDO Canada Limited, in its capacity as the Court-appointed

monitor of the Applicants (in such capacity, the "Monitor") dated May 17, 2013 (the "Second

Report"), and on hearing the submissions of counsel for the Applicants, counsel for the Monitor,

counsel for Workers United Canada Council Local 2643, counsel for Manunion Investments

Limited and counsel for Wells Fargo Capital Finance Corporation Canada and Wells Fargo

Capital Finance, LLC ("Wells Fargo"), no one appearing for any other person on the service list,

although duly served as appears from the affidavit of Eunice Baltkois sworn May 17, 2013, filed,

1. THIS COURT ORDERS that the Stay Period, as defined in paragraph 14 of the Initial

Order, be and is hereby extended to and including May 31, 2013.

N THE MATTER OF THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED

AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF THE JOHN FORSYTH SHIRT COMPANY LTD., et al.

Court File No. CV-13-10009-0OCL

ONTARIO SUPERIOR COURT OF JUSTICE

COMMERCIAL LIST


ORDER (Re: Stay Extension)



D. Robb English (LSUC # 19862F1B) Tel: 416.865.4748 Fax: 416.863.1515 Email: [email protected]

Ian Aversa (LSUC # 55449N) Tel: 416.865.3082 Fax: 416.863 -1515 Email: [email protected]


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