Document:

Exhibit 10.1

 Exhibit 10.1 
 CREDIT AGREEMENT 
 dated as of 
 March 13, 2009 
 among 
 AMERICAN APPAREL, INC., 
 THE FACILITY GUARANTORS PARTY HERETO, 
 THE LENDERS FROM TIME TO TIME PARTY HERETO, 
 and 
 LION CAPITAL LLP, 
 AS ADMINISTRATIVE AGENT AND COLLATERAL AGENT 

 TABLE OF CONTENTS 
  

					
	 	    	 	  	Page
	 ARTICLE I Definitions
	  	1
			
	 SECTION 1.01
	    	Definitions.	  	1
	 SECTION 1.02
	    	Terms Generally.	  	31
	 SECTION 1.03
	    	Accounting Terms; GAAP.	  	31
	 SECTION 1.04
	    	Currency Equivalents Generally.	  	32
		
	ARTICLE II Amount and Terms of Credit	  	32
			
	 SECTION 2.01
	    	Loans.	  	32
	 SECTION 2.02
	    	Making of Loans.	  	33
	 SECTION 2.03
	    	Notes.	  	33
	 SECTION 2.04
	    	Mandatory Principal and Interest Payments on Loans.	  	34
	 SECTION 2.05
	    	Default Interest.	  	35
	 SECTION 2.06
	    	Increased Costs.	  	35
	 SECTION 2.07
	    	Optional Prepayment of Loans; Reimbursement of Lenders.	  	36
	 SECTION 2.08
	    	Mandatory Prepayment; Commitment Termination.	  	36
	 SECTION 2.09
	    	Maintenance of Loan Account; Statements of Account.	  	37
	 SECTION 2.10
	    	Payments.	  	38
	 SECTION 2.11
	    	Settlement Amongst Lenders.	  	38
	 SECTION 2.12
	    	Taxes.	  	39
	 SECTION 2.13
	    	Mitigation Obligations; Replacement of Lenders.	  	41
	 SECTION 2.14
	    	Security Interests in Collateral.	  	42
		
	 ARTICLE III Representations and Warranties
	  	42
			
	 SECTION 3.01
	    	Organization; Powers.	  	42
	 SECTION 3.02
	    	Authorization; Enforceability.	  	42
	 SECTION 3.03
	    	Governmental Approvals; No Conflicts.	  	43
	 SECTION 3.04
	    	Financial Condition; Absence of Certain Changes.	  	43
	 SECTION 3.05
	    	Properties.	  	44
	 SECTION 3.06
	    	Litigation and Environmental Matters.	  	44
	 SECTION 3.07
	    	Compliance with Laws and Agreements.	  	44
	 SECTION 3.08
	    	Investment Company Status.	  	45
	 SECTION 3.09
	    	Taxes.	  	45
	 SECTION 3.10
	    	ERISA.	  	45
	 SECTION 3.11
	    	Disclosure.	  	45
	 SECTION 3.12
	    	Subsidiaries.	  	46
	 SECTION 3.13
	    	Insurance.	  	46
	 SECTION 3.14
	    	Labor Matters.	  	46
	 SECTION 3.15
	    	Security Documents.	  	46
	 SECTION 3.16
	    	Federal Reserve Regulations.	  	47
	 SECTION 3.17
	    	Solvency.	  	47
	 SECTION 3.18
	    	Licenses; Permits.	  	47

  

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	ARTICLE IV Conditions	  	48
			
	 SECTION 4.01
	    	Closing Date.	  	48
		
	ARTICLE V Affirmative Covenants	  	51
			
	 SECTION 5.01
	    	Financial Statements and Other Information.	  	51
	 SECTION 5.02
	    	Notices of Material Events.	  	53
	 SECTION 5.03
	    	Information Regarding Collateral.	  	54
	 SECTION 5.04
	    	Existence; Conduct of Business.	  	55
	 SECTION 5.05
	    	Payment of Obligations.	  	55
	 SECTION 5.06
	    	Maintenance of Properties.	  	55
	 SECTION 5.07
	    	Insurance.	  	55
	 SECTION 5.08
	    	Books and Records; Inspection Rights; Accountants.	  	56
	 SECTION 5.09
	    	Compliance with Laws.	  	56
	 SECTION 5.10
	    	Use of Proceeds.	  	57
	 SECTION 5.11
	    	Additional Subsidiaries.	  	57
	 SECTION 5.12
	    	[Reserved]	  	58
	 SECTION 5.13
	    	Further Assurances.	  	58
		
	ARTICLE VI Negative Covenants	  	59
			
	 SECTION 6.01
	    	Indebtedness and Other Obligations.	  	59
	 SECTION 6.02
	    	Liens.	  	59
	 SECTION 6.03
	    	Fundamental Changes	  	59
	 SECTION 6.04
	    	Investments, Loans, Advances, Guarantees and Acquisitions.	  	59
	 SECTION 6.05
	    	Asset Sales.	  	60
	 SECTION 6.06
	    	Equity Issuances.	  	60
	 SECTION 6.07
	    	Restricted Payments; Certain Payments of Indebtedness.	  	60
	 SECTION 6.08
	    	Transactions with Affiliates.	  	60
	 SECTION 6.09
	    	Restrictive Agreements.	  	61
	 SECTION 6.10
	    	Amendment of Material Documents.	  	61
	 SECTION 6.11
	    	Financial Covenants.	  	62
	 SECTION 6.12
	    	Capital Expenditures.	  	62
	 SECTION 6.13
	    	Fiscal Year.	  	62
	 SECTION 6.14
	    	ERISA.	  	62
	 SECTION 6.15
	    	Environmental Laws.	  	63
	 SECTION 6.16
	    	Additional Subsidiaries.	  	63
		
	ARTICLE VII Events of Default	  	64
			
	 SECTION 7.01
	    	Events of Default.	  	64
	 SECTION 7.02
	    	Remedies on Default.	  	67
	 SECTION 7.03
	    	Application of Proceeds.	  	67

  

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	ARTICLE VIII The Agents	  	68
			
	 SECTION 8.01
	    	Appointment and Administration by Administrative Agent.	  	68
	 SECTION 8.02
	    	Appointment of Collateral Agent.	  	68
	 SECTION 8.03
	    	Sharing of Excess Payments.	  	69
	 SECTION 8.04
	    	Agreement of Applicable Lenders.	  	69
	 SECTION 8.05
	    	Liability of Agents.	  	69
	 SECTION 8.06
	    	Notice of Default.	  	70
	 SECTION 8.07
	    	Credit Decisions.	  	71
	 SECTION 8.08
	    	Reimbursement and Indemnification.	  	71
	 SECTION 8.09
	    	Rights of Agents.	  	72
	 SECTION 8.10
	    	Notice of Transfer.	  	72
	 SECTION 8.11
	    	Successor Agents.	  	72
	 SECTION 8.12
	    	Relation Among the Lenders.	  	72
	 SECTION 8.13
	    	Agency for Perfection.	  	73
	 SECTION 8.14
	    	Delinquent Lender.	  	73
		
	 ARTICLE IX Miscellaneous
	  	74
			
	 SECTION 9.01
	    	Notices.	  	74
	 SECTION 9.02
	    	Waivers; Amendments.	  	75
	 SECTION 9.03
	    	Expenses; Indemnity; Damage Waiver.	  	77
	 SECTION 9.04
	    	Successors and Assigns.	  	78
	 SECTION 9.05
	    	Survival.	  	81
	 SECTION 9.06
	    	Counterparts; Integration; Effectiveness.	  	81
	 SECTION 9.07
	    	Severability.	  	82
	 SECTION 9.08
	    	Right of Setoff.	  	82
	 SECTION 9.09
	    	Governing Law; Jurisdiction; Consent to Service of Process.	  	82
	 SECTION 9.10
	    	WAIVER OF JURY TRIAL.	  	83
	 SECTION 9.11
	    	Press Releases and Related Matters.	  	83
	 SECTION 9.12
	    	Headings.	  	84
	 SECTION 9.13
	    	Interest Rate Limitation.	  	84
	 SECTION 9.14
	    	Additional Waivers.	  	84
	 SECTION 9.15
	    	Confidentiality.	  	86
	 SECTION 9.16
	    	Patriot Act.	  	87
	 SECTION 9.17
	    	Foreign Asset Control Regulations.	  	87
	 SECTION 9.18
	    	Rights of Initial Lender	  	88

  

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 EXHIBITS 
  

			
	Exhibit A:	    	Form of Assignment and Acceptance
	Exhibit B:	    	Form of Note
	Exhibit C:	    	Form of Joinder
	Exhibit D:	    	Form of Compliance Certificate
	Exhibit E:	    	Form of Subordination Agreement

  

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 SCHEDULES 
  

			
	Schedule 1.02(a):	  	Lenders and Commitments
	Schedule 1.02(b):	  	Material Agreements
	Schedule 3.01:	  	Organization Information
	Schedule 3.12:	  	Subsidiaries; Joint Ventures
	Schedule 3.13:	  	Insurance
	Schedule 3.14:	  	Collective Bargaining Agreements
	Schedule 5.13:	  	Post-Closing Items
	Schedule 6.01:	  	Existing Indebtedness
	Schedule 6.02:	  	Existing Encumbrances
	Schedule 6.04:	  	Existing Investments
	Schedule 6.05:	  	Scheduled Dispositions

  

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 CREDIT AGREEMENT, dated as of March 13, 2009, among: 
 (a) AMERICAN APPAREL, INC., a corporation organized under the laws of the State of Delaware, with its principal executive offices at 747 Warehouse
Street, Los Angeles, California, for itself and as agent (in such capacity, the “Borrower”); and 
 (b) the FACILITY
GUARANTORS now or hereafter party hereto; 
 (d) LION CAPITAL LLP, in its capacity as administrative agent and collateral agent
hereunder; and 
 (d) the LENDERS from time to time party hereto; 
 in consideration of the mutual covenants herein contained and benefits to be derived herefrom, the parties hereto agree as follows: 
 ARTICLE I  
 Definitions 
 SECTION 1.01 Definitions. 
 As
used in this Agreement, the following terms have the meanings specified below: 
 “59th Street Facility” means that certain facility located at 1020 E. 59th Street, Los Angeles, California 90001. 
 “Account(s)”
means “accounts” as defined in the UCC, and also means a right to payment of a monetary obligation, whether or not earned by performance, (i) for property that has been or is to be sold, leased, licensed, assigned, or otherwise
disposed of, (ii) for services rendered or to be rendered, or (iii) arising out of the use of a credit or charge card or information contained on or for use with the card. The term “Account” does not include (i) rights to
payment evidenced by chattel paper or an instrument, (ii) commercial tort claims, (iii) deposit accounts, (iv) investment property, (v) letter-of-credit rights or letters of credit, or (vi) rights to payment for money or
funds advanced or sold, other than rights arising out of the use of a credit or charge card or information contained on or for use with the card. 
 “Acquisition” means (i) any purchase or acquisition of a Controlling interest in Capital Stock of a Person, (ii) a purchase or acquisition of all or substantially all of the assets or properties of a Person or of
any business unit of a Person, or (iii) any merger or consolidation of any Person with any other Person or other transaction or series of transactions resulting in the acquisition of all or substantially all of the assets or a Controlling
interest in the Capital Stock of any Person, in each case in any transaction or group of transactions which are part of a common plan. 
 “Administrative Agent” means Lion Capital LLP, in its capacity as administrative agent for Lenders under this Agreement and the other Loan Documents, together with any of its successors in such capacity. 
  

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 “Affiliate” means, with respect to a specified Person, any Person that directly or
indirectly through one or more intermediaries Controls, is Controlled by or is under common Control with the Person specified. 
 “Agents” means, collectively, the Administrative Agent and the Collateral Agent. 
 “Aggregate
Exposure” means, with respect to any Lender at any time, an amount equal to (i) until the Closing Date, the aggregate amount of such Lender’s Commitments then in effect and (ii) thereafter, the aggregate then unpaid principal
amount of such Lender’s Loans, including PIK Interest added to the principal amount of such Loans, if any, and the PIK Fee added to the principal amount of such Loans. 
 “Aggregate Exposure Percentage” means, with respect to any Lender at any time, the ratio (expressed as a percentage) of such
Lender’s Aggregate Exposure at such time to the Aggregate Exposure of all Lenders at such time. 
 “Agreement” means
this Credit Agreement, as amended, restated, supplemented or otherwise modified and in effect from time to time. 
 “Agreement
Value” means for each Hedge Agreement, on any date of determination, an amount determined by the Administrative Agent equal to: 
 (a) In the case of a Hedge Agreement documented pursuant to an ISDA Master Agreement, the amount, if any, that would be payable by any Loan Party to its counterparty to such Hedge Agreement, as if (i) such Hedge
Agreement was being terminated early on such date of determination, (ii) such Loan Party was the sole “Affected Party” (as therein defined) and (iii) the Administrative Agent was the sole party determining such payment amount
(with the Administrative Agent making such determination pursuant to the provisions of the form of ISDA Master Agreement); 
 (b) In the case of a Hedge Agreement traded on an exchange, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss on such Hedge Agreement to the Loan Party which is party to such Hedge Agreement, determined by
the Administrative Agent based on the settlement price of such Hedge Agreement on such date of determination; or 
 (c) In all
other cases, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss on such Hedge Agreement to the Loan Party that is party to such Hedge Agreement determined by the Administrative Agent as the amount, if any, by which
(i) the present value of the future cash flows to be paid by such Loan Party exceeds (ii) the present value of the future cash flows to be received by such Loan Party, in each case pursuant to such Hedge Agreement. 
 “American Apparel (USA)” means American Apparel (USA), LLC, a California limited liability company. 
 “Applicable Law” means as to any Person: (i) all laws, statutes, rules, regulations, orders, codes, ordinances or other
requirements having the force of law and (ii) all court orders, decrees, judgments, injunctions, notices, binding agreements and/or rulings, in each case of or by any Governmental Authority which has jurisdiction over such Person, or any
property of such Person. 
  

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 “Applicable Lenders” means the Required Lenders, all affected Lenders or all Lenders, as
applicable. 
 “Assignment and Acceptance” means an assignment and acceptance entered into by a Lender and an assignee
(with, if applicable, the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent. 
 “Bankruptcy Code” means Title 11, U.S.C., as now or hereafter in effect, or any successor thereto. 
 “Board” means the Board of Governors of the Federal Reserve System of the United States of America. 
 “Borrower” has the meaning set forth in the Preamble to this Agreement. 
 “Borrowing” means the incurrence of Loans on the Closing Date. 
 “Borrowing Notice” means a request by the Borrower for a borrowing of Loans delivered in accordance with Section 2.02(a).

 “Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York are
authorized or required by law to remain closed. 
 “Canadian Affiliate” means any Affiliate of the Borrower, whether now
existing or hereafter created or acquired, organized under the laws of Canada. 
 “Canadian Loan” means the loans made to
Canadian Subsidiaries under the Canadian Loan Agreement and any refinancing or replacement thereof (including successive refinancings or replacements). 
 “Canadian Loan Agreement” means that certain loan agreement, dated as of February 26, 2009, by and between The Toronto-Dominion Bank (and any other lender thereunder), and American Apparel Canada
Wholesale, Inc./American Apparel Canada Grossiste Inc. (being the American and French names, respectively, of the same entity), as the borrower. 
 “Canadian Subsidiaries” means (i) each of American Apparel Canada Wholesale Inc. and American Apparel Canada Retail Inc., each a wholly-owned Subsidiary of the Borrower, and (ii) all other Subsidiaries of the
Borrower organized under the laws of Canada or any political subdivision thereof. The term “Canadian Subsidiary” shall mean any one of the foregoing Persons. 
 “Capital Expenditures” means, with respect to any Person for any period, (i) the additions to property, plant and equipment and other capital expenditures of the Loan Parties and 

  

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their Subsidiaries that are (or would be) set forth on the Consolidated balance sheet of the Loan Parties and their Subsidiaries for such period prepared in
accordance with GAAP and (ii) Capital Lease Obligations incurred by the Loan Parties and their Subsidiaries during such period, calculated, without duplication, for any items included in subsection (i) above; provided that the term
“Capital Expenditures” shall not include (A) expenditures made in connection with the replacement, substitution, restoration or repair of assets to the extent financed from insurance proceeds or condemnation awards paid on account of
any casualty or condemnation event or (B) any expenditures that constitute Permitted Acquisitions. 
 “Capital Lease
Obligations” means, with respect to any Person for any period, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination
thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP; for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP. 
 “Capital Stock” means, as to any Person that is a corporation, the authorized shares
of such Person’s capital stock, including all classes of common, preferred, voting and nonvoting capital stock, and, as to any Person that is not a corporation or an individual, the membership or other ownership interests in such Person,
including, without limitation, the right to share in profits and losses, the right to receive distributions of cash and other property, and the right to receive allocations of items of income, gain, loss, deduction and credit and similar items from
such Person, whether or not such interests include voting or similar rights entitling the holder thereof to exercise control over such Person, collectively with, in any such case, all warrants, options and other rights to purchase or otherwise
acquire, and all other instruments convertible into or exchangeable for, any of the foregoing; provided that, notwithstanding the foregoing, Capital Stock shall not include Indebtedness convertible into or exchangeable for Capital Stock.

 “Cash Interest” has the meaning provided in Section 2.04(a). 
 “CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §9601 et seq.

 “Change of Control” means, at any time: 
 (a) any “change in/of control” or similar event as defined in any Charter Document of any Loan Party or in any Material
Agreement, or any document governing Material Indebtedness of any Loan Party thereof; or 
 (b) occupation of a majority of the seats (other than vacant seats) on the board of directors (or other body exercising similar management authority) of the Borrower by Persons who were neither (i) nominated by
the board of directors of the Borrower, (ii) appointed by directors so nominated nor (iii) approved in accordance with the Voting Agreement; or 
 (c) except with respect to the Permitted Holders, any person or “group” (within the meaning of the Securities and Exchange Act of 1934, as amended), is or becomes the beneficial owner (within the meaning of
Rule 13d-3 or 13d-5 of the 

  

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Securities and Exchange Act of 1934, as amended, except that such person shall be deemed to have “beneficial ownership” of all Capital Stock that
such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time) directly or indirectly of thirty-five percent (35%) or more (on a fully diluted basis) of the total then outstanding Capital
Stock of the Borrower, whether as a result of the issuance of securities of the Borrower, a merger, consolidation, liquidation or dissolution of the Borrower, a direct or indirect transfers of securities or otherwise; or 
 (d) the Borrower fails at any time to own, directly or indirectly, one hundred percent (100%) of the Capital Stock of American
Apparel (USA), free and clear of all Liens (other than the Liens in favor of the Collateral Agent, for its own benefit and the ratable benefit of the other Credit Parties and Permitted Encumbrances set forth in clause (m) of the definition of
Permitted Encumbrances), except where such failure is a result of a merger or consolidation transaction between the Borrower and American Apparel (USA) permitted by Section 6.03. 
 “Change of Control Offer” has the meaning provided therefor in Section 2.08(b). 
 “Change of Control Payment” has the meaning provided therefor in Section 2.08(b). 
 “Change of Control Payment Date” has the meaning provided therefor in Section 2.08(b). 
 “Change in Law” means (i) the adoption of any law, rule or regulation after the Closing Date, (ii) any change in any law, rule
or regulation or in the interpretation or application thereof by any Governmental Authority after the Closing Date or (iii) compliance by any Credit Party with any request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the Closing Date. 
 “Charges” has the meaning provided therefor in
Section 9.13. 
 “Charter Document” means as to any Person, its partnership agreement, certificate of incorporation,
operating agreement, membership agreement or similar constitutive document or agreement, its by-laws and all shareholder or other equity holder agreements, voting trusts and similar arrangements to which such Person is a party or which is applicable
to its Capital Stock, and all other arrangements relating to the Control or management of such Person. 
 “Closing Date”
means March 13, 2009. 
 “Code” means the Internal Revenue Code of 1986 and the Treasury regulations promulgated
thereunder, as amended from time to time. 
 “Collateral” means any and all “Collateral” or words of similar
intent as defined in any applicable Security Document. 
 “Collateral Agent” means Lion Capital LLP, in its capacity as
collateral agent for the Credit Parties under this Agreement and the other Loan Documents, together with any of its successors in such capacity. 
  

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 “Commitment” means, with respect to each Lender, the aggregate commitment(s) of such
Lender hereunder to make Loans to the Borrower in an amount not to exceed the amount set forth opposite its name on Schedule 1.02(a) hereto. As of the Closing Date, the aggregate amount of the Commitments is $75,000,000. 
 “Compliance Certificate” has the meaning provided in Section 5.01(d). 
 “Consolidated” means, when used to modify a financial term, test, statement, or report of a Person, the application or preparation of
such term, test, statement or report (as applicable) based upon the consolidation, in accordance with GAAP, of the financial condition or operating results of such Person and its Subsidiaries. 
 “Consolidated EBITDA” means, with respect to any Person for any period, Consolidated Net Income for such period, 
 plus (a) without duplication and to the extent already deducted (and not added back) in arriving at such Consolidated Net Income for such
period, the sum of 
 (i) depreciation and amortization expense, 
 (ii) provisions for Taxes, 
 (iii)
Consolidated Interest Expense and non-cash or deferred interest financing costs, 
 (iv) any compensation expense incurred during such period
with respect to the issuance of up to 2,710,000 shares of common stock pursuant to Section 5.31 of the Merger Agreement, 
 (v) any
non-cash compensation expense incurred during such period including any such expenses related to the issuance of Capital Stock in connection therewith, 
 (vi) costs and expenses incurred in connection with entering into the Loan Documents and any amendments required under the First Lien Loan Documents relating thereto; provided that the amounts referred to in
this clause (vi) shall not, in the aggregate, exceed $6,000,000 (excluding items covered by other clauses of this definition) during the term of this Agreement, 
 (vii) expenses or charges incurred in connection with any issuance of Indebtedness or any amendment of any instrument governing any Indebtedness; provided that the amounts referred to in this clause
(vii) shall not, in the aggregate, exceed $500,000 in any Fiscal Quarter (excluding any items referred to in other clauses of this definition), 
 (viii) any unusual or nonrecurring non-cash expenses or charges (including, whether or not otherwise includable as a separate item in the statement of Consolidated Net Income for such period, non-cash losses on sales
of assets outside the ordinary course of business), 
 (ix) non-cash charges relating to the accretion of debt discount and amortization of
warrants and changes in derivatives liabilities, 
  

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 (x) other non-cash charges, provided that the amounts referred to in this clause (ix) shall
not, in the aggregate, exceed $500,000 (excluding any items referred to in other clauses of this definition) in any Fiscal Quarter, and 
 (xi) losses or charges for such period associated with the writedowns or impairment of assets or intangibles (including writedowns of goodwill or other assets pursuant to FASB 142 and 144, writedowns relating to discontinued operations
pursuant to FASB 144 and charges pursuant to FASB 141), 
 minus (b) without duplication and to the extent included in arriving
at such Consolidated Net Income for such period, the sum of 
 (i) interest income, 
 (ii) any unusual or nonrecurring non-cash gains increasing Consolidated Net Income for such period (including whether or not includable as a separate
item in the Statement of Consolidated Net Income for such period, non-cash gain on sales of assets outside of the ordinary course of business), 
 (iii) income tax credits to the extent not netted from provisions for Taxes, 
 (iv) any other non-cash gains increasing
Consolidated Net Income during any such period; provided that the amounts referred to in this clause (iv) shall not, in the aggregate, exceed $500,000 (excluding any items referred to in other clauses of this definition) in any Fiscal
Quarter, and 
 (v) any cash payment made during such period in respect of items described in clauses (viii), (ix) or (x) above
subsequent to the Fiscal Quarter in which the relevant non-cash expenses or losses were reflected as a charge in the statement of Consolidated Net Income for such period, all as determined on a Consolidated basis; 
 in each case, as determined on a Consolidated basis for the Borrower and its Subsidiaries in accordance with GAAP. 
 For purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each a “Reference Period”) pursuant
to any determination of the ratio of Total Debt to Consolidated EBITDA, (i) if at any time during such Reference Period the Borrower or any Subsidiary shall have made any Material Disposition, Consolidated EBITDA for such Reference Period shall
be reduced by an amount equal tot the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative)
attributable thereto for such Reference Period and (ii) if during such Reference Period the Borrower or any Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such Reference Period shall be calculated after giving
pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period. As used in this definition, “Material Disposition” means any sale, consignment, sale and leaseback, granting of an
exclusive license, transfer or other disposition of property or series of such related transactions with respect to property that yields gross proceeds to the Borrower or any of its Subsidiaries in excess of $2,000,000; and “Material
Acquisition” means any Acquisition or property or series of related Acquisitions of property for consideration by the Borrower and it Subsidiaries in excess of $2,000,000. 
  

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 “Consolidated Interest Expense” means, with respect to any Person for any period, total
interest expense (including that attributable to Capital Lease Obligations in accordance with GAAP) of such Person on a Consolidated basis with respect to all outstanding Indebtedness of such Person, including, without limitation, the Obligations
and all commissions, discounts and other fees and charges owed with respect thereto and all net payments under interest rate Hedge Agreements in respect of Indebtedness of the Borrower and its Subsidiaries, but excluding any non-cash or deferred
interest financing costs, all as determined on a Consolidated basis in accordance with GAAP. 
 “Consolidated Net Income”
means, with respect to any Person for any period, the net income (or loss) of such Person on a Consolidated basis for such period taken as a single accounting period determined in accordance with GAAP; provided, however, that there
shall be excluded (i) the income (or loss) of any Person (other than the Borrower or any of its Subsidiaries) in which any Person (other than the Borrower or any of its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to such Person during such period, (ii) the income (or loss) of any Subsidiary of such Person accrued prior to the date it becomes a Subsidiary of such Person or any of such Person’s
Subsidiaries or is merged into or consolidated with such Person or any of its Subsidiaries or substantially all of that Person’s assets are acquired by such Person or any of its Subsidiaries from a Person other than such Person or its
Subsidiaries, (iii) the income of any direct or indirect Subsidiary of a Person to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of
the terms of its Charter Documents or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary, (iv) any extraordinary items for such period, (v) foreign currency
translation gains and losses (as calculated in accordance with the Borrower’s public filings made with the SEC) and (vi) any adjustments resulting from the application of FASB No. 133. 
 “Control” means the possession, directly or indirectly, of the power (i) to vote 25% or more of the securities having ordinary
voting power for the election of directors (or any similar governing body) of a Person, or (ii) to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or
otherwise. The terms “Controlling” and “Controlled” have meanings correlative thereto. 
 “Cost” means the average cost of purchases, as reported on the Borrower’s stock ledger based upon the Borrower’s accounting practices, which practices are in effect on the Closing Date. 
 “Credit Party” means (i) the Lenders, (ii) the Agents and their Affiliates, (iii) the beneficiaries of each
indemnification obligation undertaken by the Borrower and the other Loan Parties under any Loan Document, (iv) any other Person to whom Obligations under this Agreement and other Loan Documents are owing and (v) the successors and assigns
of each of the foregoing. 
  

 - 8 - 

 “Credit Party Expenses” means, without limitation, (i) all reasonable out-of-pocket
expenses incurred by the Agents, the Initial Lender and their respective Affiliates, including the reasonable fees, charges and disbursements of counsel for the Initial Lender and the Agents, outside consultants for the Initial Lender and the Agents
(including, without limitation, commercial finance examiners), in connection with the negotiation, preparation and administration of the Loan Documents or any amendments, modifications, supplements or waivers of the provisions thereof (whether or
not the transactions contemplated hereby or thereby shall be consummated), and (ii) all reasonable out-of-pocket expenses incurred by the Initial Lender and the Agents, including the reasonable fees, charges and disbursements of counsel and
outside consultants for each of the Initial Lender and the Agents (including, without limitation, commercial finance examiners), in connection with the enforcement or protection of their rights in connection with the Loan Documents, or in connection
with the Loans made hereunder, including all reasonable out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of the Obligations; provided that the Lenders who are not the Initial Lender and the Agents
shall be entitled to reimbursement for no more than one counsel representing all such Lenders (absent a conflict of interest in which case the Lenders may engage and be reimbursed for additional counsel). 
 “Default” means any event or condition that constitutes an Event of Default or that upon notice, lapse of time or both would become an
Event of Default. 
 “Default Rate” has the meaning provided in Section 2.05. 
 “Delinquent Lender” has the meaning provided in Section 8.15. 
 “Disqualified Equity Interests” means any Capital Stock which, by its terms (or by the terms of any security or other Capital Stock into
which it is convertible or for which it is exchangeable), or upon the happening of any event or condition, (i) matures or is mandatorily redeemable (other than solely for Qualified Equity Interests), pursuant to a sinking fund obligation or
otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other
Obligations that are accrued and payable and the termination of the Commitments), (ii) is redeemable at the option of the holder thereof (other than solely for Qualified Equity Interests), in whole or in part, (iii) provides for the
scheduled payments of dividends in cash or (iv) is or becomes convertible into or exchangeable for Indebtedness or any other Capital Stock that would constitute Disqualified Equity Interests, in each case, prior to the date that is 180 days
after the Maturity Date. 
 “dollars” or “$” refers to lawful money of the United States of America.

 “Dov Charney Existing Notes” means (i) the Promissory Note, dated December 19, 2008, issued by American Apparel
(USA) in favor of Dov Charney in an original principal amount equal to $2,500,000 and (ii) the Promissory Note, dated February 10, 2009, issued by American Apparel (USA) in favor of Dov Charney in an original principal amount equal to
$4,000,000. 
  

 - 9 - 

 “Eligible Assignee” means any assignee permitted by and consented to in accordance with
Section 9.04(b); provided that in no event shall the Borrower or any of its Affiliates (other than the Initial Lender and its Affiliates) be Eligible Assignees. 
 “Environmental Laws” means all Applicable Laws issued, promulgated or entered into by or with any Governmental Authority, relating in
any way to the protection of human health or the environment, to the preservation or reclamation of natural resources, to the handling, treatment, storage, disposal of Hazardous Materials or to the assessment or remediation of any Release or
threatened Release of any Hazardous Material or to the environment. 
 “Environmental Liability” means any liability,
contingent or otherwise (including, without limitation, any liability for damages, natural resource damage, costs of environmental remediation, administrative oversight costs, fines, penalties or indemnities), of any Loan Party or one of their
Subsidiaries directly or indirectly resulting from or based upon (i) violation of any Environmental Law, (ii) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (iii) exposure to
any Hazardous Materials, (iv) the Release or threatened Release of any Hazardous Materials into the environment or (v) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect
to any of the foregoing. 
 “Equipment” has the meaning set forth in the Security Documents. 
 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time and the regulations promulgated and
rulings issued thereunder. 
 “ERISA Affiliate” means any trade or business (whether or not incorporated) that, together
with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the
Code. 
 “ERISA Event” means (i) any “reportable event,” as defined in Section 4043 of ERISA or the
regulations issued thereunder with respect to a Plan (other than an event for which the 30 day notice period is waived); (ii) the failure to meet the minimum funding standards with respect to any Plan under Section 412 or 430 of the Code
or Section 302 of ERISA, whether or not waived; (iii) the filing, pursuant to Section 412 of the Code or Section 302 of ERISA, of an application for a waiver of the minimum funding standard with respect to any Plan; (iv) the
incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (v) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any
notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (vi) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial
withdrawal from any Plan or Multiemployer Plan; or (vi) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition
of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA. 
  

 - 10 - 

 “Events of Default” has the meaning assigned to such term in Section 7.01.

 “Exchange Rate” has the meaning assigned to such term in Section 1.04. 
 “Excluded Taxes” means, with respect to the Agents, any Lender or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (i) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal
office is located or, in the case of any Lender, in which its applicable lending office is located, (ii) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower
is located and (iii) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.13(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such
Foreign Lender becomes a party to this Agreement (or designates a new lending office) is attributable to such Foreign Lender’s failure to comply with Section 2.12(e), except to the extent that such Foreign Lender (or its assignor, if any)
was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.12(a). 
 “Existing First Lien Credit Agreement” means the Credit Agreement, dated as of July 2, 2007 as amended, among American Apparel
(USA), the other borrowers from time to time party thereto, the facility guarantors from time to time party thereto, Bank of America, N.A., in its capacities as administrative agent and as collateral agent thereunder (together with its successors in
such capacities), Wells Fargo Retail Finance, LLC, as collateral monitoring agent (together with its successors in such capacities), and the lenders from time to time party thereto. 
 “Existing Second Lien Credit Agreement” means the Credit Agreement, dated as of January 18, 2007, as amended, among American
Apparel (USA), the facility guarantors from time to time party thereto, and SOF Investments, L.P. Private IV, as lender. 
 “Facility
Guarantors” means (i) each of the Subsidiaries of the Borrower, whether now existing or hereafter created or acquired, other than any Foreign Subsidiaries, and (ii) any other Person required to become a Facility Guarantor
hereunder. 
 “Facility Guarantors’ Collateral Documents” means all security agreements, mortgages, pledge agreements,
deeds of trust, and other instruments, documents or agreements executed and delivered by the Facility Guarantors to secure the Facility Guaranty or the Obligations, as applicable. 
 “Facility Guaranty” means any Guarantee of the Obligations executed by the Facility Guarantors in favor of the Credit Parties.

 “Financial Officer” means, with respect to any Loan Party, the chief financial officer, treasurer or controller of such
Loan Party. 
 “First Lien Agent” means the administrative agent and/or collateral agent, as applicable, under the First
Lien Credit Agreement. 
  

 - 11 - 

 “First Lien Credit Agreement” means (i) Existing First Lien Credit Agreement and
(ii) any loan agreement or credit agreement which replaces or refinances the Existing First Lien Credit Agreement. 
 “First
Lien Loan Documents” means the First Lien Credit Agreement and the other Loan Documents (as defined in the First Lien Credit Agreement). 
 “Fiscal Month” means any fiscal month of any Fiscal Year, which month shall generally end on the last day of each calendar month in accordance with the fiscal accounting calendar of the Borrower. 
 “Fiscal Quarter” means any fiscal quarter of any Fiscal Year, which quarters shall generally end on the last day of each March, June,
September or December of such Fiscal Year in accordance with the fiscal accounting calendar of the Borrower. 
 “Fiscal
Year” means any period of twelve consecutive months ending on December 31 of any calendar year. 
 “Foreign
Lender” means any Lender that is organized under the laws of a jurisdiction other than the United States of America or any State thereof or the District of Columbia. 
 “Foreign Subsidiary” means any Subsidiary that is organized under the laws of a jurisdiction other than the United States of America or
any State thereof or the District of Columbia. 
 “GAAP” means principles which are consistent with those promulgated or
adopted by the Financial Accounting Standards Board and its predecessors (or successors) in effect and applicable to that accounting period in respect of which reference to GAAP is being made. 
 “Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory body, court, tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining
to government. 
 “Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or
otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any
obligation of the guarantor, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any
security for the payment thereof, (ii) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof or (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation; provided that the term “Guarantee” shall not include
endorsements for collection or deposit in the ordinary course of business. 
  

 - 12 - 

 “Hazardous Materials” means all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes, mold, fungi or similar bacteria,
and all other substances or wastes of any nature regulated pursuant to any Environmental Law, including any material listed as a hazardous substance under Section 101(14) of CERCLA. 
 “Hedge Agreement” means any interest rate protection agreement, interest rate swap agreement, interest rate cap agreement, interest rate
collar agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement designed to hedge against fluctuations in interest rates or foreign
exchange rates. 
 “Indebtedness” of any Person means, without duplication: 
 (a) All obligations of such Person for borrowed money (including any obligations which are without recourse to the credit of such Person);

 (b) All obligations of such Person evidenced by bonds, debentures, notes or similar instruments; 
 (c) All obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such
Person; 
 (d) All obligations of such Person in respect of the deferred purchase price of property or services (excluding
current accounts payable incurred in the ordinary course of business); 
 (e) All Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed; 
 (f) All Guarantees by such Person of Indebtedness of others; 
 (g) All Capital Lease Obligations of such Person; 
 (h) All obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty;

 (i) All obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances; 
 (j) All Hedge Agreements; 
 (k) All Disqualified Equity Interests; and 
  

 - 13 - 

 (l) The principal and interest portions of all rental obligations of such Person under
any Synthetic Lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing where such transaction is considered borrowed money indebtedness for tax purposes but is classified as an operating lease in accordance
with GAAP. 
 The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable
therefor. 
 “Indemnified Taxes” means Taxes other than Excluded Taxes. 
 “Indemnitee” has the meaning provided in Section 9.03(b). 
 “Information” has the meaning provided in Section 9.15(a). 
 “Initial Lender” means Lion Capital (Guernsey) II Limited or any Affiliate thereof to whom its Loans are assigned within the first three
months after the Closing Date. 
 “Intellectual Property” has the meaning provided in Section 3.05(b). 
 “Intellectual Property Security Agreement” means the Intellectual Property Security Agreement, dated as of the date hereof, among the
Loan Parties and the Collateral Agent, for its own benefit and for the benefit of the other Credit Parties, as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof. 
 “Intercreditor Agreement” means the Intercreditor Agreement, dated as of the date hereof, between the First Lien Agent and the
Collateral Agent and acknowledged by the Borrower and the other Loan Parties, as amended, restated, supplemented or otherwise modified or replaced from time to time in accordance with the terms hereof and thereof. 
 “Interest Election” has the meaning provided in Section 2.04(a). 
 “Interest Payment Date” means the last day of each of March, June, September and December. 
 “Interest Rate” means a per annum rate equal to 15%. 
 “Inventory” has the meaning assigned to such term in the Security Agreement. 
 “Investment” means with respect to any Person: 
 (a) Any Capital Stock, evidence of Indebtedness or
other security of another Person, including any option, warrant or right to acquire the same; 
  

 - 14 - 

 (b) Any loan, advance, contribution to capital, Guarantee of any obligation of another
Person, extension of credit (except for trade and customer accounts receivable for inventory sold or services rendered in the ordinary course of business) to another Person; 
 (c) Any Acquisition; and 
 (d) Any other investment or interest in any Person, 
 in all cases whether now existing or hereafter made.

 “Investment Agreement” means the Investment Agreement, dated as of the date hereof, between the Borrower and Lion Capital
(Guernsey) II Limited. 
 “ISDA Master Agreement” means any form entitled “Master Agreement (Multicurrency-Cross
Border)” then currently published by the International Swap and Derivatives Association, Inc. (“ISDA”), or any successor to the ISDA. 
 “Joinder Agreement” means an agreement, in the form attached hereto as Exhibit C, pursuant to which, among other things, a Person becomes a party to, and bound by the terms of, this Agreement
and/or the other Loan Documents in the same capacity and to the same extent as a Facility Guarantor. 
 “Lease” means any
agreement, whether written or oral, no matter how styled or structured, pursuant to which a Loan Party or any Subsidiary thereof is entitled to the use or occupancy of any space in a structure, land, improvements or premises for any period of time
(excluding any Lease constituting Indebtedness). 
 “Lenders” means the Initial Lender, the other Persons identified on
Schedule 1.02(a) hereto, Lion Capital LLP, as the initial holder of Loans representing the PIK Fee, and each assignee that becomes a party to this Agreement as set forth in Section 9.04(b). 
 “Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or
security interest in, on or of such asset and (b) the interest of any Person under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset. 
 “Loan Account” has the meaning assigned to such term in Section 2.09(a).

 “Loan Documents” means this Agreement, the Notes, the Security Documents, the Intercreditor Agreement and any other
instrument or agreement now or hereafter executed and delivered in connection herewith, each as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof. 
 “Loan Party” or “Loan Parties” means the Borrower and the Facility Guarantors. 
 “Loans” means all loans made pursuant to this Agreement pursuant to Section 2.01, all PIK Interest, if any, that has been added to
the principal balance of the Loans on any Interest Payment Date pursuant to Section 2.04, and the PIK Fee that has been added to the principal balance of the Loans on the Closing Date pursuant to Section 2.01(c). 
  

 - 15 - 

 “Margin Stock” has the meaning assigned to such term in Regulation U. 
 “Material Adverse Effect” means any event, fact or circumstance, which has a material adverse effect on, (i) the business,
performance, assets, financial condition or income of the Loan Parties and their Subsidiaries taken as a whole, (ii) the ability of the Loan Parties (taken as a whole) to perform their respective obligations under any Loan Document to which the
Borrower or any of the Loan Parties is a party and (iv) the validity or enforceability of this Agreement or the other Loan Documents, taken as a whole, or any of the rights or remedies of the Credit Parties hereunder or thereunder. 

“Material Agreements” means those agreements listed on Schedule 1.02(b). 
 “Material Indebtedness” means Indebtedness (other than the Obligations) of the Loan Parties and their Subsidiaries in an aggregate
principal amount exceeding $2,500,000. For purposes of determining the amount of Material Indebtedness at any time, the amount of the obligations in respect of any Hedge Agreement at such time shall be calculated at the Agreement Value thereof.

 “Maturity Date” means December 31, 2013. 
 “Maximum Rate” has the meaning provided therefor in Section 9.13. 
 “Merger Agreement” means that certain Amended and Restated Agreement and Plan of Reorganization, dated as of November 7, 2007, by
and among Endeavor, Merger Subsidiary, Borrower, American Apparel LLC, the Canadian Affiliates, Dov Charney, each of the stockholders of the Canadian Affiliates and Sang H. Lim. 
 “Minority Lenders” has the meaning provided therefor in Section 9.02(c). 
 “Moody’s” means Moody’s Investors Service, Inc. or any successor by merger or consolidation to its business. 
 “Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate contributes or has an obligation to contribute. 
 “Net Proceeds” means, with respect to any event, (a) the
cash proceeds received in respect of such event, including (i) any cash received in respect of any non-cash proceeds, but only as and when received, (ii) in the case of a casualty, insurance proceeds, and (iii) in the case of a
condemnation or similar event, condemnation awards and similar payments, in each case net of (b) the sum of (i) all reasonable fees and out-of-pocket expenses (including appraisals, and brokerage, legal, title and recording tax expenses
and commissions) paid by any Loan Party or a Subsidiary to third parties (other than Affiliates) in connection with such event, (ii) in the case of a sale or other disposition of an asset (including pursuant to a casualty or condemnation), the
amount of all payments required to be made by any Loan Party or a Subsidiary as a result of such 

  

 - 16 - 

 
event to repay (or to establish an escrow for the repayment of) any Indebtedness (other than the Obligations and the Indebtedness incurred under clause
(h) of the definition of Permitted Indebtedness) secured by such asset to the extent that the instrument creating such Indebtedness requires such Indebtedness to be repaid upon consummation of such event and such Indebtedness is actually so
repaid (or an escrow is actually so established for such repayment) and (iii) all taxes paid or payable in connection with or relating to such event. 
 “Notes” means the notes in substantially the form as attached hereto as Exhibit B, as may be amended, supplemented or modified from time to time. 
 “Obligations” means (a) the due and punctual payment of (i) the principal of, and interest (including all interest that
accrues after the commencement of any case or proceeding by or against the Borrower or any Facility Guarantor under the Bankruptcy Code or any state, federal or provincial bankruptcy, insolvency, receivership or similar law, whether or not allowed
in such case or proceeding) on the Loans and Facility Guaranties as and when due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise and (ii) all other monetary obligations, including fees, costs,
expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise, of the Loan Parties to the Credit Parties under this Agreement and the other Loan Documents, and (b) the due and punctual payment and performance of
all the covenants, agreements, obligations and liabilities of each Loan Party under or pursuant to this Agreement and the other Loan Documents. 
 “Other Taxes” means any and all current or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution,
delivery or enforcement of, or otherwise with respect to, any Loan Document. 
 “Participant” has the meaning provided
therefor in Section 9.04(e). 
 “Participation Register” has the meaning provided therefor in Section 9.04(e).

 “PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity
performing similar functions. 
 “Permitted Acquisition” means an Acquisition in which each of the following conditions are
satisfied: 
 (a) no Default or Event of Default then exists or would arise from the consummation of such Acquisition;

 (b) the Borrower would be in pro forma compliance (assuming the Acquisition had occurred at the beginning of the most
recently completed period of four consecutive Fiscal Quarters for which financial statements of the Borrower are available) with the financial covenants in Section 6.11 if the Acquisition had occurred on the last day of the preceding Fiscal
Quarter for which financial statements of the Borrower are available; 
  

 - 17 - 

 (c) such Acquisition shall not have been objected to by the Board of Directors of the
Person (or similar governing body if such Person is not a corporation) which is the subject of such Acquisition and such Person shall not have announced that it will oppose such Acquisition or shall not have commenced any action which alleges that
such Acquisition will violate Applicable Law; 
 (d) the Borrower shall have furnished the Agents with fifteen
(15) days’ prior notice of such intended Acquisition and shall have furnished the Agents with a current draft of the acquisition agreement and other acquisition documents, a summary of any due diligence undertaken by the Borrower in
connection with such Acquisition, appropriate financial statements of the Person which is the subject of such Acquisition, pro forma projected financial statements for the twelve (12) month period following such Acquisition after giving effect
to such Acquisition (including balance sheets, cash flows and income statements by month for the acquired Person, individually, and on a Consolidated basis with all Loan Parties and the Subsidiaries thereof); 
 (e) after consummation of the Acquisition, if the Acquisition is an Acquisition of Capital Stock, the Borrower shall own directly or
indirectly a majority of the Capital Stock in the Person being acquired, shall Control a majority of any voting interests, and/or shall otherwise Control the governance of the Person being acquired and such acquisition shall result in the issuer of
such Capital Stock becoming a Subsidiary and, to the extent required by Section 5.11, a Facility Guarantor; 
 (f) any
assets acquired shall be utilized in, and if the Acquisition involves a merger, consolidation or Capital Stock acquisition, the Person which is the subject of such Acquisition shall be engaged in, a business otherwise permitted to be engaged in by
the Borrower and its Subsidiaries under this Agreement; and 
 (g) to the extent required by Sections 5.11 and 5.13, such
Acquisition shall have resulted in the Collateral Agent, for the benefit of itself and the other Credit Parties, having received a second priority security and/or mortgage interest in the acquired Capital Stock, Inventory, Accounts, and other
property of the same nature as constitutes collateral under the Security Documents in order to secure the Obligations. 
 “Permitted
Acquisition Consideration” means in connection with any Permitted Acquisition, the aggregate amount of, without duplication: (i) the purchase consideration paid or payable in cash for such Permitted Acquisition, whether payable at or
prior to the consummation of such Permitted Acquisition or deferred for payment at any future time, whether or not any such future payment is subject to the occurrence of any contingency, and including any and all payments representing the purchase
price and any assumptions of Indebtedness and/or Guarantees, “earn-outs” and other agreements to make any payment the amount of which is, or the terms of payment of which are, in any respect subject to or contingent upon the revenues,
income, cash flow or profits (or the like) of any person or business and (ii) the aggregate amount of Indebtedness incurred or assumed in connection with such Permitted Acquisition; provided in each case, that any such future payment
that is subject to a contingency shall be considered Permitted Acquisition Consideration only to the extent of the reserve, if any, required under GAAP (as determined at the time of the consummation of such Permitted Acquisition) to be established
in respect thereof by the Borrower. 
  

 - 18 - 

 “Permitted Disposition” means any of the following: 
 (a) non-exclusive licenses of Intellectual Property of a Loan Party or any of its Subsidiaries in the ordinary course of business;

 (b) bulk sales or other dispositions of Inventory not in the ordinary course of business in an amount not to exceed
(i) in any Fiscal Year of the Borrower and its Subsidiaries, 3.5% of the Cost of the “Eligible Inventory” (as defined in the First Lien Credit Agreement) of American Apparel (USA) (and the other borrowers thereunder) at the
commencement of the immediately preceding Fiscal Year and (ii) in the aggregate from and after the Closing Date, 10% of the Cost of the “Eligible Inventory” (as defined in the First Lien Credit Agreement) of American Apparel (USA)
(and the other borrowers thereunder) as of the Closing Date; provided that all sales of Inventory in connection with ten (10) or more Store closings (conducted collectively) shall be in accordance with liquidation agreements and with
professional liquidators reasonably acceptable to the Initial Lender and the Agents; 
 (c) dispositions of (i) Equipment
in the ordinary course of business that is substantially worn, damaged, obsolete or, in the judgment of a Loan Party, no longer best used or useful in its business or that of any Subsidiary and (ii) dispositions of cash and cash equivalents;

 (d) sales, transfers and dispositions among the Loan Parties; 
 (e) sales, transfers and dispositions from Subsidiaries to any Loan Party or from any Foreign Subsidiary to any other Foreign Subsidiary;

 (f) as long as no Default or Event of Default then exists or would arise therefrom, sales and transfers of Real Estate in
an amount not to exceed $500,000 in the aggregate for all such sales, including sale-leaseback transactions involving any Real Estate; provided that, in the case of any such sale-leaseback transactions, if the First Lien Agent requests an
intercreditor agreement to be executed by the purchaser/lessor of such Real Estate, the Agents shall also receive an intercreditor agreement on similar terms and conditions as agreed by the First Lien Agent (but subject to the priority rights of the
First Lien Agent); 
 (g) as long as no Default or Event of Default then exists or would arise therefrom, sales and transfers
of Equipment now or hereafter owned by any Loan Party or any Subsidiary thereof in an amount not to exceed $23,000,000 in the aggregate for all such sales, including sale-leaseback transactions involving such Equipment and the Scheduled Disposition;
provided that, in the case of any such sale-leaseback transactions, if the First Lien Agent requests an intercreditor agreement to be executed by the purchaser/lessor of such Equipment, the Agents shall also receive an intercreditor agreement
on similar terms and conditions as agreed by the First Lien Agent (but subject to the priority rights of the First Lien Agent); and 
  

 - 19 - 

 (h) dispositions, settlements and write-offs of accounts receivable in connection with
the collection or compromise thereof in the ordinary course of business; 
 provided that all sales, transfers, leases and other dispositions
permitted under clauses (f) and (g) shall be made at arm’s length, for fair value and not less than 75% of the consideration received in respect thereof shall be in the form of cash. 
 “Permitted Dividends” means: 
 (a) dividends with respect to Capital Stock payable solely in additional shares of or warrants to purchase common stock; 
 (b) stock splits or reclassifications of stock into additional or other shares of common stock; 
 (c) the declaration and payment of a dividend by (i) any Subsidiary of a Loan Party to a Loan Party and (ii) by any Subsidiary that is not a Loan Party to another Subsidiary that is not a Loan Party; and 
 (d) non-cash repurchases of Capital Stock deemed to occur upon the exercise of stock options or warrants if such Capital Stock represents
a portion of the exercise price of such options or warrants. 
 “Permitted Encumbrances” means: 
 (a) Liens imposed by law for Taxes that are not yet due or are being contested in compliance with Section 5.05; 
 (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law,
arising in the ordinary course of business and securing obligations that are not overdue by more than thirty (30) days or are being contested in compliance with Section 5.05; 
 (c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and
other social security laws or regulations; 
 (d) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business; 
 (e) judgment Liens in respect of judgments that do not constitute an Event of Default under Section 7.01(k); 
 (f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere with the ordinary conduct of business of a Loan Party or any Subsidiary thereof; 
  

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 (g) any Lien on any property or asset of any Loan Party set forth in Schedule
6.02, so long as (i) such Lien shall not cover or extend to any other property or asset of any Loan Party or any Subsidiary thereof and (ii) such Lien shall secure only the Indebtedness that it secures as of the Closing Date (and
extensions, modifications, refinancings, renewals and replacements thereof permitted under Section 6.01); 
 (h) (x)
Liens on fixed or capital assets acquired by any Loan Party or any Subsidiary (and proceeds thereof and insurance proceeds relating thereto) which are permitted under clause (e)(i) of the definition of Permitted Indebtedness so long as (i) such
Liens and the Indebtedness secured thereby are incurred prior to or within ninety (90) days after such acquisition or the completion of the construction or improvement thereof (other than refinancings thereof permitted hereunder), (ii) the
Indebtedness secured thereby does not exceed 100% of the cost of acquisition of such fixed or capital assets, and (iii) such Liens shall not cover or extend to any other property or assets of the Loan Parties or any Subsidiary, and
(y) Liens on Equipment securing Indebtedness permitted under clause (e)(ii) of the definition of Permitted Indebtedness or leases entered into pursuant to sale-leasebacks permitted under clause (g) of the definition of Permitted
Disposition, so long as such Liens are limited to such Equipment, proceeds thereof and any insurance proceeds relating thereto; 
 (i) Liens created pursuant to the Loan Documents in favor of the Collateral Agent, for its own benefit and the benefit of the other Credit Parties, to secure the Obligations; 
 (j) landlords’ and lessors’ Liens in respect of rent not in default or being contested in good faith; 
 (k) possessory Liens in favor of brokers and dealers arising in connection with the acquisition or disposition of Investments owned as of
the date hereof and Permitted Investments; provided that such Liens (i) attach only to such Investments and (ii) secure only obligations incurred in the ordinary course and arising in connection with the acquisition or disposition
of such Investments and not any obligation in connection with margin financing; 
 (l) Liens arising solely by virtue of any
statutory or common law provisions or customary provisions in account agreements relating to banker’s liens, liens in favor of securities intermediaries, rights of setoff or similar rights and remedies as to deposit accounts or securities
accounts or other funds maintained with depository institutions or securities intermediaries; 
 (m) Liens in favor of the
First Lien Agents securing the “Obligations” (as defined in the First Lien Credit Agreement) of the American Apparel (USA) and the other Loan Parties (as defined in the First Lien Credit Agreement); 
  

 - 21 - 

 (n) Liens securing the obligations of American Apparel Canada Wholesale Inc. and American
Apparel Canada Retail Inc. (and any other Canadian Subsidiary) under the Canadian Loan; 
 (o) Liens securing Indebtedness
permitted under clause (v) of the definition of Permitted Indebtedness; 
 (p) Liens of customs authorities relating to
importation of goods; 
 (q) Liens arising out of conditional sale, title retention, consignments or similar arrangements;

 (r) non-exclusive licenses of Intellectual Property permitted under clause (a) of the definition of Permitted
Dispositions; and 
 (s) Liens on assets of Persons acquired in Acquisitions which were not incurred in contemplation of such
Acquisition and which do not extend to assets of any other Person. 
 “Permitted Holders” means (i) Dov Charney,
(ii) the spouse or a family member, estate or heir of Dov Charney, (iii) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding an 80% or more controlling
interest (or beneficial interest, in the case of a trust) of which consist of Dov Charney and/or such other Persons referred to in clause (ii) above or any combination thereof, and (iv) Lion Capital LLP or any of its Affiliates.

 “Permitted Indebtedness” means each of the following: 
 (a) Indebtedness created under the Loan Documents; 
 (b) Indebtedness set forth in Schedule 6.01 and extensions, modifications, renewals and replacements of any such Indebtedness, so
long as after giving effect thereto (i) the principal amount of the Indebtedness outstanding at such time is not increased, (ii) the result of such extension, renewal or replacement shall not be an earlier maturity date or decreased
weighted average life to maturity, (iii) the terms and conditions (including, if applicable, as to collateral and subordination, but excluding interest rates) of such extended, renewed or replaced Indebtedness are not materially less favorable
to the Lenders than the terms and conditions of the Indebtedness being extended, renewed or replaced and (iv) the direct and contingent obligors with respect to such Indebtedness are not changed; 
 (c) Indebtedness of any Loan Party to any other Loan Party; provided that such Indebtedness (i) has a maturity which extends
beyond the Maturity Date, (ii) does not require the payment of principal in cash prior to the Maturity Date (iii) is subordinated to the Obligations on terms reasonably acceptable to the Initial Lender and the Agents and (iv) is
represented by a promissory note and pledged to the Collateral Agent (or any agent thereof, including, if applicable, the First Lien Agent) as Collateral for the Obligations; 
  

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 (d) (i) Guarantees by any Loan Party of Indebtedness of any other Loan Party and
(ii) Guarantees by any Foreign Subsidiary of Indebtedness of another Foreign Subsidiary; 
 (e) (i) purchase money
Indebtedness of any Loan Party or their Subsidiaries to finance the acquisition of any fixed or capital assets, including Capital Lease Obligations, and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a
Lien on any such assets prior to the acquisition thereof (and not incurred in contemplation of such acquisition) and extensions, renewals, refinancings and replacements of any such Indebtedness that (w) do not increase the outstanding principal
amount thereof or (x) result in an earlier maturity date or decreased weighted average life to maturity thereof, and (ii) Indebtedness incurred with respect to any financing of or secured by Equipment now or hereafter owned by any Loan
Party (including without limitation any sale-leaseback transaction with respect to such equipment) and extensions, renewals, refinancings and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof or
result in an earlier maturity date or decreased weighted average life to maturity thereof; provided that (x) with respect to extensions, renewals, refinancings or replacements of such Indebtedness under either clause (i) or
(ii) above, (A) the terms and conditions (including, if applicable as to collateral and subordination, but excluding interest rates) of such extended, renewed or replaced Indebtedness are not materially less favorable to the Lenders than
the terms and conditions of the Indebtedness being extended, renewed or replaced and (B) the direct and contingent obligors with respect to such Indebtedness are not changed, (y) in the case of any Indebtedness incurred with respect to any
financing of, or secured by, Equipment in connection with a sale-leaseback transaction permitted hereunder (including the Scheduled Disposition), if the First Lien Agent requests an intercreditor agreement to be executed by the purchaser/lessor of
such Equipment, the Agents shall also receive an intercreditor agreement on similar terms and conditions as agreed by the First Lien Agent (but subject to the priority rights of the First Lien Agent), and (z) the aggregate principal amount of
Indebtedness permitted by this clause (e) and shall not exceed $25,000,000 at any time outstanding; 
 (f) Indebtedness
under Hedge Agreements and guarantees thereof, entered into in the ordinary course of business and not for speculative purposes; 
 (g) contingent liabilities under surety bonds or similar instruments incurred in the ordinary course of business in connection with the construction or improvement of retail stores; 
 (h) Indebtedness under the First Lien Loan Documents; provided that in no event shall the principal amount of such Indebtedness at
any time outstanding exceed $75,000,000 less the amount of any permanent repayments, permanent prepayments or commitment reductions thereunder; provided, further, that such limitation shall not apply to protective advances made
pursuant to the First Lien Credit Agreement so long as the principal amount of all such Indebtedness at any time outstanding does not exceed $85,000,000 less the amount of any permanent repayments, permanent prepayments or commitment
reductions thereunder; 
  

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 (i) Indebtedness with respect to the deferred purchase price for any Permitted
Acquisition; provided that such Indebtedness (i) does not require the payment of principal or interest in cash prior to the Maturity Date, (ii) has a maturity which extends beyond the Maturity Date, and (iii) is subordinated to
the Obligations on substantially the same terms as those set forth in Exhibit E or on subordination terms reasonably acceptable to the Initial Lender and the Agents; provided, further, that in no event shall such Indebtedness exceed
$5,000,000 at any time outstanding; 
 (j) Indebtedness of any Loan Party owing to any Foreign Subsidiary; provided
that such Indebtedness (i) has a maturity which extends beyond the Maturity Date, (ii) does not require the payment of principal in cash prior to the Maturity Date, and (iii) is subordinated to the Obligations on substantially the
terms set forth on Exhibit E or on subordination terms reasonably acceptable to Initial Lender and the Agents. 
 (k)
Indebtedness under the Dov Charney Existing Notes; provided that in no event shall the aggregate principal amount of such Indebtedness at any time exceed $3,500,000 (after giving effect to the principal repayment to be made on the Closing
Date) plus the amount of interest paid in kind thereon pursuant to the terms thereof (as such terms exist on the date hereof) and added to the principal amount of such Indebtedness; 
 (l) Indebtedness under the Canadian Loan Agreement and any documents executed in connection therewith, without duplication;
provided that in no event shall the principal amount of such Indebtedness at any time outstanding exceed $5,000,000 less the amount of any permanent repayments, permanent prepayments or commitment reductions thereunder (excluding any
repayments, prepayments or reductions relating to a refinancing or replacement of the Canadian Loan Document), and modifications, refinancings, refundings, renewals, replacements or extensions thereof (provided that refinancing or
replacements shall be permitted if the outstanding principal in the relevant currency is not increased, even if such refinancings or replacement results in the outstanding amounts thereof to exceed $5,000,000 because of fluctuations in the Exchange
Rate for such currency after the date of original incurrence); 
 (m) [intentionally deleted]; 
 (n) [intentionally deleted]; 
 (o) Indebtedness of any Foreign Subsidiary to any other Foreign Subsidiary; and 
 (p)
Indebtedness incurred by any Subsidiary owing to a Loan Party or any other Subsidiary to the extent that such Indebtedness is permitted pursuant to clauses (k) and (l) of the definition of “Permitted Investment”; 
 (q) Indebtedness in respect of trade payables more than 120 days past due incurred in the ordinary course of business in an aggregate
amount not to exceed $5,000,000; 
  

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 (r) [intentionally deleted]; 
 (s) Indebtedness consisting of the financing of insurance premiums; 
 (t) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently
drawn against insufficient funds in the ordinary course of business; provided that such Indebtedness is extinguished within five Business Days of incurrence; 
 (u) Indemnification obligations or obligations in respect of purchase price or other similar adjustments incurred by any Loan Party
pursuant to a Permitted Acquisition, any other Permitted Investment or Permitted Disposition hereunder; provided that such amount is not Indebtedness required to be reflected on the balance sheet of the Borrower or any of its Subsidiaries in
accordance with GAAP (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this proviso); 
 (v) Indebtedness of Foreign Subsidiaries in an aggregate principal amount not to exceed $10,000,000 at any time outstanding (it being
understood that Indebtedness incurred under this clause (v) may be refinanced so long as the outstanding principal in the relevant currency is not increased, even if such refinancing results in the outstanding amounts thereof to exceed
$10,000,000 because of fluctuations in the Exchange Rate for such currency after the date of original incurrence); 
 (w)
Indebtedness of Persons acquired in Acquisitions not incurred in contemplation of such Acquisition so long as the aggregate amount of such Indebtedness outstanding at any time does not exceed $10,000,000; and 
 (x) other unsecured Indebtedness of the Loan Parties in an aggregate principal amount not to exceed $10,000,000 at any time outstanding;
provided that such Indebtedness (i) has a maturity which extends beyond the Maturity Date, (ii) does not require the payment of principal or interest in cash prior to the Maturity Date and (iii) is subordinated to the
Obligations on substantially the same terms as those set forth in Exhibit E or on subordination terms reasonably acceptable to the Initial Lender and the Agents. 
 “Permitted Investments” means each of the following: 
 (a) direct
obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United
States of America) or any state or state agency thereof, in each case maturing within one (1) year from the date of acquisition thereof; 
 (b) Investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at the date of acquisition, the highest or next highest credit rating obtainable from S&P or from
Moody’s; 
  

 - 25 - 

 (c) Investments in certificates of deposit, banker’s acceptances and time deposits
maturing within 180 days from the date of acquisition thereof which are issued or guaranteed by, or placed with, and demand deposit and money market deposit accounts issued or offered by, any Lender or any domestic office of any commercial bank
organized under the laws of the United States of America or any State thereof that has a combined capital and surplus and undivided profits of not less than $500,000,000; 
 (d) fully collateralized repurchase agreements with a term of not more than thirty (30) days for securities described in clause
(a) above (without regard to the limitation on maturity contained in such clause) and entered into with a financial institution satisfying the criteria described in clause (c) above or with any primary dealer; 
 (e) shares of any money market mutual fund that has substantially all of its assets invested in the types of investments referred to in
clauses (a) through (d), above; 
 (f) Investments existing on the Closing Date; 
 (g) Investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business; 
 (h) Loans or advances to employees including but
not limited to advances for the purpose of travel, entertainment or relocation in the ordinary course of business; provided that no such loan to any individual shall exceed $50,000 at any time and all such loans to employees shall not exceed
$500,000 in the aggregate at any time; 
 (i) as long as no Event of Default then exists or would arise therefrom,
(i) Permitted Acquisitions of a Person which becomes a Loan Party or of assets which are acquired by a Loan Party and (ii) Permitted Acquisitions of a Person which does not become a Loan Party or of assets by a non-Loan Party so long as
the aggregate amount of Permitted Acquisition Consideration of all Permitted Acquisitions consummated under this clause (ii) does not exceed, when combined with the aggregate amount of Investments made pursuant to clause (k) below,
$35,000,000 in the aggregate plus an amount equal to any repayments, returns and distributions actually received in cash in respect of any such Investment (which amount shall not exceed the amount of such Investment valued at the fair market
value of such Investment at the time such Investment was made); 
 (j) as long as no Event of Default then exists or would
arise therefrom, other Investments in an amount not to exceed $2,000,000 in the aggregate plus an amount equal to any repayments, returns and distributions actually received in cash in respect of any such Investment (which amount shall not
exceed the amount of such Investment valued at the fair market value of such Investment at the time such Investment was made); 
 (k) as long as no Event of Default then exists or would arise therefrom, Investments by a Loan Party in a Foreign Subsidiary to the extent that such Investments do not exceed, when combined with the aggregate amount of Permitted Acquisition

  

 - 26 - 

 
Consideration of all Permitted Acquisitions consummated pursuant to clause (i)(ii) above, $35,000,000 in the aggregate plus an amount equal to any
repayments, returns and distributions actually received in cash in respect of any such Investment (which amount shall not exceed the amount of such Investment valued at the fair market value of such Investment at the time such Investment was made);

 (l) Investments by a Loan Party in another Loan Party; 
 (m) Investments by a Foreign Subsidiary in another Foreign Subsidiary; 
 (n) Guarantees by any Loan Party of obligations in respect of Leases of any Foreign Subsidiary existing as of the Closing Date and
described on Schedule 6.04; and 
 (o) Investments held by any Person acquired pursuant to an Acquisition and not made
in contemplation thereof. 
 “Person” means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other entity. 
 “PIK Fee” shall have the meaning
provided in Section 2.01(c). 
 “PIK Interest” shall have the meaning provided in Section 2.04(a). 
 “Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or
Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined
in Section 3(5) of ERISA. 
 “Pledge Agreement” means the Ownership Interest Pledge and Security Agreement, dated as of
the date hereof, among the Loan Parties party thereto and the Collateral Agent, for its own benefit and the benefit of the other Credit Parties, as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof and
thereof. 
 “Prepayment Event” means any of the following events: 
 (a) except with respect to the Scheduled Disposition, any sale, transfer or other disposition pursuant to clause (f) or (g) of
the definition of Permitted Disposition of any property or asset of a Loan Party or any Subsidiary of a Loan Party resulting in receipt of Net Proceeds in excess of $500,000; provided that the foregoing shall cease to be a Prepayment Event to
the extent an amount equal to such Net Proceeds are utilized to acquire assets useful in the business of the Loan Parties and their Subsidiaries within six months after receipt of such Net Proceeds; 
 (b) any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any
property or asset of a Loan Party or any Subsidiary resulting in receipt of Net Proceeds in excess of $500,000; provided that the foregoing shall cease to be a Prepayment Event to the extent an amount equal to such Net Proceeds are utilized
to acquire similar assets useful in the business of the Loan Parties and their Subsidiaries within six months after receipt of such Net Proceeds; 
  

 - 27 - 

 (c) the issuance by the Borrower of any Capital Stock, other than the Warrants, warrants
issued to SOF Investments, L.P.. Private IV (and any Capital Stock issuable upon exercise thereof) or Capital Stock issued to management, employees or directors of the Borrower or any of its Subsidiaries pursuant to any stock option or stock
appreciation rights plan or any management, director and/or employee stock ownership or incentive plan; or 
 (d) the
incurrence by a Loan Party or any Subsidiary of a Loan Party of any Indebtedness other than Permitted Indebtedness. 
 “Qualified
Equity Interest” means any Capital Stock that does not constitute a Disqualified Equity Interest. 
 “Real Estate”
means all Leases and all land, together with the buildings, structures, parking areas, and other improvements thereon, now or hereafter owned by any Loan Party or any Subsidiary thereof, including all easements, rights-of-way, and similar rights
relating thereto and all leases, tenancies, and occupancies thereof. 
 “Register” has the meaning provided in
Section 9.04(c). 
 “Regulation U” means Regulation U of the Board as from time to time in effect and all official
rulings and interpretations thereunder or thereof. 
 “Regulation X” means Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof. 
 “Related Parties” means, with respect to any
specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates. 
 “Release” has the meaning provided in Section 101(22) of CERCLA. 
 “Reports” has the meaning provided in Section 8.13(b). 
 “Required Lenders” means
(i) if there are two or fewer Lenders who are not Delinquent Lenders, all Lenders who are not Delinquent Lenders or (ii) if there are three or more Lenders who are not Delinquent Lenders, at any time, Lenders (other than Delinquent
Lenders) holding more than 50% of (A) until the Closing Date, the Commitments and (B) thereafter the aggregate unpaid principal amount of the Loans outstanding, including PIK Interest, if any, added to the principal amount of the Loans and
the PIK Fee, in each case.. 
 “Restricted Payment” means any dividend or other distribution (whether in cash, securities or
other property) with respect to any class of Capital Stock of a Person, or any payment (whether in cash, securities or other property), including any sinking fund or similar 

  

 - 28 - 

 
deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Capital Stock of a Person or any option, warrant
or other right to acquire any Capital Stock of a Person; provided that “Restricted Payments” shall not include any dividends or distributions payable solely in Qualified Equity Interests of a Loan Party or a Subsidiary of a Loan
Party. 
 “S&P” means Standard & Poor’s Ratings Service or any successor by merger or consolidation to its
business. 
 “Scheduled Disposition” means any sale-leaseback transactions or other financings of the Equipment set forth on
Schedule 6.05. 
 “SEC” means the Securities and Exchange Commission or any successor agency thereto. 
 “Security Agreement” means the Security Agreement dated as of the date hereof, among the Loan Parties and the Collateral Agent, for its
benefit and for the benefit of the other Credit Parties, as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof. 
 “Security Documents” means the Security Agreement, the Pledge Agreement, the Intellectual Property Security Agreement, the Facility
Guaranty, the Facility Guarantors’ Collateral Documents, and each other security agreement or other instrument or document executed and delivered pursuant to this Agreement or any other Loan Document to secure any of the Obligations.

 “Senior Lenders” means the lenders party to the First Lien Credit Agreement. 
 “Settlement Date” has the meaning provided in Section 2.11. 
 “Solvent” means, with respect to any Person on a particular date, that on such date (i) at fair valuations, all of the properties
and assets of such Person are greater than the sum of the debts, including contingent liabilities, of such Person, (ii) the present fair saleable value of the properties and assets of such Person is not less than the amount that would be
required to pay the probable liability of such Person on its debts as they become absolute and matured, (iii) such Person is able to realize upon its properties and assets and pay its debts and other liabilities, contingent obligations and
other commitments as they mature in the normal course of business, (iv) such Person does not intend to, and does not believe that it will, incur debts beyond such Person’s ability to pay as such debts mature, and (v) such Person is
not engaged in a business or a transaction, and is not about to engage in a business or transaction, for which such Person’s properties and assets would constitute unreasonably small capital after giving due consideration to the prevailing
practices in the industry in which such Person is engaged. 
 “Specified Financing Documentation” means, collectively, the
Existing First Lien Credit Agreement and the Security Agreement, Pledge Agreement, Intellectual Property Security Agreement and the Facility Guaranty (each as defined in the Existing First Lien Credit Agreement) and any similar agreement which
replaces or refinances the Existing First Lien Credit Agreement, the Canadian Loan Agreement (and any similar agreement which replaces or refinances the Canadian Loan Agreement), the Dov Charney Existing Notes and all amendments, exhibits and
schedules relating thereto. 
  

 - 29 - 

 “Store” means any retail store (which includes any real property, fixtures, equipment,
inventory and other property related thereto) operated, or to be operated, by any Loan Party or Subsidiary thereof. 
 “Subordinated
Indebtedness” means Indebtedness (including the Dov Charney Existing Notes) which is expressly subordinated in right of payment to the prior payment in full of the Obligations and which is in form and on terms approved in writing by the
Initial Lender and the Agents. 
 “Subsidiary” means with respect to any Person (the “parent”) at any date,
any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s Consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (i) of which Capital Stock representing more than 50% of the equity or more than 50% of the
ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, Controlled or held, or (ii) that is, as of such date, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. Unless the context otherwise requires, “Subsidiary” or “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.

 “Synthetic Lease” means any lease or other agreement for the use or possession of property creating obligations which do
not appear as Indebtedness on the balance sheet of the lessee thereunder but which, upon the insolvency or bankruptcy of such Person, may be characterized as Indebtedness of such lessee without regard to the accounting treatment. 
 “Taxes” means any and all current or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any
Governmental Authority. 
 “Total Commitment” means $75,000,000. 
 “Total Debt” means, as of any date of determination, the outstanding principal amount of Indebtedness (not including Hedge Agreements
and the undrawn portion of any Indebtedness described in clause (h) of the definition thereof) of the Loan Parties and their Subsidiaries on a Consolidated basis. 
 “Total Debt to Consolidated EBITDA” means, as of any date of determination, the ratio of (a) Total Debt outstanding as of such date of determination to (b) Consolidated EBITDA for the most
recent four Fiscal Quarter period ended on or prior to such date of determination. 
 “UCC” means the Uniform Commercial
Code as in effect from time to time in the State of New York. 
 “Voting Agreement” means the Investment Voting Agreement,
dated as of March 13, 2009, between Dov Charney and Lion Capital (Guernsey) II Limited. 
  

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 “Unanimous Consent” means the consent of Lenders (other than Disqualified Lenders)
holding 100% of (i) until the Closing Date, the Commitments and (ii) thereafter, the aggregate unpaid principal amount of the Loans outstanding, including PIK Interest, if any, and the PIK Fee, in each case added to the principal amount of
the Loans and (y) the aggregate Available Commitment then in effect. 
 “Warrants” means those certain Warrants to
Purchase Shares of Common Stock of American Apparel, Inc. issued on March 13, 2009, and any other warrants issued to the Initial Lender after the date hereof. 
 “Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title
IV of ERISA. 
 SECTION 1.02 Terms Generally. 
 The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter
forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the
word “shall.” Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time
to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in the other Loan Documents), (b) any reference herein to any Person shall be construed to
include such Person’s successors and permitted assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (e) the words
“asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights and (f) all
financial statements and other financial information provided by the Borrower to the Agents or any Lender shall be provided with reference to dollars, (g) all references to “$” or “dollars” or to amounts of money shall be
deemed to be references to the lawful currency of the United States of America, and (h) this Agreement and the other Loan Documents are the result of negotiation among, and have been reviewed by counsel to, among others, the Borrower, the
Initial Lender and the Agents and are the product of discussions and negotiations among all parties. Accordingly, this Agreement and the other Loan Documents are not intended to be construed against the Agents or any of the Lenders merely on account
of the Agents’ or any Lender’s involvement in the preparation of such documents. 
 SECTION 1.03 Accounting Terms;
GAAP. 
 Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance
with GAAP, as in effect on the Closing Date; provided, however, that if the Borrower notifies the Administrative Agent that the Borrower requests an 

  

 - 31 - 

 
amendment to any provision hereof to reflect the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation
of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or
in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such provision shall have been amended in accordance herewith.

 SECTION 1.04 Currency Equivalents Generally. 
 For purposes of determining compliance with Section 6.01 with respect to any amount of Indebtedness in a currency other than dollars, compliance will be determined at the date of incurrence thereof using the
dollar equivalent thereof at the Exchange Rate in effect at the date of such incurrence. For purposes of the foregoing, “Exchange Rate” means on any day with respect to any currency (other than dollars), the rate at which such
currency may be exchanged into any other currency (including dollars), as set forth at approximately 11:00 a.m. (London time) on such day on the Reuters World Currency Page for such currency. In the event that such rate does not appear on any
Reuters World Currency Page, the Exchange Rate shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed by the Administrative Agent and the Borrower. 
 ARTICLE II  
 Amount and Terms of
Credit 
 SECTION 2.01 Loans. 
 (a) Subject to the terms and conditions set forth herein, the Initial Lender agrees to make Loans on the Closing Date in an amount equal to $75,000,000. Amounts borrowed under this Section 2.01(a) and repaid or
prepaid may not be reborrowed. 
 (b) The parties hereto hereby acknowledge and agree that the Loans made pursuant to Section 2.01(a) on
the Closing Date, together with the Warrants, constitute an “investment unit” for Federal income tax purposes. The Borrower and Lion Capital LLP shall, as promptly as possible, but no later than thirty (30) days after the Closing
Date, mutually determine, in consultation with a mutually agreeable accounting firm, an allocation of the $75,000,000 purchase price for such investment unit between the Loans made pursuant to Section 2.01(a) and the Warrants based on their
respective relative fair market values. 
 (c) The Borrower agrees to pay to Lion Capital LLP, on the Closing Date a fee in amount equal to
$5,000,000 (the “PIK Fee”). The PIK Fee shall be paid in full on the Closing Date by increasing the outstanding principal amount of Loans by the amount of the PIK Fee on the Closing Date. The PIK Fee so added to the principal amount
of the Loans shall bear interest as provided in Section 2.04 beginning on the Closing Date. The obligation of the Borrower to pay the PIK Fee shall be automatically evidenced by this Agreement or, if applicable, any Notes issued pursuant to
this Agreement. 
  

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 SECTION 2.02 Making of Loans. 
 (a) The Borrower shall give the Initial Lender and the Administrative Agent irrevocable notice (which notice must be received by the Initial Lender prior
to 6:00 p.m., New York City time, at least one Business Day prior to the Closing Date) requesting that the Initial Lender make the Loans on such dates and specifying the amount to be borrowed. Not later than 1:30 p.m., New York City time, on the
Closing Date, the Initial Lender shall fund the amount of its Loans (as determined in accordance with Section 2.01) in immediately available funds to the Borrower by wire transfer of such funds in accordance with instructions provided to (and
reasonably acceptable to) the Initial Lender. 
 (b) Each Lender may fulfill its Commitment with respect to any Loan by causing any lending
office of such Lender to make such Loan; provided, however, that any such use of a lending office shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of the applicable Note. Each Lender
shall, subject to its overall policy considerations, use reasonable efforts (but shall not be obligated) to select a lending office which will not result in the payment of increased costs by the Borrower pursuant to Section 2.06. 
 SECTION 2.03 Notes. 
 (a) The
Loans made by each Lender shall be evidenced by Notes, upon request by such Lender, duly executed on behalf of the Borrower, dated the Closing Date, payable to the order of such Lender in an aggregate principal amount equal to such Lender’s
Commitment or, in the case of Lion Capital LLP, in an aggregate principal amount equal to the PIK Fee. 
 (b) Each Lender is hereby
authorized by the Borrower to endorse on a schedule attached to each Note delivered to such Lender (or on a continuation of such schedule attached to such Note and made a part thereof), or otherwise to record in such Lender’s internal records,
an appropriate notation evidencing the date and amount of each Loan from such Lender, each payment and prepayment of principal of any such Loan, each payment of interest on any such Loan and the other information provided for on such schedule;
provided, however, that the failure of any Lender to make such a notation or any error therein shall not affect the obligation of the Borrower to repay the Loans made by such Lender in accordance with the terms of this Agreement and
the applicable Notes. 
 (c) Upon receipt of an affidavit of a Lender as to the loss, theft, destruction or mutilation of such Lender’s
Note and upon cancellation of such Note, the Borrower will issue, in lieu thereof, a replacement Note in favor of such Lender, in the same principal amount thereof and otherwise of like tenor. 
  

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 SECTION 2.04 Mandatory Principal and Interest Payments on Loans. 
 (a) The Borrower may, at its option (an “Interest Election”), elect to pay interest on the Loans on each Interest Payment Date
(i) entirely in cash (“Cash Interest”), (ii) 50% in Cash Interest and 50% by increasing the outstanding principal amount of the Loans on the relevant Interest Payment Date by the amount of interest accrued from the
effective date of any such Interest Election until such Interest Payment Date (“PIK Interest”) or (iii) 100% in PIK Interest, with such increases to the principal amount of the Loans allocated on a pro rata basis to the
outstanding Loans of the Lenders in accordance with such Lenders Aggregate Exposure Percentages immediately prior to such allocation. Unless the context otherwise requires, for all purposes hereof, references to “principal amount” of the
Loans refers to the face amount of the Loans and not gross proceeds funded hereunder and includes any interest so capitalized and added to the principal amount of the Loans from the date on which such interest has been so added. 
 (b) The Borrower must make an Interest Election by delivering a notice to the Administrative Agent no later than 10 Business Days prior to the effective
date of any Interest Election, which notice shall specify (x) whether such Interest Election is made under clause (i), (ii) or (iii) of the immediately preceding paragraph and (y) the effective date of such Interest Election,
which effective date must be the first Business Day after the preceding Interest Payment Date. An Interest Election shall remain in effect until the earlier of (i) next Interest Payment Date following the effective date of such Interest
Election and (ii) the Maturity Date; provided that no more than one Interest Election may be given by the Borrower in any three-month period. The Administrative Agent shall promptly deliver a corresponding notice to each Lender. In the
absence of such an election for any interest period, interest on the Loans shall be payable as PIK Interest. 
 (c) Subject to
Section 2.05, each Loan shall bear interest (computed on the basis of the actual number of days elapsed over a year of 365 (or 366 days, if applicable) at a rate per annum that shall be equal to the Interest Rate compounding quarterly.

 (d) Cash Interest accrued on each Loan shall be payable on the Interest Payment Dates applicable to such Loan, except as otherwise
provided in this Agreement. PIK Interest accrued on each Loan shall be payable by increasing the outstanding principal amount of the Loans by the amount of PIK Interest on the Interest Payment Date applicable to such Loan for such period and in such
amounts as required by the relevant Interest Election(s). Any interest so added to the principal amount of the Loans shall bear interest as provided in this Section 2.04 from the date on which such interest has been so added. The obligation of
the Borrower to pay PIK Interest shall be automatically evidenced by this Agreement or, if applicable, any Notes issued pursuant to this Agreement. 
 (e) All accrued and unpaid interest shall be paid in cash at maturity (whether by acceleration or otherwise), after such maturity on demand and upon any repayment or prepayment thereof (on the amount prepaid). 
 (f) In addition to interest payments required to be made hereunder, and subject to the rights of acceleration hereunder, the full unpaid principal
balance of the Loans, including PIK Interest, if any, and the PIK Fee, in each case that has been added to the principal balance of the Loans, shall be payable in full on the Maturity Date. 
  

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 SECTION 2.05 Default Interest. 
 After the occurrence of any Default which remains unremedied for twenty (20) days and at all times thereafter while such Default remains unremedied,
interest shall accrue on all outstanding Loans including on PIK Interest, if any, and the PIK Fee, in each case that has been added to the principal amount of the Loan (after as well as before judgment, as and to the extent permitted by law) at a
rate per annum (the “Default Rate”) equal to the Interest Rate in effect from time to time plus 2% per annum and such interest shall be payable in cash on each Interest Payment Date (or any earlier maturity of the Loans).

 SECTION 2.06 Increased Costs. 
 (a) If any Change in Law shall: 
 (i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender or any holding company of any Lender; or 
 (ii) impose on any Lender any other condition affecting this Agreement or Loans made by such Lender; 
 and the result of any of the foregoing shall be to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or
otherwise), then the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered. 
 (b) If any Lender determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such
Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have
achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender such
additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered. 
 (c) A
certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section 2.06 and setting forth in reasonable
detail the manner in which such amount or amounts were determined shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within fifteen
(15) Business Days after receipt thereof. 
 (d) Failure or delay on the part of any Lender to demand compensation pursuant to this
Section 2.06 shall not constitute a waiver of such Lender’s right to demand such compensation; provided that no compensation will be paid to any Lender with respect to any Change in Law that has occurred 180 days before such Lender
has demanded compensation under this Section 2.06. 
  

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 SECTION 2.07 Optional Prepayment of Loans; Reimbursement of Lenders. 
 (a) The Borrower shall have the right to prepay any outstanding Loans, in whole or part, upon at least two (2) Business Day’s prior written
notice or facsimile notice to the Administrative Agent, prior to 5 p.m., New York time. 
 (b) [Intentionally Deleted.] 
 (c) Any prepayment made pursuant to this Section 2.07 shall be subject to the following limitations: 
 (i) All prepayments shall be paid to the Administrative Agent for application to the prepayment of outstanding Loans, including PIK
Interest, if any, and the PIK Fee, together with any accrued and unpaid interest, ratably in accordance with each Lender’s Aggregate Exposure Percentage; and 
 (ii) Each notice of prepayment shall specify the prepayment date and the principal amount of the Loans to be prepaid. Each notice of
prepayment shall be irrevocable and shall commit the Borrower to prepay such Loan by the amount and on the date stated therein; provided that if a notice of prepayment is expressly conditioned upon the effectiveness of an acquisition, debt
incurrence or equity issuance, then such notice of prepayment may be revoked (by notice to the Administrative Agent on or prior to the specified prepayment date) if such condition is not satisfied. The Administrative Agent shall, promptly after
receiving notice from the Borrower hereunder, notify each Lender of the principal amount of the Loans held by such Lender which are to be prepaid, the prepayment date and the manner of application of the prepayment. 
 (d) In the event the Borrower fails to prepay the Loans on the date specified in any prepayment notice delivered pursuant to Section 2.07(a), the
Borrower, on demand by any Lender, shall pay to the Administrative Agent, for the account of such Lender, any amounts required to compensate such Lender for any loss incurred by such Lender as a result of such failure to prepay. Any Lender demanding
such payment shall deliver to the Borrower from time to time one or more certificates setting forth the amount of such loss as determined by such Lender and setting forth in reasonable detail the manner in which such amount was determined.

 SECTION 2.08 Mandatory Prepayment; Commitment Termination. 
 The outstanding Obligations shall be subject to prepayment as follows: 
 (a) The Borrower shall, to the extent permitted by the First Lien Credit Agreement, apply all Net Proceeds received by the Loan Parties or any Subsidiary from any Person or from any source on account of any Prepayment
Event to prepay the Loans, except as otherwise provided herein. All prepayments made pursuant to this Section 2.08(a) shall be paid to the Administrative Agent for application to the prepayment of outstanding Loans, including PIK Interest, if
any, and the PIK Fee together with any accrued and unpaid interest, ratably in accordance with each Lender’s Aggregate Exposure Percentage. Notwithstanding anything to the contrary in the foregoing, at any time a mandatory prepayment pursuant
to this Section 

  

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2.08(a) is subject to the Payment Conditions under the terms of and as defined in the First Lien Credit Agreement, (i) if the Payment Conditions are
satisfied (after giving effect to such prepayment) on the date of such Prepayment Event, an amount equal to the Net Proceeds received on account of such Prepayment Event shall be applied to prepay the Loans on the first Business Day following such
Prepayment Event in accordance with this Section 2.08(a), or (ii) if the Payment Conditions are not satisfied (after giving effect to such prepayment) on the date of such Prepayment Event, an amount equal to the portion of such Net
Proceeds, if any, that may be applied under the Payment Conditions to prepay the Loans shall be applied to prepay the Loans on the first Business Day following such Prepayment Event that the Payment Conditions are satisfied (after giving effect to
such prepayment) (provided no such prepayment shall be required if the amount of Loans required to be prepaid after satisfaction of the Payment Conditions would be less than $200,000). 
 (b) Upon the occurrence of a Change of Control, the Borrower will make an offer (a “Change of Control Offer”) to the Lenders to
repurchase the Loans at a purchase price in cash equal to one hundred and six percent (106%) of (x) the aggregate principal amount of such Loans outstanding, including PIK Interest, if any, and the PIK Fee plus (y) accrued and
unpaid interest (the “Change of Control Payment”). Within five (5) Business Days following any Change of Control, the Borrower will provide irrevocable notice to the Administrative Agent describing the transaction or
transactions that constitute the Change of Control and stating the purchase price and the purchase date, which shall be no later than five (5) Business Days from the date such notice is given (the “Change of Control Payment
Date”). On the Change of Control Payment Date, the Borrower will deposit with the Administrative Agent an amount equal to the Change of Control Payment in respect of the Loans of each Lender that has accepted the Change of Control Offer.

 (c) The Commitments shall terminate at 1:30 p.m., New York City time, on March 13, 2009. 
 SECTION 2.09 Maintenance of Loan Account; Statements of Account. 
 (a) The Administrative Agent shall maintain an account on its books in the name of the Borrower (the “Loan Account”) which will reflect
(i) all Loans made by the Lenders to the Borrower, (ii) all increases in the outstanding principal amount of the Loans resulting from the payment of PIK Interest and the PIK Fee and (iii) any and all other monetary Obligations that
have become payable. 
 (b) The Loan Account will be credited with all amounts received by the Administrative Agent from the Borrower or from
others for the Borrower’s account. After the end of each Fiscal Quarter, the Administrative Agent shall send to the Borrower a statement accounting for the Loan Account during such Fiscal Quarter. The quarterly statements shall, absent manifest
error, be an account stated, which is final, conclusive and binding on the Borrower. 
  

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 SECTION 2.10 Payments. 
 (a) The Borrower shall make each payment required to be made hereunder or under any other Loan Document (whether of principal, interest or fees, of
amounts payable under Section 2.06, Section 2.07(d) or Section 2.12, or otherwise) prior to 2:00 p.m., New York time, on the date when due, in immediately available funds, without setoff or counterclaim. Any amounts received after
such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent
at the Administrative Agent’s address as listed in Section 9.01, except that payments pursuant to Section 2.06, Section 2.07(d), Section 2.12 and Section 9.03 shall be made directly to the Persons entitled thereto and
payments pursuant to other Loan Documents shall be made to the Persons specified therein. The Administrative Agent shall distribute any such payments to the appropriate recipient promptly following receipt thereof. If any payment under any Loan
Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such
extension. All payments under each Loan Document shall be made in dollars. 
 (b) All funds received by and available to the Administrative
Agent to pay principal, interest and fees then due hereunder, shall be applied in accordance with the provisions of Section 7.03 hereof, as applicable, ratably among the parties entitled thereto in accordance with the amounts of principal,
interest, and fees then due to such respective parties. 
 (c) Unless the Administrative Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Administrative Agent, for the account of the Lenders hereunder, that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such
date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at
an interest rate that is usual and customary for syndicated financings to be agreed between the Administrative Agent and such Lender. 
 (d)
If any Lender shall fail to make any payment required to be made by it pursuant to this Agreement, then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid. 
 SECTION 2.11 Settlement Amongst Lenders. 
 The amount of each Lender’s applicable Aggregate
Exposure Percentage of outstanding Loans shall be computed quarterly (or more frequently in the Administrative Agent’s discretion) and shall be adjusted based on all Loans, all increases in the outstanding principal amount of the Loans
resulting from the payment of interest in kind and repayments of Loans received by the Administrative Agent as of 2:00 p.m., New York time, on the first Business Day (such date, the “Settlement Date”) following the end of the period
specified by the Administrative Agent. 
  

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 SECTION 2.12 Taxes. 
 (a) Any and all payments by or on account of any obligation of the Loan Parties hereunder or under any other Loan Document shall be made free and clear of
and without deduction for any Indemnified Taxes or Other Taxes; provided, however, that if a Loan Party shall be required to deduct, or an Agent or a Lender shall be required to remit, any Indemnified Taxes or Other Taxes from such
payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions or remittances for Taxes (including deductions applicable to additional sums payable under this Section 2.12) the applicable
Credit Party receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Loan Party shall make such deductions and (iii) the Loan Party shall pay the full amount deducted to the relevant
Governmental Authority in accordance with Applicable Law. 
 (b) In addition, the Loan Parties shall pay any Other Taxes to the relevant
Governmental Authority in accordance with Applicable Law. 
 (c) The Borrower shall indemnify each Credit Party, within ten (10) days
after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by such Credit Party on or with respect to any payment by or on account of any obligation of the Loan Parties hereunder or under any other Loan Document
(including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 2.12) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Credit Party, or by the Administrative
Agent on its own behalf or on behalf of any other Credit Party, setting forth in reasonable detail the manner in which such amount was determined, shall be conclusive absent manifest error. 
 (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by a Loan Party to a Governmental Authority, the Borrower shall deliver
to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the
Administrative Agent. 
 (e) Any Foreign Lender that is entitled to an exemption from or reduction in withholding tax shall deliver to the
Borrower and the Administrative Agent two (2) copies of (x) either United States Internal Revenue Service Form W-8BEN or Form W-8ECI, or any subsequent versions thereof or successors thereto, (y) in the case of a Foreign Lender
claiming exemption from or reduction in U.S. Federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, United States Internal Revenue Service Form W-8BEN, or any subsequent
versions thereof or successors thereto, together with a certificate representing that such Foreign Lender (A) is not a bank for purposes of Section 881(c) of the Code, (B) is not a 10 percent shareholder (within the meaning of
Section 871(h)(3)(B) of the Code) of any Loan Party and (C) is not a controlled foreign corporation related to the Loan 

  

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Parties (within the meaning of Section 864(d)(4) of the Code) or (z) United States Internal Revenue Service Form W-8IMY and all necessary
attachments (including the forms described in clauses (x) and (y) above, as required), properly completed and duly executed by such Foreign Lender claiming, as applicable, complete exemption from or reduced rate of, U.S. Federal
withholding tax on payments by the Loan Parties under this Agreement and the other Loan Documents, or in the case of a Foreign Lender claiming exemption for “portfolio interest” certifying that it is a foreign corporation, partnership,
estate or trust. Such forms shall be delivered by each Foreign Lender on or before the date it becomes a party to this Agreement (or, in the case of a transferee that is a participation holder, on or before the date such participation holder becomes
a transferee hereunder) and on or before the date, if any, such Foreign Lender changes its applicable lending office by designating a different lending office (a “New Lending Office”). In addition, each Foreign Lender shall deliver
such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Foreign Lender. Notwithstanding any other provision of this Section 2.12(e), a Foreign Lender shall not be required to deliver any form pursuant to
this Section 2.12(e) that such Foreign Lender is not legally able to deliver. 
 (f) The Borrower shall not be required to indemnify any
Lender or to pay any additional amounts to any Lender in respect of U.S. Federal withholding or backup withholding tax pursuant to paragraph (a) or (c) above to the extent that the obligation to pay such additional amounts would not have
arisen but for a failure by such Lender to comply with the provisions of paragraph (e) or (g) hereof, as the case may be. Should a Lender become subject to Taxes because of its failure to deliver a form required hereunder, the Loan Parties
shall, at such Lender’s expense, take such steps as such Lender shall reasonably request to assist such Lender to recover such Taxes. 
 (g) Each Lender that is organized in the United States of America or any state thereof or the District of Columbia shall (i) on or before the date such Lender becomes a Lender hereunder (or, in the case of a transferee that is a
participation holder, on or before the date such participation holder becomes a transferee hereunder), (ii) on or before the date on which any such form or certification expires or becomes obsolete and (iii) after the occurrence of any
event requiring a change in the most recent form or certification previously delivered by it pursuant to this Section 2.12(g), deliver to the Borrower and the Administrative Agent two (2) copies of properly completed and duly executed
United States Internal Revenue Service Form W-9 (certifying that such Lender is entitled to an exemption from U.S. backup withholding tax) or any subsequent versions thereof or successors thereto. 
 (h) If any Loan Party shall be required pursuant to this Section 2.12 to pay any additional amount to, or to indemnify, any Credit Party to the
extent that such Credit Party becomes subject to Taxes subsequent to the Closing Date (or, if applicable, subsequent to the date such Person becomes a party to this Agreement) as a result of any change in the circumstances of such Credit Party
(other than a change in Applicable Law), including without limitation a change in the residence, place of incorporation, principal place of business of such Credit Party or a change in the branch or lending office of such Credit Party, as the case
may be, such Credit Party shall use reasonable efforts to avoid or minimize any amounts which might otherwise be payable pursuant to this Section 2.12(h); provided however, that such efforts shall not include the taking of any
actions by such Credit Party that would result in any tax, costs or other expense to such Credit Party (other than a tax, cost or 

  

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other expense for which such Credit Party shall have been reimbursed or indemnified by the Loan Parties pursuant to this Agreement or otherwise) or any
action which would or might in the reasonable opinion of such Credit Party have an adverse effect upon its business, operations or financial condition or otherwise be disadvantageous to such Credit Party. 
 (i) If any Credit Party reasonably determines that it has received a refund of any Indemnified Taxes or Other Taxes paid or reimbursed by the Loan
Parties pursuant to subsection (a) or (c) above in respect of payments under the Loan Documents, such Credit Party shall pay to the Borrower, with reasonable promptness following the date upon which it receives the refund an amount equal
to the refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 2.12 with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out of pocket
expenses incurred in securing such refund by the Credit Party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, that the Borrower, upon the request of the Credit
Party, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Credit Party in the event the Credit Party is required to repay such refund to such
Governmental Authority. This paragraph shall not be construed to require the Credit Party to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person. 

SECTION 2.13 Mitigation Obligations; Replacement of Lenders. 
 (a) If any Lender requests compensation under Section 2.06, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to
Section 2.12, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates,
if, in the reasonable judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.06 or Section 2.12, as the case may be, in the future and (ii) would not subject
such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or
assignment; provided, however, that the Borrower shall not be liable for such costs and expenses of a Lender requesting compensation if (i) such Lender becomes a party to this Agreement on a date after the Closing Date and
(ii) the relevant Change in Law occurs on a date prior to the date such Lender becomes a party hereto. 
 (b) If any Lender requests
compensation under Section 2.06, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.12, or if any Lender defaults in its obligation to
fund Loans hereunder, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions
contained in Section 9.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); 

  

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provided, however, that (i) the Borrower shall have received the prior written consent of the Administrative Agent, which consent shall
not be unreasonably withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, including PIK Interest, if any, and the PIK Fee (if applicable), accrued interest on the Loans, accrued
fees and all other amounts payable to it hereunder from the assignee (to the extent of such outstanding principal, including PIK Interest, if any, and the PIK Fee (if applicable), accrued interest and fees) or the Borrower (in the case of all other
amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.06 or payments required to be made pursuant to Section 2.12, such assignment will result in a reduction in such compensation
or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease
to apply. 
 SECTION 2.14 Security Interests in Collateral. 
 To secure their Obligations, the Loan Parties shall grant to the Collateral Agent, for its benefit and the ratable benefit of the other Credit Parties, a
security interest in all of the Collateral pursuant to the Security Documents. 
 ARTICLE III 
 Representations and Warranties 
 To
induce the Credit Parties to make the Loans, the Loan Parties executing this Agreement, jointly and severally, make, on the Closing Date, the following representations and warranties to each Credit Party, all of which shall survive the execution and
delivery of this Agreement and the making of the Loans,: 
 SECTION 3.01 Organization; Powers. 
 Each Loan Party and each Subsidiary is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has
all requisite power and authority to own its property and assets and to carry on its business as now conducted and each Loan Party has all requisite power and authority to execute and deliver and perform all its obligations under all Loan Documents
to which such Loan Party is a party. Each Loan Party and each Subsidiary is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except where the failure to do so individually or in the
aggregate could not reasonably be expected to result in a Material Adverse Effect. Schedule 3.01 annexed hereto sets forth, as of the Closing Date, each Loan Party’s name as it appears in official filings in its state of incorporation or
organization, its state of incorporation or organization, organization type, organization number, if any, issued by its state of incorporation or organization, and its federal employer identification number. 
 SECTION 3.02 Authorization; Enforceability. 
 The transactions contemplated hereby and by the other Loan Documents to be entered into by each Loan Party are within such Loan Party’s corporate or other organizational powers and have been duly authorized by
all necessary corporate, membership, partnership or other 

  

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necessary action. This Agreement has been duly executed and delivered by each Loan Party that is a party hereto or thereto and constitutes, and each other
Loan Document to which any Loan Party is a party, when executed and delivered by such Loan Party will constitute, a legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. 
 SECTION 3.03 Governmental Approvals; No Conflicts. 
 The transactions to be entered into and contemplated by the Loan Documents (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except
for such as have been obtained or made and are in full force and effect and except filings and recordings necessary to perfect Liens created under the Loan Documents, (b) will not violate any material Applicable Law or the Charter Documents of
any Loan Party, (c) will not violate or result in a default under any indenture or any other agreement, instrument or other evidence of Material Indebtedness, or any other Material Agreement or other material instrument binding upon any Loan
Party or its assets, or give rise to a right thereunder to require any payment to be made by any Loan Party, and (d) will not result in the creation or imposition of any Lien on any asset of any Loan Party, except Liens created under the Loan
Documents. 
 SECTION 3.04 Financial Condition; Absence of Certain Changes. 
 (a) The Borrower has heretofore furnished to the Agents the unaudited consolidated balance sheet, and statements of income, stockholders’ equity, and
cash flows for the Borrower and its Subsidiaries as of and for the Fiscal Year ending December 31, 2008 and as of and for the Fiscal Month ending January 31, 2009, certified by a Financial Officer of the Borrower. Such financial statements
present fairly, in all material respects, the financial position, results of operations and cash flows of the Borrower and its Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to year end audit adjustments and the
absence of footnotes. Neither the Borrower nor any of its Subsidiaries has, as of the Closing Date, any liabilities or obligations of any nature (absolute, accrued, contingent or otherwise) which are not properly reflected or reserved against in
such financial statements to the extent required to be so reflected or reserved against in accordance with GAAP, subject in the case of unaudited financial statements to year end audit adjustments and the absence of footnotes, except for
(i) liabilities that have arisen since December 31, 2008 in the ordinary and usual course of business and consistent with past practice, (ii) contractual liabilities under (other than liabilities arising from any breach or violation
of) agreements previously disclosed to Initial Lender and the Agents or not required by this Agreement to be so disclosed, (iii) liabilities that have not had and could not reasonably be expected to have a Material Adverse Effect and
(iv) liabilities under the Loan Documents. 
 (b) Since December 31, 2008, no event or events have occurred that has had or could
reasonably be expected to have a Material Adverse Effect. 
  

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 SECTION 3.05 Properties. 
 (a) Each Loan Party and each Subsidiary has good title to, or valid leasehold interests in, all its real (immoveable) and personal (moveable) property
material to its business, except for defects which could not reasonably be expected to have a Material Adverse Effect. 
 (b) Each Loan Party
and each Subsidiary owns or possesses, or is licensed to use, all patents, trademarks, trade names, trade styles, brand names, service marks, logos, copyrights, and other intellectual property (“Intellectual Property”) material to its
business, and all applications for any of the foregoing and all licenses and rights with respect to the foregoing necessary for the present conduct of the business of the Loan Parties and their Subsidiaries, taken as a whole, without any conflict
(of which the Loan Party has been notified in writing) with the rights of others, and free from any burdensome restrictions on the present conduct of the business of the Loan Parties and their Subsidiaries, except where such conflicts and
restrictions could not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect, and the conduct of the business of the Loan Parties and their Subsidiaries does not infringe upon the rights of any other Person,
except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect 
 SECTION 3.06 Litigation and Environmental Matters. 
 (a) There are no (i) actions, complaints, suits, charges or
proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Loan Parties, threatened in writing against or affecting any Loan Party or any Subsidiary, (ii) investigations, consent decrees or
citations in effect with or pending by or before any Governmental Authority or, to the knowledge of the Loan Parties, threatened in writing against or affecting any Loan Party or any Subsidiary or (iii) unresolved violation, criticism or
exception by any Governmental Authority with respect to any report or relating to any examinations or inspections of any Loan Party or any Subsidiary, as to which there is a reasonable possibility of an adverse determination which, if adversely
determined, could reasonably be expected individually or in the aggregate to result in a Material Adverse Effect. 
 (b) No Loan Party and no
Subsidiary (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability,
(iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability, which, in each case, individually or in the aggregate, could reasonably be expected to result in
a Material Adverse Effect. 
 SECTION 3.07 Compliance with Laws and Agreements. 
 Each Loan Party and each Subsidiary thereof is in compliance with all Applicable Law, all agreements relating to Material Indebtedness, and all Material
Agreements binding upon it or its property, and no default has occurred and is continuing thereunder, except in each case where the failure to comply or the existence of a default, individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect. 
  

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 SECTION 3.08 Investment Company Status. 
 No Loan Party is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940. 
 SECTION 3.09 Taxes. 
 Each Loan
Party and each Subsidiary thereof has timely filed or caused to be filed all material tax returns and reports required to have been filed and has paid or caused to be paid all material Taxes required to have been paid by it (subject to any properly
filed requests for extension of the time for filing any tax returns), except Taxes that are being contested in good faith by appropriate proceedings, for which such Loan Party or such Subsidiary has set aside on its books adequate reserves in
accordance with GAAP. There are no enforcement actions being taken against any Loan Party with respect to any Lien for unpaid Taxes in excess of $1,000,000 in the aggregate. Proper and accurate amounts have been withheld by each Loan Party and each
Subsidiary thereof from its respective employees for all periods in material compliance with all applicable federal, state, local and foreign laws and such withholdings have been timely paid to the respective Governmental Authorities. 
 SECTION 3.10 ERISA. 
 No ERISA
Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. The present
value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such
amounts, exceed the fair market value of the assets of such Plan, and the present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of all such underfunded Plans. As of the date hereof, neither the Borrower nor any of its ERISA
Affiliates maintains or has any liabilities with respect to any Plan or any Multiemployer Plan. 
 SECTION 3.11 Disclosure.

 The Loan Parties have disclosed to the Credit Parties all (x) material agreements, instruments and corporate or other restrictions to
which any Loan Party and any Subsidiary is subject, and (y) all other matters known to any of them that, in each case, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of the reports,
financial statements, certificates or other information furnished by or on behalf of any Loan Party or any Subsidiary thereof to any Credit Party in connection with this Agreement or any other Loan Document or any transaction contemplated hereby or
thereby or delivered hereunder or thereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not materially misleading. Except for statutory or regulatory restrictions of general application, no Governmental Authority has placed any material restriction on the business or properties of any Loan
Party or any Subsidiary. 
  

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 SECTION 3.12 Subsidiaries. 
 (a) Schedule 3.12 sets forth the name of, and the ownership interest of each Loan Party in, each Subsidiary as of the Closing Date; there is no
other Capital Stock of any class outstanding as of the Closing Date. All such shares of Capital Stock are validly issued, fully paid, and non-assessable. 
 (b) Except as set forth on Schedule 3.12, no Loan Party is party to any joint venture, general or limited partnership, or limited liability company agreements or any other business ventures or entities as of
the Closing Date. 
 SECTION 3.13 Insurance. 
 Schedule 3.13 sets forth a description of all insurance maintained by or on behalf of the Loan Parties as of the Closing Date. Each insurance policy listed on Schedule 3.13 is in full force and effect
and all premiums in respect thereof that are due and payable as of the Closing Date have been paid. 
 SECTION 3.14 Labor
Matters. 
 There are no strikes, lockouts, slowdowns or work stoppages involving any Loan Party or Subsidiary thereof pending or, to the
knowledge of any Loan Party or Subsidiary thereof, threatened. The hours worked by and payments made to employees of the Loan Parties or Subsidiaries thereof have not been in violation of the Fair Labor Standards Act or any other applicable federal,
state, local or foreign law dealing with such matters to the extent that any such violation could reasonably be expected to have a Material Adverse Effect. All payments due from any Loan Party or Subsidiary thereof, or for which any claim may be
made against any Loan Party or Subsidiary thereof, on account of wages and employee health and welfare insurance and other benefits, have been paid, in all material respects, or accrued in accordance with GAAP as a liability on the books of such
Loan Party or Subsidiary thereof. Except as set forth on Schedule 3.14, no Loan Party or Subsidiary thereof is a party to or bound by any collective bargaining agreement or other contract or agreement with any labor organization. There are no
representation proceedings pending or, to any Loan Party’s knowledge, threatened to be filed with the National Labor Relations Board, and no labor organization or group of employees of any Loan Party or Subsidiary thereof has made a pending
demand for recognition or is engaged in any organizational effort. The consummation of the transactions contemplated by the Loan Documents will not give rise to any right of termination or right of renegotiation on the part of any union or labor
organization under any collective bargaining agreement or other contract or agreement with any labor organization to which any Loan Party is bound. 
 SECTION 3.15 Security Documents. 
 The Security Documents create in favor of the Collateral Agent, for its own benefit
and for the ratable benefit of the other Credit Parties, legal, valid and enforceable security or mortgage interests in the Collateral, and the Security Documents constitute, or will upon the 

  

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filing of financing statements or other requisite registrations and/or the obtaining of “control”, in each case with respect to the relevant
Collateral as required under the applicable Uniform Commercial Code or similar legislation of any jurisdiction, the creation of a duly perfected and enforceable Lien on, and security interest in, and hypothecation of, all right, title and interest
of the Loan Parties thereunder in such Collateral, in each case prior and superior in right to any other Person, except for Permitted Encumbrances having priority over the Lien of the Collateral Agent under Applicable Law and the Lien of the First
Lien Agent under the First Lien Loan Documents (it being understood that certain of the Collateral Agent’s enforcement rights with respect to the Collateral are subject to the limitations set forth in the Intercreditor Agreement). 

SECTION 3.16 Federal Reserve Regulations. 
 (a) No Loan Party is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock. 
 (b) No part of the proceeds of any Loan will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, (i) to
buy or carry Margin Stock or to extend credit to others for the purpose of buying or carrying Margin Stock or to refund indebtedness originally incurred for such purpose or (ii) for any purpose that entails a violation of, or that is
inconsistent with, the provisions of the Regulations of the Board, including Regulation U or Regulation X. 
 SECTION 3.17
Solvency. 
 The Loan Parties and their Subsidiaries, taken as a whole, are, or after giving effect to the borrowings hereunder on the
Closing Date will be, Solvent. No transfer of property is being made by any Loan Party or Subsidiary thereof and no obligation is being incurred by any Loan Party or Subsidiary in connection with the transactions contemplated by this Agreement or
the other Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of any Loan Party or Subsidiary thereof. 
 SECTION 3.18 Licenses; Permits. 
 Each Loan Party and Subsidiary thereof has obtained all permits, licenses and other
authorizations which are required with respect to the ownership and operations of its business except where the failure to obtain such permits, licenses or other authorizations, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect. Each Loan Party is in compliance with all terms and conditions of all such permits, licenses, orders and authorizations, and is also in compliance with all Applicable Law, except where the failure to comply with such
terms, conditions or Applicable Law, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 
  

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 ARTICLE IV  
 Conditions 
 SECTION 4.01 Closing Date. 
 The obligation of the Initial Lender to make the Loans on the Closing Date is subject to the following conditions precedent: 
 (a) The Agents and the Initial Lender (or their counsel) shall have received a counterpart of this Agreement and all other Loan Documents
signed on behalf of each party thereto. 
 (b) The Agents and the Initial Lender shall have received a favorable written
opinion (addressed to the Agents and the Initial Lender and dated the Closing Date) of counsel for the Loan Parties covering such matters relating to the Loan Parties, the Loan Documents or the transactions contemplated thereby as the Agents and the
Initial Lender shall reasonably request. The Loan Parties hereby request such counsel to deliver such opinions. 
 (c) The
Agents and the Initial Lender shall have received Charter Documents and such other documents and certificates as the Agents and the Initial Lender or their counsel may reasonably request relating to the organization, existence and good standing of
each Loan Party, the authorization of the transactions contemplated by the Loan Documents and any other legal matters relating to the Loan Parties, the Loan Documents or the transactions contemplated thereby, all in form and substance satisfactory
to the Agents and the Initial Lender and its counsel. 
 (d) The Agents and Initial Lender shall have received a certificate,
reasonably satisfactory in form and substance to the Agents and the Initial Lender, (i) with respect to the Solvency of the Loan Parties and their Subsidiaries, taken as a whole, as of the Closing Date and (ii) certifying that, as of the
Closing Date, the representations and warranties made by the Loan Parties in the Loan Documents and otherwise are true and complete in all material respects; provided that any representation and warranty that is qualified as to materiality or
“Material Adverse Effect” or similar language shall be true and correct in all respects; and that no Default or Event of Default exists. 
 (e) The Agents and the Initial Lender shall have received the Security Documents, and, subject to the Intercreditor Agreement, certificates evidencing any Capital Stock and Indebtedness required to be pledged
thereunder, together with undated stock and/or note powers, each executed in blank by the applicable Loan Parties. 
 (f) The
Agents and the Initial Lender shall be reasonably satisfied that any financial statements delivered to them fairly present in all material respects the business and financial condition of the Loan Parties and their Subsidiaries and that there has
been no Material Adverse Effect since the date of the most recent financial information delivered to the Initial Lender. 
  

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 (g) The Agents and the Initial Lender shall have received and be satisfied with detailed
financial projections and business assumptions for the Borrower and its Subsidiaries for the twelve month period following the Closing Date, including a Consolidated income statement, balance sheet and statement of cash flows. 
 (h) There shall not be any other Indebtedness of the Loan Parties and their Subsidiaries outstanding immediately after the Closing Date
other than Permitted Indebtedness. 
 (i) There shall not be pending any litigation or other proceeding, the result of which
could reasonably be expected to have a Material Adverse Effect. 
 (j) After giving effect to the consummation of the
transactions contemplated under this Agreement and the other Loan Documents on the Closing Date (including any Loans made hereunder), no Default or Event of Default shall exist. 
 (k) The Agents and the Initial Lender shall have received results of searches or other evidence reasonably satisfactory to the Agents and
the Initial Lender (in each case dated as of a date reasonably satisfactory to the Agents and the Initial Lender) indicating the absence of Liens on the assets of the Loan Parties, except for Permitted Encumbrances and Liens for which termination
statements and releases or subordination agreements are being tendered on the Closing Date. 
 (l) The Initial Lender shall
have received all documents and instruments, including Uniform Commercial Code financing statements, required by law or reasonably requested by the Agents or the Initial Lender and be authorized to file, register, publish or record to create or
perfect the Liens intended to be created under the Loan Documents. 
 (m) The Agents and the Initial Lender shall have
received a payoff letter related to the Existing Second Lien Credit Agreement, which letter shall provide for releases and discharges of all collateral security for the Borrower’s Indebtedness under the Existing Second Lien Credit Agreement,
each in form and substance reasonably satisfactory to the Agents and the Initial Lender. Such Indebtedness shall be repaid contemporaneously with the making of the Loan hereunder. 
 (n) The Agents and the Initial Lender shall have received, and be satisfied with, evidence of the Loan Parties’ insurance, together
with such endorsements as are required by the Loan Documents. 
 (o) All fees due at or immediately after the Closing Date and
all Credit Party Expenses incurred by in connection with the establishment of the credit facility contemplated hereby (including the reasonable fees and expenses of counsel to the Initial Lender), shall have been paid in full on or before the
Closing Date. All such amounts, other than the PIK Fee, will be paid with the proceeds of the Loans made on the Closing Date and will be reflected in the funding instructions given by the Borrower to the Administrative Agent on or before the Closing
Date. 
  

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 (p) [Reserved]. 
 (q) All necessary consents and approvals to the transactions contemplated hereby shall have been obtained and shall be reasonably
satisfactory to the Initial Lender. 
 (r) The Collateral Agent shall have entered into the Intercreditor Agreement with the
First Lien Agent on terms and conditions satisfactory to the Collateral Agent. 
 (s) The Agents and the Initial Lender shall
have received evidence that the Credit Parties have been named as additional insureds and the Collateral Agent has been named as loss payee, in each case on the Borrower’s insurance policies pursuant to Section 5.07(b). 
 (t) There shall have been delivered to the Initial Lender such additional instruments and documents as the Agents and the Initial Lender
or their counsel reasonably may require or request. 
 (u) The Initial Lender shall have received a notice with respect to
such Borrowing as required by Section 2.02(a). 
 (v) The Initial Lender shall have received a true, correct and complete
copy, certified as such by the Borrower, of the Specified Financing Documentation in effect as of the Closing Date, including, without limitation, an amendment to the Existing First Lien Credit Agreement and any loan documents related thereto,
explicitly permitting all of the transactions contemplated hereby, by the other Loan Documents, by the Investment Agreement and the Warrant, and such amendment shall be in form and substance reasonably satisfactory to the Agents and the Initial
Lender and be in full force and effect on or prior to the Closing Date. 
 (w) The Investment Agreement and related agreements
shall have been executed by the Borrower and the Initial Lender and such Investment Agreement shall be in form and substance satisfactory to the Initial Lender, and the Borrower shall have issued the Warrants to the Initial Lender on the Closing
Date. 
 Notwithstanding the foregoing, the obligations of the Lenders to make Loans hereunder shall not become effective unless all of the foregoing
conditions are satisfied (or waived as provided in Section 4.01 hereof) at or prior to 12:00 noon, New York City time, on March 13, 2009 (and, in the event such conditions are not so satisfied or waived, this Agreement shall terminate at
such time). The conditions set forth in this Section 4.01 are for the sole benefit of the Administrative Agent and each other Credit Party and may be waived by the Initial Lender and Administrative Agent, in whole or in part, without prejudice
to the Administrative Agent or any other Credit Party. 
  

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 ARTICLE V 
 Affirmative Covenants 
 Until (i) the Commitments shall have expired or been terminated and
(ii) the principal of and interest on, including PIK Interest, if any, each Loan and all fees and other Obligations shall have been paid in full, each Loan Party covenants and agrees with the Credit Parties that: 
 SECTION 5.01 Financial Statements and Other Information. 
 The Borrower will furnish to the Administrative Agent: 
 (a) (i) Within one hundred and
twenty (120) days after the end of each Fiscal Year of the Borrower (beginning with the Fiscal Year ended December 31, 2008), the Consolidated balance sheet and related statements of operations, and Consolidated statements of
stockholders’ equity and cash flows as of the end of and for such year for the Borrower and its Subsidiaries, setting forth in each case in comparative form the Consolidated figures for the previous Fiscal Year, all audited and reported on by
independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without a qualification or exception as to the scope of such audit, except in the case of such Consolidated
financial statements covering the Fiscal Year ended December 31, 2008) to the effect that such Consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and its
Subsidiaries on a Consolidated basis in accordance with GAAP and (ii) within forty-five (45) days after the end of the first three Fiscal Quarters of the Borrower, the Consolidated balance sheet and related statements of operations, and
Consolidated statements of stockholders’ equity and cash flows as of the end of and for such Fiscal Quarter for the Borrower and its Subsidiaries and the elapsed portion of the Fiscal Year, setting forth in each case in comparative form the
Consolidated figures for the previous Fiscal Year, all certified by one of the Borrower’s Financial Officers as presenting in all material respects the financial condition and results of operations of the Borrower and its Subsidiaries on a
Consolidated basis in accordance with GAAP, subject to normal year end audit adjustments and the absence of footnotes; provided that, to the extent the documents required to be delivered pursuant to this clause are included in materials
otherwise filed with the SEC and are publicly available, such documents shall be deemed to be delivered to the Administrative Agent on the date on which the Borrower provides written notice to the Administrative Agent of such filing; 
 (b) Within thirty (30) days after the end of each Fiscal Month of the Borrower (other than the third, sixth, ninth and twelfth Fiscal
Months of each Fiscal Year), the Consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows of the Borrower and its Subsidiaries, as of the end of and for such Fiscal Month and the elapsed portion of
the Fiscal Year, setting forth in each case in comparative form the Consolidated figures for the previous Fiscal Year and the figures as set forth in the projections delivered pursuant to Section 5.01(e), all certified by one of the
Borrower’s Financial Officers as presenting in all material respects the financial condition and results of operations of the Borrower and its Subsidiaries on a Consolidated basis in accordance with GAAP, subject to normal year and quarter end
audit adjustments and the absence of footnotes; 
  

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 (c) Within thirty (30) days after the end of each Fiscal Month of the Borrower, data
relating to the sales numbers for each of the Stores; 
 (d) Concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the Borrower in the form of Exhibit D hereto (a “Compliance Certificate”) (i) certifying as to whether a Default or Event of Default has occurred
and, if a Default or Event of Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations with respect to the covenants set forth in
Sections 6.11 and 6.12 hereof for such period, and (iii) stating whether any change in GAAP or in the application thereof has occurred since the date of the Borrower’s most recent audited financial statements and, if any such change has
occurred, specifying the effect of such change on the financial statements accompanying such Compliance Certificate; 
 (e)
Within sixty (60) days before the commencement of each Fiscal Year of the Borrower, a detailed, Consolidated budget by month for such Fiscal Year and shall include a projected Consolidated income statement, balance sheet, and statement of cash
flow, by month, and promptly when available, any significant revisions to such budget; 
 (f) Promptly upon receipt thereof,
copies of all reports submitted to any Loan Party or any Subsidiary thereof by independent certified public accountants in connection with each annual, interim or special audit of the books of the Loan Parties or any of their Subsidiaries made by
such accountants, including any management letter commenting on the Loan Parties’ or such Subsidiaries’ internal controls submitted by such accountants to management in connection with their annual audit; 
 (g) A detailed summary of the Net Proceeds received from any Prepayment Event within three (3) Business Days after receipt of such
proceeds, including, without limitation, to the extent applicable, the manner of allocation of the Net Proceeds among the assets and properties of the Borrower and its Subsidiaries which are the subject of the Prepayment Event; 
 (h) [Reserved]; 
 (i) [Reserved]; 
 (j) Within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year of
the Borrower, a narrative discussion and analysis of the financial condition and results of operations of the Borrower and its Subsidiaries for such Fiscal Quarter and for the period from the beginning of such Fiscal Year to the end of such Fiscal
Quarter, comparing such periods to the comparable periods of the previous Fiscal Year; provided that to the extent the documents required to be delivered pursuant to this clause are included in materials otherwise filed with the SEC and are
publicly 

  

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available, such documents shall be deemed to be delivered to the Administrative Agent on the date on which the Borrower provides written notice to the
Administrative Agent of such filing; 
 (k) Within 120 days after the end of each Fiscal Year of the Borrower (beginning with
the Fiscal Year ended December 31, 2008), a narrative discussion and analysis of the financial condition and results of operations of the Borrower and its Subsidiaries for the last Fiscal Quarter of such Fiscal Year and for such Fiscal Year,
comparing such periods to the comparable periods of the previous Fiscal Year; provided that to the extent the documents required to be delivered pursuant to this clause are included in materials otherwise filed with the SEC and are publicly
available, such documents shall be deemed to be delivered to the Administrative Agent on the date on which the Borrower provides written notice to the Administrative Agent of such filing; 
 (l) To the extent reasonably practical, immediately prior to the effectiveness of, but in any event, no later than five Business Days
following the effectiveness thereof, copies of any amendment, supplement, waiver, or other modification, replacement or renewal with respect to any Specified Financing Documentation; 
 (m) Within five days after the same are sent, copies of all financial statements and reports that the Borrower sends to the holders of any
class of its debt securities or public Capital Stock and, within five days after the same are filed, copies of all financial statements and reports that the Borrower may make to, or file with, the SEC; and 
 (n) Promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of
any Loan Party or any Subsidiary thereof, or compliance with the terms of any Loan Document, as the Agents or any Lender may reasonably request. 
 SECTION 5.02 Notices of Material Events. 
 The Borrower will furnish to the Administrative Agent prompt written notice
of the occurrence of any of the following: 
 (a) A Default or Event of Default, specifying the nature and extent thereof and
the action (if any) which is proposed to be taken with respect thereto; 
 (b) The filing or commencement of any action, suit
or proceeding by or before any arbitrator or Governmental Authority against or affecting any Loan Party or any Affiliate thereof that, if adversely determined, could reasonably be expected to result in a Material Adverse Effect; 
 (c) An ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in a
Material Adverse Effect; 
  

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 (d) Any development that results in, or could reasonably be expected to result in, a
Material Adverse Effect; 
 (e) Any change in any Loan Party’s or any Subsidiary thereof, chief executive officer or
chief financial officer; 
 (f) The discharge by any Loan Party or any Subsidiary thereof of its present independent
accountants or any withdrawal or resignation by such independent accountants; 
 (g) Any collective bargaining agreement or
other labor contract to which a Loan Party or any Subsidiary thereof becomes a party, or the application for the certification of a collective bargaining agent; 
 (h) Any “plant closing” or “mass layoff” as those terms are defined in the Worker Adjustment and Retraining
Notification Act (together with any similar state or local statute, rule or regulation); 
 (i) The filing of any Lien for
unpaid Taxes against any Loan Party or any Subsidiary thereof known to any Loan Party or any Subsidiary thereof; and 
 (j)
Any casualty or other insured damage to any material portion of the Collateral or the commencement of any action or proceeding for the taking of any interest in a material portion of the Collateral or any part thereof or interest therein under power
of eminent domain or by condemnation or similar proceeding. 
 Each notice delivered under this Section shall be accompanied by a statement of a Financial
Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and, if applicable, any action taken or proposed to be taken with respect thereto. 
 SECTION 5.03 Information Regarding Collateral. 
 The Borrower will furnish to the Agents prompt written notice of any change in: (a) any Loan Party’s name or in any trade name used to identify it in the conduct of its business or in the ownership of its
properties; (b) the location of any Loan Party’s chief executive office, its principal place of business; (c) any Loan Party’s organizational structure or jurisdiction of incorporation or formation; or (d) any Loan
Party’s Federal Taxpayer Identification Number or organizational identification number assigned to it by its state or jurisdiction of organization. The Loan Parties agree not to effect or permit any change referred to in the preceding sentence
unless the Initial Lender and the Agents have had a reasonable opportunity after receiving such notice to make all filings, publications and registrations, under the Uniform Commercial Code or other Applicable Law that are required in order for the
Agents to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral for its own benefit and the benefit of the other Credit Parties. 
  

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 SECTION 5.04 Existence; Conduct of Business. 
 Each Loan Party will, and will cause each of its Subsidiaries to do all things necessary to comply with its Charter Documents, and to preserve, renew and
keep in full force and effect its legal existence and the rights, licenses, permits, privileges, franchises and Intellectual Property, in each case (other than with respect to legal existence) material to the conduct of its business, except where
failure to preserve, renew and keep in full force and effect such rights, licenses, permits, privileges, franchises and Intellectual Property could not reasonably be expected to result in a Material Adverse Effect; provided, however,
that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03. 
 SECTION 5.05 Payment of Obligations. 
 Each Loan Party will, and will cause its Subsidiaries to, pay its Indebtedness
and other material obligations, including material Tax liabilities, and material claims for labor, materials, or supplies, before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested
in good faith by appropriate proceedings, (b) such Loan Party or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP, and (c) the failure to make payment could not reasonably be
expected to result in a Material Adverse Effect. 
 SECTION 5.06 Maintenance of Properties. 
 Each Loan Party will, and will cause its Subsidiaries to, keep and maintain all property material to the conduct of its business in good working order and
condition, ordinary wear and tear and casualty events excepted and with the exception of Store closings and asset dispositions permitted hereunder. 
 SECTION 5.07 Insurance. 
 (a) Each Loan Party shall (i) maintain insurance with financially sound and reputable
insurers reasonably acceptable to the Initial Lender and the Agents (or, to the extent consistent with prudent business practice, a program of self-insurance approved by the Initial Lender and the Agents, such approval not to be unreasonably
withheld) on such of its property and in at least such amounts and against at least such risks as is customary with companies in the same or similar businesses operating in the same or similar locations, including public liability insurance against
claims for personal injury or death occurring upon, in or about or in connection with the use of any properties owned, occupied or controlled by it (including the insurance required pursuant to the Security Documents); (ii) maintain such other
insurance as may be required by law; and (iii) furnish to the Initial Lender and the Agents, upon written request, full information as to the insurance carried. 
 (b) Fire and extended coverage policies maintained with respect to any Collateral shall be endorsed or otherwise amended to include (i) a non-contributing mortgage clause (regarding improvements to real property)
and lenders’ loss payable clause (regarding personal property), in form and substance reasonably satisfactory to the Initial Lender and the Agents, (ii) a provision to the effect that none of the Loan Parties, any of their Subsidiaries,
the Credit Parties or any other Person shall be a co-insurer, and (iii) such other provisions as the 

  

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Initial Lender and the Agents may reasonably require from time to time to protect the interests of the Credit Parties. Commercial general liability policies
shall be endorsed to name the Credit Parties as additional insureds. Business interruption policies shall name the Collateral Agent as a loss payee and shall be in form and substance reasonably satisfactory to the Initial Lender and the Agents. The
Borrower shall use commercially reasonable efforts to cause each such policy referred to in this Section 5.07(b) to provide (or to cause the Borrower’s insurance broker to agree) that it shall not be canceled, modified or not renewed
(i) by reason of nonpayment of premium except upon not less than ten (10) days’ prior written notice thereof by the insurer to the Initial Lender and the Collateral Agent or (ii) for any other reason except upon not less than
thirty (30) days’ prior written notice thereof by the insurer (or such broker) to the Collateral Agent. The Borrower shall deliver to the Initial Lender and the Collateral Agent, prior to the cancellation, modification or non-renewal of
any such policy of insurance, a copy of a renewal or replacement policy (or other evidence of renewal of a policy previously delivered to the Initial Lender and the Collateral Agent, including an insurance binder) together with evidence satisfactory
to the Initial Lender and the Collateral Agent of payment of the premium therefor. 
 SECTION 5.08 Books and Records; Inspection
Rights; Accountants. 
 (a) Each Loan Party will, and will cause each of its Subsidiaries to, keep proper books of record and account in
accordance with GAAP (or, in the case of Subsidiaries located in jurisdictions outside of the United States, in accordance with accepted accounting standards and legal requirements of the applicable jurisdiction) and in which full, true and correct
entries are made of all dealings and transactions in relation to its business and activities. Each Loan Party will, and will cause each of its Subsidiaries to, permit any representatives designated by the Initial Lender and any Agent, upon
reasonable prior notice, to visit and inspect its properties, to discuss its affairs, finances and condition with its officers and independent accountants (provided that the Loan Parties shall be entitled to be present at any such meeting with its
accountants) and to examine and make extracts from its books and records, all at such reasonable times and as often as reasonably requested; provided that, so long as no Event of Default has occurred and is continuing, in no event shall any Loan
Party be responsible for the costs and expenses relating to more than one such visit in any Fiscal Year. 
 (b) The Loan Parties shall
instruct such accountants to cooperate with, and be available to, the Initial Lender and the Agents or their representatives to discuss the Loan Parties’ and such Subsidiaries’ financial performance, financial condition, operating results,
controls, and such other matters, within the scope of the retention of such accountants, as may be raised by the Initial Lender or the Agents. The Loan Parties shall be entitled to have notice of and an opportunity to attend any such discussions.

 SECTION 5.09 Compliance with Laws. 
 Each Loan Party will, and will cause each of its Subsidiaries to, comply with all Applicable Laws and the orders of any Governmental Authority except where the failure to do so, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect. Each Loan Party shall, and shall cause each of its Subsidiaries to: (a) conduct its operations and keep and maintain its Real Estate in compliance with all Environmental Laws
other than such noncompliance as could not reasonably be expected to have a Material Adverse 

  

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Effect; (b) implement any and all investigation, remediation, removal and response actions that are appropriate or necessary to maintain the value and
marketability of the Real Estate or to otherwise comply with Environmental Laws pertaining to the presence, generation, treatment, storage, use, disposal, transportation or Release of any Hazardous Materials on, at, in, under, above, to, from or
about any of its Real Estate, except to the extent that non compliance with any of the foregoing could not reasonably be expected to have a Material Adverse Effect; (c) notify the Administrative Agent promptly after such Person becomes aware of
any violation of Environmental Laws or any Release on, at, in, under, above, to, from or about any Real Estate which could reasonably be expected to result in a Material Adverse Effect; and (d) promptly forward to Administrative Agent a copy of
any order, notice, request for information or any communication or report received by such Person in connection with any such violation or Release or any other matter relating to any Environmental Laws which could reasonably be expected to result in
a Material Adverse Effect, in each case whether or not any Governmental Authority has taken or threatened any action in connection with any such violation, Release or other matter. 
 SECTION 5.10 Use of Proceeds. 
 The proceeds of the Loans made hereunder on the Closing Date will be used only (i) to pay off Indebtedness outstanding under the Existing Second Lien Credit Agreement, (ii) to pay fees and expenses related to the foregoing and the
financing contemplated hereby, including but not limited to the attorney’s fees for the Initial Lender, the Agents and the Borrower, (iii) to pay down certain Indebtedness outstanding under the Existing First Lien Credit Agreement (without
any corresponding reduction in commitments), (iv) to pay not more than $3,250,000 of Indebtedness outstanding under the Dov Charney Existing Notes, and (v) only if proceeds remain after the payments made pursuant to clauses (i), (ii),
(ii), (iii) and (iv) above, for general corporate purposes. No part of the proceeds of the Loans will be used, whether directly or indirectly, for any purpose that entails a violation of any of the regulations of the Board, including
Regulations U and X. 
 SECTION 5.11 Additional Subsidiaries. 
 If any Loan Party shall form or acquire a Subsidiary after the Closing Date, the Borrower will
notify the Initial Lender and the Agents thereof and (a) if such Subsidiary is not a Foreign Subsidiary, the Borrower will cause such Subsidiary to become a Loan Party hereunder and under each applicable Security Document in the manner provided
therein within ten (10) Business Days after such Subsidiary is formed or acquired and promptly take such actions to create and perfect Liens on such Subsidiary’s assets to secure the Obligations as the Initial Lender, the Administrative
Agent or the Required Lenders shall reasonably request, (b) if any shares of Capital Stock or Indebtedness of such Subsidiary are owned by or on behalf of any Loan Party, the Borrower will cause such Indebtedness to be evidenced by promissory
notes and will cause such shares and promissory notes evidencing such Indebtedness to be pledged to secure the Obligations within ten (10) Business Days after such Subsidiary is formed or acquired (except that if such Subsidiary is a Foreign
Subsidiary, shares of Capital Stock of such Subsidiary to be pledged shall be limited to 65% of the outstanding shares of Capital Stock of such Subsidiary, provided that, if such Subsidiary is a Canadian Subsidiary, the Borrower shall not be
obligated to cause such shares of Capital Stock of such Canadian Subsidiary to be pledged to secure the Obligations until such time as the Canadian Loan is refinanced in accordance with the terms of this Agreement with a lender other than The
Toronto-Dominion Bank). 
  

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 SECTION 5.12 [Reserved] 
 SECTION 5.13 Further Assurances. 
 (a) Each Loan Party will execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements and other documents), that may
be required under any Applicable Law, or which the Initial Lender, any Agent or the Required Lenders may reasonably request, including the items listed on Schedule 5.13, to effectuate the transactions contemplated by the Loan Documents or to
grant, preserve, protect or perfect the Liens created or intended to be created by the Security Documents or the validity or priority of any such Lien, all at the expense of the Loan Parties. The Loan Parties also agree to provide to the Initial
Lender and the Agents, from time to time upon request, evidence reasonably satisfactory to the Initial Lender and the Agents as to the perfection and priority of the Liens created or intended to be created by the Security Documents. 
 (b) If a fee interest in any Real Estate having a book value or fair market value greater than $500,000 is acquired by any Loan Party after the Closing
Date, the Borrower will notify the Initial Lender and the Agents thereof, the Loan Parties will cause such assets to be subjected to a Lien securing the Obligations and will take such actions as shall be necessary or shall be requested by any Agent
to grant and perfect such Liens, including actions described in paragraph (a) of this Section 5.13, all at the expense of the Loan Parties. 
 (c) Notwithstanding anything to the contrary set forth in any of the Loan Documents, including the threshold set forth in Section 5.13(b), to the extent the Loan Parties take any actions to grant and/or perfect
any Liens on any assets of the Loan Parties in favor of the First Lien Agent and First Lien Lenders which are not, at such time, subject to a Lien in favor of the Collateral Agent under the Security Documents, the Loan Parties will cause such assets
to be subjected to a Lien securing the Obligations and will take such actions as shall be necessary or shall be requested by any Agent to grant and perfect such Liens, including actions described in paragraph (a) of this Section 5.13, all
at the expense of the Loan Parties; provided that the Loan Parties shall not be required to take any additional actions to perfect Liens on any assets that cannot be perfected separately in favor of both the First Lien Agent and the
Collateral Agent. 
  

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 ARTICLE VI  
 Negative Covenants 
 Until (i) the Commitments shall have expired or been terminated and
(ii) the principal of and interest on, including PIK Interest, if any, each Loan and all fees and other Obligations shall have been paid in full, each Loan Party covenants and agrees with the Credit Parties that: 
 SECTION 6.01 Indebtedness and Other Obligations. 
 No Loan Party will, or will permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except Permitted Indebtedness. 
 SECTION 6.02 Liens. 
 No Loan
Party will, or will permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including Accounts) or rights in respect of any
thereof, except Permitted Encumbrances and sales of delinquent Accounts in the ordinary course of business. 
 SECTION 6.03
Fundamental Changes 
 (a) No Loan Party will, or will permit any Subsidiary to, merge into or consolidate with any other Person, or
permit any other Person to merge into or consolidate with it or any such Subsidiary, or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default or Event of Default shall have occurred and be
continuing or would arise therefrom, (i) any Loan Party may merge or consolidate with or into the Borrower in a transaction in which the Borrower is the surviving corporation, (ii) any Subsidiary may merge or consolidate with or into any
other Subsidiary that is a Facility Guarantor in a transaction in which a Facility Guarantor Subsidiary is the Surviving Person, (iii) any Foreign Subsidiary may merge or consolidate with or into any other Foreign Subsidiary, (iv) any
Subsidiary of Borrower which is a Facility Guarantor may merge or consolidate with or into any other Subsidiary of Borrower which is a Facility Guarantor, (v) liquidations and dissolutions of Subsidiaries shall be permitted if (x) the
Borrower determines in good faith that any such liquidation or dissolution is in the best interests of the Borrower and not materially disadvantageous to the Lenders and (y) to the extent such Subsidiary is a Loan Party, any assets, or business
not otherwise disposed of in accordance with Section 6.04 or 6.05, or in the case of any such business, discontinued, shall be transferred to, or otherwise owned or conducted by, another Loan Party after giving effect to such liquidation or
dissolution and payment of liabilities of such Subsidiary, and (vi) Permitted Acquisitions and asset dispositions permitted pursuant to Section 6.05 hereof may be consummated in the form of a merger, as long as, in the event of a Permitted
Acquisition, a Loan Party is the surviving Person; provided that any such merger in connection with a Permitted Acquisition involving a Person that is not a wholly owned Subsidiary immediately prior to such merger shall not be permitted
unless also permitted by Section 6.04. 
 (b) No Loan Party will, or will permit any Subsidiary to, engage, to any material extent, in
any business other than businesses of the type conducted by such Loan Party or such Subsidiary on the date of execution of this Agreement and businesses reasonably related thereto, or reasonably related to the manufacture or retailing of apparel and
related products. 
 SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions. 
 No Loan Party will, or will permit any Subsidiary to, make or permit to exist any Investment, except Permitted Investments. 
  

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 SECTION 6.05 Asset Sales. 
 No Loan Party will, or will permit any Subsidiary to, sell, transfer, lease or otherwise dispose of any asset, including any Capital Stock, except
(i) sales of inventory in the ordinary course of business, (ii) Permitted Dispositions, (iii) Permitted Dividends, (iv) issuances of Capital Stock of the Borrower, (v) issuances of Capital Stock of any Subsidiary of the
Borrower to any Loan Party and (vi) issuances of Capital Stock of any Subsidiary that is not a Loan Party to any other Subsidiary of the Borrower. 
 SECTION 6.06 Equity Issuances. 
 No Loan Party will, or will permit any Subsidiary to,
(i) issue any preferred Capital Stock or other Disqualified Equity Interests; provided that the Borrower may issue Disqualified Equity Interests to the extent permitted by Section 6.01 and preferred Capital Stock, which in each case
shall be subject to the limitations set forth in Section 6.07. 
 SECTION 6.07 Restricted Payments; Certain Payments of
Indebtedness. 
 (a) No Loan Party will, or will permit any Subsidiary to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment other than (i) Permitted Dividends, and (ii) so long as (x) no Default or Event of Default has occurred and is continuing, and (y) there is at least $30,000,000 of Excess Availability (as
defined in the First Lien Credit Agreement) under the First Lien Credit Agreement immediately after giving effect to any such repurchase, repurchases of the Borrower’s Capital Stock in an amount not to exceed $30,000,000. 
 (b) No Loan Party will, or will permit any Subsidiary to, make or agree to pay or make, directly or indirectly, any payment or other distribution
(whether in cash, securities or other property) of or in respect of principal of or regularly scheduled interest on any Subordinated Indebtedness, or any payment or other distribution (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation, defeasance or termination of any Subordinated Indebtedness, except (i) conversions of such Subordinated Indebtedness to Qualified
Equity Interests and (ii) so long as no Default or Event of Default has occurred and is continuing and such payment is permitted to be made under the terms of the First Lien Credit Agreement (as such terms may be amended, modified or waived by
the First Lien Lenders), repayments of principal amounts outstanding, and payments of interest, under the Dov Charney Existing Notes. 
 SECTION 6.08 Transactions with Affiliates. 
 No Loan Party will, or will permit any Subsidiary to, sell, lease or
otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) (i) transactions in the ordinary
course of business that are at prices and on terms and conditions not less favorable to such Loan Party or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties and (ii) contributions of capital by an
Affiliate to a Loan Party or issuances of Capital Stock by the Borrower to Affiliates of Borrower which are otherwise permitted under this Agreement, (b) transactions between or among the Loan Parties and 

  

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transactions in the ordinary course of business between the Loan Parties and Subsidiaries of the Loan Parties who are not Loan Parties, (c) Permitted
Dividends, (d) Permitted Investments pursuant to clauses (f), (h), (k), (l), (m), and (n) of the definition thereof, (e) transactions in respect of the 59th Street Facility, and (f) repayments of Indebtedness permitted under Section 6.01. 
 SECTION 6.09 Restrictive Agreements. 
 No Loan Party will, or will permit any Subsidiary to, directly or indirectly
enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of such Loan Party to create, incur or permit to exist any Lien upon any of its property or assets
as security for the Obligations or (b) the ability of any Subsidiary thereof to pay dividends or other distributions with respect to any shares of its Capital Stock to such Loan Party or to make or repay loans or advances to a Loan Party or any
other Subsidiary of a Loan Party or to guarantee Indebtedness of the Loan Parties or any other Subsidiary of the Loan Parties; provided that (i) the foregoing shall not apply to (a) restrictions and conditions imposed by Applicable
Law or by any Loan Document, (b) restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such
Indebtedness, (c) customary provisions in leases restricting the assignment or subleasing thereof, (d) customary restrictions arising under leases, licenses and other contracts entered into in the ordinary course of business,
(v) restrictions contained in any of the First Lien Loan Documents, (vi) restrictions applicable to the leases and assets subject to leases entered into in connection with sale-leaseback transactions permitted by this Agreement,
(vii) restrictions on assets subject to contracts for the disposition thereof which are Permitted Dispositions under this Agreement, (viii) restrictions on assets of or Persons acquired in Acquisitions and (ix) customary restrictions
contained in the documentation relating to Indebtedness of a Foreign Subsidiary, which Indebtedness is permitted by Section 6.01. Notwithstanding anything in this Section 6.09 to the contrary, neither (i)(a) the prohibition on the pledge
of security interest in the Capital Stock of the Canadian Subsidiaries, nor (b) the prohibition on the granting of any guaranty or security interest by the Canadian Subsidiaries, in each case set forth in the Canadian Loan, shall be prohibited
by this Section 6.09. 
 SECTION 6.10 Amendment of Material Documents. 
 No Loan Party will, or will permit any Subsidiary to, amend, modify, waive any of its rights under or, in the case of Material Agreements, allow to be
terminated (other than in accordance with its terms) (a) its Charter Documents, (b) any Material Agreement or (c) any Material Indebtedness, in each case to the extent that such amendment, modification or waiver or such termination
would be material and adverse to the Lenders. 
  

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 SECTION 6.11 Financial Covenants. 
 (a) Total Debt to Consolidated EBITDA. The Borrower will not permit the Total Debt to Consolidated EBITDA Ratio as of the last day of any four
consecutive Fiscal Quarters to be greater than the ratio set forth below opposite the last day of such period: 
  

			
	 FOUR FISCAL QUARTER
 PERIOD ENDING
	  	 TOTAL DEBT TO
 CONSOLIDATED EBITDA

	 June 30, 2009
	  	2.20 to 1.00
	 September 30, 2009
	  	2.20 to 1.00
	 December 31, 2009
	  	2.20 to 1.00
	 March 31, 2010
	  	1.75 to 1.00
	 June 30, 2010
	  	1.70 to 1.00
	 September 30, 2010
	  	1.65 to 1.00
	 December 31, 2010
	  	1.60 to 1.00
	 March 31, 2011
	  	1.55 to 1.00
	 June 30, 2011
	  	1.45 to 1.00
	 September 30, 2011
	  	1.35 to 1.00
	 December 31, 2011 and
 thereafter
	  	1.25 to 1.00

 SECTION 6.12 Capital Expenditures. 
 The Loan Parties shall not make or incur, nor permit a Subsidiary to make or incur, Capital Expenditures, except Capital Expenditures not exceeding in the
aggregate for the Borrower and its Subsidiaries during each Fiscal Year set forth below, the amount set forth opposite such Fiscal Year (which, for the avoidance of doubt, in the case of the Fiscal Year ending December 31, 2009 shall include
all Capital Expenditures incurred since the beginning of such Fiscal Year): 
  

			
	 FISCAL YEAR
	  	 MAXIMUM CAPITAL
 EXPENDITURES AMOUNT
 ($)

	 December 31, 2009
	  	27,500,000
	 December 31, 2010
	  	27,500,000
	 December 31, 2011
	  	27,500,000
	 December 31, 2012
	  	30,000,000
	 December 31, 2013
	  	30,000,000

 SECTION 6.13 Fiscal Year. 
 No Loan Party will, or will permit any Subsidiary to, change its Fiscal Year (except that any Subsidiary may change its Fiscal Year to match the
Borrower’s Fiscal Year). 
 SECTION 6.14 ERISA. 
 No Loan Party shall, or shall cause or permit any of its Subsidiaries or its ERISA Affiliates to: 
 (a) cause or permit to occur an event that could reasonably be expected to result in the imposition of a Lien under Section 412 of the IRC or
Section 302 or 4068 of ERISA; or 
  

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 (b) cause or permit to occur an ERISA Event to the extent such ERISA Event could reasonably be expected
to result in taxes, penalties and other liability and could reasonably be expected to result in a Material Adverse Effect; or 
 (c) engage
in any transaction in connection with which a Loan Party or any ERISA Affiliate could be reasonably expected to be subject to either a civil penalty assessed pursuant to the provisions of Section 502(i) of ERISA or a tax imposed under the
provisions of Section 4975 of the IRC which, in each case, could reasonably be expected to result in a Material Adverse Effect; or 
 (d) terminate any Plan under Section 4041(c) of ERISA without the prior consent of Administrative Agent which could reasonably be expected to result in a Material Adverse Effect; or 
 (e) fail in any material respect to make payment when due (including permissible extensions) of all amounts which, under the provisions of any Plan, it
is required to pay as contributions thereto or as premiums to the PBGC, which could reasonably be expected to result in a Material Adverse Effect; or 
 (f) enter into a new agreement or agreements that would (i) obligate a Loan Party or any ERISA Affiliate to make contributions to a Multiemployer Plan subject to subtitle (e) of Title IV of ERISA which could
reasonably be expected to result in a Material Adverse Effect or (ii) to create, extend or increase an obligation to provide health or medical benefits for retirees of a Loan Party or an ERISA Affiliate that would increase the accumulated post
retirement benefit obligation and could reasonably be expected to result in a Material Adverse Effect. 
 SECTION 6.15 Environmental
Laws. 
 The Loan Parties shall not, and shall not permit any Subsidiary to, (a) fail to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, or (b) become subject to any Environmental Liability, in each case which could reasonably be expected to have a Material Adverse Effect.

 SECTION 6.16 Additional Subsidiaries. 
 The Loan Parties will not, and will not permit any Subsidiary to, create any additional Subsidiary, unless such Subsidiary is a Loan Party or if the Investment with respect thereto is permitted pursuant to
Section 6.04 hereof. 
  

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 ARTICLE VII 
 Events of Default 
 SECTION 7.01 Events of Default. 
 If any of the following events (“Events of Default”) shall occur: 
 (a) any Loan Party shall fail to pay any principal of any Loan when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or otherwise; 
 (b) any Loan Party shall fail to pay any interest on any
Loan or any fee or any other amount (other than an amount referred to in Section 7.01(a)) payable under this Agreement or any other Loan Document and such failure shall continue for a period of five (5) consecutive days; 
 (c) any representation or warranty made by or on behalf of any Loan Party in, or in connection with, any Loan Document or any amendment,
supplement or modification thereof or waiver thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with any Loan Document or any amendment or modification thereof or waiver
thereunder, shall prove to have been materially incorrect when made; 
 (d) any Loan Party or any Subsidiary thereof shall
fail to observe or perform when due any covenant, condition or agreement contained in (i) Article VI (provided that any Default under Section 6.01 or Section 6.02 shall not constitute a Default or Event of Default for five
(5) Business Days after the occurrence of such Default so long as the parties are diligently pursuing the cure of such Default and the amount involved is less than $1,000,000), or (ii) in any of Section 5.02, Section 5.07 or
Section 5.08 (provided that, if (A) any such Default described in this clause (d)(ii) is of a type that can be cured within five (5) Business Days and (B) such Default could not materially adversely impact the
Lenders’ Liens on the Collateral, such default shall not constitute an Event of Default for five (5) Business Days after the occurrence of such Default so long as the Loan Parties are diligently pursuing the cure of such Default);

 (e) any Loan Party or any Subsidiary thereof shall fail to observe or perform when due any covenant, condition or agreement
contained in any Loan Document (other than those specified in Section 7.01(a), Section 7.01(b), or Section 7.01(d)), and such failure shall continue unremedied for a period of fifteen (15) days after notice thereof from the
Initial Lender, the Administrative Agent or the Required Lenders to the Borrower; 
 (f) (i) any Loan Party shall fail to make
any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness when and as the same shall become due and payable (after giving effect to the expiration of any grace or cure period set forth therein)
or (ii) any event or condition occurs that (A) results in any Material Indebtedness becoming due prior to its scheduled maturity or (B) enables or permits (with or without the giving of notice, the lapse of time or both) the holder or
holders of any such Material Indebtedness or any trustee or agent on its or their behalf to cause any such Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided that, with respect to the occurrence of any event or condition described in clause (ii) with respect to the First Lien Loan Documents, such event or condition shall only constitute an Event of Default under this
Agreement if either (x) such 

  

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event or condition is not cured or waived within 15 days after the date on which the holder or holders of the Indebtedness outstanding under the First Lien
Credit Agreement (or the First Lien Agent on behalf of such Lenders) are permitted to cause such Indebtedness to become due prior to its scheduled maturity or (y) such event or condition results in the acceleration of all Indebtedness
outstanding under the First Lien Credit Agreement and/or the termination of the commitments thereunder (it being understood and, for the avoidance of doubt, to the extent that any instrument governing any Material Indebtedness that by its terms
provides that the Indebtedness thereunder may become payable for any reason at any time upon demand by the holder or holders thereof, neither the existence of the right to demand payment at any time in any such instrument nor the exercise of any
such right by such holder(s) shall constitute an Event of Default hereunder); 
 (g) an involuntary proceeding shall be
commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of any Loan Party or any Subsidiary thereof or its debts, or of a substantial part of its assets, under the Bankruptcy Code
or any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party or any
Subsidiary thereof or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered;

 (h) any Loan Party or any Subsidiary thereof shall (i) voluntarily commence any proceeding or file any petition
seeking liquidation, reorganization or other relief under the Bankruptcy Code or any federal, state, provincial or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or
fail to contest in a timely and appropriate manner, any proceeding or petition described in Section 7.01(g), (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for
any Loan Party or any Subsidiary thereof or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit
of creditors or (vi) take any action for the purpose of effecting any of the foregoing; 
 (i) any Loan Party or any
Subsidiary thereof shall become unable, admit in writing its inability or fail generally to pay its debts as they become due; 
 (j) except as permitted under Section 6.05 hereof, the determination of the Loan Parties and their Subsidiaries’, whether by vote of the Loan Parties’ or their Subsidiaries’ board of directors or otherwise to: suspend
the operation of the Loan Parties’ and their Subsidiaries’ business, taken as a whole, in the ordinary course, liquidate all or substantially all of the Loan Parties’ and their Subsidiaries’, taken as a whole, assets or store
locations, or employ an agent or other third party to conduct any so-called store closing, store liquidation or “Going-Out-Of-Business” with respect to all or substantially all of the Loan Parties’ and their Subsidiaries’, taken
as a whole, assets or Store locations; 
  

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 (k) one or more final and nonappealable judgments for the payment of money in an
aggregate amount in excess of $2,500,000 excess of insurance coverage shall be rendered against any Loan Party or any Subsidiary thereof or any combination of Loan Parties and such Subsidiaries and the same shall remain undischarged for a period of
thirty (30) days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any material assets of any Loan Party or any Subsidiary thereof to enforce any such
judgment; 
 (l) an ERISA Event shall have occurred that when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in a Material Adverse Effect and the same shall remain undischarged for a period of thirty (30) consecutive days during which period any action shall not be legally taken to attach or levy upon any
material assets of any Loan Party or any Subsidiary thereof to enforce any such liability; 
 (m) any challenge by or on
behalf of any Loan Party to the validity of any Loan Document or the applicability or enforceability of any Loan Document strictly in accordance with the subject Loan Document’s terms or which seeks to void, avoid, limit, or otherwise adversely
affect any security interest created by or in any Loan Document or any payment made pursuant thereto; 
 (n) any challenge by
or on behalf of any other Person to the validity of any Loan Document or the applicability or enforceability of any Loan Document strictly in accordance with the subject Loan Document’s terms or which seeks to void, avoid, limit, or otherwise
adversely affect any security interest created by or in any Loan Document or any payment made pursuant thereto, in each case, as to which a nonappealable order or final and nonappealable judgment has been entered adverse to the Agents and the
Lenders; 
 (o) any Lien purported to be created under any Security Document shall (other than as a result of acts or
omissions of the Agents or the Lenders that are not caused by any failure by the Borrower to comply with the terms of any Loan Document) cease to be, or shall be asserted by any Loan Party not to be, a valid and perfected Lien on any Collateral,
with the priority required by the applicable Security Document except as a result of the sale or other disposition of the applicable Collateral in a transaction permitted under the Loan Documents; 
 (p) the occurrence of any uninsured loss to any material portion of the Collateral; 
 (q) [Reserved]; 
 (r) the indictment of, or institution of any legal process or proceeding by any governmental agency against, any Loan Party or any Subsidiary thereof, under any federal, state, provincial, municipal, and other civil or criminal statute,
rule, regulation, order, or other requirement having the force of law where the relief, penalties, or remedies sought include the forfeiture of a material amount of any property of the Loan Parties, taken as a whole, unless the Initial Lender and
the Administrative Agent, in their reasonable discretion, determine that the indictment is not material; 
  

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 (s) the imposition of any stay or other order, the effect of which could reasonably be
expected to restrain the conduct by the Loan Parties, taken as a whole, of their business in the ordinary course and could reasonably be expected to result in a Material Adverse Effect; 
 then, and in every such event (other than an event described in Section 7.01(g) or Section 7.01(h) with respect to any Loan Party), and at any time thereafter during the continuance of such event, the
Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments
shall irrevocably terminate immediately or (ii) declare the Obligations then outstanding to be due and payable in whole, and thereupon the principal of the Loans, including any interest paid-in-kind, and all other Obligations so declared to be
due and payable, together with accrued interest thereon and all fees and other obligations of the Loan Parties accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Loan Parties. In case of any event with respect to any Loan Party described in Section 7.01(g) or Section 7.01(h), the Commitments shall automatically and irrevocably terminate and the principal of the Loans,
including any interest paid-in-kind, and other Obligations then outstanding, together with accrued interest thereon and all fees and other obligations of the Loan Parties accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Loan Parties. 
 SECTION 7.02
Remedies on Default. 
 In case any one or more of the Events of Default shall have occurred and be continuing, and whether or not the
maturity of the Obligations shall have been accelerated pursuant hereto, the Agents may (and at the direction of the Required Lenders, shall) proceed to protect and enforce their rights and remedies under this Agreement or any of the other Loan
Documents by suit in equity, action at law or other appropriate proceeding, whether for the specific performance of any covenant or agreement contained in this Agreement and the other Loan Documents or any instrument pursuant to which the
Obligations are evidenced, and, if such amount shall have become due, by declaration or otherwise, proceed to enforce the payment thereof or any other legal or equitable right of the Credit Parties. No remedy herein is intended to be exclusive of
any other remedy and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or any other provision of law. 
 SECTION 7.03 Application of Proceeds. 
 After the occurrence of an Event of Default and acceleration of the Obligations, all proceeds realized from any Loan Party or on account of any Collateral or, without limiting the foregoing, on account of any Prepayment Event, shall be
applied in the following order: 
 (a) FIRST, ratably to pay the Obligations in respect of any Credit Party Expenses,
indemnities and other amounts then due to the Agents until paid in full; 
  

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 (b) SECOND, ratably to pay any Credit Party Expenses, indemnities and fees then due to
the Lenders until paid in full; 
 (c) THIRD, ratably to pay interest accrued in respect of the Obligations until paid in
full; 
 (d) FOURTH, ratably to pay principal due, including interest paid-in-kind, in respect of the Loans to the Borrower
until paid in full; 
 (e) FIFTH, ratably to pay any other Obligations; and 
 (f) SIXTH, to the Borrower or such other Person entitled thereto under Applicable Law. 
 ARTICLE VIII 
 The Agents 

SECTION 8.01 Appointment and Administration by Administrative Agent. 
 The general administration of the Loan Documents shall be by the Administrative Agent. The Lenders each hereby (a) irrevocably authorize the
Administrative Agent (i) to enter into the Loan Documents to which it is a party, and (ii) at its discretion, to take or refrain from taking such actions as agent on its behalf and to exercise or refrain from exercising such powers under
the Loan Documents as are delegated by the terms hereof or thereof, as appropriate, together with all powers reasonably incidental thereto, and (b) agree and consent to all of the provisions of the Security Documents. The Administrative Agent
shall have no duties or responsibilities except as set forth in this Agreement and the other Loan Documents, nor shall it have any fiduciary relationship with any other Credit Party, and no implied covenants, responsibilities, duties, obligations,
or liabilities shall be read into the Loan Documents or otherwise exist against the Administrative Agent. 
 SECTION 8.02 Appointment
of Collateral Agent. 
 The Lenders each hereby (a) irrevocably authorize the Collateral Agent (i) to enter into the Loan
Documents to which it is a party, and (ii) at its discretion, to take or refrain from taking such actions as agent on its behalf and to exercise or refrain from exercising such powers under the Loan Documents as are delegated by the terms
hereof or thereof, as appropriate, together with all powers reasonably incidental thereto, and (b) agree and consent to all of the provisions of the Security Documents. All Collateral shall be held or administered by the Collateral Agent (or
its duly-appointed agent) for its own benefit and for the ratable benefit of the other Credit Parties. Any proceeds received by the Collateral Agent from the foreclosure, sale, lease or other disposition of any of the Collateral and any other
proceeds received pursuant to the terms of the Security Documents or the other Loan Documents shall be paid over to the Administrative Agent for application as provided in this Agreement and the other Loan Documents. The Collateral 

  

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Agent shall have no duties or responsibilities except as set forth in this Agreement and the other Loan Documents, nor shall it have any fiduciary
relationship with any other Credit Party, and no implied covenants, responsibilities, duties, obligations, or liabilities shall be read into the Loan Documents or otherwise exist against the Collateral Agent. 
 SECTION 8.03 Sharing of Excess Payments. 
 If at any time or times any Credit Party shall receive (i) by payment, foreclosure, setoff, banker’s lien, counterclaim, or otherwise, or any payments with respect to the Obligations owing to such Credit Party arising under, or
relating to, this Agreement or the other Loan Documents, except for any such proceeds or payments received by such Credit Party from the Administrative Agent pursuant to the terms of this Agreement or payments pursuant to Section 9.04, or
(ii) payments from the Administrative Agent in excess of such Credit Party’s ratable portion of all such distributions by the Administrative Agent, such Credit Party shall promptly (1) turn the same over to the Administrative Agent,
in kind, and with such endorsements as may be required to negotiate the same to the Administrative Agent, or in same day funds, as applicable, for the account of all of the Credit Parties and for application to the Obligations in accordance with the
applicable provisions of this Agreement, or (2) purchase, without recourse or warranty, an undivided interest and participation in the Obligations owed to the other Credit Parties so that such excess payment received shall be applied ratably as
among the Credit Parties in accordance with their Aggregate Exposure Percentages; provided, however, that if all or part of such excess payment received by the purchasing party is thereafter recovered from it, those purchases of
participations shall be rescinded in whole or in part, as applicable, and the applicable portion of the purchase price paid therefor shall be returned to such purchasing party, but without interest except to the extent that such purchasing party is
required to pay interest in connection with the recovery of the excess payment. 
 SECTION 8.04 Agreement of Applicable Lenders.

 Upon any occasion requiring or permitting an approval, consent, waiver, election or other action on the part of the Applicable Lenders,
action shall be taken by the Administrative Agent, for and on behalf or for the benefit of all Credit Parties upon the direction of the Applicable Lenders, and any such action shall be binding on all Credit Parties. No amendment, modification,
consent, or waiver shall be effective except in accordance with the provisions of Section 9.02. 
 SECTION 8.05 Liability of
Agents. 
 (a) The Agents, when acting on behalf of the Credit Parties, may execute any of their respective duties under this Agreement by
or through any of its officers, agents and employees, and no Agent nor its respective directors, officers, agents or employees shall be liable to any other Credit Party for any action taken or omitted to be taken in good faith, or be responsible to
any other Credit Party for the consequences of any oversight or error of judgment, or for any loss, except to the extent of any liability imposed by law by reason of such Agent’s own gross negligence, bad faith or willful misconduct. No Agent
or its respective directors, officers, agents and employees shall in any event be liable to any other Credit Party for any action taken or omitted to be taken by it pursuant to instructions received by it from the Applicable Lenders, or in reliance
upon the advice of counsel selected by it. Without limiting the 

  

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foregoing, no Agent or any of its respective directors, officers, employees, or agents shall be: (i) responsible to any other Credit Party for the due
execution, validity, genuineness, effectiveness, sufficiency, or enforceability of, or for any recital, statement, warranty or representation in, this Agreement, any other Loan Document or any related agreement, document or order; (ii) required
to ascertain or to make any inquiry concerning the performance or observance by any Loan Party of any of the terms, conditions, covenants, or agreements of this Agreement or any of the Loan Documents; (iii) responsible to any other Credit Party
for the state or condition of any properties of the Loan Parties or any other obligor hereunder constituting Collateral for the Obligations or any information contained in the books or records of the Loan Parties; (iv) responsible to any other
Credit Party for the validity, enforceability, collectibility, effectiveness or genuineness of this Agreement or any other Loan Document or any other certificate, document or instrument furnished in connection therewith; or (v) responsible to
any other Credit Party for the validity, priority or perfection of any Lien securing or purporting to secure the Obligations or for the value or sufficiency of any of the Collateral. 
 (b) The Agents may execute any of their duties under this Agreement or any other Loan Document by or through its agents or attorneys-in-fact, and shall
be entitled to the advice of counsel concerning all matters pertaining to its rights and duties hereunder or under the other Loan Documents. The Agents shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care. 
 (c) None of the Agents nor any of their respective directors, officers, employees, or agents shall
have any responsibility to any Loan Party on account of the failure or delay in performance or breach by any other Credit Party (other than by each such Agent in its capacity as a Lender) of any of its respective obligations under this Agreement or
any of the other Loan Documents or in connection herewith or therewith. 
 (d) The Agents shall be entitled to rely, and shall be fully
protected in relying, upon any notice, consent, certificate, affidavit, or other document or writing believed by them to be genuine and correct and to have been signed, sent or made by the proper person or persons, and upon the advice and statements
of legal counsel (including, without, limitation, counsel to the Loan Parties), independent accountants and other experts selected by any Loan Party or any Credit Party. The Agents shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless they shall first receive such advice or concurrence of the Applicable Lenders as it deems appropriate or they shall first be indemnified to its satisfaction by the other Credit Parties against
any and all liability and expense which may be incurred by them by reason of the taking or failing to take any such action. 
 SECTION 8.06 Notice of Default. 
 No Agent shall be deemed to have knowledge or notice of the occurrence of any Default
or Event of Default unless such Agent has actual knowledge of the same or has received notice from a Credit Party or Loan Party referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice
of default”. In the event that an Agent obtains such actual knowledge or receives such a notice, such Agent shall give prompt notice thereof to each of the other Credit Parties. Upon the occurrence of an Event of Default, the Administrative
Agent shall (subject to the provisions of Section 9.02) take such action with respect to such 

  

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Default or Event of Default as shall be reasonably directed by the Applicable Lenders. Unless and until the Administrative Agent shall have received such
direction, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to any such Default or Event of Default as it shall deem advisable in the best interest of the Credit Parties.
In no event shall the Administrative Agent be required to comply with any such directions to the extent that the Administrative Agent believes that its compliance with such directions would be unlawful. 
 SECTION 8.07 Credit Decisions. 
 Each Credit Party (other than the Agents) acknowledges that it has, independently and without reliance upon the Agents or any other Credit Party, and based on the financial statements prepared by the Loan Parties and such other documents
and information as it has deemed appropriate, made its own credit analysis and investigation into the business, assets, operations, property, and financial and other condition of the Loan Parties and has made its own decision to enter into this
Agreement and the other Loan Documents. Each Credit Party (other than the Agents) also acknowledges that it will, independently and without reliance upon the Agents or any other Credit Party, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in determining whether or not conditions precedent to closing any Loan hereunder have been satisfied and in taking or not taking any action under this Agreement and the other
Loan Documents. 
 SECTION 8.08 Reimbursement and Indemnification. 
 Each Credit Party (other than the Agents) agrees to (i) reimburse the Agents for such Credit Party’s applicable Aggregate Exposure Percentage of
(x) any expenses and fees incurred by any Agent for the benefit of Credit Parties under this Agreement and any of the other Loan Documents, including, without limitation, counsel fees and compensation of agents and employees paid for services
rendered on behalf of the Credit Parties, and any other expense incurred in connection with the operations or enforcement thereof not reimbursed by the Loan Parties and (y) any expenses of any Agent incurred for the benefit of the Credit
Parties that the Loan Parties have agreed to reimburse pursuant to this Agreement or any other Loan Document and have failed to so reimburse and (ii) indemnify and hold harmless each Agent and any of its directors, officers, employees, or
agents, on demand, in the amount of such Credit Party’s applicable Aggregate Exposure Percentage, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by, or asserted against it or any Credit Party in any way relating to or arising out of this Agreement or any of the other Loan Documents or any action taken or omitted by it or any of
them under this Agreement or any of the other Loan Documents to the extent not reimbursed by the Loan Parties, including, without limitation, costs of any suit initiated by each Agent against any Credit Party (except such as shall have been
determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from the gross negligence, bad faith or willful misconduct of such Agent); provided, however, that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against such Credit Party in its capacity as such. The provisions of this Section 8.08 shall survive the repayment of the Obligations
and the termination of the Commitments. 
  

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 SECTION 8.09 Rights of Agents. 
 It is understood and agreed that the Agents shall have the same rights and powers hereunder (including the right to give such instructions) as the other
Lenders and may exercise such rights and powers, as well as their rights and powers under other agreements and instruments to which they are or may be party, and engage in other transactions with the Loan Parties, as though they were not the Agents.
Each Agent and its affiliates may accept deposits from, lend money to, and generally engage in any kind of commercial or investment banking, trust, advisory or other business with the Loan Parties and their Affiliates as if it were not an Agent
hereunder. 
 SECTION 8.10 Notice of Transfer. 
 The Administrative Agent may deem and treat a Lender party to this Agreement as the owner of such Lender’s portion of the Obligations for all purposes, unless and until, and except to the extent, an Assignment
and Acceptance shall have become effective as set forth in Section 9.04. 
 SECTION 8.11 Successor Agents. 
 Any Agent may resign at any time by giving thirty (30) Business Days’ written notice thereof to the other Credit Parties and the Borrower. Upon
any such resignation of an Agent, the Required Lenders shall have the right to appoint a successor Agent, which, so long as there is no Event of Default under Section 7.01(a), 7.01(b), Section 7.01(g), Section 7.01(h),
Section 7.01(i), or Section 7.01(j), shall be reasonably satisfactory to the Borrower (whose consent in any event shall not be unreasonably withheld or delayed). If no successor Agent shall have been so appointed by the Required Lenders
and/or none shall have accepted such appointment within thirty (30) days after the retiring Agent’s giving of notice of resignation, the retiring Agent may, on behalf of the other Credit Parties, appoint a successor Agent which shall be a
Person capable of complying with all of the duties of such Agent hereunder (in the opinion of the retiring Agent and as certified to the other Credit Parties in writing by such successor Agent) which, so long as there is no Event of Default under
Section 7.01(a), 7.01(b), Section 7.01(g), Section 7.01(h), Section 7.01(i), or Section 7.01(j), shall be reasonably satisfactory to the Borrower (whose consent shall not in any event be unreasonably withheld or delayed).
Upon the acceptance of any appointment as Agent by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent and the retiring Agent shall be
discharged from its duties and obligations under this Agreement. After any retiring Agent’s resignation hereunder as such Agent, the provisions of this Article VIII shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was such Agent under this Agreement. 
 SECTION 8.12 Relation Among the Lenders. 
 The Lenders are not partners or co-venturers, and no Lender shall be liable for the acts or omissions of, or (except as otherwise set forth herein in case
of any Agent) authorized to act for, any other Lender. 
  

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 SECTION 8.13 Agency for Perfection. 
 Each Lender hereby appoints each other Lender as agent for the purpose of perfecting Liens for the benefit of the Agents and the Lenders, in assets which,
in accordance with Article 9 of the UCC or any other Applicable Law of the United States of America can be perfected only by possession. Should any Lender (other than an Agent) obtain possession of any such Collateral, such Lender shall notify the
Administrative Agent thereof, and, promptly upon the Administrative Agent’s request therefor, shall deliver such Collateral to the Collateral Agent or otherwise deal with such Collateral in accordance with the Collateral Agent’s
instructions. 
 SECTION 8.14 Delinquent Lender. 
 (a) If for any reason any Lender shall fail or refuse to abide by its obligations under this Agreement, including without limitation its obligation to make available to the Administrative Agent its applicable
Aggregate Exposure Percentage of any Loans, expenses or setoff (a “Delinquent Lender”) and such failure is not cured within ten (10) days of receipt from the Administrative Agent of written notice thereof, then, in addition to
the rights and remedies that may be available to the other Credit Parties, the Loan Parties or any other party at law or in equity, and not at limitation thereof, (i) such Delinquent Lender’s right to participate in the administration of,
or decision-making rights related to, the Loans, this Agreement or the other Loan Documents shall be suspended during the pendency of such failure or refusal, and (ii) a Delinquent Lender shall be deemed to have assigned any and all payments
due to it from the Loan Parties, whether on account of outstanding Loans, interest, fees or otherwise, to the remaining non-delinquent Lenders for application to, and reduction of, their proportionate shares of all outstanding Obligations until, as
a result of application of such assigned payments the Lenders’ respective Aggregate Exposure Percentages of all outstanding Obligations shall have returned to those in effect immediately prior to such delinquency and without giving effect to
the nonpayment causing such delinquency. The Delinquent Lender’s decision-making and participation rights and rights to payments as set forth in clauses (i) and (ii) hereinabove shall be restored only upon the payment by the
Delinquent Lender of its applicable Aggregate Exposure Percentage of any Obligations, any participation obligation, or expenses as to which it is delinquent, together with interest thereon at the rate set forth in Section 2.05 hereof from the
date when originally due until the date upon which any such amounts are actually paid. 
 (b) The non-Delinquent Lenders shall also have the
right, but not the obligation, in their respective, sole and absolute discretion, to cause the termination and assignment, without any further action by the Delinquent Lender for no cash consideration (pro rata, based on the respective
Commitments of those Lenders electing to exercise such right), of the Delinquent Lender’s applicable Commitment to fund future Loans. Upon any such purchase of the applicable Aggregate Exposure Percentage of any Delinquent Lender, the
Delinquent Lender’s share in future Loans and its rights under the Loan Documents with respect thereto shall terminate on the date of purchase, and the Delinquent Lender shall promptly execute all documents reasonably requested to surrender and
transfer such interest, including, if so requested, an Assignment and Acceptance. 
  

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 (c) Each Delinquent Lender shall indemnify the Administrative Agent and each non-delinquent Lender from
and against any and all loss, damage or expenses, including but not limited to reasonable attorneys’ fees and funds advanced by the Administrative Agent or by any non-delinquent Lender, on account of a Delinquent Lender’s failure to timely
fund its applicable Aggregate Exposure Percentage of a Loan or to otherwise perform its obligations under the Loan Documents. 
 ARTICLE IX

 Miscellaneous 
 SECTION 9.01 Notices. 
 Except in the case of notices and other communications expressly permitted to be given by
telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile or e-mail, as follows: 
 (a) if to any Loan Party, to it at American Apparel, Inc. 747 Warehouse St., Los Angeles, CA 90021, Attention: Adrian Kowalewski (Telecopy
No. (213) 201-3062), (E-Mail adrian@americanapparel.net), with a copy to Skadden, Arps, Slate, Meagher & Flom LLP, Attention: David Reamer (Telecopy No. (213) 621-5052); E-Mail dreamer@skadden.com); 
 (b) if to the Administrative Agent or the Collateral Agent or to Lion Capital LLP, as the initial holder of Loans representing the PIK Fee
that has been added to the principal balance of the Loans, to it at: 
 Lion Capital LLP 
 21 Grosvenor Place 
 London 
 SW1X 7HF 
 United Kingdom 
 Attn: Janet Dunlop 
 Telephone: +44 20 7201
2247 
 Fax: +44 20 7201 2222 
 with a copy to: 
 Lion Capital (Americas) Inc. 
 888 Seventh Avenue 
 New York, New York 10019 
 Attn: Jacob Capps 
 Telephone: +1
(212) 314-1903 
 Fax: +1 (212) 314-1950 
 (c) if to any other Credit Party, to it at its address (or facsimile number or e-mail address) as set forth on
Schedule 1.02(a) hereto or on any Assignment and Acceptance. 
  

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 Notwithstanding the foregoing, any notice hereunder sent by e-mail shall be solely for the distribution
of (i) routine communications such as financial statements and (ii) documents and signature pages for execution by the parties hereto, and for no other purpose. Any party hereto may change its address, facsimile number or email address for
notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given three
(3) days after mailing or otherwise upon delivery. 
 SECTION 9.02 Waivers; Amendments. 
 (a) No failure or delay by any Credit Party in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The
rights and remedies of the Credit Parties hereunder and under the other Loan Documents are cumulative and are not exclusive of any other rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to
any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by Section 9.02(b), and then such waiver or consent shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default or Event of Default, regardless of whether any Credit Party may have had notice or knowledge of such Default or Event of
Default at the time. 
 (b) Except as otherwise specifically provided herein, neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Loan Parties and the Required Lenders or, in the case of any other Loan
Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent (or the Collateral Agent, as the case may be) and the Loan Parties that are parties thereto, in each case with the consent of the Required Lenders;
provided however, that no such waiver, amendment, modification or other agreement shall: 
 (i) Increase the
Commitment of any Lender without the prior written consent of such Lender; 
 (ii) Reduce the principal amount of any
Obligation or reduce the rate of interest thereon, or reduce any fees payable under the Loan Documents without the consent of the Lenders adversely affected thereby; 
 (iii) Postpone the scheduled date of payment of the principal amount of any Obligation, or any interest thereon, or any fees payable under
the Loan Documents, or reduce the amount of, waive or excuse any such payment, or postpone the expiration of the Commitments or postpone the Maturity Date without the consent of the Lenders adversely affected thereby; 
  

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 (iv) Change Section 2.08(b) or Section 2.08(c) without the prior written
consent of each Lender adversely affect thereby; 
 (v) Without prior written Unanimous Consent of all Lenders: 
 (A) release all or substantially all of the Facility Guarantors under the Facility Guaranty or release all or substantially all of the
Collateral under the Security Documents; 
 (C) change Section 7.03; 
 (D) subordinate the Obligations hereunder or the Liens granted hereunder or under the other Loan Documents to any other Indebtedness or
Lien, as the case may be, other than the Lien securing the “Obligations” (as defined in the First Lien Credit Agreement) of the American Apparel (USA) and the other “Loan Parties” under the First Lien Loan Documents; or

 (E) change any of the provisions of this Section 9.02 or the definition of “Required Lenders” or any
other provision of any Loan Document specifying the number or percentage of Lenders required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder. 
 (vi) Without prior written consent of the Agents, affect the rights or duties of the Agents. 
 (c) Notwithstanding anything to the contrary contained in this Section 9.02, in the event that the Borrower shall request that this Agreement or any
other Loan Document be modified, amended or waived in a manner which would require the consent of the Lenders pursuant to Section 9.02(b) and such amendment is approved by the Required Lenders, but not by the requisite percentage of all of the
Lenders, the Borrower and the Administrative Agent shall be permitted to amend this Agreement without the consent of the Lender or Lenders which did not agree to the modification or amendment requested by the Borrower (such Lender or Lenders,
collectively the “Minority Lenders”) subject to their providing for (i) the termination of each Commitment of each of the Minority Lenders, (ii) the addition to this Agreement of one or more other Eligible Assignees,
subject to the reasonable approval of the Administrative Agent, or an increase in the Commitment of one or more of the Required Lenders, so that the Total Commitments after giving effect to such amendment shall be in the same amount as the aggregate
Commitments immediately before giving effect to such amendment, (iii) if any Loans are outstanding at the time of such amendment, the making of such additional Loans by such new or increasing Lender or Lenders, as the case may be, as may be
necessary to repay in full the outstanding Loans (including principal, interest, fees and other amounts) of the Minority Lenders immediately before giving effect to such amendment and (iv) such other modifications to this Agreement or the Loan
Documents as may be appropriate and incidental to the foregoing. 
 (d) No notice to or demand on any Loan Party shall entitle any Loan Party
to any other or further notice or demand in the same, similar or other circumstances. Each holder of a Note shall be bound by any amendment, modification, waiver or consent authorized as 

  

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provided herein, whether or not a Note shall have been marked to indicate such amendment, modification, waiver or consent and any consent by a Lender, or any
holder of a Note, shall bind any Person subsequently acquiring a Note, whether or not a Note is so marked. No amendment to this Agreement or any other Loan Document shall be effective against the Borrower or any other Loan Party unless signed by the
Borrower or other applicable Loan Party. 
 SECTION 9.03 Expenses; Indemnity; Damage Waiver. 
 (a) The Loan Parties shall be jointly and severally obligated pay all Credit Party Expenses. 
 (b) The Loan Parties shall, jointly and severally, indemnify the Credit Parties and each of their Subsidiaries and Affiliates, and each of their
respective stockholders, directors, officers, employees, agents, attorneys, and advisors of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all
damages, actual out-of-pocket losses, claims, actions, causes of action, settlement payments, obligations, liabilities and related expenses, including the reasonable fees, charges and disbursements of any counsel for any Indemnitee, incurred,
suffered, sustained or required to be paid by, or asserted against, any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or delivery of any Loan Document or any other agreement or instrument contemplated
hereby, the performance by the parties to the Loan Documents of their respective obligations thereunder or the consummation of the transactions contemplated by the Loan Documents or any other transactions contemplated hereby, (ii) any Loans or
the use of the proceeds therefrom, (iii) any actual or alleged presence or Release of Hazardous Materials on or from any property currently or formerly owned, leased or operated by any Loan Party or any Subsidiary, or any Environmental
Liability related in any way to any Loan Party or any Subsidiary, (iv) any actual or prospective claim, litigation, investigation or proceeding relating to or arising from any of the foregoing, whether based on contract, tort or any other
theory and regardless of whether any Indemnitee is a party thereto or (v) any documentary taxes, assessments or similar charges made by any Governmental Authority by reason of the execution and delivery of this Agreement or any other Loan
Document; provided, however, that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by
final and nonappealable judgment to have resulted from the gross negligence, bad faith or willful misconduct of such Indemnitee or any Affiliate of such Indemnitee (or any officer, director, employee, advisor or agent of such Indemnitee or any such
Indemnitee’s Affiliates). In connection with any indemnified claim hereunder, the Indemnitee shall be entitled to select its own counsel and the Loan Parties shall promptly pay the reasonable fees and expenses of such counsel. 
 (c) No Loan Party shall assert and, to the extent permitted by Applicable Law, each Loan Party hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby or thereby, the transactions contemplated by the Loan Documents, any Loans or the use of the proceeds thereof. 
  

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 (d) The provisions of this Section 9.03 shall remain operative and in full force and effect
regardless of the termination of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Obligations, the invalidity or unenforceability of any term or provision of any Loan Document, or any
investigation made by or on behalf of any Credit Party. All amounts due under this Section 9.03 shall be payable no later than ten (10) days after written demand therefor. 
 SECTION 9.04 Successors and Assigns. 
 (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that no Loan Party may assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of the Initial Lender and the Administrative Agent (and any such attempted assignment or transfer without such consent shall be null and void). Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, Indemnitees), any legal or equitable right, remedy or
claim under or by reason of this Agreement. 
 (b) Any Lender may, with the consent of the Initial Lender and the Administrative Agent and,
so long as no Event of Default shall have occurred an be continuing, the Borrower, in each case, such consent not to be unreasonably withheld or delayed, assign to one or more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided, however, that no such consent shall be required in connection with any assignment to another Lender or to an Affiliate of a
Lender, provided, further that each assignment shall be subject to the following conditions: (i) except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the
assigning Lender’s Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to an assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $1,000,000, or, if less, the entire remaining amount of the assigning Lender’s Commitment or Loans; (ii) each partial assignment shall be made as an assignment of a proportionate part of all the
assigning Lender’s rights and obligations under all of the Loans; and (iii) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance together with a processing and recordation fee of
$5,000.00. Subject to acceptance and recording thereof pursuant to Section 9.04(d), from and after the effective date specified in each Assignment and Acceptance, the assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to
be entitled to the benefits of Section 9.03). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04(b) shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with Section 9.04(e). The Loan Parties hereby acknowledge and 

  

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agree that any assignment shall give rise to a direct obligation of the Loan Parties to the assignee and that the assignee shall be considered to be a
“Credit Party” for all purposes under this Agreement and the other Loan Documents. 
 (c) The Administrative Agent, acting for this
purpose as an agent of the Loan Parties, shall maintain a copy of each Assignment and Acceptance delivered to it and a register (the “Register”) for the recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time. The entries in the Register shall be conclusive and the Loan Parties and Credit Parties may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from
time to time upon reasonable prior notice. 
 (d) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning
Lender and an assignee, the processing and recordation fee referred to in Section 9.04(b) and any written consent to such assignment required by Section 9.04(b), the Administrative Agent shall accept such Assignment and Acceptance and
record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this Section 9.04(d). 
 (e) Any Lender may, without the consent of the Loan Parties or any other Person, sell participations to one or more banks or other entities (a
“Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it), subject to the following: 
 (i) such Lender’s obligations under this Agreement and the other Loan Documents shall remain unchanged; 
 (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations; 
 (iii) the Loan Parties and other Credit Parties shall continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement; 
 (iv) any agreement or instrument pursuant to which a Lender
sells a participation in the Commitments and the Loans shall provide that such Lender shall retain the sole right to enforce the Loan Documents and to approve any amendment, modification or waiver of any provision of the Loan Documents;
provided, however, that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the proviso to Section 9.02(b) that
adversely affects such Participant; 
 (v) subject to clauses (viii) and (ix) of this Section 9.04(e), the Loan
Parties agree that each Participant shall be entitled to the benefits of Section 2.06 and Section 2.12 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 9.04(b); 
  

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 (vi) to the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 9.08 as though it were a Lender so long as such Participant agrees to be subject to Section 8.03 as though it were a Lender; 
 (vii) each Lender, acting for this purpose as an agent of the Loan Parties, shall maintain at its offices a record of each agreement or instrument effecting any participation and a register (each a
“Participation Register”) meeting the requirements of 26 CFR §5f.103-1(c) for the recordation of the names and addresses of its Participants and their rights with respect to principal amounts and other Obligations from time to
time. The entries in each Participation Register shall be conclusive and the Loan Parties and the Credit Parties may treat each Person whose name is recorded in a Participant Register as a Participant for all purposes of this Agreement (including,
for the avoidance of doubt, for purposes of entitlement to benefits under Section 2.06, Section 2.12, and Section 9.08). The Participation Register shall be available for inspection by the Borrower and any Credit Party at any
reasonable time and from time to time upon reasonable prior notice; 
 (viii) a Participant shall not be entitled to receive
any greater payment under Section 2.06 or Section 2.12 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is
made with the Borrower’s prior written consent; and 
 (ix) a Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.12 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Loan Parties, to comply with Section 2.12(e) as
though it were a Lender; provided, however, that a Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.12 with respect to any withholding tax that is imposed on amounts
payable to such Participant at the time it acquires its participation except to the extent that the Lender from which it acquired its participation was entitled at such time to receive additional amounts from the Borrower with respect to such
withholding tax pursuant to Section 2.12. 
 (f) Any Credit Party may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of such Credit Party, including any pledge or assignment to secure obligations to any of the twelve Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12
U.S.C. Section 341, and this Section 9.04 shall not apply to any such pledge or assignment of a security interest; provided, however, that no such pledge or assignment of a security interest shall release a Credit Party from
any of its obligations hereunder or substitute any such pledgee or assignee for such Credit Party as a party hereto. 
  

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 (g) The Loan Parties authorize each Credit Party to disclose to any Participant or assignee and any
prospective Participant or assignee, subject to the provisions of Section 9.15, any and all financial information in such Credit Party’s possession concerning the Loan Parties which has been delivered to such Credit Party by or on behalf
of the Loan Parties pursuant to this Agreement or which has been delivered to such Credit Party by or on behalf of the Loan Parties in connection with such Credit Party’s credit evaluation of the Loan Parties prior to becoming a party to this
Agreement. 
 SECTION 9.05 Survival. 
 All covenants, agreements, indemnities, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this
Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans, regardless of any investigation made by any
such other party or on its behalf and notwithstanding that any Credit Party may have had notice or knowledge of any Default or Event of Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue
in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other Obligation is outstanding and unpaid and so long as the Commitments have not expired or been irrevocably terminated. The provisions of
Section 2.06, Section 2.12, Section 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Obligations, the expiration or
termination of the Commitments or the termination of this Agreement or any provision hereof. In connection with the termination of this Agreement and the release and termination of the security interests in the Collateral, the Administrative Agent,
on behalf of itself and the other Credit Parties, may require such assurances and indemnities as it shall reasonably deem necessary or appropriate to protect the Credit Parties against loss on account of such release and termination, including,
without limitation, with respect to credits previously applied to the Obligations that may subsequently be reversed or revoked. 
 SECTION 9.06 Counterparts; Integration; Effectiveness. 
 This Agreement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract
among the parties relating to the subject matter hereof and supersede any and all contemporaneous or previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this
Agreement shall become effective when it shall have been executed by the applicable Credit Parties and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties
hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or e-mail shall be
effective as delivery of a manually executed counterpart of this Agreement. 
  

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 SECTION 9.07 Severability. 
 Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof, and the invalidity of a particular provision in a particular jurisdiction shall not invalidate
such provision in any other jurisdiction. 
 SECTION 9.08 Right of Setoff. 
 If an Event of Default shall have occurred and be continuing, each Credit Party, each Participant, and each of their respective Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by law, to setoff and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by
such Credit Party, Participant, or Affiliate to or for the credit or the account of the Loan Parties against any of and all the obligations of the Loan Parties now or hereafter existing under this Agreement or other Loan Document held by a Credit
Party, irrespective of whether or not such Credit Party shall have made any demand under this Agreement or other Loan Document and although such obligations may be matured or unmatured or otherwise fully secured. The Administrative Agent or the
applicable Lender shall provide the Borrower with written notice promptly after any exercise of the right of setoff. The rights of each Credit Party under this Section 9.08 are in addition to other rights and remedies (including other rights of
setoff) that such Credit Party may have, provided that the proceeds of any setoff shall be shared in accordance with Section 8.03. Notwithstanding the foregoing, no Credit Party will, or will permit its Participant to, exercise its rights under
this Section 9.08 without the consent of the Administrative Agent or the Required Lenders. ANY AND ALL RIGHTS TO REQUIRE THE ADMINISTRATIVE AGENT OR THE COLLATERAL AGENT TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL
WHICH SECURES ANY OF THE OBLIGATIONS PRIOR TO THE EXERCISE BY ANY CREDIT PARTY OF ITS RIGHT OF SETOFF UNDER THIS SECTION ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. 
 SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process. 
 (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 
 (b) Each Loan Party agrees that any suit for the enforcement of this Agreement or any other Loan Document may be brought in the federal or state courts
of the State of New York as the Initial Lender and the Administrative Agent may elect in its sole discretion and consents to the non-exclusive jurisdiction of such courts. Each party to this Agreement 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 Agreement shall affect any right that any Credit Party may otherwise have to bring any action or proceeding relating to this Agreement against a Loan Party or its
properties in the courts of any jurisdiction. 
  

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 (c) Each Loan Party agrees that any action commenced by any Loan Party asserting any claim or
counterclaim arising under or in connection with this Agreement or any other Loan Document shall be brought solely in the federal or state courts of the State of New York as the Administrative Agent may elect in its sole discretion and consents to
the exclusive jurisdiction of such courts with respect to any such action. 
 (d) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law. 

SECTION 9.10 WAIVER OF JURY TRIAL. 
 EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY) AND WAIVES THE RIGHT TO ASSERT ANY SETOFF, COUNTERCLAIM OR CROSS-CLAIM IN RESPECT OF, AND ALL STATUTES OF LIMITATIONS WHICH MAY BE RELEVANT TO,
SUCH ACTION OR PROCEEDING; AND WAIVES DUE DILIGENCE, DEMAND, PRESENTMENT AND PROTEST AND ANY NOTICES THEREOF AS WELL AS NOTICE OF NONPAYMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. 
 SECTION 9.11 Press Releases and Related
Matters. 
 Each Credit Party executing this Agreement agrees that neither it nor its Affiliates will in the future issue any press
releases or other public disclosure using the name of the Administrative Agent or its Affiliates or referring to this Agreement or the other Loan Documents without at least two (2) Business Days’ prior notice to the Initial Lender and the
Administrative Agent and without the prior written consent of the Initial Lender and the Administrative Agent unless (and only to the extent that) such Credit Party or Affiliate is required to do so under law and then, in any event, such Credit
Party or Affiliate will consult with the Administrative Agent before issuing such press release or other public disclosure. The Borrower consents to the publication by the Initial Lender and the Administrative Agent or any Lender of advertising
material relating to the financing transactions contemplated by this Agreement using the Borrower’s name, product photographs, logo or trademark. The Initial Lender and the Administrative Agent reserves the right to provide to industry trade
organizations information necessary and customary for inclusion in league table measurements. 
  

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 SECTION 9.12 Headings. 
 Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not
affect the construction of, or be taken into consideration in interpreting, this Agreement. 
 SECTION 9.13 Interest Rate
Limitation. 
 Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all
fees, charges and other amounts that are treated as interest on such Loan under Applicable Law (collectively, the “Charges”), shall be found by a court of competent jurisdiction in a final order to exceed the maximum lawful rate
(the “Maximum Rate”) that may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with Applicable Law, the rate of interest payable in respect of such Loan hereunder, together with
all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section
shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds
Effective Rate to the date of repayment, shall have been received by such Lender. 
 SECTION 9.14 Additional Waivers. 

(a) To the fullest extent permitted by Applicable Law, the obligations of each Loan Party hereunder shall not be affected by (i) the failure of
any Credit Party to assert any claim or demand or to enforce or exercise any right or remedy against any other Loan Party under the provisions of this Agreement, any other Loan Document or otherwise, (ii) any rescission, waiver, amendment or
modification of, or any release of any Loan Party from, any of the terms or provisions of, this Agreement, any other Loan Document, or (iii) the failure to perfect any security interest in, or the release of, any of the Collateral or other
security held by or on behalf of the Administrative Agent, the Collateral Agent or any other Credit Party. 
 (b) The obligations of each
Loan Party, whether set forth hereunder or pursuant to any Guaranty, to pay the Obligations in full hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than the indefeasible payment in full in
cash of the Obligations after the termination of all Commitments to any Loan Party under any Loan Document), including any claim of waiver, release, surrender, alteration or compromise of any of the Obligations, and shall not be subject to any
defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of any of the Obligations, or otherwise. Without limiting the generality of the foregoing, the obligations of each Loan
Party shall not be discharged or impaired or otherwise affected by the failure of the Administrative Agent or any other Credit Party to assert any claim or demand or to enforce any remedy under this Agreement, any other Loan Document or any 

  

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other agreement, by any waiver or modification of any provision of any thereof, any default, failure or delay, willful or otherwise, in the performance of
any of the Obligations, or by any other act or omission that may or might in any manner or to any extent vary the risk of any Loan Party or that would otherwise operate as a discharge of any Loan Party as a matter of law or equity (other than the
indefeasible payment in full in cash of all the Obligations after termination of all Commitments to any Loan Party under any Loan Document). 
 (c) To the fullest extent permitted by Applicable Law, each Loan Party waives any defense based on or arising out of any defense of any other Loan Party or the unenforceability of the Obligations or any part thereof from any cause, or the
cessation from any cause of the liability of any other Loan Party, other than the indefeasible payment in full in cash of all the Obligations after the termination of all Commitments to any Loan Party under any Loan Document. The Administrative
Agent and the other Credit Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any
part of the Obligations, make any other accommodation with any other Loan Party, or exercise any other right or remedy available to them against any other Loan Party, without affecting or impairing in any way the liability of any Loan Party
hereunder except to the extent that all the Obligations have been indefeasibly paid in full in cash and performed in full after the termination of Commitments to any Loan Party under any Loan Document. Pursuant to Applicable Law, each Loan Party
waives any defense arising out of any such election even though such election operates, pursuant to Applicable Law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Loan Party against any other
Loan Party, as the case may be, or any security. 
 (d) Any indebtedness of any Loan Party now or hereafter held by any other Loan Party or
any Subsidiary thereof is hereby subordinated in right of payment to the prior indefeasible payment in full of the Obligations and no Loan Party will demand, sue for or otherwise attempt to collect any such indebtedness. If any amount shall
erroneously be paid to any Loan Party or any such Subsidiary on account of (i) such subrogation, contribution, reimbursement, indemnity or similar right or (ii) any such indebtedness of any Loan Party, such amount shall be held in trust
for the benefit of the Credit Parties and shall forthwith be paid to the Administrative Agent, to be credited against the payment of the Obligations, whether matured or unmatured, in accordance with the terms of this Agreement and the other Loan
Documents. 
 (e) Without limiting the generality of the foregoing, or of any other waiver or other provision set forth in this Agreement,
each Loan Party waives all rights and defenses arising out of an election of remedies by any Credit Party, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed
such Credit Party’s rights of subrogation and reimbursement against such Loan Party by the operation of Section 580(d) of the California Code of Civil Procedure or otherwise. Each Loan Party waives all rights and defenses that such Loan
Party may have because the Obligations are secured by Real Estate which means, among other things: (i) a Credit Party may collect from any Loan Party without first foreclosing on any Real Estate or personal property Collateral pledged by a Loan
Party; (ii) if any Credit Party forecloses on any Real Estate pledged by any Loan Party, the amount of the Obligations may be reduced only by the price for which 

  

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that Real Estate is sold at the foreclosure sale, even if the Real Estate is worth more than the sale price; and (iii) the Credit Parties may collect
Obligations from a Loan Party even if a Credit Party, by foreclosing on any such Real Estate, has destroyed any right any Loan Party may have to collect from the other Loan Parties. This is an unconditional and irrevocable waiver of any rights and
defenses any Loan Party may have because the Obligations are secured by Real Estate. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure. Each Loan Party hereby absolutely, knowingly, unconditionally, and expressly waives any and all claim, defense or benefit arising directly or indirectly under any one or more of Sections 2787 to 2855 inclusive of the California Civil Code
or any similar law of California. 
 (f) Each Loan Party hereby agrees to keep each other Loan Party fully apprised at all times as to the
status of its business, affairs, finances, and financial condition, and its ability to perform its Obligations, and in particular as to any adverse developments with respect thereto. Each Loan Party hereby agrees to undertake to keep itself apprised
at all times as to the status of the business, affairs, finances, and financial condition of each other Loan Party, and of the ability of each other Loan Party to perform its Obligations, and in particular as to any adverse developments with respect
to any thereof. Each Loan Party hereby agrees, in light of the foregoing mutual covenants to inform each other, and to keep themselves and each other informed as to such matters, that the Credit Parties shall have no duty to inform any Loan Party of
any information pertaining to the business, affairs, finances, or financial condition of any other Loan Party, or pertaining to the ability of any other Loan Party to perform its Obligations, even if such information is adverse, and even if such
information might influence the decision of one or more of the Loan Parties to continue to be jointly and severally liable for, or to provide Collateral for, Obligations of one or more of the other Loan Parties. To the fullest extent permitted by
applicable law, each Loan Party hereby expressly waives any duty of the Credit Parties to inform any Loan Party of any such information. 
 SECTION 9.15 Confidentiality. 
 (a) Each of the Credit Parties agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to their Affiliates and their Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent
required by Applicable Law or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or
any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to any assignee of or Participant in, or any prospective assignee
of or Participant in, any of its rights or obligations under this Agreement and any actual or prospective counterparty or advisors to any swap or derivative transactions relating to the Loan Parties and the Obligations, (g) with the consent of
the Loan Parties or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to any Credit Party on a nonconfidential basis from a source other than
the Loan Parties. For the purposes of this Section, the term “Information,” 

  

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means all information received from the Loan Parties relating to their business, other than any such information that is available to the Credit Parties on a
nonconfidential basis prior to disclosure by the Loan Parties provided that, in the case of information received from the Loan Parties after the date hereof, such information is clearly identified at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information. 
 (b) Each of the Loans Parties agrees to maintain the
confidentiality of the Lender Information (as defined below), except that Lender Information may be disclosed (a) to their Affiliates and their Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and
other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any
regulatory authority, (c) to the extent required by Applicable Law or by any subpoena or similar legal process, (d) to any other party to this Agreement, or (e) with the consent of the Credit Parties. In the event that any Loan Party
is permitted to disclose Lender Information pursuant to clause (b) or (c) above, such Loan Party will notify the Credit Parties as early as practicable prior to such disclosure. For the purposes of this Section, the term “Lender
Information,” means all information received from the Loan Parties in connection with the Loan Documents or set forth therein, including, without limitation, the identity of the Credit Parties and their Affiliates. Any Person required to
maintain the confidentiality of Lender Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information
as such Person would accord to its own confidential information. 
 SECTION 9.16 Patriot Act. 
 Each Lender hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law
October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Borrower and the other Loan Parties, which information includes the name and address of the Borrower and the other Loan
Parties and other information that will allow such Lender to identify the Borrower and the other Loan Parties in accordance with the Act. The Borrower is in compliance, in all material respects, with the Patriot Act. No part of the proceeds of the
Loans will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain,
retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended. 
 SECTION 9.17 Foreign Asset Control Regulations. 
 Neither the advance of the Loans nor the use of the proceeds of any
thereof will violate the Trading With the Enemy Act (50 U.S.C. § 1 et seq., as amended) (the “Trading With the Enemy Act”) or any of the foreign assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) (the “Foreign Assets Control  

  

 - 87 - 

 
Regulations”) or any enabling legislation or executive order relating thereto (which for the avoidance of doubt shall include, but shall not be
limited to (a) Executive Order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the “Executive
Order”) and (b) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56)). Furthermore, none of the Borrower or its Affiliates (a) is or will
become a “blocked person” as described in the Executive Order, the Trading With the Enemy Act or the Foreign Assets Control Regulations or (b) engages or will engage in any dealings or transactions, or be otherwise associated, with
any such “blocked person” or in any manner violative of any such order. 
 SECTION 9.18 Rights of Initial Lender.

 All provisions contained in this Agreement requiring (a) the consent or approval of the Initial Lender and either or both of the
Agents or (b) the furnishing of the Initial Lender of documents and information, other than in its capacity as a Credit Party, shall cease to be effective with respect to the Initial Lender at any time when the Initial Lender holds less than a
majority of Aggregate Exposure under this Agreement. 
  

 - 88 - 

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

			
	AMERICAN APPAREL, INC., as Borrower
		
	By:	 	 /s/    Dov Charney

	Name:	 	Dov Charney
	Title:	 	CEO & President
	
	AMERICAN APPAREL (USA), LLC, as Facility Guarantor
		
	By:	 	 /s/    Dov Charney

	Name:	 	Dov Charney
	Title:	 	Sole Manager
	
	AMERICAN APPAREL, LLC, as Facility Guarantor
		
	By:	 	 /s/    Dov Charney

	Name:	 	Dov Charney
	Title:	 	Sole Manager
	
	KCL KNITTING, LLC, as Facility Guarantor
		
	By:	 	 AMERICAN APPAREL (USA), LLC

		
	By:	 	 /s/    Dov Charney

	Name:	 	Dov Charney
	Title:	 	Sole Manager

 [Signature Page to Second Lien Credit Agreement] 

			
	AMERICAN APPAREL RETAIL, INC., as Facility Guarantor
		
	By:	 	 /s/    Dov Charney

	Name:	 	Dov Charney
	Title:	 	CEO & President
	
	AMERICAN APPAREL DYEING & FINISHING, INC., as Facility Guarantor
		
	By:	 	 /s/    Dov Charney

	Name:	 	Dov Charney
	Title:	 	CEO & President
	
	FRESH AIR FREIGHT, INC., as Facility Guarantor
		
	By:	 	 /s/    Dov Charney

	Name:	 	Dov Charney
	Title:	 	CEO & President

 [Signature Page to Second Lien Credit Agreement] 

			
	 LION CAPITAL LLP,
 as Administrative
Agent, Collateral Agent and as a Lender

		
	By:	 	 /s/    Janet M Dunlop

	Name:	 	Janet M Dunlop
	Title:	 	(Under Power of Attorney)

 [Signature Page to Second Lien Credit Agreement] 

			
	 LION CAPITAL (GUERNSEY) II LIMITED,
 as Initial Lender

		
	By:	 	 /s/    Rob Jones

	Name:	 	Rob Jones
	Title:	 	Director

 [Signature Page to Second Lien Credit Agreement]Exhibit 10.2

 Exhibit 10.2 
  
  
  
 INVESTMENT AGREEMENT 
 dated as of
March 13, 2009 
 between 
 AMERICAN APPAREL, INC. 
 and 
 LION CAPITAL (GUERNSEY) II LIMITED 
  
  
  

 TABLE OF CONTENTS 
  

					
	 ARTICLE I TRANSACTIONS; CLOSING
	  	2
			
	1.1	  	Transactions	  	2
	 1.2
	  	Closing	  	2
		
	 ARTICLE II REPRESENTATIONS AND WARRANTIES
	  	3
			
	2.1	  	Disclosure	  	3
	 2.2
	  	Representations and Warranties of the Company	  	4
	 2.3
	  	Representations and Warranties of Investor	  	8
		
	 ARTICLE III COVENANTS
	  	10
			
	 3.1
	  	Filings; Other Actions	  	10
	 3.2
	  	Access, Information and Confidentiality	  	11
	 3.3
	  	Short Sales	  	12
		
	 ARTICLE IV ADDITIONAL AGREEMENTS
	  	12
			
	 4.1
	  	Board Representation	  	12
	 4.2
	  	Registration Rights	  	15
	 4.3
	  	Allocation	  	28
		
	 ARTICLE V MISCELLANEOUS
	  	29
			
	 5.1
	  	Expenses	  	29
	 5.2
	  	Amendment; Waiver	  	29
	 5.3
	  	Counterparts and Facsimile	  	29
	 5.4
	  	Governing Law; Jurisdiction	  	29
	 5.5
	  	WAIVER OF JURY TRIAL	  	30
	 5.6
	  	Notices	  	30
	 5.7
	  	Entire Agreement; Assignment	  	32
	 5.8
	  	Interpretation; Other Definitions	  	32
	 5.9
	  	Captions	  	33
	 5.10
	  	Severability	  	33
	 5.11
	  	No Third Party Beneficiaries	  	33
	 5.12
	  	Time of Essence	  	33
	 5.13
	  	Public Announcements	  	34
	 5.14
	  	Specific Performance	  	34

  

 ii 

 INDEX OF DEFINED TERMS 
  

			
	 Term
	 	 Location of Definition

	 Affiliate
	 	5.8(a)
	 Agreement
	 	Preamble
	 Alternate Investor Attendee
	 	4.1(d)
	 Board
	 	1.2(b)(1)(H)
	 beneficially own
	 	5.8(b)
	 business day
	 	5.8(f)
	 Capitalization Date
	 	2.2(a)
	 Closing
	 	1.2(a)
	 Closing Date
	 	1.2(a)
	 Common Stock
	 	Recitals
	 Company
	 	Preamble
	 Company Indemnitee
	 	4.2(g)(2)
	 Company Preferred Stock
	 	2.2(a)
	 Company Reports
	 	2.2(c)(1)
	 Company Subsidiary
	 	2.2(b)(4)
	 control/controlled by/under common control with
	 	5.8(a)
	 Credit Agreement
	 	Recitals
	 Demand Registration
	 	4.2(a)(1)
	 Demanding Other Holders
	 	4.2(a)(7)
	 Exchange Act
	 	2.2(c)(1)
	 Existing First Lien Credit Agreement
	 	Recitals
	 Existing First Lien Credit Agreement Amendment
	 	Recitals
	 Existing Second Lien Credit Agreement
	 	Recitals
	 Governmental Entity
	 	2.2(b)(5)
	 Holder
	 	4.2(j)(1)
	 Holder Indemnitee
	 	4.2(g)(1)
	 Holders’ Counsel
	 	4.2(j)(2)
	 HSR Act
	 	3.1
	 Indemnified Party
	 	4.2(g)(3)
	 Indemnifying Party
	 	4.2(g)(3)
	 Information
	 	3.2(b)
	 Investor
	 	Preamble
	 Investor Director
	 	4.1(a)
	 Investor Funds
	 	5.8(a)
	 Investor Observer
	 	4.1(a)
	 Issue Price
	 	4.3
	 knowledge
	 	5.8(h)
	 Liens
	 	2.2(b)(4)
	 Loans
	 	Recitals
	 material
	 	2.1(a)
	 Maximum Number of Shares
	 	4.2(a)(3)

  

 iii 

			
	 Term
	 	 Location of Definition

	 person
	 	5.8(g)
	 Piggyback Registration
	 	4.2(a)(4)
	 Previously Disclosed
	 	2.1(b)
	 register, registered and registration
	 	4.2(j)(3)
	 Registrable Securities
	 	4.2(j)(4)
	 Registration Expenses
	 	4.2(j)(5)
	 Rule 144
	 	4.2(j)(6)
	 Rule 405
	 	4.2(j)(6)
	 Rule 415
	 	4.2(j)(6)
	 SEC
	 	2.1(b)
	 Securities
	 	4.2(k)(7)
	 Securities Act
	 	2.2(c)(1)
	 Selling Expenses
	 	4.2(j)(8)
	 Shelf Registration Statement
	 	4.2(a)(2)
	 Special Registration
	 	4.2(i)
	 Subsidiary
	 	2.2(b)(4)
	 Valid Business Reason
	 	4.2(a)(1)
	 Voting Debt
	 	2.2(a)
	 Warrant
	 	Recitals
	 Warrant Stock
	 	3.3

  

 iv 

 LIST OF EXHIBITS 
  

			
	Exhibit A:            	  	Form of Warrant
		
	Exhibit B:	  	Non-Compete Agreement Amendment
		
	Exhibit C:	  	Lock-Up Agreement Amendment
		
	Exhibit D:	  	Investment Voting Agreement

  

 v 

 INVESTMENT AGREEMENT, dated as of March 13, 2009 (this “Agreement”), between
American Apparel, Inc., a Delaware corporation (the “Company”), and Lion Capital (Guernsey) II Limited, a Guernsey limited company (“Investor”). 
 RECITALS: 
 WHEREAS, Investor has agreed to make loans (the
“Loans”) to the Company upon the terms and conditions set forth hereinafter and in the Credit Agreement (as defined below), and the Company has agreed to issue to Investor a warrant (the “Warrant”) to purchase an
aggregate of 16,000,000 shares of common stock, par value $0.0001 per share, of the Company (the “Common Stock”) upon the terms and conditions set forth hereinafter; 
 WHEREAS, concurrently with the execution of this Agreement, the Company, Investor, Lion Capital LLP, as administrative agent and collateral agent,
and certain facility guarantors have entered into the Credit Agreement (the “Credit Agreement”), dated as of the date hereof, which provides for the making of the Loans by Investor, and the related Security Documents (as defined in
the Credit Agreement), and Lion Capital LLP has entered into the Intercreditor Agreement (as defined in the Credit Agreement), as second lien collateral agent thereunder, with lenders parties to the Credit Agreement, dated as of July 2, 2007,
as amended, among American Apparel (USA), LLC, the other borrowers from time to time party thereto, the facility guarantors from time to time party thereto, Bank of America, N.A., in its capacities as administrative agent and as collateral agent
thereunder, Wells Fargo Retail Finance, LLC, as collateral monitoring agent, and the lenders from time to time parties thereto (the “Existing First Lien Credit Agreement”); 
 WHEREAS, a portion of the Loans to be made by Investor to the Company shall be used by the Company to repay in full on the Closing Date (as
defined below) all outstanding amounts due and owing under the Credit Agreement, dated as of January 18, 2007, as amended, among American Apparel (USA), LLC, the facility guarantors from time to time party thereto, and SOF Investments, L.P.
Private IV, as lender (the “Existing Second Lien Credit Agreement”); and 
 WHEREAS, as a condition and inducement to
Investor’s willingness to enter into this Agreement and consummate the transactions contemplated hereby, concurrently with the execution of this Agreement, American Apparel (USA), LLC has executed and delivered to Investor Amendment No. 6
to the Existing First Lien Credit Agreement (the “Existing First Lien Credit Agreement Amendment”) which, among other things, includes the consent of the lenders parties to the Existing First Lien Credit Agreement to this Agreement
and the consummation of the transactions contemplated hereby. 
 NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements set forth herein, the parties agree as follows: 

 ARTICLE I 
 TRANSACTIONS; CLOSING 
 1.1 Transactions. On the terms and subject to the conditions set forth
herein, Investor will (a) make the Loans to the Company in accordance with the terms and conditions set forth hereinafter and in the Credit Agreement and (b) receive from the Company the Warrant. 
 1.2 Closing. 
 (a)
Subject to the satisfaction or waiver of the conditions precedent to Investor’s obligation to make the Loans to the Company set forth in Section 4.01 of the Credit Agreement, the closing (the “Closing”) of the transactions
contemplated by this Agreement shall take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Los Angeles, 300 South Grand Avenue, Suite 3400, California 90071 (or such other place as the parties mutually agree), at 9:00 a.m.,
California time, on March 13, 2009 (or such other time as the parties mutually agree). The date of the Closing is referred to as the “Closing Date”. 
 (b) At the Closing: 
 (1) the Company will deliver to Investor: 
 (A)(i) a Note (as defined in the Credit Agreement), duly executed on
behalf of the Company, dated the Closing Date, payable to the order of Investor in an aggregate principal amount of $75,000,000 and (ii) a Note (as defined in the Credit Agreement), duly executed on behalf of the Company, dated the Closing
Date, payable to the order of Lion Capital LLP in an aggregate principal amount of $5,000,000; 
 (B) a Warrant to purchase
16,000,000 shares of Common Stock in the form attached as Exhibit A hereto; 
 (C) the Credit Agreement, the Security
Documents and the Intercreditor Agreement, each duly executed by the Company; 
 (D) a payoff letter with respect to the
Existing Second Lien Credit Agreement, in form and substance reasonably satisfactory to Investor; 
 (E) each of the other
deliverables required to be delivered by the Company at the Closing pursuant to the Credit Agreement; 
  

 2 

 (F) an agreement, duly executed by Mr. Dov Charney, the Company and Investor,
extending through December 31, 2013 the time period applicable to the various non-competition and non-solicitation covenants contained in Section 5.27(a) of the Amended and Restated Agreement and Plan of Reorganization, dated as of
November 7, 2007, in the form attached as Exhibit B hereto, effective as of the Closing Date; 
 (G) an
agreement, duly executed by Mr. Dov Charney, the Company and Investor, extending through December 31, 2013 the “Restricted Period” in the Lock-Up Agreement, dated as of December 12, 2007, in the form attached as Exhibit
C hereto, effective as of the Closing Date; and 
 (H) an agreement, duly executed by Mr. Dov Charney and Investor,
providing for each party thereto to vote for the election of certain designated individuals to the Board of Directors of the Company (the “Board”), in the form attached as Exhibit D hereto, effective as of the Closing Date.

 (2) Investor will fund to the Company Loans in an aggregate amount required in accordance with the Credit Agreement,
Investor will deliver to the Company the Credit Agreement, duly executed by Investor, and Lion Capital LLP will deliver to the Company the Credit Agreement, the Security Documents (as defined in the Credit Agreement) and the Intercreditor Agreement
(as defined in the Credit Agreement), each duly executed by Lion Capital LLP. 
 ARTICLE II 
 REPRESENTATIONS AND WARRANTIES 
 2.1
Disclosure. (a) As used in this Agreement, any reference to any fact, change, circumstance or effect being “material” with respect to the Company means such fact, change, circumstance or effect is material in relation to
the business, assets, results of operations or financial condition of the Company and the Company Subsidiaries, taken as a whole. 
 (b) “Previously Disclosed” means information publicly disclosed by the Company in (1) its Annual Report on Form 10-K for the fiscal year ended December 31, 2007, as amended, (2) its Quarterly Reports on
Form 10-Q for the quarterly periods March 31, 2008, June 30, 2008 and September 30, 2008 or (3) any of its Current Reports on Form 8-K filed or furnished since December 31, 2007, in each case, as filed or furnished by
the Company with the U.S. Securities and Exchange Commission (the “SEC”) and publicly available prior to the date of this Agreement (excluding any risk factor disclosures contained in such documents under the heading “Risk
Factors” and any disclosure of risks included in any “forward-looking statements” disclaimer or other statements that are similarly non-specific and are predictive or forward-looking in nature). 
  

 3 

 (c) All of the representations and warranties contained in this Article II shall
terminate upon the Closing, except for the representations and warranties set forth in Sections 2.2(a), 2.2(b), 2.2(d), 2.2(e), 2.2(f), 2.3(a), 2.3(b) and 2.3(h), each of which shall survive until the first anniversary of the Closing Date. The
stockholders of the Company (other than Investor) are not entitled to rely upon the representations or warranties contained herein. 
 2.2
Representations and Warranties of the Company. Except as Previously Disclosed, the Company represents and warrants to Investor, as of the Closing Date (except to the extent expressly made only as of a specified date in which case as of such
date), that: 
 (a) Capitalization. The authorized capital stock of the Company consists of 120,000,000 shares of
Common Stock and 1,000,000 shares of preferred stock, par value $0.0001 per share, of the Company (the “Company Preferred Stock”). As of the close of business on March 11, 2009 (the “Capitalization Date”),
there were 71,033,757 shares of Common Stock outstanding and no shares of Company Preferred Stock outstanding. Since the Capitalization Date and through the date of this Agreement, except in connection with this Agreement and the transactions
contemplated hereby, the Company has not (i) issued or authorized the issuance of any shares of Common Stock or Company Preferred Stock, or any securities convertible into or exchangeable or exercisable for shares of Common Stock or Company
Preferred Stock, (ii) reserved for issuance any shares of Common Stock or Company Preferred Stock or (iii) repurchased or redeemed, or authorized the repurchase or redemption of, any shares of Common Stock or Company Preferred Stock. As of
the close of business on the Capitalization Date, except in connection with this Agreement and the transactions contemplated hereby, other than (i) awards outstanding under the Company’s 2007 Performance Equity Plan in respect of which an
aggregate of 11,000,000 shares of Common Stock have been reserved for issuance and (ii) as required pursuant to the warrants to purchase 1,000,000 shares of Common Stock of the Company issued to SOF Investments, L.P.—Private IV on
December 19, 2008, in respect of which an aggregate of 1,000,000 shares of Common Stock have been reserved for issuance, no shares of Common Stock or Company Preferred Stock were reserved for issuance. All of the issued and outstanding shares
of Common Stock and Company Preferred Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights. No bonds, debentures, notes or other indebtedness having the right to vote on any matters on
which the stockholders of the Company may vote (“Voting Debt”) are issued and outstanding. As of the date of this Agreement, except as expressly set forth in this Section 2.2(a), the Company does not have and is not bound by
any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of, or securities or rights convertible into or exchangeable for, any shares of Common Stock or Company
Preferred Stock or any other equity securities of the Company or Voting Debt or any securities representing the right to purchase or otherwise receive any shares of capital stock of the Company (including any rights plan or agreement). 

 

 4 

 (b) Authorization. (1) The Company has the corporate power and authority to
enter into this Agreement and to issue the Warrant and to carry out its obligations hereunder and thereunder. The execution, delivery and performance of this Agreement and the Warrant by the Company and the consummation of the transactions
contemplated hereby and thereby have been duly and unanimously authorized by the Board. No other corporate proceedings are necessary for the execution and delivery by the Company of this Agreement or the Warrant, the performance by it of its
obligations hereunder or thereunder or the consummation by it of the transactions contemplated hereby or thereby, including the authorization and issuance of the shares of Common Stock to be issued on exercise of the Warrant in accordance with the
terms thereof. 
 (2) This Agreement has been duly and validly executed and delivered by the Company and, assuming due
authorization, execution and delivery by Investor, is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms (except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles). 
 (3) The Warrant, when executed and delivered by the Company pursuant to this Agreement, will constitute a valid and legally binding
agreement of the Company enforceable in accordance with its terms (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or
affecting creditors’ rights or by general equity principles). 
 (4) None of the execution and delivery by the Company of
this Agreement and the Warrant, the consummation of the transactions contemplated hereby and thereby, and compliance by the Company with any of the provisions hereof or thereof (including, without limitation, the issuance of the shares of Common
Stock to be issued on exercise of the Warrant in accordance with the terms thereof), will (A) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or result in the loss of any benefit or creation of any right on the part of any third party under, or accelerate the performance required by, or result in a right of termination or
acceleration of, or result in the creation of any lien, charge, adverse right or claim, security interest and other encumbrance of any kind (“Liens”) upon any of the properties or assets of the Company or any Company Subsidiary
under any of the terms, conditions or provisions of 

  

 5 

 
(i) the certificate of incorporation or bylaws of the Company or the certificate of incorporation, charter, bylaws or other governing instrument of any
Company Subsidiary or (ii) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Company or any Company Subsidiary is a party or by which it may be bound, or to which the
Company or any Company Subsidiary or any of the properties or assets of the Company or any Company Subsidiary may be subject, or (B) subject to compliance with the statutes and regulations referred to in the next paragraph, violate any law,
statute, ordinance, rule, regulation, permit, concession, grant, franchise or any judgment, ruling, order, writ, injunction or decree applicable to the Company or any Company Subsidiary or any of their respective properties or assets, except in the
case of clauses (A)(ii) and (B) for such violations, conflicts and breaches as would not reasonably be expected to have a material adverse effect on the business, assets, results of operations or financial condition of the Company and the
Company Subsidiaries, taken as a whole, or materially and adversely affect the Company’s ability to perform its respective obligations under this Agreement or consummate the transactions contemplated hereby on a timely basis. As used herein,
“Subsidiary” means, with respect to any person, any corporation, partnership, joint venture, limited liability company or other entity (x) of which such person or a subsidiary of such person is a general partner or (y) of
which a majority of the voting securities or other voting interests, or a majority of the securities or other interests of which having by their terms ordinary voting power to elect a majority of the board of directors or persons performing similar
functions with respect to such entity, is directly or indirectly owned by such person and/or one or more subsidiaries thereof; and “Company Subsidiary” means any Subsidiary of the Company. 
 (5) No notice to, registration, declaration or filing with, exemption or review by, or authorization, order, consent or approval of, any
government or governmental or regulatory body thereof, or political subdivision thereof, whether federal, state, local, national, multi-national, or foreign, or any agency or instrumentality, authority, department, commission, board or bureau
thereof, any self-regulatory organization, or any court, arbitrator, arbitration panel or similar judicial body (each, a “Governmental Entity”), nor expiration or termination of any statutory waiting period, is necessary for the
consummation by Investor of the transactions contemplated by this Agreement. 
 (c) Reports. (1) Since
December 31, 2007, the Company and each Company Subsidiary has filed all material reports, registrations, documents, filings, statements and submissions, together with any amendments thereto, that it was required to file with any Governmental
Entity (the foregoing, collectively, the “Company Reports”) and has paid all material fees and assessments due and payable in connection therewith. As of their respective dates of filing, the 

  

 6 

 
Company Reports complied as to form in all material respects with the applicable requirements of the Securities Act of 1933, as amended (the
“Securities Act”) and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). To the knowledge of the Company, as of the date of this Agreement, there are no outstanding comments from the SEC or any
other Governmental Entity with respect to any Company Report. In the case of each such Company Report filed with or furnished to the SEC, such Company Report did not, as of its date or if amended prior to the date of this Agreement, as of the date
of such amendment, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements contained therein, in light of the circumstances under which they were
made, not misleading. No executive officer of the Company or any Company Subsidiary has failed in any respect to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act of 2002. 
 (2) The Company (A) has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the
Exchange Act) to ensure that material information relating to the Company, including the consolidated Company Subsidiaries, is made known to the chief executive officer and the chief financial officer of the Company by others within those entities,
and (B) has disclosed, based on its most recent evaluation prior to the date hereof, to the Company’s outside auditors and the audit committee of the Board (x) any significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information
and (y) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting. 
 (d) Anti-takeover Provisions Not Applicable. The Board has taken all necessary action to ensure that the transactions contemplated
by this Agreement and any of the transactions contemplated hereby will be deemed to be exceptions to the provisions of Section 203 of the Delaware General Corporation Law, and that any other similar “moratorium,” “control
share,” “fair price,” “takeover” or “interested stockholder” law does not and will not apply to this Agreement, the acquisition or exercise of the Warrant by Investor or any of its Affiliates or any of the
transactions contemplated hereby. 
 (e) Brokers and Finders. Except for Financo, Inc., neither the Company nor any
Company Subsidiary nor any of their respective officers, directors, employees or agents has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no broker or
finder has acted directly or indirectly for the Company or any Company Subsidiary, in connection with this Agreement or the transactions contemplated hereby. 
  

 7 

 (f) No Other Representations and Warranties. The Company acknowledges that, except
for the representations and warranties contained in Section 2.3 of this Agreement, Investor makes no express or implied representation or warranty in connection with this Agreement or the transactions contemplated hereby. 
 2.3 Representations and Warranties of Investor. Investor hereby represents and warrants to the Company, as of the Closing Date, that: 

(a) Organization and Authority. Investor is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified and where failure to be so
qualified would be reasonably expected to materially and adversely affect Investor’s ability to perform its obligations under this Agreement or consummate the transactions contemplated hereby on a timely basis. Investor has the corporate or
other power and authority and governmental authorizations to own its properties and assets and to carry on its business as it is now being conducted, except as would not be reasonably expected to materially and adversely affect Investor’s
ability to perform its obligations under this Agreement or consummate the transactions contemplated hereby on a timely basis. 
 (b) Authorization. (1) Investor has the corporate or other power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution, delivery and performance of this Agreement by Investor and
the consummation of the transactions contemplated hereby have been duly authorized by Investor’s shareholders and board of directors and no further approval or authorization by any of its shareholders, managers or other equity owners, as the
case may be, is required. This Agreement has been duly and validly executed and delivered by Investor and assuming due authorization, execution and delivery by the Company, is a valid and binding obligation of Investor enforceable against Investor
in accordance with its terms (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by
general equity principles). 
 (2) Neither the execution, delivery and performance by Investor of this Agreement, nor the
consummation of the transactions contemplated hereby, nor compliance by Investor with any of the provisions hereof, will (A) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any Lien upon any of
the properties or assets of Investor under any of the terms, conditions or provisions of (i) its memorandum of association or articles 

  

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or association or similar governing documents or (ii) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument
or obligation to which Investor is a party or by which it may be bound, or to which Investor or any of the properties or assets of Investor may be subject, or (B) subject to compliance with the statutes and regulations referred to in the next
paragraph, violate any law, statute, ordinance, rule or regulation, permit, concession, grant, franchise or any judgment, ruling, order, writ, injunction or decree applicable to Investor or any of its properties or assets, except in the case of
clauses (A)(ii) and (B) for such violations, conflicts and breaches as would not reasonably be expected to materially and adversely affect Investor’s ability to perform its respective obligations under this Agreement or consummate the
transactions contemplated hereby on a timely basis. 
 (3) No notice to, registration, declaration or filing with, exemption
or review by, or authorization, order, consent or approval of, any Governmental Entity, nor expiration or termination of any statutory waiting period, is necessary for the consummation by Investor of the transactions contemplated by this Agreement.

 (c) Purchase for Investment. Investor acknowledges that the neither the issuance or sale of the Warrant, nor the
issuance of the shares of Common Stock issuable upon the exercise thereof, have been registered under the Securities Act or under any state securities laws. Investor (1) is acquiring the Warrant and the shares of Common Stock issuable upon the
exercise thereof pursuant to an exemption from registration under the Securities Act solely for investment with no present intention to distribute any of the Securities to any person, (2) will not sell or otherwise dispose of any of the Warrant
or the shares of Common Stock issuable upon the exercise thereof, except in compliance with the registration requirements or exemption provisions of the Securities Act and any other applicable securities laws and (3) has such knowledge and
experience in financial and business matters and in investments of this type that it is capable of evaluating the merits and risks of its investment in the Warrant and the shares of Common Stock issuable upon the exercise thereof and of making an
informed investment decision. Investor has had a reasonable opportunity to ask questions of the Company and its representatives, and the Company has answered to the satisfaction of Investor all inquiries that Investor or Investor’s
representatives have put to it. 
 (d) Financial Capability. At the Closing, Investor will have available to it an
aggregate amount of immediately available funds necessary to consummate the Closing on the Closing Date on the terms and conditions contemplated by this Agreement. 
 (e) OFAC. Neither Investor, nor any of its shareholders nor any of their respective general partners or managers, appears on the
Specially Designated Nationals and Blocked Persons list published by the Office of Foreign Assets Control, United States Department of the Treasury. 
  

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 (f) Anti-Money Laundering Laws. To the knowledge of Investor, neither Investor nor
any of its shareholders nor any of their respective general partners or managers: (1) is under investigation by any governmental authority for, or has been charged with, or convicted of, money laundering, drug trafficking, terrorist related
activities, any crimes which in the United States would be predicate crimes to money laundering, or any violation of any applicable anti-money laundering laws; (2) has been assessed civil or criminal penalties under any applicable anti-money
laundering laws; or (3) has had any of its funds seized or forfeited in any action under any applicable anti-money laundering laws. The manager of Investor’s shareholders has established an anti-money laundering policy and program, which
includes written policies, procedures and internal controls reasonably designed to prevent, detect and report money laundering. 
 (g) No Short Sales. Investor represents and warrants that, since December 31, 2008, neither Investor nor, to its knowledge, any of its Affiliates has engaged in any short sale of any equity security of the Company. 

(h) No Other Representations and Warranties. Investor acknowledges that, except for the representations and warranties contained
in Section 2.2 of this Agreement and those contained in the Credit Agreement, the Company makes no express or implied representation or warranty in connection with this Agreement or the transactions contemplated hereby. 
 ARTICLE III 
 COVENANTS

 3.1 Filings; Other Actions. The Company shall take all action necessary to ensure that the shares of Common Stock issuable upon
exercise of the Warrant may be issued without violation of any applicable law, rule or regulation or any requirement of any exchange on which the Common Stock is then listed or quoted. The Company and Investor shall cooperate to take all such other
actions (including the preparing and filing of a supplemental listing application as promptly as practicable after Closing, and in any event no later than three business days after the Closing, such that the shares of Common Stock into which the
Warrant may be exercised will be authorized for listing on the NYSE Alternext U.S.) to the extent applicable and required to permit Investor or its Affiliates to exercise the Warrant for shares of Common Stock and to own such Common Stock without
Investor or its Affiliates being in violation of any applicable law, rule or regulation or requirement for any necessary approvals or authorizations of, filings or registrations with, or notifications to, any Governmental Entity, or expiration or
termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”). 
  

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 3.2 Access, Information and Confidentiality. 
 (a) From the date hereof, for so long as the Loans are outstanding and held by Investor or any of its Affiliates or any Warrants are held
by Investor or any of its Affiliates, the Company will permit Investor to visit and inspect, at Investor’s expense, the properties of the Company and the Company Subsidiaries, to examine the corporate books and to discuss the affairs, finances
and accounts of the Company and the Company Subsidiaries with the principal officers of the Company, all upon reasonable notice and at such reasonable times and as often as Investor may reasonably request. Any investigation pursuant to this
Section 3.2 shall be conducted during normal business hours and in such manner as not to interfere unreasonably with the conduct of the business of the Company, and nothing herein shall require the Company or any Company Subsidiary to disclose
any information to the extent (i) prohibited by applicable law or regulation, (ii) that the Company reasonably believes such information to be competitively sensitive information (except to the extent Investor provides written assurances
reasonably acceptable to the Company that such information shall not be used by Investor or its Affiliates to compete with the Company and Company Subsidiaries), or (iii) that such disclosure would reasonably be expected to cause a violation of
any agreement to which the Company or any Company Subsidiary is a party or would cause a risk of a loss of privilege to the Company or any Company Subsidiary (provided that the Company shall use commercially reasonable efforts to make
appropriate substitute disclosure arrangements under circumstances where the restrictions in this clause (iii) apply). 
 (b) Each party to this Agreement will hold, and will cause its respective Affiliates and its and their respective directors, officers, employees, partners, stockholders, agents, advisors and financing sources to hold, in strict confidence
all non-public records, books, contracts, instruments, computer data and other data and information, whether in written, verbal, graphic, electronic or any other form, including, without limitation, financial information, business plans, forecasts,
retail strategies and projections or analyses, together with any and all notes, analyses, compilations, studies, interpretations or other documents prepared by or on behalf of a party hereto or its representatives that contain, reflect or are
otherwise based upon, in whole or in part, such information (collectively, “Information”) concerning the other party hereto furnished to it by such other party or its representatives prior to or after the date hereof (except to the
extent that such information can be shown by a party to have been (i) previously known by such party on a non-confidential basis from a source other than the other party hereto or its representatives, provided that, to such party’s
knowledge, after due inquiry, such source is not prohibited from disclosing such information to such party or its representatives by a contractual, legal or fiduciary obligation to the other party hereto or its representatives, (ii) in the
public domain through no fault of such party or its representatives, (iii) independently developed by such party or on its behalf without use or reference to the Information, as shown by documents and other competent evidence in such
party’s possession, or (iv) later lawfully acquired from other sources), and neither party hereto shall 

  

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release or disclose such Information to any other person, except its Affiliates and its and their respective directors, officers, employees, agents,
auditors, attorneys, financial advisors, consultants and other advisors. In the event that a party hereto is requested or required by law, regulation, regulatory authority or other applicable judicial or governmental order to disclose any
Information concerning the other party hereto, such party shall, to the extent legally permissible, delay disclosure of such Information and (x) provide the other party with prompt written notice of such request or requirement, (y) consult
with the other party and its counsel on the advisability of taking legally available steps to resist or narrow such request and (z) assist the other party, at the other party’s expense, in seeking a protective order or other appropriate
remedy to limit or minimize such disclosure. If a protective order or other remedy is not obtained and such party is, based on the reasonable advice of counsel, legally required to disclose such Information, such party may disclose to the applicable
tribunal only that portion of such Information that such party is so legally required to disclose and will exercise reasonable efforts, upon the other party’s written request, to obtain assurance that confidential treatment will be accorded to
that portion of such Information that is being disclosed. In any event, such party and its representatives will not oppose action by the other party to obtain, at the other party’s expense, a protective order or other reliable assurance that
confidential treatment will be accorded such Information to be disclosed. 
 3.3 Short Sales. Investor hereby agrees that, from the
date hereof and for so long as Investor and its Affiliates beneficially own more than 6,000,000 shares of Common Stock issued or issuable upon exercise of the Warrant (“Warrant Stock”), neither Investor nor any of its Affiliates
shall engage in any transaction which constitutes a “naked short sale,” “short sale” or “short against the box” (as those terms are generally understood) with respect to any equity or debt securities of the Company;
provided that, for the avoidance of doubt, nothing herein shall be construed to prohibit Investor or any of its Affiliates from engaging in any collar transaction or any other hedging transaction with embedded options that allows Investor or
such Affiliate to hedge certain economic risks and/or the benefits of owning any such securities of the Company without transferring directly or indirectly all of the economic risks and benefits of owning such securities. 
 ARTICLE IV 
 ADDITIONAL AGREEMENTS

 4.1 Board Representation. (a) For so long as Investor and its Affiliates beneficially own at least 11,000,000 shares of
Warrant Stock, Investor shall have the right to designate two persons for nomination for election to the Board (each such designee, an “Investor Director”). For so long as Investor and its Affiliates beneficially own at least
6,000,000 shares of Warrant Stock but less than 11,000,000 shares of Warrant Stock, Investor shall have the right to designate one Investor Director for nomination for election to the Board. In addition, except as otherwise provided in
Section 4.1(f), for so long as Investor beneficially owns at least 1,000,000 shares of Warrant Stock, Investor shall have the right to designate one person as a non-voting Board observer (an “Investor Observer”). 
  

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 (b) For so long as Investor has the right to designate any person for nomination for
election to the Board pursuant to Section 4.1(a), the Company agrees to use its reasonable best efforts to cause the election of such person to the Board, including by (1) nominating such individual to be elected as a director as provided
herein, (2) including such nomination and other required information regarding such individual in the Company’s proxy statement for its annual meeting of stockholders and (3) soliciting or causing the solicitation of proxies in
connection with the election of such individual as a director. 
 (c) The Company shall, subject to applicable law and
regulatory requirements, use its reasonable best efforts to take all necessary or desirable actions as may be required under applicable law or regulatory requirements to cause the individuals designated by Investor as the initial Investor Directors
to be appointed or elected to the Board as soon as practicable but not later than the later of (1) the date which is 30 days after the Closing Date and (2) the date which is 30 days after receiving Investor’s written notice
of its designees (whether such notice is received before or after the Closing Date). 
 (d) For so long as Investor has the
right to designate any person for nomination for election to the Board pursuant to Section 4.1(a), in the event that a vacancy is created at any time by the death, disability, retirement, resignation or removal (with or without cause) of an
Investor Director, Investor shall have the right to designate a replacement to fill such vacancy, and the Company, subject to applicable law, shall use its reasonable best efforts to take all necessary or desirable actions as may be required under
applicable law to cause the individual designated by Investor to be appointed or elected. For so long as Investor has the right to designate any person for nomination for election to the Board pursuant to Section 4.1(a), the Company shall not
take any action to cause the removal of an Investor Director without cause unless it is directed to do so by Investor, and if the Company is so directed, the Company shall use its reasonable best efforts to take all necessary or desirable actions to
effect such removal and to elect a replacement Investor Director as provided in the immediately preceding sentence. In addition, for so long as Investor has the right to designate any person as an Investor Director, any such Investor Director may
designate at any time an alternate (an “Alternate Investor Attendee”) to attend a meeting of the Board as a non-voting attendee in lieu of such Investor Director. In such an event, such Alternate Investor Attendee shall be entitled
to attend such meeting of the Board, observe all deliberations of the Board and receive copies of materials provided to the Board, but such Alternate Investor Attendee shall not count for quorum purposes or be entitled to vote at such meeting.

 (e) In respect of any newly proposed Investor Director (other than the initial Investor Directors), Investor shall notify
the Company of the proposed Investor Director, in writing, a reasonable time in advance of the mailing of any 

  

 13 

 
proxy statement, information statement or registration statement in which any Board nominee or Board member of the Company would be named (which in the event
of any proxy statement relating to an annual meeting of stockholders of the Company shall be no later than 30 days prior to the first anniversary of the mailing of the proxy statement related to the previous year’s annual meeting of
stockholders), together with all information concerning such nominee reasonably requested by the Company, so that the Company can comply with applicable disclosure rules. 
 (f) For so long as Investor has the right to designate any person for nomination for election to the Board pursuant to
Section 4.1(a), the Company shall not (1) increase the size of the Board to more than 10 directors (or 13 directors in the event the Company elects to increase the size of the Board to 12 directors in accordance with this
Section 4.1(f)), or (2) amend its certificate of incorporation or bylaws in any manner (or take any similar action) that would materially and adversely affect Investor’s rights under this Section 4.1 or the Company’s ability
to comply with its obligations under this Section 4.1; provided, however, not later than 30 days after the Closing Date, the Company may take all actions necessary to increase the size of the Board to 12 directors, in which case
(A) Investor shall be entitled to a third Investor Director under Section 4.1(a) for so long as Investor beneficially owns at least 3,000,000 shares of Warrant Stock and (B) Investor shall not be entitled to the Investor Observer.

 (g) For so long as Investor has the right to designate any person as an Investor Observer pursuant to Section 4.1(a),
the Investor Observer shall be entitled to attend all meetings of the Board, observe all deliberations of the Board and receive copies of materials provided to the Board, provided that such Investor Observer shall have no voting rights with
respect to actions taken or elected not to be taken by the Board. 
 (h) The Company agrees to reimburse each Investor
Director, any Alternate Investor Attendee and the Investor Observer for all reasonable and documented out-of-pocket expenses incurred in connection with the performance of his or her duties as an Investor Director, Alternate Investor Attendee or
Investor Observer, as the case may be, including without limitation reasonable and documented out-of-pocket expenses incurred in attending meetings of the Board or any committee thereof, and each Investor Director shall be entitled to
indemnification arrangements and director and officer insurance coverage equivalent to such arrangements and insurance coverage applicable to all non-employee directors of the Company or to which all non-employee directors of the Company are
entitled or receive. Investor agrees that no Investor Director shall be entitled to any compensation for serving as a director of the Company. 
 (i) All obligations of the Company pursuant to this Section 4.1 relating to Investor Directors shall terminate immediately, and Investor shall cause the Investor Director or Investor Directors, as the case may
be, to resign promptly from the Board (and the Company shall be entitled to take all action to 

  

 14 

 
remove the Investor Directors from the Board), when Investor no longer has the right to designate any person as an Investor Director for nomination for
election to the Board pursuant to Section 4.1(a). Without prejudice to the foregoing, at any such time, the Investor Directors shall not vote or exercise any other rights or powers of office during the period pending resignation. Any vacancy
created by such resignation may be filled by the Board or the stockholders of the Company in accordance with the Company’s certificate of incorporation and bylaws and applicable law. 
 (j) All obligations of the Company pursuant to this Section 4.1 relating to the Investor Observer shall terminate immediately, and
Investor shall cause the Investor Observer to cease attending meetings of the Board (and the Company shall be entitled to take all action to prohibit such Investor Observer from attending meetings of the Board), when Investor no longer has the right
to designate an Investor Observer pursuant to Section 4.1(a). 
 4.2 Registration Rights. 
 (a) Registration. 
 (1) Subject to the terms and conditions of this Agreement, upon the written request of Investor, which may not be delivered prior to September 13, 2009, requesting that the Company effect the registration under
the Securities Act of at least $15 million of Investor’s Registrable Securities and specifying the number of Registrable Securities proposed to be sold and intended method of disposition thereof, the Company thereupon will, as expeditiously as
reasonably practicable, use its reasonable best efforts to effect the registration under the Securities Act pursuant to this Section 4.2 of the Registrable Securities which the Company has been so requested to register by Investor (a
“Demand Registration”); provided that in no event shall the Company be required to effect more than three Demand Registrations (each of which may involve an underwritten offering) pursuant to this Section 4.2(a)(1). The
Company may include in any such registration other securities for sale for its own account or for the account of any other person. If the Board, in its good faith judgment, determines that (A) any registration of Registrable Securities should
not be made or continued because it would materially interfere with any material financing, acquisition, corporate reorganization or merger or similar material transaction involving the Company, in each case, which is then under consideration by the
Company or (B) it would require the disclosure of material non-public information concerning the Company which at the time is not, in the good faith judgment of the Board (excluding the Investor Directors), in the best interests of the Company
to disclose and is not, in the opinion of the Company’s counsel, otherwise required to be disclosed (a “Valid Business Reason”), the Company may postpone filing a registration statement relating to a Demand Registration (but
not the preparation thereof) until such Valid Business Reason no 

  

 15 

 
longer exists, but in no event for more than 60 days during any 12-month period. The Company shall give written notice of its determination to postpone a
registration statement and of the fact that the Valid Business Reason for such postponement no longer exists, in each case, promptly after the occurrence thereof. If the Company gives the Holders notice of its determination to postpone a
registration statement, the Holders shall have the right, within 10 business days of receipt thereof, to withdraw their request for Demand Registration, in which case such request shall not be counted for purposes of this Section 4.2(a)(1).
Notwithstanding anything to the contrary contained herein, the Company may not postpone a filing under this Section 4.2 more than once in any 12-month period. 
 (2) Any registration pursuant to this Section 4.2(a) may be effected by means of a shelf registration under the Securities Act (a
“Shelf Registration Statement”) in accordance with the methods and distribution set forth in the Shelf Registration Statement and Rule 415. If Investor or any other holder of Registrable Securities to whom the registration rights
conferred by this Agreement have been transferred in compliance with this Agreement intends to distribute any Registrable Securities by means of an underwritten offering it shall promptly so advise the Company and the Company shall take all
reasonable steps to facilitate such distribution, including the actions required pursuant to Section 4.2(c). The underwriter(s) in any such distribution shall be selected by the Company; provided, however, that such underwriter(s) shall
be approved by holders of a majority of the Registrable Securities to be distributed, such approval not be unreasonably withheld. 
 (3) If a Demand Registration relates to an underwritten offering, and the managing underwriters advise the Company that in their reasonable opinion the dollar amount or number of shares of Registrable Securities requested to be included in
such registration and the shares of Common Stock, if any, as to which registration has been requested pursuant to written contractual piggy-back registration rights held by other stockholders of the Company who desire to sell exceeds the maximum
dollar amount or maximum number of shares which can be sold without adversely affecting the marketability of such offering (including an adverse effect on the per share offering price) (such maximum dollar amount or maximum number of shares, as
applicable, the “Maximum Number of Shares”), the Company will include in such registration or prospectus only such number of securities that in the reasonable opinion of such managing underwriters can be sold without adversely
affecting the marketability of the offering (including an adverse effect on the per share offering price), which securities will be so included in the following order of priority: (i) first, the Registrable Securities of Investor and all other
Holders who have requested registration of Registrable Securities pursuant to Section 4.2(a)(1), pro rata on the basis of the aggregate number of such securities or shares requested to be included by each such person, 

  

 16 

 
(ii) second, the securities the Company proposes to sell and (iii) third, any other securities of the Company that have been requested to be so
included, subject to the terms of this Agreement. 
 (4) Whenever the Company proposes to register any of its securities,
other than a Demand Registration pursuant to Section 4.2(a)(1) or a Special Registration, and the registration form to be filed may be used for the registration or qualification for distribution of Registrable Securities, the Company will give
prompt written notice to Investor and all other Holders of its intention to effect such a registration (but in no event less than 15 days prior to the anticipated filing date) and will include in such registration all Registrable Securities with
respect to which the Company has received written requests for inclusion therein within 10 days after the date of the Company’s notice (a “Piggyback Registration”). Any such person that has made such a written request may
withdraw its Registrable Securities from such Piggyback Registration by giving written notice to the Company and the managing underwriter, if any, on or before the second business day prior to the planned effective date of such Piggyback
Registration. The Company may terminate or withdraw any registration under this Section 4.2(a)(4) prior to the effectiveness of such registration, whether or not Investor or any other Holders have elected to include Registrable Securities in
such registration. 
 (5) If the registration referred to in Section 4.2(a)(4) is proposed to be underwritten, the
Company will so advise Investor and all other Holders as a part of the written notice given pursuant to Section 4.2(a)(4). In such event, the right of Investor and all other Holders to registration pursuant to this Section 4.2(a) will be
conditioned upon such persons’ participation in such underwriting and the inclusion of such person’s Registrable Securities in the underwriting, and each such person will (together with the Company and the other persons distributing their
securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. If any participating person disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to the Company, the managing underwriter and Investor. 
 (6) If a Piggyback Registration relates to an underwritten primary offering on behalf of the Company, and the managing underwriter(s) advise the Company that in their reasonable opinion the dollar amount or number of securities requested to
be included in such registration, taken together with the Registrable Securities as to which registration has been requested under this Section 4.2(a)(6) and the shares of Common Stock, if any, as to which registration has been requested
pursuant to the written contractual piggy-back registration right of other stockholders of the Company, exceeds the Maximum Number of Shares, 

  

 17 

 
the Company will include in such registration or prospectus only such number of securities that in the reasonable opinion of such managing underwriters can
be sold without adversely affecting the marketability of the offering (including an adverse effect on the per share offering price), which securities will be so included in the following order of priority: (i) first, the securities the Company
proposes to sell and (ii) second, Registrable Securities of Investor, all other Holders who have requested registration of Registrable Securities pursuant to Section 4.2(a)(4), and securities of any other stockholder exercising contractual
piggyback registration rights, pro rata on the basis of the aggregate number of such securities or shares requested to be included by each such person, subject to the terms of this Agreement. 
 (7) If a Piggyback Registration relates to an underwritten primary offering on behalf of any stockholders of the Company (other than a
Holder) who has exercised demand registration rights (the “Demanding Other Holders”), and the managing underwriter(s) advise the Company that in their reasonable opinion the dollar amount or number of securities requested to be
included in such registration, taken together with the Registrable Securities as to which registration has been requested under this Section 4.2(a)(7), and the shares of Common Stock, if any, as to which registration has been requested pursuant
to the written contractual piggy-back registration right of other stockholders of the Company, exceeds the Maximum Number of Shares, the Company will include in such registration or prospectus only such number of securities that in the reasonable
opinion of such managing underwriters can be sold without adversely affecting the marketability of the offering (including an adverse effect on the per share offering price), which securities will be so included in the following order of priority:
(i) first, the securities proposed to be sold by the Demanding Other Holders, if any, (ii) second, Registrable Securities of Investor, all other Holders who have requested registration of Registrable Securities pursuant to
Section 4.2(a)(4), and securities of any other stockholder exercising contractual piggyback registration rights, pro rata on the basis of the aggregate number of such securities or shares requested to be included by each such person and
(iii) third, the securities the Company proposes to sell, subject to the terms of this Agreement. 
 (b) Expenses of
Registration. All Registration Expenses incurred in connection with any registration, qualification or compliance hereunder shall be borne by the Company. All Selling Expenses incurred in connection with any registrations hereunder, shall be
borne by the holders of the securities so registered pro rata on the basis of the aggregate offering or sale price of the securities so registered. The Company shall not, however, be required to pay for expenses of any registration proceeding
begun pursuant to Section 4.2(a)(1), the request of which as been subsequently withdrawn by Investor or requesting Holder(s) unless (1) the withdrawal is based upon material adverse information concerning the Company that the Company had
not publicly revealed at least 48 

  

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hours prior to the request or that the Company had not otherwise notified Investor or Holders of at the time of such request, (2) unless the withdrawal
is pursuant to receipt of the Company’s notice of its determination to postpone a registration statement for a Valid Business Reason pursuant to Section 4.2(a)(1) or (3) Investor or a majority of the Holders agree to forfeit their
right to one requested registration pursuant to Section 4.2(a)(1) in which event such right shall be forfeited by all Holders. 
 (c) Obligations of the Company. Whenever required to effect the registration of any Registrable Securities or facilitate the distribution of Registrable Securities, the Company shall, as expeditiously as reasonably practicable:

 (1) Prepare and file with the SEC a registration statement on any form for which the Company then qualifies or that counsel
for the Company shall deem appropriate and which form shall be available for the registration of the Registrable Securities to be registered thereunder in accordance with the intended method of distribution thereof, and use its reasonable best
efforts to cause such filed registration statement to become effective without unreasonable delay and remain effective for not less than 90 days or until the date on which all Registrable Securities included in such registration statement shall have
been sold or shall have otherwise ceased to be Registrable Securities. 
 (2) Prepare and file with the SEC a prospectus or
prospectus supplement with respect to a proposed offering of Registrable Securities pursuant to an effective registration statement and, subject to Section 4.2(c), keep such prospectus or prospectus supplement current. 
 (3) Prepare and file with the SEC such amendments and supplements to the applicable registration statement and the prospectus or
prospectus supplement used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement. 

(4) Furnish to the Holders and any underwriters, upon written request of such Holders and underwriters, as applicable, such number of
copies of the applicable registration statement and each such amendment and supplement thereto (including in each case all exhibits) and of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act,
and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned or to be distributed by them. 
  

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 (5) Use its reasonable best efforts to register and qualify the securities covered by
such registration statement under such other securities or blue sky laws of such U.S. jurisdictions as shall be reasonably requested by the Holders or any managing underwriter(s), to keep such registration or qualification in effect for so long as
such registration statement remains in effect, and to take any other action which may be reasonably necessary to enable such seller to consummate the disposition in such jurisdictions of the securities owned by such Holder; provided that the
Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions. 
 (6) Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event as a result of which the applicable prospectus, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing. 
 (7)
Give written notice to the Holders requesting registration of Registrable Securities: 
 (A) when any registration statement
filed pursuant to Section 4.2 or any amendment thereto has been filed with the SEC and when such registration statement or any post-effective amendment thereto has become effective; 
 (B) of any request by the SEC for amendments or supplements to any registration statement or the prospectus included therein or for
additional information; 
 (C) of the issuance by the SEC of any stop order suspending the effectiveness of any registration
statement or the initiation of any proceedings for that purpose; 
 (D) of the receipt by the Company or its legal counsel of
any notification with respect to the suspension of the qualification of the Common Stock for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and 
 (E) of the happening of any event that requires the Company to make changes in any effective registration statement or the prospectus
related to the registration statement in order to make the statements therein not misleading (which notice shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made). 
 (8) Use its reasonable best efforts to prevent the issuance or obtain the withdrawal of any order suspending the effectiveness of any
registration statement referred to in Section 4.2(c)(7)(C) at the earliest practicable time. 
  

 20 

 (9) Cooperate with Investor to facilitate the timely delivery of Registrable Securities
to be sold, which shall not bear any restrictive legends, and to enable such Registrable Securities to be issued in such denominations and registered in such names as Investor may reasonably request at least two business days prior to the closing of
any sale of Registrable Securities. 
 (10) Upon the occurrence of any event contemplated by Section 4.2(c)(6) or
4.2(c)(7)(E), promptly prepare a post-effective amendment to such registration statement or a supplement to the related prospectus or file any other required document so that, as thereafter delivered to the Holders and any underwriters, the
prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the
Holders in accordance with Section 4.2(c)(7)(E) to suspend the use of the prospectus until the requisite changes to the prospectus have been made, then the Holders and any underwriters shall suspend use of such prospectus and use their
reasonable best efforts to return to the Company all copies of such prospectus (at the Company’s expense) other than permanent file copies then in such Holder’s or underwriter’s possession. The total number of days that any such
suspension may be in effect in any 180 day period shall not exceed 60 days. 
 (11) Use reasonable best efforts to procure the
cooperation of the Company’s transfer agent in settling any offering or sale of Registrable Securities, including with respect to the transfer of physical stock certificates into book-entry form in accordance with any procedures reasonably
requested by the Holders or any managing underwriter(s). 
 (12) Enter into an underwriting agreement in customary form, scope
and substance and take all such other actions reasonably requested by the managing underwriter(s), if any, to expedite or facilitate the underwritten disposition of such Registrable Securities, and in connection therewith in any underwritten
offering (including making members of management and executives of the Company reasonably available to participate in reasonable “road show”, similar sales events and other marketing activities), (i) make such representations and
warranties to the Holders that are selling stockholders and the managing underwriter(s), if any, with respect to the business of the Company and its subsidiaries, and the registration statement, prospectus and documents, if any, incorporated or
deemed to be incorporated by reference therein, in each case, in customary form, substance and scope, and, if true, confirm the same if and when requested, (ii) use its reasonable best efforts to furnish underwriters 

  

 21 

 
opinions of counsel to the Company, addressed to the managing underwriter(s), if any, covering the matters customarily covered in such opinions requested in
underwritten offerings, (iii) use its reasonable best efforts to obtain “comfort” letters from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any
business acquired by the Company for which financial statements and financial data are included in the registration statement) who have certified the financial statements included in such registration statement, addressed to each of the managing
underwriter(s), if any, such letters to be in customary form and covering matters of the type customarily covered in “comfort” letters, (iv) if an underwriting agreement is entered into, the same shall contain indemnification
provisions and procedures customary in underwritten offerings, and (v) deliver such documents and certificates as may be reasonably requested by the Holders of a majority of the Registrable Securities being sold in connection therewith, their
counsel and the managing underwriter(s), if any, to evidence the continued validity of the representations and warranties made pursuant to clause (i) above and to evidence compliance with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company. 
 (13) Make available for inspection by a representative of Holders
that are selling stockholders, the managing underwriter(s), if any, and any attorneys or accountants retained by such Holders or managing underwriter(s), at the offices where normally kept, during reasonable business hours, financial and other
records, pertinent corporate documents and properties of the Company, and cause the officers, directors and employees of the Company to supply all information in each case reasonably requested by any such representative, managing underwriter(s),
attorney or accountant in connection with such registration statement. 
 (14) Cause all such Registrable Securities to be
listed on each securities exchange on which similar securities issued by the Company are then listed or, if no similar securities issued by the Company are then listed on any securities exchange, use its reasonable best efforts to cause all such
Registrable Securities to be listed on the NYSE Alternext U.S., the New York Stock Exchange or the NASDAQ Stock Market, as determined by the Company; provided that the applicable listing requirements are satisfied. 
 (15) If requested by Holders of a majority of the Registrable Securities being registered and/or sold in connection therewith, or the
managing underwriter(s), if any, as soon as reasonably practicable include in a prospectus supplement or amendment such information as the Holders of a majority of the Registrable Securities being registered and/or sold in connection therewith or
managing underwriter(s), if any, as reasonably required to be included therein in order to permit the intended method of distribution of such securities and make all required filings of such prospectus supplement or such amendment as soon as
practicable after the Company has received such request. 
  

 22 

 (16) Timely provide to its security holders earning statements satisfying the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder. 
 (d) Suspension of Sales. Upon receipt of
written notice from the Company that a registration statement, prospectus or prospectus supplement contains or may contain an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make
the statements therein not misleading or that circumstances exist that make inadvisable use of such registration statement, prospectus or prospectus supplement, Investor and each other Holder of Registrable Securities shall forthwith discontinue
disposition of Registrable Securities until such Holder has received copies of a supplemented or amended prospectus or prospectus supplement, or until such Holder is advised in writing by the Company that the use of the prospectus and, if
applicable, prospectus supplement may be resumed, and, if so directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holder’s possession, of the
prospectus and, if applicable, prospectus supplement covering such Registrable Securities current at the time of receipt of such notice. The total number of days that any such suspension may be in effect in any 180 day period shall not exceed 60
days. 
 (e) Termination of Registration Rights. A Holder’s registration rights as to any securities held by such
Holder (and its Affiliates, partners, members and former members) shall not be available unless such securities are Registrable Securities. 
 (f) Furnishing Information. 
 (1) To the extent any “free writing
prospectus” (as defined in Rule 405) is used, the Company shall file with the SEC any free writing prospectus that is required to be filed by the Company with the SEC in accordance with the Securities Act and retain any free writing prospectus
not required to be filed. 
 (2) It shall be a condition precedent to the obligations of the Company to take any action
pursuant to Section 4.2(c) that Investor and/or the selling Holders and the underwriters, if any, shall furnish to the Company such information regarding themselves, the Registrable Securities held by them and the intended method of disposition
of such securities as shall be required to effect the registration of their Registrable Securities. 
  

 23 

 (g) Indemnification. 
 (1) The Company agrees to indemnify each Holder and each person, if any, that controls a Holder within the meaning of the Securities Act,
and their respective officers, directors, general or limited partners, members, shareholders, employees, agents, representatives and Affiliates, and each person who participates as an underwriter in an underwritten offering of Registrable Securities
and each person that controls such underwriter (each, a “Holder Indemnitee”), against any and all losses, claims, damages, actions, liabilities, costs and expenses (including without limitation reasonable fees, expenses and
disbursements of attorneys and other professionals incurred in connection with investigating, defending, settling, compromising or paying any such losses, claims, damages, actions, liabilities, costs and expenses), joint or several, arising out of
or based upon any untrue statement or alleged untrue statement of material fact contained in any registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto or any
documents incorporated therein by reference or contained in any free writing prospectus (as such term is defined in Rule 405) prepared by the Company or authorized by it in writing for use by such Holder (or any amendment or supplement thereto), or
any omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, that the Company shall not be liable
to such Holder Indemnitee in any such case to the extent that any such loss, claim, damage, action, liability, cost and expenses (including without limitation reasonable fees, expenses and disbursements of attorneys and other professionals incurred
in connection with investigating, defending, settling, compromising or paying any such losses, claims, damages actions, liabilities, costs and expenses) results from an untrue statement or omission made in such registration statement, including any
such preliminary prospectus or final prospectus contained therein or any such amendments or supplements thereto, in reliance upon and in conformity with information furnished in writing to the Company by such Holder Indemnitee expressly for use in
connection with such registration statement, including any such preliminary prospectus or final prospectus contained therein or any such amendments or supplements thereto. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any Holder Indemnitee and shall survive the transfer of Registrable Securities by any seller. 
 (2) Each Holder agrees to indemnify the Company, each person, if any, that controls the Company within the meaning of the Securities Act, and their respective officers, directors, general or limited partners, members, shareholders,
employees, agents, representatives and Affiliates, and each person who participates as an underwriter in an underwritten offering of Registrable Securities and each person that controls such underwriter (each, a “Company
Indemnitee”), against any and all losses, claims, damages, actions, liabilities, costs and expenses 

  

 24 

 
(including without limitation reasonable fees, expenses and disbursements of attorneys and other professionals incurred in connection with investigating,
defending, settling, compromising or paying any such losses, claims, damages, actions, liabilities, costs and expenses), joint or several, arising out of or based upon any untrue statement or alleged untrue statement of material fact contained in
any registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto or any documents incorporated therein by reference or contained in any free writing prospectus (as such
term is defined in Rule 405) prepared by the Company or authorized by it in writing for use by such Holder (or any amendment or supplement thereto), or any omission to state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were made, not misleading, to the extent that the statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company by such
Company Indemnitee expressly for use in connection with such registration statement, including any such preliminary prospectus or final prospectus contained therein or any such amendments or supplements thereto. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of any Company Indemnitee and shall survive the transfer of Registrable Securities by any seller. 
 (3) Promptly after receipt by any person of any notice of any loss, claim, damage, action, liability, costs of expenses in respect of
which indemnity may be sought pursuant to Section 4.2(g)(1) or Section 4.2(g)(2), such person (the “Indemnified Party”) shall, if a claim in respect thereof is to be made against any other person for indemnification
hereunder, notify such other person (the “Indemnifying Party”) in writing of the loss, claim, damage, action, liability, costs of expenses; provided, however, that the failure by the Indemnified Party to notify the
Indemnifying Party shall not relieve the Indemnifying Party from any liability which the Indemnifying Party may have to such Indemnified Party hereunder, except and solely to the extent the Indemnifying Party is actually prejudiced by such failure.
If the Indemnified Party is seeking indemnification with respect to any claim or action brought against the Indemnified Party, then the Indemnifying Party shall be entitled to participate in such claim or action, and, to the extent that it wishes,
jointly with all other Indemnifying Parties, to assume control of the defense thereof with counsel satisfactory to the Indemnified Party. After notice from the Indemnifying Party to the Indemnified Party of its election to assume control of the
defense of such claim or action, the Indemnifying Party shall not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof other than reasonable costs of
investigation; provided, however, that in any action in which both the Indemnified 

  

 25 

 
Party and the Indemnifying Party are named as defendants, the Indemnified Party shall have the right to employ separate counsel (but no more than one such
separate counsel) to represent the Indemnified Party and its controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Indemnified Party against the Indemnifying Party, with the
fees and expenses of such counsel to be paid by such Indemnifying Party if, based upon the written opinion of counsel of such Indemnified Party, representation of both parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, consent to entry of judgment or effect any settlement of any claim or pending or threatened proceeding in respect of which the
Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such judgment or settlement includes an unconditional release of such Indemnified Party from all liability arising out
of such claim or proceeding. 
 (4) If for any reason the indemnification provided for in Section 4.2(g)(1) or
Section 4.2(g)(2) is unavailable to the Indemnified Party with respect to any losses, claims, damages, actions, liabilities, costs or expenses contemplated by Section 4.2(g)(1) and Section 4.2(g)(2) or is insufficient to hold the
Indemnified Party harmless as contemplated by Section 4.2(g)(1) or Section 4.2(g)(2), as the case may be, then the Indemnifying Party shall contribute to the amount paid or payable by the indemnified party as result of such losses, claims,
damages, action, liabilities, costs or expenses in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and the Indemnified Party, as well as any other relevant equitable considerations. The relative fault of the
Indemnified Party, on the one hand, and of the Indemnifying Party, on the other hand, shall be determined by reference to, among other factors, whether the untrue statement of a material fact or omission to state a material fact relates to
information supplied by the Company or by the Holder Indemnitee and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; the Company and each Holder agree that it would
not be just and equitable if contribution pursuant to this Section 4.2(g)(4) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in this
Section 4.2(g)(4). No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
Notwithstanding any provisions of this Article IV to the contrary, each Holder’s indemnification obligations hereunder shall be several and not joint and shall be limited to the amount of any net proceeds actually received by such Holder.

  

 26 

 (h) Assignment of Registration Rights. The rights of Investor to registration of
Registrable Securities pursuant to Section 4.2(a) may be assigned by Investor, in whole or in part, to any transferee or assignee of Registrable Securities; provided, however, the transferor shall, within 10 days after such
transfer, furnish to the Company written notice of the name and address of such transferee or assignee and the number and type of Registrable Securities that are being assigned and, as a condition to the effectiveness of such transfer, such
transferee or assignee shall agree in writing to be bound by all applicable obligations, and be entitled to all applicable rights, set forth in this Section 4.2 in a manner reasonably satisfactory to the Company. 
 (i) With respect to any underwritten offering of Registrable Securities by Investor or other Holders pursuant to this Section 4.2,
the Company agrees not to effect (other than pursuant to such registration or pursuant to a Special Registration) any public sale or distribution, or to file any registration statement (other than such registration or a Special Registration)
covering any of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the period not to exceed ten days prior and 90 days following the effective date of such offering, if requested by
the managing underwriter. “Special Registration” means the registration of (i) equity securities and/or options or other rights in respect thereof solely registered on Form S-4 or Form S-8 (or successor forms) or
(ii) shares of equity securities and/or options or other rights in respect thereof to be offered to directors, members of management, employees, consultants, customers, lenders or vendors of the Company or its direct or indirect Subsidiaries or
in connection with dividend reinvestment plans. 
 (j) As used in this Section 4.2, the following terms shall have the
following respective meanings: 
 (1) “Holder” means Investor and any other holder of Registrable Securities
to whom the registration rights conferred by this Agreement have been transferred in compliance with Section 4.2(h) hereof. 
 (2) “Holders’ Counsel” means one counsel for the selling Holders chosen by Holders holding a majority interest in the Registrable Securities being registered. 
 (3) “register,” “registered,” and “registration” shall refer to a registration effected
by preparing and (a) filing a registration statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of effectiveness of such registration statement or (b) filing a
prospectus and/or prospectus supplement in respect of an appropriate effective registration statement on Form S-3. 
  

 27 

 (4) “Registrable Securities” means the Securities (and any shares of
capital stock or other equity interests issued or issuable to any Holder with respect to such Securities by way of stock dividends or stock splits or in connection with a combination of shares, recapitalization, merger, reorganization,
reclassification or similar transaction), provided that, once issued, such Securities will not be Registrable Securities when (i) they are sold pursuant to an effective registration statement under the Securities Act, (ii) they are
sold pursuant to Rule 144, (iii) they are sold in a private transaction in which the transferor’s rights under this Agreement are not assigned or, (iii) they shall have ceased to be outstanding. 
 (5) “Registration Expenses” mean all expenses incurred by the Company in effecting any registration pursuant to this
Agreement (whether or not any registration or prospectus becomes effective or final) or otherwise complying with its obligations under this Section 4.2, including, without limitation, all registration, filing and listing fees, printing
expenses, fees and disbursements of counsel for the Company, blue sky fees and expenses, expenses incurred in connection with any “road show”, rating agency fees, the reasonable fees and disbursements of a single law firm acting as
Holders’ Counsel, the reasonable fees and disbursements of the Company’s counsel, expenses of the Company’s independent accountants in connection with any regular or special reviews or audits or “comfort” letters incident to
or required by any such registration, and any reasonable fees and disbursements of underwriters customarily paid by the issuers, including liability insurance if the Company so desires, but shall not include Selling Expenses. 
 (6) “Rule 144”, “Rule 405” and “Rule 415” mean, in each case, such rule promulgated
under the Securities Act (or any successor provision), as the same shall be amended from time to time. 
 (7)
“Securities” means the shares of Common Stock issuable upon the exercise of the Warrant. 
 (8)
“Selling Expenses” mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities and fees and disbursements of counsel for any Holder (other than the fees and
disbursements of Holders’ Counsel included in Registration Expenses). 
 (k) Without limiting any of the remedies
available to any Holder at law or in equity, the parties agree that the failure of the Company to effect any registration shall not result in any cash settlement of any Warrant. 
 4.3 Allocation. A portion of the aggregate amount funded by Investor to the Company (the “Issue Price”) shall be allocated to the
Warrant and deemed to be the purchase price paid by Investor in respect of the Warrant. As promptly as practicable but 
  

 28 

 
in no event more than 30 days after the Closing Date, the parties shall agree in writing the allocation of the Issue Price to the Loans and to the Warrant.
Neither the Company nor Investor shall take any position (whether in financial statements, tax returns, tax audits or otherwise) that is inconsistent with, and shall file all tax returns consistent with, such allocation. 
 ARTICLE V 
 MISCELLANEOUS

 5.1 Expenses. Each of the parties will bear and pay all costs and expenses incurred by it or on its behalf in connection with
the transactions contemplated pursuant to this Agreement; except that the Company shall bear and, upon Investor’s request, reimburse Investor for all of the reasonable out-of-pocket expenses of Investor and its Affiliates incurred in connection
with their review of the Company and its Affiliates, the negotiation and preparation of this Agreement and the funding and other actions undertaken to consummate the transactions contemplated pursuant to this Agreement (including the reasonable fees
and expenses of attorneys, accountants, consultants and other advisors and HSR Act filing fees incurred by or on behalf of Investor or its Affiliates in connection with the transactions contemplated pursuant to this Agreement). 
 5.2 Amendment; Waiver. No amendment or waiver of any provision of this Agreement will be effective with respect to any party unless made in
writing and signed by an officer of a duly authorized representative of such party (provided that Section 4.2 may be amended or waived in a writing signed by the Company and the Holder(s) of a majority of Registrable Securities (or
Warrants exercisable therefor)). No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The conditions to each party’s obligation to consummate the Closing are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by
applicable law. No waiver of any party to this Agreement, as the case may be, will be effective unless it is in a writing signed by a duly authorized officer of the waiving party that makes express reference to the provision or provisions subject to
such waiver. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. 
 5.3
Counterparts and Facsimile. For the convenience of the parties hereto, this Agreement may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will
together constitute the same agreement. Executed signature pages to this Agreement may be delivered by facsimile or other electronic means and such electronic signature pages will be deemed as sufficient as if physical signature pages had been
delivered. 
 5.4 Governing Law; Jurisdiction. This Agreement will be governed by and construed in accordance with the laws of the
State of New York. Any action against either party hereto, including any action for provisional or conservatory measures or action to enforce any judgment entered by any court in respect of any thereof, may be 
  

 29 

 
brought in any federal or state court of competent jurisdiction located in the Borough of Manhattan in the State of New York, and each party hereto
irrevocably consents to the jurisdiction and venue in the United States District Court for the Southern District of New York and in the courts hearing appeals therefrom unless no federal subject matter jurisdiction exists, in which event, each party
hereto irrevocably consents to jurisdiction and venue in the Supreme Court of the State of New York, New York County, and in the courts hearing appeals therefrom. Each party hereto hereby irrevocably waives, and agrees not to assert, by way of
motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement, any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure to serve
process in accordance with this Agreement, that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise), and to the fullest extent permitted by applicable law, that the suit, action or proceeding in any such court is brought in an inconvenient forum, that the venue of such
suit, action or proceeding is improper, or that this Agreement, or the subject matter hereof or thereof, may not be enforced in or by such courts and further irrevocably waives, to the fullest extent permitted by applicable law, the benefit of any
defense that would hinder, fetter or delay the levy, execution or collection of any amount to which the party is entitled pursuant to the final judgment of any court having jurisdiction. Each party expressly acknowledges that the foregoing waiver is
intended to be irrevocable under the laws of the State of New York and of the United States of America. 
 5.5 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 
 5.6 Notices. Any notice, request, instruction or other document to be given hereunder by any party to the other will be in writing and will be
deemed to have been duly given (a) on the date of delivery if delivered personally or by telecopy or facsimile, upon confirmation of receipt, (b) on the first business day following the date of dispatch if delivered by a recognized
next-day courier service, or (c) on the third business day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the party to receive such notice. 
  

	 	(a)	If to Investor to it at: 

  

	 	  	Lion Capital (Guernsey) II Limited 

	 	  	PO Box 656 

	 	  	2nd Floor, Tudor House 

	 	  	Le Bordage 

	 	  	St Peter Port 

	 	  	Guernsey 

  

 30 

	 	  	GY1 3PP 

	 	  	Attn: Rob Jones 

	 	  	Telephone: +44 (0) 1481 749711 

	 	  	Fax: +44 (0) 1481 749749 

  

	 	  	with copies to: 

  

	 	  	Lion Capital (Americas) Inc. 

	 	  	888 Seventh Avenue 

	 	  	New York, New York 10019 

	 	  	Attn: Jacob Capps 

	 	  	Telephone: (212) 314-1903 

	 	  	Fax: (212) 314-1950 

  

	 	  	Lion Capital LLP 

	 	  	21 Grosvenor Place 

	 	  	London 

	 	  	SW1X 7HF 

	 	  	United Kingdom 

	 	  	Attn: Janet Dunlop 

	 	  	Telephone: +44 20 7201 2247 

	 	  	Fax: +44 20 7201 2222 

  

	 	  	with a copy to (which copy alone shall not constitute notice): 

  

	 	  	Simpson Thacher & Bartlett LLP 

	 	  	425 Lexington Avenue 

	 	  	New York, New York 10017 

	 	  	Attn: Kathryn King Sudol 

	 	  	Telephone: (212) 455-2000 

	 	  	Fax: (212) 455-2502 

  

	 	(b)	If to the Company: 

  

	 	  	American Apparel, Inc. 

	 	  	747 Warehouse Street 

	 	  	Los Angeles, California 90021-1106 

	 	  	Attention: General Counsel 

	 	  	Tel. No.: (213) 488-0266 

	 	  	Fax No.: (213) 201-3062 

  

	 	  	with a copy to (which copy alone shall not constitute notice): 

  

	 	  	Skadden, Arps, Slate, Meagher & Flom LLP 

	 	  	300 South Grand Avenue, Suite 3400 

	 	  	Los Angeles, CA 90071 

	 	  	Attention: Jeffrey H. Cohen & David C. Eisman 

	 	  	Tel. No.: (213) 687-5288 and (213) 687-5381 

	 	  	Fax No.: (213) 621-5288 and (213) 621-5381 

  

 31 

 5.7 Entire Agreement; Assignment. (a) This Agreement (including the Exhibits hereto)
constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof except for the Credit Agreement and each
of the related Loan Documents (as defined in the Credit Agreement); and (b) this Agreement will not be assignable by operation of law (other than in connection with a merger, consolidation or similar transaction) or otherwise (any attempted
assignment in contravention hereof being null and void); provided that Investor may assign all or part of its rights and obligations under this Agreement (i) to one or more Affiliates, but only if the transferee agrees in writing for the
benefit of the Company (with a copy thereof to be furnished to the Company) to be bound by the terms of this Agreement (any such transferee shall be included in the term “Investor”), and (ii) as provided in Section 4.2;
provided, further, that no such assignment shall relieve Investor of its obligations set forth in Section 3.2(b). 
 5.8
Interpretation; Other Definitions. Wherever required by the context of this Agreement, the singular shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa, and references
to any agreement, document or instrument shall be deemed to refer to such agreement, document or instrument as amended, supplemented or modified from time to time. All article, section, paragraph or clause references not attributed to a particular
document shall be references to such parts of this Agreement, and all exhibit, annex and schedule references not attributed to a particular document shall be references to such exhibits, annexes and schedules to this Agreement. Any requirements
contained herein based on beneficial ownership of a specific number of shares of Common Stock shall be deemed adjusted accordingly to reflect any stock split, reverse stock split or similar transaction. In addition, the following terms are ascribed
the following meanings: 
 (a) the term “Affiliate” means, with respect to any person, any person directly or
indirectly controlling, controlled by or under common control with, such other person, and, with respect to Investor, shall include without limitation (i) Lion Capital Fund II, L.P., Lion Capital Fund II B, L.P. and Lion Capital Fund II
SBS, L.P. (the “Investor Funds”), (ii) the general partner or manager of each Investor Fund and (iii) any other person controlling, controlled by or under common control with any of the foregoing. For purposes of this
definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) when used with respect to any person, means the possession, directly or
indirectly, of the power to cause the direction of management or policies of such person, whether through the ownership of voting securities by contract or otherwise; 
 (b) the term “beneficially own” has the meaning given to it in Rule 13d-3 under the Exchange Act; 
  

 32 

 (c) the word “or” is not exclusive; 
 (d) the words “including,” “includes,” “included” and “include” are
deemed to be followed by the words “without limitation”; and 
 (e) the terms “herein,”
“hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision; 
 (f) “business day” means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which
banking institutions in the State of New York or in the State of California generally are authorized or required by law or other governmental action to close; 
 (g) “person” has the meaning given to it in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and
14(d)(2) of the Exchange Act; and 
 (h) “knowledge” of a party means the actual knowledge of the
“officers” (as such term is defined in Rule 3b-2 under the Exchange Act) of such party. 
 5.9 Captions. The article,
section, paragraph and clause captions herein are for convenience of reference only, do not constitute part of this Agreement and will not be deemed to limit or otherwise affect any of the provisions hereof. 
 5.10 Severability. If any provision of this Agreement or the application thereof to any person (including the officers and directors of the
parties hereto) or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to which
it has been held invalid or unenforceable, will remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such determination, the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties. 
 5.11 No Third Party Beneficiaries. Nothing contained in this Agreement, expressed or implied, is intended to confer upon any person other than the
parties hereto, any benefit right or remedies, except that the provisions of Section 4.2 shall inure to the benefit of the persons to whom the registration rights conferred by this Agreement have been transferred in compliance with
Section 4.2(h) hereof. 
 5.12 Time of Essence. Time is of the essence in the performance of each and every term of this
Agreement. 
  

 33 

 5.13 Public Announcements. Subject to each party’s disclosure obligations imposed by law or
regulation or the rules of any stock exchange upon which its securities are listed, each of the parties hereto will cooperate with each other in the development and distribution of all news releases and other public information disclosures with
respect to this Agreement and any of the transactions contemplated by this Agreement, and neither the Company nor Investor will make any such news release or public disclosure without first consulting with the other, and, in each case, also
receiving the other’s consent (which shall not be unreasonably withheld or delayed) and each party shall coordinate with the party whose consent is required with respect to any such news release or public disclosure. 
 5.14 Specific Performance. The parties hereby acknowledge and agree that each party would not have an adequate remedy at law for money damages,
and irreparable damage would occur, in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that any party shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement by the other party and to enforce specifically the terms and provisions of this Agreement against the other party, this being in addition to any other remedy to which either such party
is entitled at law or in equity, and each party waives (a) the defense in any action for an injunction or other equitable relief that a remedy at law would be adequate and (b) agrees that any such action for injunctive relief or specific
performance may be brought in (and hereby irrevocably submits to the jurisdiction of) any federal or state court in the State of New York. 
 (Remainder of Page Intentionally Left Blank) 
  

 34 

 IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized
officers of the parties hereto as of the date first herein above written. 
  

			
	AMERICAN APPAREL, INC.
		
	By:	 	 /s/    Dov Charney

	Name:	 	Dov Charney
	Title:	 	CEO & President

 [Signature Page to Investment Agreement] 

			
	LION CAPITAL (GUERNSEY) II LIMITED
		
	By:	 	 /s/    Rob Jones

	Name:	 	Rob Jones
	Title:	 	Director

 [Signature Page to Investment Agreement]

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