Document:

EX-10.1

Exhibit 10.1

Gordon A. Ulsh

President and

Chief Executive Officer

Exide Technologies

Corporate Headquarters

13000 Deerfield Parkway, Bldg. 200

Alpharetta, GA 30004

678-556-9000 tel

678-566-9171 fax

www.exide.com

January 28, 2009

Board of Directors of Exide Technologies

13000 Deerfield Parkway

Building 200

Alpharetta, Georgia 30004

Gentlemen:

As you know, under the terms of my Amended and Restated Employment Agreement (“Employment
Agreement”), dated January 31, 2008, Section 5(a) provides that my salary shall be increased to no
less than $1,000,000 effective April 1, 2009. Given the current economic environment, and the
Company’s decision to defer indefinitely annual merit increases for salaried employees not subject
to collective bargaining agreements, I propose the following amendments to my Employment Agreement:

	 	•	 	The scheduled increase in my base salary specified in Section 5(a) of the Employment
Agreement will be deferred or postponed indefinitely, subject to being reinstated at a
later date pursuant to the provisions of the following bullet point.

	 	•	 	Upon providing written notice to the Board of Directors of my intention to activate my
base salary increase from $950,000 to an amount not less than $1,000,000, my salary will
increase to $1,000,000 per annum (or such higher amount as may be established by the
Board), which increase will become effective beginning with the next bi-monthly pay period
after such notice is given and shall not be retroactive to April 1, 2009.

	 	•	 	Any Bonus or Equity Awards, payable for fiscal 2010, will be based on a base salary of
$950,000, unless I have provided written notice to the Board of Directors of my decision to
re-instate my base salary increase prior to March 15, 2010.

Defined terms are used as defined in the Employment Agreement unless otherwise defined in this
letter. If this amendment to the Employment Agreement is acceptable to the Board of Directors,
please sign and date below.

      /s/ Gordon A. Ulsh—

Gordon A. Ulsh

      /s/ John P. Reilly—

John P. Reilly

Chairman

Date: January 28, 2009ex10-1.htm

     

    Exhibit
10.1

    
      

      

      EMPLOYMENT
AGREEMENT

      

      

      EMPLOYMENT
AGREEMENT, made as of January 27, 2009, by and between American Apparel, Inc., a
Delaware corporation (herein referred to as the “Company”), and Glenn
A. Weinman (herein referred to as the “Executive”) (the
“Agreement”).

      

      W
I T N E S S E T H:

      

      WHEREAS,
the Company and the Executive deem it to be in their respective best interests
to enter into an agreement providing for the Company’s employment of the
Executive pursuant to the terms herein stated;

      

      NOW,
THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the parties hereto hereby agree as follows:

      

      1.           Employment; Position and
Duties; Exclusive Services.

      

      (a)         
Employment.  The
Company agrees to employ the Executive, and the Executive agrees to be employed
by the Company, for the Term provided in Section 2 below and upon the other
terms and conditions hereinafter provided.

      

      (b)         Position and
Duties.  During the Term, the Executive (i) agrees to serve as
the General Counsel and Secretary of the Company and to perform such reasonable
duties as may be delineated in the By-Laws of the Company and as may be assigned
to him from time to time by the Board of Directors of the Company (the “Board”), including,
without limitation, the management of the legal affairs of the Company, (ii)
shall report, as General Counsel of the Company, only to the Board, the Chairman
of the Board and the Chief Executive Officer of the Company, (iii) shall be
given such authority as is appropriate to carry out the duties described above,
it being understood that, in his capacities as General Counsel and Secretary of
the Company, his duties will be consistent in scope, prestige and authority with
the duties of General Counsel of the Company as demonstrated by the Company’s
existing practices as of the effective date of this Agreement, and (v) agrees to
serve, if elected, at no additional compensation in the position of officer or
director of any subsidiary or affiliate of the Company; provided, however, that such
position shall be of no less status relative to such subsidiary or affiliate as
the position that the Executive holds pursuant to clause (i) of this Section
1(b) is relative to the Company.

      

      (c)         
Exclusive
Services.  During the Term, and except for illness or
incapacity, the Executive shall devote all of his business time, attention,
skill and efforts exclusively to the business and affairs of the Company and its
subsidiaries and affiliates, shall not be engaged in any other business
activity, and shall perform and discharge the 

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      duties
which may be assigned to him from time to time by the Board or the Chief
Executive Officer; provided, however, that nothing
in this Agreement shall preclude the Executive from devoting time during
reasonable periods required for:

      

      (1)        serving,
in accordance with the Company’s policies, as a director or member of a
committee of any company or organization involving no actual or potential
conflict of interest with the Company or any of its subsidiaries or
affiliates,

      

         
(ii)     delivering lectures and fulfilling speaking
engagements,

      

         
(iii)    engaging in charitable and community activities,
and

      

         
(iv)    investing his personal assets in a Passive
Investment.  For purposes of this Agreement, a “Passive Investment”
shall mean an investment in a business or entity which does not require the
Executive to render any services in the operations or affairs of such business
or entity and which does not materially adversely affect or interfere with the
performance of the Executive’s duties and obligations to the Company or any of
its subsidiaries or affiliates.

      

      (d)          Place of
Employment.  The Executive shall perform his duties out of the
Company’s Los Angeles, California office (as same may be relocated in the same
metropolitan area from time to time) or at such other location as shall be
agreed to by the Company and the Executive.

      

      2.           Term of
Agreement.

      

      The
term of employment under this Agreement shall initially be the two-year period
commencing on February 17, 2009 (the “Effective Date”) and
ending on February 17, 2011, and shall be automatically extended without further
action by either party for successive one-year periods, unless written notice of
the Company’s intention to terminate this Agreement has been given to the
Executive at least 90 days prior to the expiration of the Term (including any
one-year extension thereof).  As used in this Agreement, the “Term” shall mean the
initial two-year term plus any extensions thereof as provided in this
Section 2.

      

      3.             Salary and
Bonuses.

      

      The
Executive’s cash compensation for all services to be rendered by him in any
capacity hereunder shall consist of base salary and other compensation as
provided in this Section.

      

      (a)          Salary.  The
Executive shall be paid a minimum base salary (the “Salary”) at the rate of
$300,000.00 per annum.  The Salary shall be payable in accordance with
the customary payroll practices for executives of the Company.  The
amount of the Executive’s Salary will be reviewed not less often than annually
by the 

       

       

      
        
          
          

        

        
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      Compensation
Committee of the Board (the “Compensation
Committee”) and may be increased, but not decreased below such amount, on
the basis of such review.

      

      (b)          Performance Bonuses.
The Board will consider the payment to the Executive of an annual performance
bonus as to each fiscal year during the Term.  The Board will also
consider the Executive’s participation in a long-term performance bonus program
being considered by the Board for senior executives of the
Company.  The amount and timing of the bonuses, if any, and criteria
therefore shall be at the sole discretion of the Board.

      

      4.           Stock
Options.

      

      Commencing
as of the Effective Date, the Executive shall be eligible for stock and stock
option grants under the Company’s 2007 Performance Equity Plan and any successor
plan thereto (collectively, the “Equity Plan”) for the
Company’s executive officers, in accordance with the terms and conditions
thereof.  Stock and stock option grants, if any, will be at the sole
discretion of the Compensation Committee.  Any options granted to the
Executive under the Equity Plan shall be subject to the terms and conditions
specified by the Compensation Committee in accordance with the provisions of the
Equity Plan.

      

      5.           Pension and Welfare
Benefits.

      

      During
the Term, the Executive will participate in all pension and welfare plans,
programs and benefits that are applicable to executives of the
Company.

       

      6.           Other
Benefits.

      

      (a)          Travel and Business-related
Expenses.  During the Term, the Executive shall be reimbursed
in accordance with the policies of the Company for traveling and other expenses
incurred in the performance of the business of the Company.

      

      (b)          Vacation; Leaves of
Absence.  The Executive shall accrue three weeks of paid
vacation for each full year of employment during the Term; provided that the
Executive shall be allowed vacations and leaves of absence with pay on the same
basis as the Company generally provides to other senior executive employees of
the Company.

      

      (c)          State, County and Legal
Association Bar Dues and Fees.  During the Term, the Executive
shall be reimbursed for his State and County Bar Dues and for dues and/or fees
required to join legal or trade associations in the furtherance of the
Executive's duties and/or education.

      

      7.           Termination of
Employment.

      

      (a)          Termination for Cause;
Resignation Without Good Reason.

       

       

      
        
          
          

        

        
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      (i)          If
the Executive’s employment is terminated by the Company for Cause (as defined
below in this Section) or if the Executive resigns from his employment without
Good Reason (as defined below in this Section), prior to the expiration of the
Term, the Executive shall be entitled to receive:  (A) the Salary
provided for in Section 3(a) as accrued through the date of such
resignation or termination; (B) any annual performance bonus or long term
performance bonus earned but not yet paid in respect of any calendar year
preceding the year in which such termination or resignation occurs; and (C) any
unreimbursed expenses.  The Executive shall not accrue or otherwise be
eligible to receive Salary payments or to participate in any plans, programs or
benefits described in Section 5 hereof with respect to
periods after the date of such termination or resignation and shall not be
eligible to receive any annual performance bonus or long term performance bonus
in respect of the year of such termination or resignation or any calendar year
following the year in which such termination or resignation
occurs.  Any bonus earned in respect of a year prior to the year in
which such termination or resignation occurs shall be payable at the same time
and in the same manner as bonuses are paid to participants in the applicable
bonus plan.

      

      The
Executive shall have no right under this Agreement or otherwise to receive any
other compensation, or to participate in any other plan, arrangement or benefit,
with respect to future periods after such termination or resignation of
employment (except to the extent provided for under the terms of any such plan,
arrangement or benefit).

      

      (ii)         Termination
for “Cause”
shall mean termination by action of the Board because of:  (A) the
Executive’s willful and continued failure (other than by reason of the
incapacity of the Executive due to physical or mental illness) substantially to
perform his duties hereunder; (B) the conviction of the Executive or the
Executive entering a plea of guilty or nolo contendere to a crime that
constitutes a felony or the perpetration by the Executive of a serious dishonest
act against the Company or any of its affiliates or subsidiaries; (C) any
willful misconduct by the Executive that is materially injurious to the
financial condition or business reputation of the Company or any of its
affiliates or subsidiaries; or (D) chronic alcoholism or drug abuse which
materially affects the Executive’s performance hereunder, provided, however, that no
event or circumstance shall be considered to constitute Cause within the meaning
of this clause (ii) unless the Executive has been given written notice of the
events or circumstances constituting Cause and has failed to effect a cure
thereof within 30 calendar days following the receipt of such
notice.

      

      (iii)        Resignation
for “Good
Reason” shall mean the resignation of the Executive because of (A) a
material reduction in the Executive’s responsibilities, duties, authority,
status or titles as described in Section 1 above; (B) failure by the
Company to pay or provide the Executive when due any compensation, benefits

       

       

      
        
          
          

        

        
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      or
perquisites to which the Executive is entitled pursuant to this Agreement or any
other plan, contract or arrangement in which the Executive participates or is
entitled to participate; or (c) a material breach of the Company’s obligations
under this Agreement; provided, however, that no
event or circumstance shall be considered to constitute Good Reason within the
meaning of this clause (iii) unless the Company has been given written notice of
the events or circumstances constituting Good Reason by the Executive within 30
days of the initial occurrence of such event or circumstance and the Company has
failed to effect a cure thereof within 30 calendar days following the receipt of
such notice.

      

      (iv)        The
date of termination of employment by the Company pursuant to this
Section 7(a) shall be the date specified in a written notice of termination
from the Company to the Executive, which, in the case of a proposed termination
to which the 30-day cure period provided for in subsection (ii) above applies
shall be no less than 31 days after the delivery of such notice to the
Executive.  The date of a resignation by the Executive pursuant to
this Section 7(a) shall be the date specified in the written notice of
resignation from the Executive to the Company, which, in the case of a proposed
resignation to which the 30-day cure period provided for in subsection (iii)
above applies shall be no less than 31 days after the delivery of such notice to
the Company, or, if no date is specified therein, 61 days after receipt by the
Company of the written notice of resignation from the Executive.

      

      (b)        Termination Without Cause,
Resignation for Good Reason.

      

      (i)         If
the Executive’s employment is terminated by the Company without Cause or if the
Executive should resign for Good Reason, prior to the expiration of the Term, he
shall be entitled to receive:  (A) the Salary provided for in
Section 3(a) as accrued through the date of such resignation or termination
and continuing for a period of one year from the date of such resignation or
termination (the “Continuation
Period”); (B) any bonus earned but not yet paid in respect of any
calendar year preceding the year in which such termination or resignation
occurs; (C) any unreimbursed expenses and (1) a bonus for the calendar year in
which such termination or resignation occurs equal to the Executive’s target
annual performance bonus, if any, for such year and each subsequent calendar
year included in whole or in part within the Continuation Period, provided, however, that the
amount of such bonus payable in respect of any partial calendar year at the
conclusion of the Continuation Period shall be prorated and shall equal such
target annual performance bonus multiplied by a fraction, the numerator of which
shall equal the number of days in such calendar year up to and including the
last day of the Continuation Period and the denominator of which shall equal the
lesser of 365 or
the number of days in such final calendar year up to and including the last day
of the Term; and (D) all stock and stock option grants awarded to the Executive
by the Company, or a successor by merger or acquisition, including, but not
limited to all awards under the Company’s 2007 Performance Equity Plan and any
successor plan thereto, shall 

       

       

      
        
          
          

        

        
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      become
100% vested and shall be exercisable as provided in the applicable stock option
agreement.

      

      Except
to the extent required pursuant to Section 21 hereof, during the Continuation
Period, (X) Salary payments to the Executive shall be payable in accordance with
the payroll practices of the Company, and (Y) bonus payments, if any, shall be
made in respect of each calendar year at the same time and in the same manner as
bonuses are paid to participants in the applicable bonus plan.

      

      The
Executive shall also be entitled to continued participation in the medical,
dental and insurance plans and arrangements described in Section 5, on the same terms and
conditions as are in effect immediately prior to such termination or
resignation, until the earlier to occur of (i) the last day of the Continuation
Period and (ii) such time as the Executive is entitled to comparable benefits
provided by a subsequent employer.  Anything herein to the contrary
notwithstanding, the Company shall have no obligation to Continue to maintain
during the Continuation Period any plan or program solely as a result of the
provisions of this Agreement.  If, during the Continuation Period, the
Executive is precluded from participating in a plan or program by its terms or
applicable law or if the Company for any reason ceases to maintain such plan or
program, the Company shall provide the Executive with compensation or benefits
the aggregate value of which, in the reasonable judgment of the Company, is no
less than the aggregate value of the compensation or benefits that the Executive
would have received under such plan or program had he been eligible to
participate therein or had such plan or program continued to be maintained by
the Company.

      

      (ii)         Except
as may be provided under the terms of any applicable grants to the Executive,
under any plan or arrangement in which the Executive participates or except as
may be otherwise required by applicable law, including, without limitation, the
provisions of Section 4980B(f) of the Internal Revenue Code of 1986, as amended
(the “Code”),
the Executive shall have no right under this Agreement or any other agreement to
receive any other compensation, or to participate in any other plan, arrangement
or benefit, with respect to future periods after such termination or resignation
of employment.  In the event of a termination or resignation pursuant
to this Section 7(b), the Executive shall have no duty of mitigation with
respect to amounts payable to him pursuant to this Section 7(b) or other
benefits to which he is entitled pursuant hereto.  Notwithstanding
anything to the contrary in this Agreement, the right of the Executive to
receive payments provided for in this Section 7(b) shall be subject to
Section 8 of this Agreement.

      

      (iii)        The
date of termination of employment by the Company pursuant to this
Section 7(b) shall be the date specified in the written notice of
termination from the Company to the Executive or, if no date is specified
therein, ten business days after receipt by the Executive of the written notice
of termination from the Company.  The date of a resignation by the
Executive 

       

       

      
        
          
          

        

        
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      pursuant
to this Section 7(b) shall be the date specified in the written notice of
resignation from the Executive to the Company or, if no date is specified
therein, ten business days after receipt by the Company of the written notice of
resignation from the Executive.

      

      (c)          Death.  If
the Executive’s employment hereunder terminates by reason of death prior to
expiration of the Term, the Executive’s beneficiary (or if no such beneficiary
is designated, his estate) shall be entitled to receive:  (i) the
Salary provided for in Section 3(a) as accrued through the date of the
Executive’s death; (ii) any bonus earned but not yet paid in respect of any
calendar year preceding the year in which the Executive’s death occurs; (iii) a
bonus for the calendar year in which the Executive’s death occurs equal to a
pro rata portion of the Executive’s target annual performance bonus, if
any, for such year, determined on the basis of the number of days in such year
through the date of the Executive’s death; and (iv) any unreimbursed
expenses.  Bonus payments provided for in this Section 7(c) shall
be made at the same time and in the same manner as bonuses are paid to
participants in the applicable bonus plan.  As used in this Section,
the term “beneficiary” includes
both the singular and the plural of such term, as may be
appropriate.

      

      In
lieu of the payment schedule provided for in the preceding paragraph, the
Executive’s beneficiary (or if no such beneficiary is designated, his estate)
may elect, by written notice to the Company not more than 90 days following
the date of the Executive’s death, to receive all amounts provided for in the
preceding paragraph that have not theretofore been paid in a single lump sum
equal to the present value of all such payments.  For purposes of the
previous sentence, present value shall be calculated on the basis of the
applicable short-term federal interest rate (applicable to loans with monthly
compounding) as determined pursuant to Section 1274(d) of the Code for the month
in which death occurs.

      

      (d)          Disability.  If,
the Executive is terminated from employment by the Company as a result of the
Executive’s Disability (as defined below in this Section), the Executive, his
conservator or guardian, as the case may be, shall be entitled to
receive:  (i) the Salary provided for in Section 3(a) as accrued
through the date of the Executive’s termination of employment; (ii) any bonus
earned but not yet paid in respect of any calendar year preceding the year in
which the Executive’s termination of employment occurs; (iii) a bonus for the
calendar year in which the Executive’s termination of employment occurs equal to
a pro rata portion of the Executive’s target bonus, if any, for such year,
determined on the basis of the number of days in such year through the date of
the Executive’s termination of employment; and (iv) any unreimbursed expenses.
Bonus payments provided for in this Section 7(d) shall be made at the same
time and in the same manner as bonuses are paid to participants in the
applicable bonus plan.  For purposes of this Agreement, “Disability” shall
mean that the Executive is unable to engage in any substantial gainful activity
by reason  of any medically determinable physical or mental impairment
which can be expected to last for a continuous period of not less than 12
months.  Any dispute as to whether or not the Executive is disabled
within the meaning of the preceding sentence shall be resolved by a

       

       

      
        
          
          

        

        
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      physician
reasonably satisfactory to the Executive and the Company, and the determination
of such physician shall be final and binding upon both the Executive and the
Company.

      

      8.           Tax
Withholding.

      

      Payments
to the Executive of all compensation contemplated under this Agreement shall be
subject to all applicable legal requirements with respect to the withholding of
taxes.

      

      9.           Confidentiality and
Proprietary Rights.

      

      (a)          Confidentiality.  The
Executive acknowledges that as a result of his employment with the Company, the
Executive will obtain secret and confidential information concerning the
business of the Company, and its subsidiaries and affiliates (all of such
entities referred to collectively in this Section, as the “Company”). Other than
in the performance of his duties hereunder, the Executive agrees not to
disclose, either during the Term of his employment with the Company or at any
time thereafter, to any person, firm or corporation any confidential information
concerning the Company which is not in the public domain including trade
secrets, budgets, strategies, operating plans, marketing plans, supplier lists,
non-public company agreements, employee lists, or the customer lists or similar
confidential information of the Company.

      

      (b)          Proprietary
Rights.  All records, files, memoranda, reports, price lists,
customer lists, drawings, plans, sketches, documents and the like (together with
all copies thereof) relating to the business of the Company and/or its
subsidiaries, which the Executive shall use or prepare or come in contact with
in the course of, or as a result of his employment, or as a result of work
performed by the Executive for the Company, shall, as between the parties,
remain the sole property of the Company. Upon termination of his employment with
the Company, the Executive agrees to immediately return all such materials and
shall not thereafter cause removal thereof from the premises of the Company.
Further, the Executive agrees to disclose and assign, and does hereby assign, to
the Company as its exclusive property, all ideas, writings, inventions,
discoveries, improvements and technical or business innovations made or
conceived by the Executive, whether or not patentable or copyrightable, either
solely or jointly with others during the course of his employment with the
Company, relating directly to the business, work or investigations of the
Company or its subsidiaries (“Company Inventions”).

      

      Notwithstanding
the foregoing, the Executive understands that the provisions of this Agreement
requiring assignment of Company Inventions to the Company do not apply to any
invention that qualifies under the provisions of California Labor Code Section
2870 (as set forth in Exhibit A hereto). The Executive understands that Company
will keep in confidence and will not disclose to third parties without the
Executive’s consent any confidential information disclosed in writing to Company
relating to inventions that qualify under the provisions of Section 2870 of the
California Labor Code.

       

       

      
        
          
          

        

        
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      10.         Nonassignability; Binding
Agreement.

      

      Neither
this Agreement nor any right, duty, obligation or interest hereunder shall be
assignable or delegable by the Executive without the Company’s prior written
consent; provided, however, that nothing
in this Section shall preclude the Executive from designating any of his
beneficiaries to receive any benefits payable hereunder upon his death or
disability, or his executors, administrators, or other legal representatives,
from assigning any rights hereunder to the person or persons entitled
thereto.  This Agreement shall be binding upon, and inure to the
benefit of, the parties hereto, any successors to or assigns of the Company and
the Executive’s heirs and the personal representatives of the Executive’s
estate.

      

      11.       Amendment;
Waiver.  This Agreement may not be modified, amended or waived
in any manner except by an instrument in writing signed by the parties
hereto.  The waiver by either party of compliance with any provision
of this Agreement by the other party shall not operate or be construed as a
waiver of any provision of this Agreement, or of any subsequent breach by such
party of a provision of this Agreement.

      

      12.       Notices.

      

      Any
notice hereunder by either party to the other shall be given in writing by
personal delivery, email or certified mail, return receipt requested, to the
applicable address set forth below:

       

      
 

      
        
          	
                  (a)

                	
                  To
      the Company:

                	
                  American
      Apparel, Inc.

                
	 
      	 
      	
                  747
      Warehouse Street

                
	 
      	 
      	
                  Los
      Angeles, California 90021

                
	 
      	 
      	
                  Attention:  Adrian
      Kowalewski

                
	 
      	 
      	
                  Email:
      adrian@americanapparel.net

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                  (b)

                	
                  To
      the Executive:

                	
                  Glenn
      A. Weinman

                
	 
      	 
      	
                  17045
      Rancho Street

                
	 
      	 
      	
                  Encino,
      California  91316

                
	 
      	 
      	
                  Email:
      gaweinman@aol.com

                

        

      

    

     

     

    
      (or
such other address as may from time to time be designated by notice by any party
hereto for such purpose). Notice shall be deemed given, if by personal delivery,
on the date of such delivery or, if by email, on the business day following
receipt of confirmation or, if by certified mail, on the date shown on the
applicable return receipt.

      

      13.         California
Law.

      

      This
Agreement is to be governed by and interpreted in accordance with the laws of
the State of California, without giving effect to the choice-of-law provisions

       

       

      
        
          
          

        

        
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      thereof.
If, under such law, any portion of this Agreement is at any time deemed to be in
conflict with any applicable statute, rule, regulation or ordinance, such
portion shall be deemed to be modified or altered to conform thereto or, if that
is not possible, to be omitted from this Agreement, and the invalidity of any
such portion shall not affect the force, effect and validity of the remaining
portion hereof.

      

      14.         Arbitration.

      

      The
Company and the Executive agree that any and all disputes based upon, relating
to or arising out of this Agreement, the Executive’s employment relationship
with the Company or any of its subsidiaries or affiliates and/or the termination
of that relationship, and/or any other dispute by and between the Executive and
the Company or any of its subsidiaries or affiliates, including any and all
claims that the Executive may at any time attempt to assert against the Company
or any of its subsidiaries or affiliates, shall be submitted to binding
arbitration in Los Angeles County, California, pursuant to the American
Arbitration Association’s (“AAA”) Employment
Arbitration Rules and Mediation Procedures, including the Optional Rules for
Emergency Measures of Protection (the “Rules”), provided
that the arbitrator shall allow for discovery sufficient to adequately arbitrate
any asserted claims, including access to essential documents and witnesses, and
otherwise in accordance with California Code of Civil Procedure § 1283.05, and
provided further that the Rules shall be modified by the arbitrator to the
extent necessary to be consistent with applicable law. The arbitrator shall be a
retired judge of the California Superior Court, California Court of Appeal, or
United States District Court, to be mutually agreed upon by the parties. If,
however, the parties are unable to agree upon an arbitrator, then an arbitrator,
who is a retired judge of the California Superior Court, California Court of
Appeal, or United States District Court, shall be selected by AAA in accordance
with the Rules. The Company and the Executive further agree that each party
shall pay its own costs and attorneys’ fees, if any; provided, however, that if
either party prevails on a claim which affords the prevailing party an award of
attorneys’ fees, then the arbitrator may award reasonable attorneys’ fees to the
prevailing party, consistent with applicable law. In any event, the Company
shall pay any expenses that the Executive would not otherwise have incurred if
the dispute had been adjudicated in a court of law, rather than through
arbitration, including the arbitrator’s fee, any administrative fee and any
filing fee in excess of the maximum court filing fee in the jurisdiction in
which the arbitration is commenced. The Company and the Executive further agree
that any hearing must be transcribed by a certified shorthand reporter, and that
the arbitrator shall issue a written decision and award supported by essential
findings of fact and conclusions of law in order to facilitate judicial
review.  Said award and decision shall be issued within thirty (30)
days of the completion of the arbitration. Judgment in a court of competent
jurisdiction may be had on said decision and award of the arbitrator. For these
purposes, the parties agree to submit to the jurisdiction of the state and
federal courts located in Los Angeles County, California.

      

      15.         Injunctive
Relief.

      

      The
Executive acknowledges and agrees that the services being rendered 

       

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

       

      by
the Executive to the Company under this Agreement are of a special, unique and
extraordinary character that gives them peculiar value to the Company and/or its
subsidiaries and affiliates, the loss of which (in violation of this Agreement)
would cause irreparable harm to the Company and/or its subsidiaries and
affiliates, for which the Company and/or its subsidiaries and affiliates would
have no adequate remedy at law.  The Executive further acknowledges
and agrees that the trade secrets and confidential and related information
referred to in this Agreement each are of substantial value to the Company
and/or its subsidiaries and affiliates and that a breach of any of the terms and
conditions of this Agreement relating to those subjects would cause irreparable
harm to the Company and/or its subsidiaries and affiliates, for which the
Company and/or its subsidiaries and affiliates would have no adequate remedy at
law. Therefore, in addition to any other remedies (in law or in equity) that may
be available to the Company and/or any of its subsidiaries and affiliates under
this Agreement or otherwise, the Company and/or its subsidiaries and affiliates
shall be entitled to obtain (pursuant to the Rules) temporary restraining
orders, preliminary and permanent injunctions and/or other equitable relief
(pursuant to the Rules) to specifically enforce the Executive’s duties and
obligations under this Agreement, or to enjoin any breach of this Agreement,
without the need to post a bond or other security and without the need to
demonstrate special damages.

      

      16.         Counterparts.

      

      This
Agreement may be executed by either of the parties hereto in counterparts, each
of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument.

      

      17.         Indemnity, Attorneys’ Fees
and Costs. The
Company will indemnify the Executive (and his legal representatives or other
successors) to the fullest extent permitted (including payment of expenses in
advance of final disposition of a proceeding) by the laws of the State of
California, as in effect at the time of the subject act or omission, or by the
Certificate of Incorporation and By-Laws of the Company, as in effect at such
time, or by the terms of any indemnification agreement between the Company and
the Executive, whichever affords greatest protection to the Executive, and the
Executive shall be entitled to the protection of any insurance policies the
Company may elect to maintain generally for the benefit of its directors and
officers (and to the extent the Company maintains such an insurance policy or
policies, the Executive shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company officer or director), against all costs, charges and
expenses whatsoever incurred or sustained by him or his legal representatives at
the time such costs, charges and expenses are incurred or sustained, in
connection with any action, suit or proceeding to which he (or his legal
representatives or other successors) may be made a party by reason of his being
or having been a director, officer or employee of the Company or any subsidiary
thereof, or his serving or having served any other enterprises as a director,
officer or employee at the request of the Company.  In the event of any dispute
arising out of the subject matter of this Agreement, the prevailing party shall
recover, in addition to any other damages assessed, its 

       

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

       

      attorneys’
fees, legal expenses and costs incurred in arbitrating or otherwise attempting
to enforce this Agreement or resolve such dispute. In construing this Agreement,
no party hereto shall have any term or provision construed against such party
solely by reason of such party having drafted or written such term or
provision.

      

      18.         Cumulative
Remedies.

      

      Each
and all of the several rights and remedies provided in this Agreement, or by law
or in equity, shall be cumulative, and no one of them shall be exclusive of any
other right or remedy, and the exercise of any one of such rights or remedies
shall not be deemed a waiver of, or an election to exercise, any other such
right or remedy.

       

      19.         Headings.

      

      The
section and other headings contained in this Agreement are for reference
purposes only and shall not in any way affect the meaning and interpretation of
this Agreement.

      

      20.         Survival.

      

      Any
provision of this Agreement which imposes an obligation after termination or
expiration of this Agreement (including but not limited to the obligations set
forth in Section 11 hereof) shall, unless otherwise specified, survive the
termination or expiration of this Agreement and be binding on Executive and the
Company.

      

      21.         General 409A
Compliance.

      

      To
the extent applicable, it is intended that the Agreement comply with the
provisions of section 409A of the Code, as amended.  This Agreement
will be administered and interpreted in a manner consistent with this intent,
and any provision that would cause this Agreement to fail to satisfy Section
409A of the Code will have no force and effect until amended to comply therewith
(which amendment may be retroactive to the extent permitted by Section 409A of
the Code).  Notwithstanding anything contained herein to the contrary,
to the extent required in order to avoid accelerated taxation and/or tax
penalties under Section 409A, the Executive shall not be considered to have
terminated employment with the Company for purposes of this Agreement and no
payments shall be due to the Executive under this Agreement which are payable
upon the Executive's termination of employment until the Executive would be
considered to have incurred a “separation from service” from the Company within
the meaning of Section 409A of the Code.  To the extent required in
order to avoid accelerated taxation and/or tax penalties under Section 409A of
the Code, amounts that would otherwise be payable and benefits that would
otherwise be provided pursuant to this Agreement during the six-month period
immediately following the Executive's termination of employment shall instead be
paid on the first business day after the date that is six months following the
Executive's termination of employment (or upon the Executive's death, if
earlier).  In addition, for purposes of the Agreement, each amount to

       

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

       

      be
paid or benefit to be provided to the Executive pursuant to this Agreement shall
be construed as a separate identified payment for purposes of Section 409A of
the Code.  With respect to expenses eligible for reimbursement under
the terms of the Agreement, (i) the amount of such expenses eligible for
reimbursement in any taxable year shall not affect the expenses eligible for
reimbursement in another taxable year and (ii) any reimbursements of such
expenses shall be made no later than the end of the calendar year following the
calendar year in which the related expenses were incurred, except, in each case,
to the extent that the right to reimbursement does not provide for a “deferral
of compensation” within the meaning of Section 409A of the Code.

      

      

      

      IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first written above, effective as of the Effective Date.

      

      
        
          
            
              
                
                  
                    
                      
                        	 
      	
                                American
      Apparel, Inc.

                              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                                By:

                              	/s/
      Dov Charney	 
      
	 
      	
                                Title:

                              	President
      and Chief Executive Officer	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	
                                /s/
      Glenn A. Weinman

                              	
                                 

                              
	 
      	 
      	 	 
      
	 
      	 
      	
                                Glenn
      A. Weinman

                              	
                                 

                              

                      

                    

                  

                

              

            

          

        

      

       

       

       

      
        
          
          

        

        
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      Exhibit
A

      CALIFORNIA
LABOR CODE SECTION 2870

      EMPLOYMENT
AGREEMENTS; ASSIGNMENT OF RIGHTS

      

      “(a)
Any provision in an employment agreement which provides that an employee shall
assign, or offer to assign, any of his or her rights in an invention to his or
her employer shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer’s equipment,
supplies, facilities, or trade secret information except for those inventions
that either: (1) Relate at the time of conception or reduction to practice of
the invention to the employer’s business, or actual or demonstrably anticipated
research or development of the employer; or (2) Result from any work performed
by the employee for the employer. (b) To the extent a provision in an employment
agreement purports to require an employee to assign an invention otherwise
excluded from being required to be assigned under Subdivision (a), the provision
is against the public policy of this state and is unenforceable.”

       

       

       

       

       

       

      14

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