The dispute between three directors of Fruit of the Loom's Irish operations and the parent company has been was resolved. The settlement terms are not being disclosed but it is understood that a redundancy package amounting to around $2 million (£1.3 million) was agreed between the two parties following an adjourned High Court hearing yesterday morning. This does not include the pension settlement and other entitlements. Mr William McCarter, managing director, Mr John McCarter, sales director and Mr Seamus McEleney, finance director, will resign from the company on September 30th, according to the statement issued on behalf of both parties.

The statement was drawn up in the presence of lawyers for each side after a decision was made on May 29th to remove the directors as part of a European restructuring programme. Fruit of the Loom has stated that the three positions will not be filled.

The court action began when they applied for an injunction to block the redundancy move.

Yesterday's statement says that "all parties have agreed that no details of the settlement will be disclosed". However, it is reliably understood that $2 million was agreed as a final redundancy figure. Mr William McCarter, who has been associated with the company for 26 years, will receive the larger share of the payoff, as well as considerable pension entitlements. The current chairman of the International Fund for Ireland, he has been managing director since 1972 and was joined by his brothers, John and Andy, six years later.

Their father, who was also involved in the business, had advised his sons not to get involved, saying that there were "easier ways of making money", Mr Willie McCarter said in an interview with The Irish Times in 1988.

A year before, the 60-year-old Buncrana company, which was founded by the McCarters' uncle, was acquired by the Chicago-based Fruit of the Loom company.

Asked if he was sad at leaving the company after his long association with it, William McCarter was philosophical yesterday, saying: "Well, that's life." A spokesman at the SIPTU branch office in Letterkenny said members were sorry to see the "local directors" leaving. "They were genuinely committed to Donegal and to employment in Donegal," he said. Earlier this month, almost half of the 3,500 employees signed a petition urging the parent company not to remove the three directors and saying that "people's hopes within our small community have been dealt a severe blow and we feel that if there is any possibility of reinstatement it would go a long way to restoring that much needed hope".

The statement from both parties said they were pleased that an agreement had been reached. "We wish to assure all of the employees at Fruit of the Loom in Donegal and Derry that it has, and will continue to be business as usual," it said.

The three outgoing directors said that they were pleased that Mr Andy McCarter and Ms Mary Cullen, the two remaining directors, would continue with the company. Mr McCarter will take over the running of the Irish operations and Ms Cullen will have an enhanced role. The dispute became protracted after a series of severance offers to the three directors were rejected. A recent one is believed to have been worth more than $1 million (£680,000).

A spokesman for the company said the parties reached agreement at 2 p.m. after their legal representatives had asked at yesterday morning's hearing that the case be put in for mention in the afternoon. When the case came up, Mr Ercus Stewart SC, counsel for the company, and Mr Tom Mallon, counsel for the directors, asked that the matter be struck out with no further order. A spokesman for the three directors said they would have preferred to have remained with the company but that, in the circumstances, they believed the settlement was in the interests of themselves, the employees and the company. The three will now "take a break".