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Exhibit
10.14
AMENDMENT NO. 3 AND
WAIVER
TO
CREDIT AGREEMENT OF
AMERICAN APPAREL, INC.
AMENDMENT NO. 3 AND WAIVER
(this “Amendment”), dated as of November
[ ], 2007, to the Credit Agreement dated as
of January 18, 2007 (as amended by that certain Amendment
No. 1 and Waiver to Credit Agreement of American Apparel, Inc.
dated as of July 2, 2007 and that certain Amendment No. 2
and Waiver to Credit Agreement of American Apparel, Inc. dated as
of November 9, 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 the Borrower breached Section 6.12
( Capital Expenditures ) of the Credit Agreement by
incurring Capital Expenditures in excess of $18,000,000 in the
aggregate as of the date hereof (the “ Specified Event of
Default ”);
WHEREAS, the Borrower has
requested that the Lender waive the Specified Event of Default and
further amend the Credit Agreement as set forth herein;
and
WHEREAS, the Lender agrees,
subject to the limitations and conditions set forth herein, to
waive the Specified Event 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 the Specified Event 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 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 Credit
Agreement is hereby amended as follows:
A MENDMENT N
O . 3 AND W AIVER
TO C REDIT A
GREEMENT
OF A
MERICAN A PPAREL , I
NC .
(a) Amendments to
Article I (Definitions)
(i) The following definitions
are hereby amended and restated in their entirety to read as
follows:
“ Merger
Agreement ” means that certain Amended and Restated
Agreement and Plan of Reorganization by and among Endeavor, Merger
Subsidiary, Borrower, LLC, the Canadian Affiliates, Dov Charney,
each of the stockholders of the Canadian Affiliates and Sang H. Lim
dated as of November 7, 2007.
“ Merger
Subsidiary ” means AAI Acquisition LLC.
(b) Amendment to
Article VI (Negative Covenants)
(i) Section 6.12
(Capital Expenditures) of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
“The Loan Parties shall
not make or incur, nor permit a Subsidiary to make or incur,
Capital Expenditures:
(a) in excess of $25,000,000
in the aggregate for the Fiscal Year ending December 31, 2007;
and
(b) in excess of $18,000,000
in the aggregate for the Fiscal Year ending December 31, 2008
and for any Fiscal Year thereafter; provided that for the
Fiscal Quarter ending March 31, 2008 and for any Fiscal
Quarter thereafter, the Loan Parties shall not make or incur, nor
permit a Subsidiary to make or incur, Capital Expenditures in
excess of $5,000,000 per Fiscal Quarter.”
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 are true and correct.
(d) No Default or Event of
Default. After giving effect to this Amendment, no Default or
Event of Default (except for those that may have been duly waived)
shall have occurred and be continuing, either on the date hereof or
on the Amendment Effective Date.
2
A MENDMENT N
O . 3 AND W AIVER
TO C REDIT A
GREEMENT
OF A
MERICAN A PPAREL , I
NC .
(e) No Litigation. No
litigation shall have been commenced against any Loan Party or any
of its Subsidiaries, either on the date hereof or the Amendment
Effective Date, seeking to restrain or enjoin (whether temporarily,
preliminarily or permanently) the performance of any action by any
Loan Party required or contemplated by this Amendment or the Credit
Agreement or any Loan Document, in either case as amended
hereby.
(f) Fees and Expenses
Paid. The Borrower shall have paid all Obligations due, after
giving effect to this Amendment, on or before the later of the date
hereof and the Amendment Effective Date including, without
limitation, the fees set forth in Section 5 (Fees and
Expenses) hereof and all costs and expenses of the Lender in
connection with the preparation, reproduction, execution and
delivery of this Amendment and all other Loan Documents entered
into in connection herewith (including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the
Lender with respect thereto and all other Loan Documents) and all
other costs, expenses and fees due under any Loan
Document.
(g) No Default or Event of
Default Under Existing First Lien Credit Agreement. No default
or event of default shall exist with respect to the Existing
First
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