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Exhibit
10.13
AMENDMENT NO. 2 AND
WAIVER
TO
CREDIT AGREEMENT OF
AMERICAN APPAREL, INC.
AMENDMENT NO. 2 AND WAIVER
(this “ Amendment ”), dated as of
November 9, 2007, to the Credit Agreement, dated as of
January 18, 2007 (as amended by Amendment No. 1 and
Waiver to Credit Agreement of American Apparel, Inc., dated as of
July 2, 2007, the “ Credit Agreement ”),
among American Apparel, Inc., a California corporation (the “
Borrower ”), the Facility Guarantors thereto (the
“ Guarantors ”) and SOF Investments, L.P. -
Private IV, as lender (the “ Lender ”).
Capitalized terms used herein but not defined herein are used as
defined in the Credit Agreement.
WITNESSETH:
WHEREAS, the Borrower, the
Guarantors and the Lender are party to the Credit
Agreement;
WHEREAS, Borrower has
notified Lender that (i) the Borrower breached
Section 6.01 (Indebtedness and Other Obligations) and
Section 6.08 (Transactions with Affiliates) of the
Credit Agreement by guaranteeing Indebtedness of certain of its
Foreign Subsidiaries with respect to certain Capital Lease
Obligations of such Foreign Subsidiaries prior to
September 30, 2007, as more fully described on Exhibit
A hereto (the “ September 30 Capital Lease Default
”), (ii) the Borrower breached Section 6.08
(Transactions with Affiliates) of the Credit Agreement by
guaranteeing Indebtedness of certain of its Foreign Subsidiaries
with respect to certain real property leases entered into by such
Foreign Subsidiaries prior to September 30, 2007, as more
fully described on Exhibit A hereto (the “
September 30 Real Property Lease Default ”),
(iii) the Borrower breached Section 6.08 (Transactions
with Affiliates) of the Credit Agreement by assigning
$4,000,000 of the proceeds of a certain life insurance policy on
the life of Dov Charney to a lender of its Canadian Affiliate and
by paying the premiums associated with such policy, as more fully
described on Exhibit B hereto (the “ September 30
Life Insurance Assignment Default ” and, together with
the September 30 Capital Lease Default and the
September 30 Real Property Lease Default, collectively, the
“ September 30 Specified Events of Default ”),
(iv) the Borrower breached Section 6.01 (Indebtedness
and Other Obligations) and Section 6.08 (Transactions
with Affiliates) of the Credit Agreement by guaranteeing
Indebtedness of certain of its Foreign Subsidiaries with respect to
certain Capital Lease Obligations of such Foreign Subsidiaries, as
more fully described on Exhibit A hereto (the “
November Capital Lease Default ”), and (v) the
Borrower breached Section 6.08 (Transactions with
Affiliates) of the Credit Agreement by guaranteeing
Indebtedness of certain of its Foreign Subsidiaries with respect to
certain real property leases entered into by such Foreign
Subsidiaries, as more fully described on Exhibit A hereto
(the “ November Real Property Lease Default ”
and, together with the November Capital Lease Default,
collectively, the “ November Specified Events of
Default ” and, together with the September 30
Specified Events of Default, collectively, the “ Specified
Events of Default ”);
WHEREAS, the Borrower has
requested that the Lender waive the Specified Events of Default and
further amend the Credit Agreement as set forth herein;
and
A MENDMENT N
O . 2 AND W AIVER
TO C REDIT A
GREEMENT
O F A
MERICAN A PPAREL , I
NC .
WHEREAS, the Lender agrees,
subject to the limitations and conditions set forth herein, to
waive the Specified Events of Default and to further amend the
Credit Agreement as set forth herein.
NOW, THEREFORE, in
consideration of the premises and the covenants and obligations
contained herein the parties hereto agree as follows:
Section 1.
Waiver
Effective as of the Amendment
Effective Date and subject to the satisfaction (or due waiver) of
the conditions set forth in Section 3 (Conditions Precedent
to the Effectiveness of this Amendment) hereof, the Lender
waives (i) the September 30 Specified Events of Default
as of September 30, 2007 and (ii) the November Specified
Events of Default as of the date hereof; provided, however,
that the waiver set forth in this paragraph shall not constitute a
consent or waiver with respect to any failure to comply after the
Amendment Effective Date with the Credit Agreement as amended
hereby.
Section 2.
Amendments to the Credit Agreement
Effective as of
September 30, 2007 and subject to the satisfaction (or due
waiver) of the conditions set forth in Section 3
(Conditions Precedent to the Effectiveness of this Amendment)
hereof, the Credit Agreement is hereby amended as
follows:
(a) Amendments to
Article I (Definitions)
(i) The definition of
“Permitted Investments” is hereby amended by deleting
the word “and” at the end of clause (i) and
further inserting after clause (j) the following new clauses
(k) and (l) as follows:
(k) Investments constituting
transactions described in clause (a) of Section 6.08 not
to exceed $10,000,000 at any time; and
(l) Investments described in
clauses (b), (c) and (d) of SECTION 6.08; provided
that Investments described in clause (c) of SECTION 6.08
permitted hereby shall not exceed $35,000,000 in the aggregate per
Fiscal Year;
(b) Amendments to
Schedules
(i) Schedule 1.02(b)
to the Credit Agreement is hereby replaced in its entirety with
Schedule 1.02(b) attached as Exhibit C
hereto.
(ii) Schedule 6.04 to
the Credit Agreement is hereby replaced in its entirety with
Schedule 6.04 attached as Exhibit D
hereto.
2
A MENDMENT N
O . 2 AND W AIVER
TO C REDIT A
GREEMENT
O F A
MERICAN A PPAREL , I
NC .
Section 3.
Conditions Precedent to the Effectiveness of this
Amendment
This Amendment shall become
effective as of the date first written above when, and only when,
each of the following conditions precedent shall have been
satisfied (the “ Amendment Effective Date ”) or
duly waived by the Lender:
(a) Certain Documents.
The Administrative Agent shall have received this Amendment, duly
executed by the Borrower, each Guarantor and the Lender, and dated
the Amendment Effective Date, in form and substance satisfactory to
the Lender.
(b) Corporate and Other
Proceedings. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with
the transactions contemplated by this Amendment shall be
satisfactory in all respects to the Lender.
(c) Representations and
Warranties. Each of the representations and warranties
contained in Section 4 (Representations and Warranties)
below
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