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Exhibit
10.10
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| SECOND
AMENDMENT AND WAIVER TO |
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| CREDIT
AGREEMENT |
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LASALLE RETAIL FINANCE |
Date: November 26,
2007
THIS SECOND AMENDMENT AND WAIVER TO
CREDIT AGREEMENT (this “Second Amendment”)
is made to the Credit Agreement (the “Credit
Agreement”) dated as of July 2, 2007 by and
among:
(a) AMERICAN APPAREL,
INC., a corporation organized under the laws of the State of
California, with its principal executive offices at 747 Warehouse
Street, Los Angeles, California, for itself and as agent (in such
capacity, the “Lead Borrower”) for the other
Borrowers now or hereafter party to the Credit Agreement;
and
(b) the BORROWERS now
or hereafter party to the Credit Agreement; and
(c) the FACILITY
GUARANTORS now or hereafter party to the Credit Agreement;
and
(d) LASALLE BUSINESS
CREDIT, LLC, AS AGENT FOR LASALLE BANK MIDWEST NATIONAL
ASSOCIATION, ACTING THROUGH ITS DIVISION, LASALLE RETAIL FINANCE,
with offices at 135 South LaSalle Street, Suite 425, Chicago,
Illinois 60603, as administrative agent (in such capacity, the
“Administrative Agent”) for its own benefit and
the benefit of the other Credit Parties; and
(e) LASALLE BUSINESS
CREDIT, LLC, AS AGENT FOR LASALLE BANK MIDWEST NATIONAL
ASSOCIATION, ACTING THROUGH ITS DIVISION, LASALLE RETAIL FINANCE,
with offices at 135 South LaSalle Street, Suite 425, Chicago,
Illinois 60603, as collateral agent (in such capacity, the
“Collateral Agent”) for its own benefit and the
benefit of the other Credit Parties; and
(f) WELLS FARGO RETAIL
FINANCE, LLC, with offices at One Boston Place, 19 th Floor, Boston, Massachusetts 02108, as
collateral monitoring agent (in such capacity, the
“Collateral Monitoring Agent”) for its own
benefit and the benefit of the other Credit Parties;
and
(g) the LENDERS party
to the Credit Agreement; and
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(h) LASALLE BANK NATIONAL
ASSOCIATION, a national banking association with offices at 135
South LaSalle Street, Chicago, Illinois 60603, as Issuing Bank; in
consideration of the mutual covenants herein contained and benefits
to be derived herefrom, the parties hereto agree as
follows:
Background:
A. Amendment . On
October 11, 2007, the parties hereto entered into that certain
First Amendment to Credit Agreement. The parties hereto desire to
further amend the Credit Agreement on the terms and conditions set
forth herein.
B. Waiver . In
addition, the Lead Borrower has advised the Administrative Agent
that the Borrowers have exceeded the financial performance covenant
which establishes the limitation on capital expenditures, as set
forth in Paragraph 2 on Exhibit M to the Credit Agreement (the
“Capex Covenant”), in that the existing limit
provides that “The Loan Parties shall not make or incur
Capital Expenditures in any Fiscal year in excess of
$17,500,000.00’, and the actual Capital Expenditures,
based upon preliminary financial data through the date hereof, are
currently estimated to be approximately $18,000,000.00 as of this
date (the “Existing Default”). The Lead Borrower
has requested that the Administrative Agent and the Lenders waive
the Existing Default, and the Administrative Agent and the Lenders
are willing to do so, on the terms and conditions set forth
herein.
Accordingly, it is hereby
agreed, as follows:
| 1. |
Amendment to Credit Agreement: Subject to satisfaction
of each and all of the Preconditions to Effectiveness set forth in
Section 2, below, the Credit Agreement is amended, as
follows: |
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a. |
By deleting the definition of “SOF Investments
Loan” in its entirety and substituting the following in its
place: |
“ SOF Investments
Loan ” means the term loan in the aggregate principal
amount of $61,000,000 made by SOF Investments to the Borrowers, the
terms of which are reasonably satisfactory to the Administrative
Agent.
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b. |
By deleting Paragraph 2 on Exhibit M to the Credit Agreement in
its entirety and substituting the following in its
place: |
2. Capital Expenditures.
The Loan Parties shall not make or incur Capital
Expenditures:
(a) For the Fiscal year
ending December 31, 2007, in excess of
$25,000,000.00;
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(b) For the Fiscal year
commencing January 1, 2008 and thereafter, in any Fiscal year
in excess of $17,500,000.00; and
(c) For any Fiscal
quarter, in excess of $5,000,000.00.
| 2. |
Waiver of Existing Default. The Administrative Agent and
the Lenders hereby waive the Existing Default effective as of
November 26, 2007, subject to the following: |
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a. |
The waiver of the Existing Default is a one-time waiver, and
shall not be deemed to constitute a waiver with respect to any
other similar circumstance, nor a waiver of any other Event of
Default, whether now existing or hereafter arising, including
without limitation, on account of the breach of any other provision
of the Credit Agreement. |
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b. |
The limited waiver granted herein is made in reliance upon the
representations, warranties, acknowledgements, and agreements of
the Borrowers set forth in Section 4, below. |
| 3. |
Preconditions to Effectiveness. This Second Amendment
shall not take effect unless and until each and all of the
following items has been satisfied or delivered, as the case may
be, and in all events, to the satisfaction of the Agents, in their
sole and exclusive discretion. The willingness of the Agents and
the Lenders to enter into this Second Amendment is expressly
conditioned upon the prior receipt by the Administrative Agent of
the following items: |
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a. |
The Lead Borrower, the Borrowers, and the Faci |
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