american_ex10-1.htm


    FIRST
AMENDMENT TO THE

     

    2007
PERFORMANCE EQUITY PLAN

     

    American Apparel, Inc., a Delaware corporation (the
“Company”), hereby amends the 2007 Performance Equity Plan (the “Plan”) with this First Amendment to the Plan
(this “Amendment”),
effective October
27, 2008, with reference to the
following:

    


    WHEREAS, the Company maintains the Plan
for the benefit of its employees, officers, directors and
consultants; and

    


    WHEREAS, the Board of Directors
(the “Board”) of the Company desires to amend the Plan
to require the approval of
stockholders of the Company prior to any reduction of the exercise price of an
outstanding Stock Option or Stock Appreciation Right.

    


    NOW THEREFORE, the Plan is hereby
amended as follows:

    


    1.      Definitions.
Capitalized terms used herein without definition shall have the respective
meanings assigned to such terms in the Plan.

     

    2.      Section 5 (Stock
Options).  Section 5.2(j) of the Plan is hereby deleted in its
entirety.

     

    3.      Section 2.2 (Powers of
Committee).  Section 2.2(g) is hereby amended in its entirety
to read as follows:

     

    “to
substitute (i) new Stock Options for previously granted Stock Options, which
previously granted Stock Options have higher option exercise prices and/or
contain other less favorable terms, and (ii) new awards of any other type for
previously granted awards of the same type, which previously granted awards are
upon less favorable terms; provided, however, that such authority may not be
exercised without the approval of the Company's shareholders;”

    


    4.      Effect on the
Plan.  On and after the date hereof, each reference in the Plan
to “the Plan”, “this Plan”, “herein”, “hereof”, “hereunder” or words of similar
import shall mean and be a reference to the Plan as amended
hereby.  Except as specifically amended by this Amendment, all terms
and conditions of the Plan are unamended and shall remain in full force and
effect, and the Plan, as amended by this Amendment, is hereby ratified and
confirmed in all respects, subject to approval of this Amendment by the
Board.

     

    5.      Headings.  Headings
to sections herein are inserted for convenience of reference only and shall not
be deemed to be a part of or to affect the meaning or interpretation of this
Amendment.

     

     [Signature
Page Follows]

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    IN WITNESS HEREOF, the Company has
executed this Amendment to the Plan effective as of the date written
above.

    


    
      


      
        
          
            
              
                	 
      	 
      
	 
      	
                        AMERICAN
      APPAREL, INC.

                      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	
                         

                      	
                        By:

                      	/s/ Dov Charney	
                        
                           

                        

                      
	 
      	 
      	
                        Name:
      Dov Charney

                      
	 
      	 
      	
                        Title:   
      Chairman