WAIVER TO CREDIT AGREEMENT
Date: June 5, 2008
THIS WAIVER TO
CREDIT AGREEMENT (this “ Waiver
”) is made to the Credit Agreement (as amended, restated,
supplemented or otherwise modified from time to time, the “
Credit
Agreement ”) dated as of July 2, 2007 by and
among:
AMERICAN APPAREL
(USA), LLC (f/k/a AAI Acquisition LLC (successor by merger
to American Apparel, Inc.)), a California limited liability
company, as agent for itself and the other Borrowers party thereto
(in such capacity, the “ Lead Borrower
”);
THE
BORROWERS now or hereafter party to the Credit
Agreement;
THE FACILITY
GUARANTORS now or hereafter party to the Credit
Agreement;
LASALLE BUSINESS
CREDIT, LLC , AS AGENT FOR LASALLE BANK MIDWEST NATIONAL
ASSOCIATION, ACTING THROUGH ITS DIVISION, LASALLE RETAIL FINANCE,
with offices at 100 Federal Street, 9th Floor, Boston,
Massachusetts 02110, as administrative agent (in such capacity, the
“ Administrative
Agent ”) for its own benefit and the benefit of the
other Credit Parties;
LASALLE BUSINESS
CREDIT, LLC , AS AGENT FOR LASALLE BANK MIDWEST NATIONAL
ASSOCIATION, ACTING THROUGH ITS DIVISION, LASALLE RETAIL FINANCE,
with offices at 100 Federal Street, 9th Floor, Boston,
Massachusetts 02110, as collateral agent (in such capacity, the
“ Collateral
Agent ”, and together with the Administrative Agent,
individually an “ Agent ”
and collectively, the “ Agents
”) for its own benefit and the benefit of the other Credit
Parties;
WELLS FARGO RETAIL
FINANCE, LLC , with offices at One Boston Place, 19th 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;
the
LENDERS party to
the Credit Agreement; and
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.
BACKGROUND
A. Reference
is made to that certain Waiver and Consent to Credit Agreement
dated as of May 16, 2008 (the “ May 2008
Waiver ”) entered into by and among the parties
hereto, pursuant to which, among other things, the Loan Parties
agreed to enter into, by May 31, 2008, each in form and substance
satisfactory to the Agents and each Lender in their discretion, (i)
an amendment to the Credit Agreement and related documents
(collectively, the “ Fourth Amendment
Documents ”), which Fourth Amendment Documents may,
among other things, (a) effect a joinder by American Apparel, Inc.
(f/k/a Endeavor Acquisition Corp.) to the Loan Documents, whereby
American Apparel, Inc. (f/k/a Endeavor Acquisition Corp.) shall
become a Facility Guarantor thereunder, and (b) delete certain
financial performance covenants, including, without limitation, the
financial performance covenant relating to Capital Expenditures, in
each case in accordance with the Summary of Terms and Conditions
set forth as Exhibit B to
the May 2008 Waiver, and (ii) an amendment to the Pledge Agreement,
pursuant to which, among other things, the parties thereto shall
amend Schedule I thereto to include all Subsidiaries in existence
as of the date of such amendment. Pursuant to the May
2008 Waiver, the failure of the Loan Parties to enter into the
Fourth Amendment Documents by May 31, 2008 constitutes an Event of
Default under the Credit Agreement.
B. The
Loan Parties have failed to enter into the Fourth Amendment
Documents by May 31, 2008 (such failure, the “ Specified Event of
Default ”).
C. In
light of the foregoing, the Lead Borrower has requested that the
Agents and the Required Lenders waive the Specified Event of
Default. The Agents and the Required Lenders are willing
to waive the Specified Event of Default, on the terms and
conditions set forth herein
Accordingly, it is hereby agreed as follows:
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1.
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Waiver of
Specified Event of Default. The Agents and the
Required Lenders hereby waive the Specified Event of
Default. The Loan Parties acknowledge and agree
that:
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(a)
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The foregoing waiver is a one-time waiver and shall not be deemed
to constitute a waiver of any other Event of Default or a waiver of
any other requirement of the Credit Agreement or any other Loan
Document (including, without limitation, the May 2008 Waiver) with
respect to any other circumstance.
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(b)
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The consent and waiver provided above shall not take effect upon
the execution of this Agreement, and shall only take effect upon
satisfaction of each and all of the requirements of Section 2,
below.
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2.
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Conditions to
Effectiveness . The Waiver provided in Section 1
above shall be effective as of the date hereof upon the fulfillment
of the following conditions precedent:
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(a)
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All actions on the part of the Loan Parties necessary for the valid
execution, delivery, and performance by the Loan Parties of this
Waiver shall have been duly and effectively taken.
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(b)
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The Administrative Agent shall have received an original copy of
this Waiver duly executed and delivered by the Loan Parties, the
Agents, and the Required Lenders.
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(c)
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The Administrative Agent shall have received, for the ratable
benefit of the Lenders executing this Waiver, a waiver fee in the
amount of $75,000.00, which shall be fully earned on the date
hereof and shall not be subject to refund or rebate in whole or in
part under any circumstance. The Administrative Agent is
hereby authorized to make a Credit Extension to pay the waiver
fee.
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(d)
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The Administrative Agent shall have received reimbursement from the
Loan Parties for all reasonable costs, expenses, and legal fees
incurred by the Administrative Agent through June 5, 2008 in
connection with the negotiation, preparation, and execution of this
Waiver. Provided that the Administrative Agent shall
have notified the Lead Borrower of the amount of such costs,
expenses, and legal fees incurred through such date, the
Administrative Agent is hereby authorized to make a Credit
Extension to reimburse the Administrative Agent for such costs,
expenses, and legal fees. Each of the Loan Parties
acknowledges and agrees that additional statements for all
reasonable costs, expenses, and legal fees incurred by the
Administrative Agent in connection with the negotiation,
preparation, and execution of this Waiver for periods after June 5,
2008 will be rendered and paid as set forth in the Credit
Agreement.
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3.
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Amendment; Joinder;
Pledge; Alternate Sources of Funding .
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(a)
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Each Loan Party hereby agrees to take all commercially reasonable
actions that are necessary or advisable to enable such Loan Party
to enter into, by June 20, 2008, an amendment to the Credit
Agreement
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