Exhibit 10.1

WAIVER TO CREDIT AGREEMENT

WAIVER, dated as of September 30, 2009 (this “Waiver”), to the Credit Agreement
dated as of March 13, 2009 (as modified by that certain Resignation, Waiver,
Consent and Appointment Agreement dated as of March 31, 2009, the “Credit
Agreement”) among American Apparel, Inc., a corporation organized under the laws
of the State of Delaware (the “Borrower”), the Facility Guarantors from time to
time party thereto, Wilmington Trust FSB, in its capacity as Administrative
Agent and in its capacity as Collateral Agent thereunder, and the Lenders from
time to time party thereto.

W I T N E S S E T H:

WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make, and
have made, certain loans and other extensions of credit to the Borrower;

WHEREAS, the Borrower has requested that certain provisions of the Credit
Agreement be waived as set forth in this Waiver; and

WHEREAS, the Lenders are willing to agree to such waiver on the terms and
subject to the conditions set forth in this Waiver;
 
NOW THEREFORE, in consideration of the premises and mutual covenants contained
in this Waiver, the undersigned hereby agree as follows:
 
I.      Defined Terms; Interpretation; Etc.  Capitalized terms used but not
defined in this Waiver shall have the meanings given to them in the Credit
Agreement.
 
II.     Waiver of Applicability of Section 6.11 of the Credit Agreement.  The
Required Lenders hereby agree that the applicability of the provisions of
Section 6.11 for the period of four consecutive Fiscal Quarters ending September
30, 2009 shall be waived for the period from September 30, 2009 to and including
November 14, 2009.
 
III.       Conditions Precedent to the Effectiveness of this Waiver.
 
(a) This Waiver shall become effective as of, and with effect from, the date
(the “Effective Date”) on which the Borrower and the Required Lenders shall have
duly executed and delivered to the Administrative Agent this Waiver.
 
(b) All corporate and other proceedings required in connection with this Waiver,
and all documents, instruments and other legal matters in connection with the
transactions contemplated by this Waiver, shall be satisfactory in all respects
to the Required Lenders, which satisfaction shall be evidenced by the execution
and delivery by the Required Lenders of this Waiver.
 
(c) Each of the representations and warranties contained in Section IV
(Representations and Warranties) of this Waiver shall be true and correct.
 
(d) After giving effect to this Waiver, no Default or Event of Default shall
have occurred and be continuing as of the date hereof.
 
(e) No litigation shall have been commenced against any Loan Party or any of its
Subsidiaries, either on the date hereof or the Effective Date, seeking to
restrain or enjoin (whether temporarily,
 

 
 

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preliminarily or permanently) the performance of any action by any Loan Party
required or contemplated by this Waiver, the Credit Agreement or any Loan
Document. 
 
IV.    Representations and Warranties.  On and as of the date hereof and as of
the Effective Date, the Borrower hereby represents and warrants to the
Administrative Agent, the Collateral Agent and the Lenders as follows:
 
(a) this Waiver has been duly authorized, executed and delivered by the Borrower
and each Facility Guarantor and constitutes a legal, valid and binding
obligation of the Borrower and each Facility Guarantor, enforceable against the
Borrower and each Facility Guarantor in accordance with its terms and the Credit
Agreement and constitutes the legal, valid and binding obligation of the
Borrower and each Facility Guarantor, enforceable against the Borrower and each
Facility Guarantor in accordance with its terms;
 
(b) each of the representations and warranties contained in Article III
(Representations and Warranties) of the Credit Agreement, the other Loan
Documents or otherwise made in writing in connection therewith are true and
correct in all material respects on and as of the date hereof and the Effective
Date, in each case as if made on and as of such date except to the extent that
such representations and warranties specifically relate to a specific date, in
which case such representations and warranties shall be true and correct in all
material respects as of such specific date;
 
(c) after giving effect to this Waiver, no Default or Event of Default has
occurred and is continuing; and
 
(d) no litigation has been commenced against any Loan Party or any of its
Subsidiaries seeking to restrain or enjoin (whether temporarily, preliminarily
or permanently) the performance of any action by any Loan Party required or
contemplated by this Waiver, the Credit Agreement or any Loan Document.
 
V.     No Other Amendments or Waivers; Confirmation.  Except as expressly set
forth herein, this Waiver shall not by implication or otherwise limit, impair,
constitute a waiver of, or otherwise affect the rights and remedies of the
Lenders, the Agents, the Borrower or any other Loan Party under the Credit
Agreement or any other Loan Document, and shall not alter, modify, amend or in
any way affect any of the terms, conditions, obligations, covenants or
agreements contained in the Credit Agreement or any other Loan Document, all of
which are ratified and affirmed in all respects and shall continue in full force
and effect.  Nothing herein shall be deemed to entitle the Borrower to any
future consent to, or a waiver, amendment, modification or other change of, any
of the terms, conditions, obligations, covenants or agreements contained in the
Credit Agreement or any other Loan Document in similar or different
circumstances.  This Waiver shall apply and be effective only with respect to
the provisions of the Credit Agreement specifically referred to herein. After
the Effective Date, any reference in any Loan Document to the Credit Agreement
shall mean the Credit Agreement as modified hereby.  This Waiver is a Loan
Document.
 
VI.    Consent of Facility Guarantors. Each Facility Guarantor hereby consents
to this Waiver and agrees that the terms hereof shall not affect in any way its
obligations and liabilities under the Loan Documents (as expressly modified
hereby), all of which obligations and liabilities shall remain in full force and
effect and each of which is hereby reaffirmed (as expressly modified hereby).
 

 
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VII.   Expenses.  The Borrower agrees to reimburse the Administrative Agent and
the Lenders for their respective reasonable out-of-pocket expenses incurred in
connection with this Waiver  (including the reasonable fees, disbursements and
other charges of Simpson Thacher & Bartlett LLP).
 
VIII.    Governing Law.  THIS WAIVER AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
 
IX.    Counterparts.  This Waiver may be executed by one or more of the parties
hereto on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.  This
Waiver may be delivered by facsimile or other electronic transmission of the
relevant signature pages hereof.
 
X.     Headings.  The Section headings used herein are for convenience of
reference only, are not part of this Agreement and are not to affect the
construction of, or to be taken into consideration in interpreting, this Waiver.
 
XI.    Notices.  All communications and notices hereunder shall be given as
provided in the Credit Agreement or, as the case may be, the Facility Guaranty.
 
XII.     Severability. The fact that any term or provision of this Waiver is
held invalid, illegal or unenforceable as to any person in any situation in any
jurisdiction shall not affect the validity, enforceability or legality of the
remaining terms or provisions hereof or the validity, enforceability or legality
of such offending term or provision in any other situation, or jurisdiction or
as applied to any person.
 
XIII.  Successors. The terms of this Waiver shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
assigns.
 
XIV.  Waiver of Jury Trial. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES TRIAL
BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS WAIVER OR ANY OTHER
LOAN DOCUMENT.
 
XV.   Submission to Jurisdiction. Each Loan Party agrees that any suit for the
enforcement of this Waiver may be brought in the federal or state courts of the
State of New York as the Lenders may elect in their sole discretion and consents
to the non-exclusive jurisdiction of such courts. Each party to this Waiver
hereby waives any objection which it may now or hereafter have to the venue of
any such suit or any such court or that such suit is brought in an inconvenient
forum and agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.  Nothing in this Waiver shall affect any
right that any Credit Party may otherwise have to bring any action or proceeding
relating to this Waiver against a Loan Party or its properties in the courts of
any jurisdiction.
 

[Remainder of Page Intentionally Left Blank]

 

 
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IN WITNESS WHEREOF, the parties hereto have caused this Waiver to be duly
executed and delivered by their respective proper and duly authorized officers
as of the day and year first above written.

 
AMERICAN APPAREL, INC.,
 
as Borrower
         
By:
/s/ Adrian Kowalewski
 
Name:
Adrian Kowalewski
 
Title:
Chief Financial Officer

 
 
 

[Signature Page to Waiver]
 
 

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AMERICAN APPAREL (USA), LLC, as
 
Facility Guarantor
         
By:
/s/ Adrian Kowalewski
 
Name:
Adrian Kowalewski
 
Title:
Chief Financial Officer

 
 
 

[Signature Page to Waiver]
 
 

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FRESH AIR FREIGHT, INC., as Facility
 
Guarantor
         
By:
/s/ Adrian Kowalewski
 
Name:
Adrian Kowalewski
 
Title:
Chief Financial Officer

 
 
 

[Signature Page to Waiver]
 
 

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AMERICAN APPAREL, LLC, as Facility
 
Guarantor
         
By:
/s/ Adrian Kowalewski
 
Name:
Adrian Kowalewski
 
Title:
Chief Financial Officer

 
 
 

[Signature Page to Waiver]
 
 

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KCL KNITTING, LLC, as Facility Guarantor
         
By:
/s/ Adrian Kowalewski
 
Name:
Adrian Kowalewski
 
Title:
Chief Financial Officer

 
 
 

[Signature Page to Waiver]
 
 

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AMERICAN APPAREL RETAIL, INC., as
 
Facility Guarantor
         
By:
/s/ Adrian Kowalewski
 
Name:
Adrian Kowalewski
 
Title:
Chief Financial Officer

 
 
 

[Signature Page to Waiver]
 
 

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AMERICAN APPAREL DYEING &
  FINISHING, INC., as Facility Guarantor           
By:
/s/ Adrian Kowalewski
 
Name:
Adrian Kowalewski
 
Title:
Chief Financial Officer

 
 
 

[Signature Page to Waiver]
 
 

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WILMINGTON TRUST FSB, as
  Administrative Agent and Collateral Agent          
By:
/s/ Jane Schweiger
 
Name:
Jane Schweiger
 
Title:
Vice President

 
 
 

[Signature Page to Waiver]
 
 

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LION CAPITAL (AMERICAS) INC., as Lender
         
By:
/s/ Janet M. Dunlop
 
Name:
Janet M. Dunlop
 
Title:
Director

 
 
 

[Signature Page to Waiver]
 
 

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LION/HOLLYWOOD L.L.C., as Lender
         
By:
/s/ /s/ Jeff Chang
 
Name:
/s/ Jeff Chang
 
Title:
Vice President

 
 
 
 
[Signature Page to Waiver]