Exhibit 10.1

AMENDMENT NO. 2 TO CREDIT AGREEMENT

THIS AMENDMENT NO. 2 TO CREDIT AGREEMENT dated as of July 5, 2013 (this
“Amendment”), is among AMERICAN APPAREL (USA), LLC, a California limited
liability company (“AA USA”), AMERICAN APPAREL RETAIL, INC., a California
corporation (“AA Retail”), AMERICAN APPAREL DYEING & FINISHING, INC., a
California corporation (“AA Dyeing & Finishing”), KCL KNITTING, LLC, a
California limited liability company (“KCL” and, together with AA USA, AA Retail
and AA Dyeing & Finishing, collectively, the “Borrowers” and each, individually,
a “Borrower”), AMERICAN APPAREL, INC., a Delaware corporation (“Holdings”),
FRESH AIR FREIGHT, INC., a California corporation (“Fresh Air” and, together
with Holdings, collectively, the “Guarantors” and each, individually, a
“Guarantor”), CAPITAL ONE LEVERAGE FINANCE CORP., as administrative agent (in
such capacity, the “Administrative Agent”), and each of the Lenders party
hereto.
 
RECITALS:

A.         The Borrowers, the other borrowers from time to time party thereto,
the Guarantors, the other guarantors from time to time party thereto, the
lenders from time to time party thereto (collectively, “Lenders”) and the
Administrative Agent have entered into that certain Credit Agreement dated as of
April 4, 2013 (as amended by that certain Amendment No. 1 to Credit Agreement
dated as of May 22, 2013, the “Credit Agreement”).  Capitalized terms used and
not otherwise defined herein shall have the meanings ascribed to them in the
Credit Agreement.
 
B.         The Guarantors have entered into that certain Guaranty dated as of
April 4, 2013, in favor of the Administrative Agent.
 
C.         The Borrowers have requested that the Administrative Agent and
Lenders amend certain provisions of the Credit Agreement.
 
D.         Subject to the terms and conditions set forth below, the
Administrative Agent and Lenders party hereto are willing to so amend the Credit
Agreement.
 
In furtherance of the foregoing, the parties agree as follows:
 
Section 1.         AMENDMENTS.  Subject to the covenants, terms and conditions
set forth herein and in reliance upon the representations and warranties set
forth herein, the Credit Agreement is amended as follows:

(a)        The existing definitions in Section 1.01 of the Credit Agreement for
the terms “Appraiser,” “Business Day,” “Required Lenders” and “Swing Line
Sublimit” are deleted in their entirety and the following new definitions for
such terms are added in lieu thereof:

“Appraiser” means an appraisal firm reasonably acceptable to the Administrative
Agent.

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state where the Administrative Agent’s Office is located and, if
such day relates to the calculation of the Eurodollar Rate, means any such day
that is a London Banking Day; provided that, for purposes of the definition of
“Defaulting Lender,” Section 2.01 and Section 2.02 only, “Business

 
 

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Day” shall exclude any other day on which commercial banks are authorized to
close under the Laws of, or are in fact closed in, Canada.

“Required Lenders” means, as of any date of determinations, two or more Lenders
holding more than 66 2/3% of the sum of the (a) Total Outstandings (with the
aggregate amount of each Revolving Credit Lender’s risk participation and funded
participation in L/C Obligations and Swing Line Loans being deemed “held” by
such Lender for purposes of this definition) and (b) aggregate unused
Commitments; provided that (i) the unused Commitment of, and the portion of the
Total Outstandings held or deemed held by, any Defaulting Lender shall be
excluded for purposes of making a determination of Required Lenders; and (ii) if
there are only two (2) Lenders, “Required Lenders” shall mean both Lenders, and
if there is only one (1) Lender, “Required Lenders” shall mean such
Lender.  Additionally, solely for this definition, a Lender and its Affiliates
shall collectively constitute one (1) Lender.

“Swing Line Sublimit” means $7,500,000.

(b)        The existing Section 8.03 of the Credit Agreement is amended by
deleting clause (vii) in its entirety and inserting the following in lieu
thereof:
 
(vii)         Seventh, to payment of that portion of the Obligations
constituting unpaid principal on the Swing Line Loan and unpaid L/C Borrowings,
ratably among the holders thereof in proportion to the respective amounts
described in this clause Seventh held by them;

(c)         The existing Section 9.03 of the Credit Agreement is amended by
deleting the last sentence of the second paragraph thereof in its entirety and
inserting the following in lieu thereof:

The Administrative Agent shall promptly notify the Lenders or each other Lender,
as the case may be, upon obtaining actual knowledge of the existence of a
Default or Event of Default; provided that the Administrative Agent shall not be
deemed to have knowledge of any Default or Event of Default unless and until
notice describing such Default or Event of Default is given to the
Administrative Agent in writing by a Credit Party, a Lender or the L/C
Issuer.  The Administrative Agent shall hold all security for itself and for and
on behalf of the Secured Parties, in accordance with this Agreement and the
other Loan Documents.  The Administrative Agent shall provide copies of all
Security Documents requested by any Lender and follow the instructions of the
Required Lenders with respect to perfecting and maintaining the security granted
to the Administrative Agent under this Agreement or Security Documents, provided
that the Administrative Agent shall not be required to take any action that, in
its opinion or the opinion of its counsel, may expose it to liability or that is
contrary to any Loan Document or applicable law, including for the avoidance of
doubt any action that may be in violation of the automatic stay under any Debtor
Relief Law or that may effect a forfeiture, modification or termination of
property of a Defaulting Lender in violation of any Debtor Relief Law.

(d)         The existing Schedule 2.01 to the Credit Agreement is deleted in its
entirety and Schedule 2.01 attached hereto is inserted in lieu thereof.  For the
avoidance of doubt, the revised Schedule 2.01 includes the increase in the
Commitments pursuant to Section 2.21 of the Credit Agreement and that certain
Revolving Credit Facility Increase Request dated as of July 3, 2013.  As of the
Amendment Effective Date, Borrowers have fully utilized the increase option
under Section 2.21 of the Credit Agreement, and the Revolving Credit Facility
may not be further increased pursuant to such Section.

(d)         The existing Schedule 6.20 to the Credit Agreement is deleted in its
entirety and Schedule 6.20 attached hereto is inserted in lieu thereof.

 
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The amendments to the Credit Agreement are limited to the extent specifically
set forth above and no other terms, covenants or provisions of the Credit
Agreement are intended to be affected hereby.

Section 2.         CONDITIONS PRECEDENT.  The parties hereto agree that the
amendments set forth in Section 1 above shall not be effective until the
satisfaction of each of the following conditions precedent (the date on which
such conditions precedent are satisfied or waived, the “Amendment Effective
Date”):

(a)         Documentation.  The Administrative Agent shall have received (i) a
counterpart of this Amendment, duly executed and delivered by each Borrower,
each Guarantor and each Lender, and (ii) such other documents and certificates
as the Administrative Agent or its counsel may reasonably request relating to
the organization, existence and good standing of each Credit Party, the
authorization of this Amendment and any other legal matters relating to the
Credit Parties or the transactions contemplated hereby.

(b)         Revolving Credit Facility Increase and Assignment.  (i) The
Revolving Credit Facility shall have been increased in accordance with Section
2.21(e) of the Credit Agreement such that, as of the Amendment Effective Date,
the Commitments are $50,000,000, and the Administrative Agent shall have
received each document or certificate required pursuant to Section 2.21(e) of
the Credit Agreement; and (ii) the Administrative Agent shall have received an
Assignment and Assumption Agreement, duly executed by Bank of Montreal, Chicago
Branch and the Borrower Agent.

(c)         Fees and Expenses. All fees and expenses of counsel to the
Administrative Agent estimated to date shall have been paid in full (without
prejudice to final settling of accounts for such fees and expenses), in each
case to the extent invoiced.

Section 3.         REPRESENTATIONS AND WARRANTIES.

(a)         In order to induce the Administrative Agent and Lenders to enter
into this Amendment, each Credit Party represents and warrants to the
Administrative Agent and Lenders as follows:

(i)           The representations and warranties made by such Credit Party
contained in Article V of the Credit Agreement are true and correct in all
material respects (but without any duplication of any materiality
qualifications) on and as of the date hereof, except to the extent that such
representations and warranties expressly relate to an earlier date in which case
such representations and warranties are true and correct in all material
respects (but without any duplication of any materiality qualifications) on and
as of such earlier date.

(ii)           Since the Balance Sheet Date, no act, event, condition or
circumstance has occurred or arisen which, individually or in the aggregate, has
had or could reasonably be expected to have a Material Adverse Effect.

(iii)           No Default or Event of Default has occurred and is continuing or
will exist after giving effect to this Amendment.

(b)         In order to induce the Administrative Agent and Lenders to enter
into this Amendment, each Credit Party represents and warrants to the
Administrative Agent and Lenders that this Amendment has been duly authorized,
executed and delivered by such Credit Party and constitutes its legal, valid and
binding obligation.

 
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Section 4.         MISCELLANEOUS

(a)         Ratification and Confirmation of Loan Documents.  Each Credit Party
hereby consents, acknowledges and agrees to the amendments set forth herein and
hereby confirms and ratifies in all respects the Loan Documents to which such
Person is a party (including, without limitation, with respect to each
Guarantor, the continuation of its payment and performance obligations under the
Guaranty upon and after the effectiveness of the amendments contemplated hereby
and, with respect to each Credit Party, the continuation and existence of the
liens granted under the Security Documents to secure the Obligations).

(b)         Fees and Expenses.  The Borrowers, jointly and severally, shall
promptly pay on demand (and, in any event, within 10 Business Days after demand
therefor) all reasonable costs and expenses of the Administrative Agent in
connection with the preparation, reproduction, execution, and delivery of this
Amendment and any other documents prepared in connection herewith, including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
for the Administrative Agent.

(c)         Headings.  Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.

(d)         Governing Law; Waiver of Jury Trial.  This Amendment shall be
governed by and construed in accordance with the laws of the State of New York,
and shall be further subject to the provisions of Section 10.14 of the Credit
Agreement.

(e)         Counterparts.  This Amendment may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original, and all of which when taken together shall constitute one and the same
agreement.  Delivery of an executed counterpart of a signature page of this
Amendment by facsimile or electronic transmission (including .pdf file) shall be
effective as delivery of a manually executed counterpart hereof.

(f)          Entire Agreement.  This Amendment, together with all the Loan
Documents (collectively, the “Relevant Documents”), sets forth the entire
understanding and agreement of the parties hereto in relation to the subject
matter hereof and supersedes any prior negotiations and agreements among the
parties relating to such subject matter.  No promise, condition, representation
or warranty, express or implied, not set forth in the Relevant Documents shall
bind any party hereto, and no such party has relied on any such promise,
condition, representation or warranty.  Each of the parties hereto acknowledges
that, except as otherwise expressly stated in the Relevant Documents, no
representations, warranties or commitments, express or implied, have been made
by any party to the other.  None of the terms or conditions of this Amendment
may be changed, modified, waived or canceled orally or otherwise except in a
writing signed by the parties hereto for such purpose.

(g)          Enforceability.  Should any one or more of the provisions of this
Amendment be determined to be illegal or unenforceable as to one or more of the
parties hereto, all other provisions nevertheless shall remain effective and
binding on the parties hereto.

(h)          Successors and Assigns.  This Amendment shall be binding upon and
inure to the benefit of each Borrower, each Guarantor, the Administrative Agent,
each Lender and their respective successors and assigns (subject to Section
10.06 of the Credit Agreement).

[Remainder of page intentionally left blank; signatures begin on following page]

 
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The following parties have caused this Amendment No. 2 to Credit Agreement to be
executed as of the date first written above.

 
BORROWERS:
     
AMERICAN APPAREL (USA), LLC
         
By:
 
 /s/ John Luttrell
     
Name:
 
John Luttrell
     
Title:
 
Chief Financial Officer
         
AMERICAN APPAREL RETAIL, INC.
         
By:
 
 /s/ John Luttrell
     
Name:
 
John Luttrell
     
Title:
 
Chief Financial Officer
         
AMERICAN APPAREL DYEING & FINISHING, INC.
         
By:
 
 /s/ John Luttrell
     
Name:
 
John Luttrell
     
Title:
 
Chief Financial Officer
         
KCL KNITTING, LLC
         
By:
 
 /s/ John Luttrell
     
Name:
 
John Luttrell
     
Title:
 
Chief Financial Officer

 

 

AMENDMENT NO. 2 TO CREDIT AGREEMENT
Signature Page
 
 

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GUARANTORS:
     
AMERICAN APPAREL, INC.
         
By:
 
 /s/ John Luttrell
     
Name:
 
John Luttrell
     
Title:
 
Chief Financial Officer
         
FRESH AIR FREIGHT, INC.
         
By:
 
 /s/ John Luttrell
     
Name:
 
John Luttrell
     
Title:
 
Chief Financial Officer

 
 

 
AMENDMENT NO. 2 TO CREDIT AGREEMENT
Signature Page
 
 

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ADMINISTRATIVE AGENT AND LENDERS:
     
CAPITAL ONE LEVERAGE FINANCE CORP.,
 
as Administrative Agent and Lender
             
By:
 
 /s/ Julianne Low
     
Name:
 
Julianne Low
     
Title:
 
Vice President

AMENDMENT NO. 2 TO CREDIT AGREEMENT
Signature Page
 
 

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BANK OF MONTREAL, CHICAGO BRANCH,
 
as Lender
         
By:
 
/s/ Larry Allan Swiniarski
     
Name:
 
Larry Allan Swiniarski
     
Title:
 
Director, Bank of Montreal, Chicago Branch

AMENDMENT NO. 2 TO CREDIT AGREEMENT
Signature Page
 
 

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SCHEDULE 2.01
 
Commitments and Applicable Percentages

Lender
 
Commitment
 
Applicable
Percentage
Capital One Leverage Finance Corp.
 
$
35,000,000.00
 
70.000000000%
Bank of Montreal, Chicago Branch
 
$
15,000,000.00
 
30.000000000%
Total
 
$
50,000,000.00
 
100.000000000%

 
 

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SCHEDULE 6.20
 
Post Closing Obligations

The Credit Parties shall deliver, or cause to be delivered, to the
Administrative Agent as soon as possible, but in any event within the time
periods set forth below (or such longer period as the Administrative Agent may
otherwise agree), in each case, in form and substance reasonably satisfactory to
the Administrative Agent:

Within 90 days after the Closing Date:

1.         A duly executed Agency Account Agreement among the applicable Credit
Parties, the Administrative Agent, U.S. Bank National Association, as Senior
Notes Trustee, and HSBC Bank USA, National Association, as depositary bank, with
respect to the Credit Parties’ deposit accounts maintained at HSBC Bank USA,
National Association required to be subject to an Agency Account Agreement
pursuant to the terms of Section 6.17 of the Credit Agreement.

2.         A duly executed Agency Account Agreement among the applicable Credit
Parties, the Administrative Agent, U.S. Bank National Association, as Senior
Notes Trustee, and U.S. Bank National Association, as depositary bank, with
respect to the Credit Parties’ deposit accounts maintained at U.S. Bank National
Association required to be subject to an Agency Account Agreement pursuant to
the terms of Section 6.17 of the Credit Agreement.

3.         Evidence satisfactory to the Administrative Agent that the Lien in
favor of Bank of America, N.A. on the Permitted Bank of America Cash Collateral
has been terminated.

4.         Evidence satisfactory to the Administrative Agent that the Lien in
favor of Crystal Financial LLC on the Permitted Crystal Cash Collateral has been
terminated.

Within 120 days after the Closing Date:

5.         A copy of all commercial property, liability and trade credit
insurance policies, a certificate of insurance with respect thereto and an
endorsement from an independent insurance broker naming the Administrative Agent
as lender’s loss payee or additional insured, as applicable, thereunder, which
shall be in amounts, types and terms and conditions reasonably satisfactory to
the Administrative Agent.

6.         A duly executed Collateral Assignment of Lease between AA USA and
Utica Leaseco, LLC pursuant to which AA USA assigns all of its interests in that
certain Equipment Lease Agreement dated November 13, 2012 between AA USA, as
lessee, and Utica Leaseco, LLC, as lessor, to the Administrative Agent.

7.         A duly executed Agency Account Agreement among the applicable Credit
Parties, the Administrative Agent, U.S. Bank National Association, as Senior
Notes Trustee, and Bank of America, N.A., as depositary bank, with respect to
the Credit Parties’ deposit accounts maintained at Bank of America, N.A.
required to be subject to an Agency Account Agreement pursuant to the terms of
Section 6.17 of the Credit Agreement.

 
 

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No later than December 31, 2013:

8.         Evidence satisfactory to the Administrative Agent that all of the
Credit Parties’ deposit accounts maintained at U.S. Bank National Association as
of the Closing Date have been closed; provided that, at all times after July 5,
2013, the Credit Parties’ operating account number 153499249377 and payroll
account number 153492249492 shall be the only deposit accounts maintained by the
Credit Parties at U.S. Bank National Association until December 31, 2013 (or
such longer period as the Administrative Agent may otherwise agree.
 
 
 
 

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