Exhibit 10.6
American Apparel, Inc.
747 Warehouse Street
Los Angeles, California 90021
March 13, 2009
Lion Capital (Guernsey) II
Limited
PO Box 656
2nd Floor, Tudor House
Le Bordage
St Peter Port
Guernsey
GY1 3PP
Attn: Rob Jones
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RE:
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Extension
of Non-Competition and Non-Solicitation Covenants in
Section 5.27(a) of the Merger Agreement
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Ladies and Gentlemen:
Reference is made to (i) the
Investment Agreement, dated as of March 13, 2009 (as it may be
hereafter amended, supplemented or modified from time to time, the
“ Investment Agreement ”), between American
Apparel, Inc., a Delaware corporation (the “ Company
”), and Lion Capital (Guernsey) II Limited, a Guernsey
limited company (the “ Investor ”), and
(ii) the Amended and Restated Agreement and Plan of
Reorganization, dated as of November 7, 2007 (as it may be
hereafter amended, supplemented or modified from time to time, the
“ Merger Agreement ”), by and among the Company
(f/k/a Endeavor Acquisition Corp.), American Apparel (USA) LLC
(f/k/a AAI Acquisition LLC), a California limited liability
company, American Apparel Inc., a California corporation, American
Apparel, LLC, a California limited liability company, each of the
Canadian companies set forth on Schedule A to the Merger Agreement
(the “ CI Companies ”), Dov Charney (“
Mr. Charney ”), each of the stockholders of the CI
Companies (with respect to certain provisions of the Merger
Agreement) and Sam Lim (with respect to certain provisions of the
Merger Agreement).
This letter agreement is being
delivered by the Company to the Investor pursuant to
Section 1.2(b)(1)(F) of the Investment Agreement.
Capitalized terms used but not defined herein have the respective
meanings set forth in the Investment Agreement.
Mr. Charney and the Company
hereby agree that, with respect to Mr. Charney only, the time
period applicable to the non-competition and non-solicitation
covenants contained in Section 5.27(a) of the Merger
Agreement shall be extended from December 12, 2011 to
December 31, 2013 (the “ Extension Period
”); provided that the Extension Period shall terminate
upon the earliest to occur of the following events (any such event,
an “ Extension Period Termination Event ”):
(i) (A) the Investor and its Affiliates beneficially own
less than 4,000,000 shares of Common Stock issued or issuable upon
exercise of the Warrant and (B) the loans made pursuant to the
Credit Agreement, as it may be hereafter amended, supplemented or
modified from time to time, have been repaid in full,
(ii) Mr. Charney’s employment is terminated by the
Company “without cause” or (iii) Mr. Charney
terminates his employment with the Company for “Good
Reason” (the terms “without cause” and
“Good Reason” having the respective meanings set forth
in the Employment Agreement, dated as of December 12, 2007, as
it may be hereafter amended, supplemented or modified from time to
time,
between Mr. Charney and the Company).
Except as expressly provided herein, nothing herein shall modify
the terms of the non-competition and non-solicitation covenants
contained in Section 5.27(a) of the Merger Agreement,
and, for the avoidance of doubt, the occurrence of any Extension
Period Termination Event shall not apply to or terminate the time
period through December 12, 2011 applicable to the
non-competition and non-solicitation covenants contained in
Section 5.27(a) of the Merger Agreement.
This letter agreement is not
intended to, and does no
