Document:

Exhibit 10.13

 Exhibit 10.13 

 

 

  
 FIFTH AMENDMENT
TO 
 CREDIT AGREEMENT 

BANK OF AMERICA, N.A. 

Date: December 19, 2008 

THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this “Fifth Amendment”) is 

made to the Credit Agreement (as amended, the “Credit Agreement”) dated as of July 2, 2007 by and among:

 (a) AMERICAN APPAREL (USA), LLC (f/k/a AAI Acquisition LLC (successor-by-merger to American Apparel, Inc.)), a
corporation organized under the laws of the State of California, with its principal executive offices at 747 Warehouse Street, Los Angeles, California 90021, for itself and as agent (in such capacity, the “Lead Borrower”) for the other
Borrowers now or hereafter party to the Credit Agreement; and 
 (b) the BORROWERS now or hereafter party to the
Credit Agreement; and 
 (c) the FACILITY GUARANTORS now or hereafter party to the Credit Agreement; and

 (d) BANK OF AMERICA, N.A. (successor by merger to LaSalle Business Credit, LLC, as agent for LaSalle Bank
Midwest National Association, acting through its division, LaSalle Retail Finance), with offices at 100 Federal Street, 9th Floor, Boston, Massachusetts 02110, as administrative agent (in such capacity, the “Administrative Agent”) for its
own benefit and the benefit of the other Credit Parties; and 
 (e) BANK OF AMERICA, N.A. (successor by merger to
LaSalle Business Credit, LLC, as agent for LaSalle Bank Midwest National Association, acting through its division, LaSalle Retail Finance), with offices at 100 Federal Street, 9th Floor, Boston, Massachusetts 02110, as collateral agent (in such
capacity, the “Collateral Agent”, and together with the Administrative Agent, individually an “Agent” and collectively, the “Agents”) for its own benefit and the benefit of the other Credit Parties; and 

(f) WELLS FARGO RETAIL FINANCE, LLC, with offices at One Boston Place, 19th Floor, Boston, Massachusetts 02108, as
collateral monitoring agent (in such capacity, the “Collateral Monitoring Agent”) for its own benefit and the benefit of the other Credit Parties; and 

(g) the LENDERS party to the Credit Agreement; and 

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 (h) BANK OF
AMERICA, N.A. (successor by merger to LaSalle Bank National Association), a national banking association with offices at 100 Federal Street, 9th Floor, Boston, Massachusetts 02110, as Issuing Bank; 

in consideration of the mutual covenants herein contained and benefits to be derived herefrom, the parties hereto agree as
follows: 
 Background: 

A. Amendment. The parties hereto entered into that certain First Amendment to Credit Agreement on October 11, 2007,
that certain Second Amendment and Waiver to Credit Agreement on November 26, 2007, that certain Third Amendment to Credit Agreement on December 12, 2007, and that certain Fourth Amendment to Credit Agreement on June 20, 2008. The
parties hereto desire to further amend the Credit Agreement on the terms and conditions set forth herein. 
 B.
SOF Investments Loan. SOF Investments has requested that the Loan Parties agree to certain modifications of the SOF Investments Loan. Pursuant to the Credit Agreement and that certain Intercreditor Agreement dated as of July 2, 2007 (as
amended, restated, supplemented or otherwise modified, the “Intercreditor Agreement”) by and among the Agents (as “First Lien Administrative Agent” thereunder) and SOF Investments (as “Second Lien Administrative Agent”
thereunder) and acknowledged by the Lead Borrower, certain modifications of the SOF Investments Loan are subject to the consent and approval of the Agents. The Loan Parties have requested that the Agents consent to and approve the modifications set
forth in the amendment to the SOF Investments Loan attached hereto in the form of Exhibit A. The Agents are willing to consent to such amendment, subject to the terms and conditions set forth herein. 

Accordingly, it is hereby agreed, as follows: 

1. Amendment to Credit Agreement. Subject to satisfaction of each and all of the 

Preconditions to Effectiveness set forth in Section 3 hereof, the Credit Agreement is amended as follows: 

a. By deleting Exhibit K (Form of Compliance Certificate) to the Credit Agreement in its entirety and substituting the
attached Exhibit K in its stead. 
 b. By deleting Exhibit M (Financial Performance Covenants) to the Credit
Agreement in its entirety and substituting the attached Exhibit M in its stead. 
 c. By adding to
Section 1.01 the following new definitions in appropriate alphabetical order: 
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 “
“Cash Flow Projections” means the projections demonstrating the Lead Borrower’s and its Subsidiaries’ weekly cash flows (including an Availability model) for the thirteen-week period commencing on or about the date of delivery to
the Administrative Agent of the initial Cash Flow Projections in accordance with SECTION 5.01(j) hereof, together with a detailed description of any assumptions made therein, in each case in form and substance satisfactory to the Administrative
Agent in the good faith exercise of its reasonable business judgment, but in its sole discretion nonetheless.” 

“ “Deteriorating Lender” means any Delinquent Lender or any Lender as to which (a) the Issuing Bank
has a good faith belief that such Lender has defaulted in fulfilling its obligations under one or more other syndicated credit facilities as a result of such Lender’s financial condition, or (b) a Person that Controls such Lender has been
deemed insolvent or become the subject of a bankruptcy, insolvency or similar proceeding.” 
 “
“Fifth Amendment Fee Letter” means the Fee Letter dated as of December 19, 2008 by and among the Lead Borrower and the Agents.” 

“ “Intercreditor Agreement” means that certain Intercreditor Agreement dated as of the Closing Date by and
among the Agents (as “First Lien Administrative Agent” thereunder) and SOF Investments (as “Second Lien Administrative Agent” thereunder) and acknowledged by the Lead Borrower, as amended, restated, supplemented or otherwise
modified from time to time.” 
 “ “Raw Materials Appraisal Percentage” means 60%.”

 “ “Richter” means Richter Consulting, Inc.” 

“ “Warrants” means those certain Warrants to Purchase Shares of Common Stock of American Apparel, Inc.
issued to SOF Investments on December 19, 2008.” 
 “ “Yearly Projections” shall mean
the balance sheet, income statement, and cash flow projections (including an Availability model) of the Lead Borrower and its Subsidiaries, prepared on a monthly basis for the balance of the Fiscal Year ending December 31, 2008 and the Fiscal
Year ending December 31, 2009, together with a detailed description of any assumptions made therein, in each case in form and substance satisfactory to the Administrative Agent in the good faith exercise of its reasonable business judgment, but
in its sole discretion nonetheless.” 
 d. By deleting the definition of “Applicable Margin” in
its entirety and substituting the following definition in its stead: 
 “Applicable Margin” means the
following: 
 Applicable Margin for LIBO Loans 

Applicable Margin for Prime Rate Loans 

4.50% 2.50% 

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 a. By deleting
clause (a) of the definition of “Borrowing Base” in its entirety and substituting the following clause (a) in its stead: 

“(a) (i) the Raw Materials Appraisal Percentage of the Appraised Inventory Liquidation Value with respect to
Eligible Inventory consisting of raw materials, and (ii) the Appraisal Percentage of the Appraised Inventory Liquidation Value with respect to all other Eligible Inventory;” 

b. By amending the definition of “Equipment Reduction Amount” by deleting the phrase “one-sixtieth
(1/60th)” in the second line thereof in its entirety and substituting the phrase “one-thirtieth (1/30th)” in its stead. 

c. By amending the definition of “Permitted Disposition” by deleting the word “and” at the end of
clause (f) thereof and adding the following new clause (g) immediately after clause (f) thereof: 

“(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 in an amount not to exceed $15,000,000 in the aggregate for all such sales, including sale-leaseback transactions involving such equipment; provided that (i) the Net Proceeds received by any Loan Party
in connection therewith shall be deposited into the Concentration Account for application to and reduction of the Obligations in accordance with SECTION 2.16 hereof, and (ii) in the case of any such sale-leaseback transactions, upon the request
of the Agents, the lessor(s) of any such equipment shall have entered into an intercreditor agreement with the Agents, in form and substance satisfactory to the Collateral Agent in the good faith exercise of its reasonable business judgment, but in
its sole discretion nonetheless.” 
 d. By amending the definition of “Permitted Encumbrances” by
deleting clause (h) thereof and substituting the following new clause (h) in its stead: 
 “(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 extend to any other property or assets of the Loan Parties, 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-leaseback transactions 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;” 

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 e. By amending
the definition of “Permitted Indebtedness” by deleting clauses (e), (k), (I) and (q) thereof in their entirety and substituting the following new clauses (e), (k), (I) and (q) in their stead: 

“(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 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 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
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 thereof; provided that (x) with respect to extensions, renewals, or
replacements of such Indebtedness, the holders of such Indebtedness are not afforded covenants, defaults, rights or remedies more burdensome in any material respect to the obligor or obligors than those contained in the Indebtedness being extended,
renewed or replaced, (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, upon request of the Agents, the lessor(s) of any
such equipment shall have entered into an intercreditor agreement with the Agents, in form and substance satisfactory to the Collateral Agent in the good faith exercise of its reasonable business judgment, but in its sole discretion nonetheless, and
(z) that the aggregate principal amount of Indebtedness permitted by this clause (e) and clause (i) below shall not exceed $20,000,000 at any time outstanding;” 

“(k) [Intentionally Deleted.];” 

“(1) Subordinated Indebtedness not existing on the Closing Date, 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 terms reasonably acceptable to the Agents;”

 “(q) other unsecured Indebtedness in an aggregate principal amount not exceeding $25,000,000 at any time
outstanding, provided that the terms of such Indebtedness are reasonably acceptable to the Agents;” 
 f. By
amending the definition of “Prepayment Event” by deleting clause (d) thereof in its entirety and substituting the following new clause (d) in its stead: 

“(d) The incurrence by a Loan Party of any Indebtedness other than Permitted Indebtedness (other than Permitted
Indebtedness of the types described in clauses (1) or (q) of the definition thereof).” 
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 g. By deleting
the definition of “Prime Rate” in its entirety and substituting the following definition in its stead: 

“Prime Rate” means, for any day, the highest of: (a) the variable annual rate of interest then most
recently announced by the Administrative Agent as its “Prime Rate”; (c) the one-month LIBO Rate plus two and one-half percent (2.50%) per annum, which rate shall be determined on a daily basis; and (c) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1% (0.50%) per annum. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate being charged to any customer. If for any reason the Administrative Agent shall have
determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations
thereof in accordance with the terms hereof, the Prime Rate shall be determined without regard to clause (b) of the first sentence of this definition, until the circumstances giving rise to such inability no longer exist. Any change in the
Prime Rate due to a change in the Administrative Agent’s Prime Rate or the Federal Funds Effective Rate shall be effective on the effective date of such change in the Administrative Agent’s Prime Rate or the Federal Funds Effective Rate,
respectively.” 
 h. By deleting the definition of “SOF Investments” in its entirety and
substituting the following new definition in its stead: 
 “SOF Investments” means SOF Investments,
L.P. – Private IV, or another lender party to the Material Agreements in respect of the SOF Investments Loan.” 

i. By deleting the definition of “SOF Investments Loan” in its entirety and substituting the following new
definition in its stead: 
 “SOF Investments Loan” means the term loan in the aggregate principal
amount of $51,000,000 made by SOF Investments to the Borrowers, the terms of which are satisfactory to the Administrative Agent, as such loan may be refinanced in accordance with the terms of this Agreement and the Intercreditor Agreement or
otherwise on terms satisfactory to the Administrative Agent in the good faith exercise of its reasonable business judgment, but in its sole discretion nonetheless.” 

j. By amending Section 2.05 (Swingline Loans) thereto as follows: 

i. By amending clause (a) thereof by adding the phrase “in its sole discretion” immediately after the
phrase “at any time” in the second line thereof; 
 ii. By amending clause (b) thereof by adding
the phrase “in its sole discretion” (i) immediately after the phrase “Swingline Loans may be made by Swingline Lender” in the first line thereof, and (ii) immediately after the phrase “continue to make Swingline
Loans” in the third sentence thereof. 
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 k. By deleting
Section 2.12(a) (Letters of Credit) thereto in its entirety and substituting the following new Section 2.12(a) in its stead: 

“(a) Upon the terms and subject to the conditions herein set forth, at any time and from time to time after the date
hereof and prior to the Termination Date, the Lead Borrower, on behalf of the Borrowers, may request the Issuing Bank to issue, and subject to the terms and conditions contained herein, the Issuing Bank shall issue, for the account of the relevant
Borrower, one or more Letters of Credit; provided, however, that no Letter of Credit shall be issued (x) if after giving effect to such issuance (i) the aggregate Letter of Credit Outstanding shall exceed $10,000,000, or (ii) the
aggregate Revolving Loan Credit Extensions (including Swingline Loans) would exceed the limitation set forth in SECTION 2.01(a)(i), and (y) without the prior consent of the Administrative Agent if a default of any Revolving Credit Lender’s
obligations to fund under this SECTION 2.03 exists or any Revolving Credit Lender is at such time a Delinquent Lender or Deteriorating Lender hereunder, unless the Issuing Bank has entered into arrangements satisfactory to the Issuing Bank with the
Borrowers or such Revolving Credit Lender to eliminate the Issuing Bank’s risk with respect to such Revolving Credit Lender.” 

I. By amending Section 2.17(b) (Fees) thereto by deleting the phrase “0.375% per annum” therefrom in its
entirety and substituting the phrase “0.50% per annum” in its stead. 
 m. By amending
Section 5.01 (Financial Statements and Other Information) thereof by deleting the word “and” at the end of clause (i) thereof, re-lettering clause (j) thereof as clause (k), and inserting the following new clause
(j) therein: 
 “(j) in addition to the other documents and other information required to be delivered
pursuant to this SECTION 5.01, (i) from and after December 31, 2009, on or before Wednesday of each calendar week, a comparison of projected to actual performance for such period and a detailed explanation of any variances, which
comparison and explanation shall be certified by the chief financial officer of the Lead Borrower; and (ii) upon request from the Administrative Agent, updated Cash Flow Projections, in each case in form, scope and substance satisfactory to the
Agents in the good faith exercise of their reasonable business judgment, but in their sole discretion nonetheless; and” 

n. By amending Section 5.08(b) (Books and Records; Inspection and Audit Rights; Appraisals; Accountants) thereto as
follows: 
 i. By deleting the proviso in the second sentence in its entirety and substituting the following new
proviso in its stead: 
 “provided, that the Loan Parties shall be responsible only for the costs and
expenses of three (3) appraisals of Inventory, three (3) appraisals of Equipment, and three (3) commercial finance examinations in any twelve month period following the Closing Date, unless (x) an Event of Default shall have
occurred 
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 and be
continuing, or (y) the Agents are required to obtain such appraisals and/or commercial finance examinations pursuant to Applicable Law, in either of which cases the Agents may undertake such additional appraisals and commercial finance
examinations as they deem appropriate, at the Loan Parties’ sole cost and expense.” 
 ii. By adding
the following new sentences at the end thereof. 
 “Each appraisal, commercial finance examination and other
evaluation conducted in accordance with this SECTION 5.08(b) shall be in form, scope and substance satisfactory to the Agents in the good faith exercise of their reasonable business judgment, but in their sole discretion nonetheless. Without
limiting their other obligations under this SECTION 5.08(b), the Loan Parties shall cooperate with Richter in conducting an updated commercial finance examination, which cooperation shall include (subject to customary confidentiality undertakings by
Richter), without limitation, (i) providing all financial information and inventory data of the Loan Parties reasonably requested by Richter, (ii) providing access to the books and records of the Loan Parties and such other information as
Richter may reasonably request, and (iii) making officers of the Loan Parties available to discuss the affairs, finances and accounts of the Loan Parties with Richter.” 

o. By amending Section 5.08(c) (Books and Records; Inspection and Audit Rights; Appraisals; Accountants) thereof by
adding the following new sentences at the end thereof: 
 “Without limiting the generality of the foregoing,
the Agents and the Lenders shall retain Richter or another independent financial consultant, satisfactory to the Agents in the good faith exercise of their reasonable business judgment, but in their sole discretion nonetheless, to conduct a review
of the initial Cash Flow Projections and the Yearly Projections delivered to the Agents, which review shall include an analysis of, among other things, whether the Loan Parties’ assumptions made therein are reasonable. The Loan Parties shall
cooperate with Richter in such review, which cooperation shall include (subject to customary confidentiality undertakings by Richter), among other things, (i) providing all financial information of the Loan Parties reasonably requested by
Richter, including all such information used in preparing such initial Cash Flow Projections and Yearly Projections, (ii) providing reasonable access to the books and records of the Loan Parties and such other information as Richter may
reasonably request, and (iii) making officers of the Loan Parties available to discuss the affairs, finances and accounts of the Loan Parties with Richter. Upon completion of such review by the Agents and promptly following the Agents’
request therefor, the Loan Parties shall deliver to the Agents any updated Cash Flow Projections and Yearly Projections, each in form and substance satisfactory to the Agents in the good faith exercise of their reasonable business judgment, but in
their sole discretion nonetheless.” 
 p. By amending Section 5.09 (Physical Inventories) as follows:

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 i. By amending
clause (a) thereof by inserting the phrase “and/or their agents or representatives” immediately following the phrase “The Agents” in the second sentence thereof. 

ii. By adding the following new clause (c) at the end thereof: 

“(c) Without limiting the generality of Section 5.09(a) or any of the Loan Parties’ obligations therein,
the Loan Parties, at their own expense, shall cause a physical inventory (including, without limitation, with respect to assets of the type included in the Borrowing Base (the “Borrowing Base Collateral”) located at each warehouse and each
other location containing any Borrowing Base Collateral) to be commenced on or before January 15, 2009 and concluded on or before January 31, 2009, conducted by such inventory takers as are satisfactory to the Agents and following such
methodology as is consistent with the methodology used in the immediately preceding inventory or as otherwise may be satisfactory to the Agents. Richter shall, and the Agents, the Lenders and/or their respective agents or representatives may,
participate in and/or observe each such physical inventory, in each case at the expense of the Loan Parties. The Borrowers, within ten (10) Business Days following the completion of such inventory, shall provide the Agents with a reconciliation
of the results of such inventory (as well as of any other physical inventory undertaken by a Loan Party) and shall post such results to the Loan Parties’ stock ledgers and general ledgers, as applicable, which reconciliation and results shall
have been satisfactorily reviewed by Richter; provided if the Administrative Agent determines in the good faith exercise of its reasonable business judgment, but in its sole discretion nonetheless, that the failure of the Loan Parties to comply with
any covenant set forth in this clause (c) is not a result of the Loan Parties’ action or inaction, the Administrative Agent may, in the good faith exercise of its reasonable business judgment, but in its sole discretion nonetheless, elect
to provide a one-time extension of any deadline set forth in this clause (c) for a period not to exceed two (2) weeks.” 

q. By deleting Section 6.06 (Equity Issuances) thereto in its entirety and substituting the following new
Section 6.06 in its stead: 
 “SECTION 6.06 Equity Issuances. No Loan Party will, or will permit any
Subsidiary to, (i) issue any preferred stock or other Capital Stock (except for preferred stock (x) all dividends in respect of which are to be paid (and all other payments in respect of which are to be made) in additional shares of such
preferred stock, in lieu of cash until all Obligations are paid in full and all Commitments terminated, (y) that is not subject to redemption other than redemption at the option of the Loan Party issuing such preferred stock and (z) all
payments in respect of which are expressly subordinated to the Obligations), (ii) except as permitted above, be or become liable in respect of any obligation (contingent or otherwise) to purchase, redeem, retire, acquire or make any other
payment in respect of (x) any shares of Capital Stock of any Loan Party or (y) any option, warrant or other right to acquire any such shares of Capital Stock of any Loan 

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 Party, or
(iii) except as permitted above, issue any additional shares of its Capital Stock; provided that notwithstanding anything to the contrary contained herein, nothing in this SECTION 6.06 shall prohibit (a) the issuance of Capital Stock by
the Parent (other than preferred stock not permitted to be issued under clause (i) above) so long as the Net Proceeds thereof (if any) are deposited into the Concentration Account for application to and reduction of the Obligations in
accordance with SECTION 2.16 hereof; (b) the issuance of options or stock awards, including, without limitation, issuances of options or stock awards to employees of the Merger Subsidiary pursuant to the Merger Agreement and expressly set forth
therein so long as the Net Proceeds thereof (if any) are deposited into the Concentration Account for application to and reduction of the Obligations in accordance with SECTION 2.16 hereof, or (c) the issuance of Capital Stock by Parent (other
than preferred stock not permitted to be issued under clause (i) above) with respect to the Warrants or in connection with the issuance of options, warrants or stock awards, or in connection with the exercise of options, warrants or stock
awards, so long as the Net Proceeds thereof (if any) are deposited into the Concentration Account for application to and reduction of the Obligations in accordance with SECTION 2.16 hereof.” 

r. By amending Section 6.07(b) (Restricted Payments; Certain Payments of Indebtedness) thereto as follows:

 i. By deleting clause (ii) thereof in its entirety and substituting the following clause (ii) in its
stead: 
 “(ii) mandatory payments of regularly scheduled interest and fees as and when due in respect of
the SOF Investments Loan;” 
 ii. By adding the phrase “and interest” after the phrase “any
prepayments of principal” in clause (vii) thereof; 
 iii. By deleting clause (viii) in its
entirety and substituting the following new clauses (viii) and (ix) in its stead: 
 “(viii)
conversions to equity of Indebtedness permitted pursuant to clauses (1) or (q) of the definition of Permitted Indebtedness; and 

(ix) payments on account of Permitted Indebtedness of any type other than that described in any of clause (i) through
(viii) hereof so long as the Payment Conditions have been satisfied.” 
 s. By amending
Section 7.01 (Events of Default) thereto as follows: 
 i. By deleting clause (r) thereof in its
entirety and substituting the following new clause (r) in its stead: 
 “(r) A material breach by any
Borrower, any other Loan Party or any other Person under any of the Material Agreements, provided that such breach shall be 

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 deemed
continuing hereunder until the Agents or the Required Lenders have expressly waived such breach in writing, notwithstanding the fact that such breach may have been waived under the terms of the applicable Material Agreements;” 

ii. By adding the word “or” to the end of clause (v) thereof, 

iii. By adding the following new clause (w) thereto: 

“(w) if, on or prior to April 1, 2009, the Loan Parties shall not have engaged any of the “big four”
independent accounting firms or another nationally recognized independent accounting firm reasonably acceptable to the Agents, as its auditor.” 

t. By deleting Section 8.15(a) (Delinquent Lender) thereto in its entirety and substituting the following new
Section 8.15(a) in its stead: 
 “(a) If for any reason any Lender shall have (i) failed or
refused to abide by its obligations under this Agreement, including without limitation its obligation to make available to Administrative Agent its Revolving Credit Commitment Percentage of any Revolving Credit Loans, expenses or setoff or purchase
its Revolving Credit Commitment Percentage of a participation interest in the Swingline Loans, (ii) otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within one
Business Day of the date when due, unless the subject of a good faith dispute, or (iii) been deemed insolvent or become the subject of a bankruptcy, insolvency or similar proceeding (any such Lender, a “Delinquent Lender”), 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, (x) 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, refusal or insolvency or similar proceeding, and (y) 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 Commitment 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 (x) and (y) hereinabove
shall be restored only upon the payment by the Delinquent Lender of its Commitment 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
2.11 hereof from the date when originally due until the date upon which any such amounts are actually paid.” 

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 u. By amending
Section 9.01 (Notices) thereto by deleting clauses (a) and (b) thereof in their entirety and substituting the following new clauses (a) and (b) in their stead: 

“(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, the Collateral Agent or the Swingline Lender, to Bank of America, N.A.
(successor by merger to LaSalle Business Credit, LLC), 100 Federal Street, Boston, Massachusetts 02110, Attention: Stephen J. Garvin (Telecopy No. (617) 434-6685, E-Mail stephen.garvin@bankofamerica.com), with a copy to Riemer &
Braunstein LLP, Three Center Plaza, Boston, Massachusetts 02108, Attention: Donald E. Rothman, Esquire (Telecopy No. (617) 880-3456, E-Mail drothman@riemerlaw.com); and” 

2. Amendments to Loan Documents. Subject to (i) the provisions of Section 9.04 of the Credit Agreement, and
(ii) the satisfaction of each and all of the Preconditions to Effectiveness set forth in Section 3 hereof, each Loan Document is amended as follows: 

a. any reference in any Loan Document to the “Administrative Agent” shall be deemed to mean and refer to Bank of
America, N.A. (successor by merger to LaSalle Business Credit, LLC, as agent for LaSalle Bank Midwest National Association, acting through its division, LaSalle Retail Finance), a national banking association with offices at 100 Federal Street, 9th
Floor, Boston, Massachusetts 02110, as administrative agent for its own benefit of the other Credit Parties; 

b. any reference in any Loan Document to the “Collateral Agent” shall be deemed to mean and refer to Bank of
America, N.A. (successor by merger to LaSalle Business Credit, LLC, as agent for LaSalle Bank Midwest National Association, acting through its division, LaSalle Retail Finance), a national banking association with offices at 100 Federal Street, 9th
Floor, Boston, Massachusetts 02110, as collateral agent for its own benefit of the other Credit Parties; 
 c.
any reference in any Loan Document to the “Issuing Bank” shall be deemed to mean and refer to Bank of America, N.A. (successor by merger to LaSalle Bank National Association), a national banking association with offices at 100 Federal
Street, 9th Floor, Boston, Massachusetts 02110, in its capacity as issuer of Letters of Credit under the Credit Agreement; and 

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 d. any
reference in any Loan Document to “LaSalle Business Credit, LLC, as agent for LaSalle Bank Midwest National Association, acting through its division, LaSalle Retail Finance”, in such Person’s capacity as a Lender or a Secured Party,
shall be deemed to mean and refer to Bank of America, N.A. (successor by merger to LaSalle Business Credit, LLC, as agent for LaSalle Bank Midwest National Association, acting through its division, LaSalle Retail Finance), a national banking
association with offices at 100 Federal Street, 9th Floor, Boston, Massachusetts 02110, in its capacity as a Lender or a Secured Party, as the case may be. 

3. Preconditions to Effectiveness. This Fifth Amendment shall not take effect unless and until each and all of the
following items has been satisfied or delivered, as the case may be, and in all events, to the satisfaction of the Agents, in their sole and exclusive discretion exercised in good faith. The willingness of the Agents and the Lenders to enter into
this Fifth Amendment is expressly conditioned upon the receipt by the Administrative Agent of the following items: 

a. On or prior to the date hereof, the Lead Borrower, the Borrowers, and the Facility Guarantors shall have delivered to
the Administrative Agent duly executed copies of this Fifth Amendment and the Fifth Amendment Fee Letter, including all exhibits to be replaced in accordance with the terms hereof, and evidence that the Borrowers have obtained all necessary consents
and approvals to this Fifth Amendment, the Fifth Amendment Fee Letter and the documents, agreements and instruments executed in connection herewith. 

b. Without limiting the generality of the foregoing, the Second Lien Administrative Agent (as defined in the Intercreditor
Agreement) shall have delivered to the Administrative Agent an executed counterpart to this Fifth Amendment, pursuant to which the Second Lien Administrative Agent shall have consented to this Fifth Amendment. 

c. On or prior to the date hereof, (i) Dov Charney (“D. Charney”) shall have made a loan to the Lead
Borrower in the amount of $2,500,000.00, the Net Proceeds of which shall have been deposited into the Concentration Account for application to and reduction of the Obligations in accordance with SECTION 2.16 of the Credit Agreement, and
(ii) the Loan Parties and D. Charney shall have delivered to the Administrative Agent, in the form attached hereto as Exhibit B, a duly executed copy of that certain Amended and Restated Subordination Agreement by and between the Lead Borrower
and D. Charney and acknowledged by the Agents, pursuant to which D. Charney shall have agreed to subordinate certain Liens and rights to payment in accordance with the terms thereof. 

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 d. The Loan
Parties shall have delivered to the Administrative Agent a duly executed copy of the Amendment No. 9 to the SOF Investments Loan, in the form attached hereto as Exhibit A. 

e. The Lead Borrower, the Borrowers, and the Facility Guarantors shall have delivered to the Administrative Agent such
other and further documents as the Administrative Agent reasonably may require and shall have identified prior to the execution of this Fifth Amendment, in order to confirm and implement the terms and conditions of this Fifth Amendment. 

f. On or prior to the date hereof, the Borrowers shall have paid to the Administrative Agent, for the ratable benefit of
the Lenders executing this Fifth Amendment, an amendment fee in the amount of $750,000.00. In this regard, the amendment fee shall be fully earned as of the date of execution of this Fifth Amendment, and the Administrative Agent is hereby authorized
to make a Revolving Credit Loan under the Credit Agreement to pay the amendment fee. 
 g. On or prior to the
date hereof, the Borrowers shall have paid the fees set forth in the Fifth Amendment Fee Letter. 
 h. No Default
or Event of Default shall exist. 
 i. Except as set forth on Schedule 3.06 to the Credit Agreement, 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. No default of any material contract or agreement of any Loan Party or any Subsidiary of any Loan Party shall exist
except where the existence of a default, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. 

4. Post-Closing Matters. On or prior to December 31, 2008, the Loan Parties shall have delivered to the
Administrative Agent the Cash Flow Projections and the Yearly Projections. 
 5. Waiver. The Administrative Agent
and the Lenders hereby waive the requirement set forth in Section 5.01(a) of the Credit Agreement to deliver audited financial statements for the Fiscal Year ending December 31, 2008 without a “going concern” or like
qualification; provided that the foregoing waiver shall only apply in the event any such qualification results from the approaching maturity of the Obligations and/or the SOF Investments Loan. 

6. Ratification of Loan Documents. No Claims against any Lender. 

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 a. Except as
provided herein, all terms and conditions of the Credit Agreement and of each of the other Loan Documents remain in full force and effect. Each Loan Party hereby ratifies, confirms, and re-affirms all terms and provisions of the Loan Documents.

 b. Each Loan Party hereby makes all representations, warranties, and covenants set forth in the Credit
Agreement as of the date hereof (other than representations, warranties and covenants that relate solely to an earlier date). To the extent that any changes in any representations, warranties, and covenants require any amendments to the schedules to
the Credit Agreement, such schedules are hereby updated, as evidenced by any supplemental schedules (if any) annexed to this Fifth Amendment. 

c. Each Loan Party represents and warrants to the Administrative Agent and each Lender that as of the date of this Fifth
Amendment, no Default or Event of Default exists. 
 d. Each Loan Party acknowledges and agrees that to its
actual knowledge (i) there is no basis nor set of facts on which any amount (or any portion thereof) owed by any of the Loan Parties under any Loan Document could be reduced, offset, waived, or forgiven, by rescission or otherwise;
(ii) nor is there any claim, counterclaim, off set, or defense (or other right, remedy, or basis having a similar effect) available to any of the Loan Parties with regard thereto; (iii) nor is there any basis on which the terms and
conditions of any of the Obligations could be claimed to be other than as stated on the written instruments which evidence such Obligations. 

e. Each of the Loan Parties hereby acknowledges and agrees that it has no offsets, defenses, claims, or counterclaims
against the Agents, the Lenders, or their respective parents, affiliates, predecessors, successors, or assigns, or their officers, directors, employees, attorneys, or representatives, with respect to the Obligations, or otherwise, and that if any of
the Loan Parties now has, or ever did have, any offsets, defenses, claims, or counterclaims against such Persons, whether known or unknown, at law or in equity, from the beginning of the world through this date and through the time of execution of
this Fifth Amendment, all of them are hereby expressly WAIVED, and each of the Loan Parties hereby RELEASES such Persons from any liability therefor. 

7. Acknowledgment of Obligations. The Loan Parties hereby acknowledge and agree that the Loan Parties are unconditionally
liable to the Credit Parties for the following amounts which constitute a portion of the Obligations in accordance with the terms of the Credit Agreement, as of the date hereof: 

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 a. For
outstanding Credit Extensions: 
 $60,571,040.23 

b. For all amounts now due, or hereafter coming due, to any Agent, any Lender or any of their respective Affiliates with
respect to cash management, ACH, depository, investment, banker’s acceptance, letter of credit, Hedge Agreement, or other banking or financial services provided by any Agent, any Lender or any such Affiliate to any Loan Party. 

c. For all interest heretofore or hereafter accruing under the Loan Documents, for all fees heretofore or hereafter
accruing under the Loan Documents, and for all Credit Party Expenses and other fees, costs, expenses, and costs of collection heretofore or hereafter incurred by the Lenders in connection with and pursuant to the terms of, and any other amounts due
under, the Loan Documents, including, without limitation, (i) all attorney’s fees and expenses incurred in connection with the negotiation and preparation of this Fifth Amendment, the Fifth Amendment Fee Letter and all documents,
instruments, and agreements incidental hereto or thereto, and (ii) all interest, fees and expenses that accrue after the commencement of any case or proceeding by or against any Loan Party 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. 

8. Consent of Second Lien Administrative Agent. The Second Lien Administrative Agent (as defined in the Intercreditor
Agreement) hereby consents to the amendments to the Loan Documents described in this Fifth Amendment. 
 9.
Consent to Amendment to SOF Investment Loan. The Lenders and the Agents consent to the terms of Amendment No. 9 to the SOF Investments Loan, in the form annexed hereto as Exhibit A. 

10. Miscellaneous. 

a. Terms used in this Fifth Amendment which are defined in the Credit Agreement are used as so defined. 

b. This Fifth Amendment may be executed in counterparts, each of which when so executed and delivered shall be an
original, and all of which together shall constitute one agreement. 
 c. This Fifth Amendment expresses the
entire understanding of the parties with respect to the transactions contemplated hereby. No prior negotiations or discussions shall limit, modify, or otherwise affect the provisions hereof. 

-16- 

 

 

  
 d. Any
determination that any provision of this Fifth Amendment or any application hereof is invalid, illegal, or unenforceable in any respect and in any instance shall not affect the validity, legality, or enforceability of such provision in any other
instance, or the validity, legality, or enforceability of any other provisions of this Fifth Amendment. 
 e. The
Borrowers shall pay on demand all reasonable costs and expenses of the Agents and the Lenders, including, without limitation, reasonable attorneys’ fees incurred by the Agents in connection with the preparation, negotiation, execution, and
delivery of this Fifth Amendment. The Administrative Agent is hereby authorized by the Borrowers to make one or more Revolving Credit Loans to pay all such costs, expenses, and attorneys’ fees and expenses. 

f. In connection with the interpretation of this Fifth Amendment and all other documents, instruments, and agreements
incidental hereto: 
 i. All rights and obligations hereunder and thereunder, including matters of construction,
validity, and performance, shall be governed by and construed in accordance with the law of The Commonwealth of Massachusetts and are intended to take effect as sealed instruments. 

ii. The captions of this Fifth Amendment are for convenience purposes only, and shall not be used in construing the intent
of the parties under this Fifth Amendment. 
 iii. In the event of any inconsistency between the provisions of
this Fifth Amendment and any of the other Loan Documents, the provisions of this Fifth Amendment shall govern and control. 

g. Each Loan Party agrees that any suit for the enforcement of this Fifth Amendment or any other Loan Document may be
brought in the courts of the Commonwealth of Massachusetts sitting in Boston, Massachusetts or any federal court sitting therein as the Administrative Agent may elect in its sole discretion and consents to the non-exclusive jurisdiction of such
courts. Each party to this Fifth Amendment 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 Fifth Amendment shall affect any right that any Credit Party may otherwise

 -17- 

 

 

  
 have to bring
any action or proceeding relating to this Fifth Amendment against a Loan Party or its properties in the courts of any jurisdiction. 

h. Each Loan Party agrees that any action commenced by any Loan Party asserting any claim or counterclaim arising under or
in connection with this Fifth Amendment or any other Loan Document shall be brought solely in a court of the Commonwealth of Massachusetts sitting in Boston, Massachusetts or any federal court sitting therein 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 

i. The Agents, the Lenders, the Borrowers, and the Facility Guarantors have prepared this Fifth Amendment and all
documents, instruments, and agreements incidental hereto with the aid and assistance of their respective counsel. Accordingly, all of them shall be deemed to have been drafted by the Agents, the Lenders, the Borrowers, and the Facility Guarantors
and shall not be construed against any party. 
 [Signatures Follow] 

-18- 

 

 

  
 IN WITNESS
WHEREOF, the undersigned have caused this Fifth Amendment to be duly executed under seal as of the date first set forth above. 

AMERICAN APPAREL (USA), LLC (f/k/a AAI Acquisition LLC (successor-by-merger to American Apparel, Inc.), as Lead Borrower
and as a Borrower 
 By: 

Name: Dov Charney 

Title: Sole Manager 

AMERICAN APPAREL RETAIL, INC., as a Borrower 

By: 

Name: Dov Charney 

Title: President 

AMERICAN APPAREL DYEING & FINISHING, INC., 

as a Borrower 

By: 

Name: Dov Charney 

Title: President 

KCL KNITTING, LLC, as a Borrower 

By: American Apparel (USA), LLC, its sole member 

By: 

Name: Dov Charney 

Title: Sole Member 

Signature Page to Fifth Amendment to Credit Agreement 

 

 

  
 AMERICAN
APPAREL, LLC, 
 as a Facility Guarantor 

By: American Apparel (USA), LLC, its sole member 

By: 

Name: Dov Charney 

Title: Sole Manager 

FRESH AIR FREIGHT, INC., 

as a Facility Guarantor 

By: 

Name: Dov Charney 

Title: President 

AMERICAN APPAREL, INC. (f/k/a Endeavor Acquisition Corp.), as a Facility Guarantor 

By: 

Name: Dov Charney 

Title: Chairman of the Board 

Signature Page to Fifth Amendment to Credit Agreement 

 

 

  
 BANK OF
AMERICA, N.A. (successor by merger to LaSalle Business Credit, LLC, as Agent for LaSalle Bank Midwest National Association, acting through its division, LaSalle Retail Finance), as Administrative Agent, as Collateral Agent, as Swingline Lender and
as Lender 
 By: 

Name: David Vega 

Title: Managing Director 

BANK OF AMERICA, N.A. (successor by merger to LaSalle Bank National Association), as Issuing Bank 

By: 

Name: David Vega 

Title: Managing Director 

Signature Page to Fifth Amendment to Credit Agreement 

 

 

  
 WELLS FARGO
RETAIL FINANCE, LLC, as Collateral Monitoring Agent and as a Lender 
 By: 

Name: Emily Abrahamson 

Title: Vice President/Account Executive 

Signature Page to Fifth Amendment to Credit Agreement 

 

 

  
 NATIONAL CITY
BUSINESS CREDIT, INC., 
 as a Lender 

By: 

Name: 

Title: 

Signature Page to Fifth Amendment to Credit Agreement 

 

 

  
 The foregoing
is acknowledged, agreed and consented to: 
 SOF INVESTMENTS, L.P – PRIVATE IV, 

as Second Lien Administrative Agent 

By: 

Name: Marc R. Lisker 

Title: General Counsel 

Acknowledgement Page to Fifth Amendment to Credit Agreement 

 

 

  
 AMENDMENT NO. 9
TO CREDIT AGREEMENT OF AMERICAN APPAREL (USA), LLC 
 This AMENDMENT NO. 9 (this “Amendment”), dated as
of December 19, 2008, is among American Apparel (USA), LLC (f/k/a AAI Acquisition LLC (successor by merger to American Apparel, Inc.)), a California limited liability company (the “Borrower”), the Facility Guarantors thereto (the
“Facility Guarantors”) and SOF Investments, L.P.—Private IV, as lender (the “Lender”), parties to the Credit Agreement dated as of January 18, 2007 (as amended by that certain Amendment No. 1 and Waiver to Credit Agreement
of American Apparel, Inc. dated as of July 2, 2007, that certain Amendment No. 2 and Waiver to Credit Agreement of American Apparel, Inc. dated as of November 9, 2007, that certain Amendment No. 3 and Waiver to Credit Agreement of American Apparel,
Inc. dated as of November 28, 2007, that certain Amendment No. 4 and Waiver to Credit Agreement of American Apparel, Inc. dated as of December 12, 2007, that certain Amendment No. 5 and Waiver to Credit Agreement of American Apparel (USA), LLC dated
as of February 29, 2008, that certain Amendment No. 6, Consent and Waiver To Credit Agreement of American Apparel (USA), LLC dated as of May 16, 2008, that certain Amendment No. 7 to Credit Agreement of American Apparel (USA), LLC dated as of June
20, 2008 and that certain Amendment No. 8 and Waiver to Credit Agreement of American Apparel (USA), LLC dated as of November 7, 2008, the “Credit Agreement’). Capitalized terms used herein but not defined herein are used as defined in the
Credit Agreement. 
 WITNESSETH: 

WHEREAS, the Lender and the Borrower desire to amend the Credit Agreement on the terms set forth herein. 

NOW, THEREFORE, in consideration of the premises and the covenants and obligations contained herein, the parties hereto
agree as follows: 
 Section 1. Amendments to the Credit Agreement 

Effective as of the Amendment Effective Date and subject to the satisfaction (or due waiver) of the conditions set forth
in Section 2 (Conditions Precedent to the Effectiveness of this Amendment) hereof the Credit Agreement is hereby amended as follows: 

(a) Amendments to Article I (Definitions) 

(i) Section 1.01 (Definitions) of the Credit Agreement is hereby amended as follows: 

(A) The definition of “Maturity Date” is hereby amended and restated in its entirety as follows: 

“Maturity Date” means April 20, 2009. 

(B) The definition of “Permitted Disposition” is hereby amended by deleting the word “and” at the end
of clause (f) thereof and adding the following new clause (g) immediately after clause (f) thereof: 

 

 

  
 Amendment No. 9
of American Apparel (USA), LLC 
 “(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 in an amount not to exceed $15,000,000 in the aggregate for all such sales, including sale-leaseback transactions involving such equipment; provided that the net
proceeds of any disposition of equipment pursuant to this clause (g) shall be used solely to pay down the “Obligations” (as defined in the Existing First Lien Credit Agreement) (without a reduction of the commitments thereunder) and, to
the extent expressly permitted under the Existing First Lien Credit Agreement, the Loans made hereunder pursuant to SECTION 2.08(a); and” 

(C) Clause (h) of the definition of “Permitted Encumbrances” is hereby amended and restated in its entirety as
follows: 
 “(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 extend to any other property or assets of the Loan Parties, 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.” 

(D) The definition of “Permitted Indebtedness” is hereby amended by (i) deleting clause (j) thereof and
replacing it with “[intentionally deleted]”, (ii) inserting the word “and” after the term “Maturity Date” in clause (k)(ii) thereof and by deleting the language “and (iv) such Loan Party shall be in pro forma
compliance with Section 6.11(a) after the incurrence of such Subordinated Indebtedness” from the end of clause (k) thereof, (iii) deleting the reference to “$12,000,000” in clause (1) thereof and replacing it with
“$25,000,000,” and (iv) amending and restating clause (e) in its entirety as follows: 
 “(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 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 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 and replacements of any such Indebtedness that do not increase the outstanding principal 

2 

 

 

  
 Amendment No. 9
of American Apparel (USA), LLC 
 amount thereof or result in an earlier maturity date or decreased weighted
average life thereof; provided that with respect to extensions, renewals, or replacements of such Indebtedness, the holders of such Indebtedness are not afforded covenants, defaults, rights or remedies more burdensome in any material respect to the
obligor or obligors than those contained in the Indebtedness being extended, renewed or replaced, and further provided however, that the aggregate principal amount of Indebtedness permitted by this clause (e) and clause (i) below shall not exceed
$20,000,000 at any time outstanding;” 
 (E) The definition of “Prepayment Event” is hereby
amended by amending and restating clause (a) thereof in its entirety as follows: 
 “(a) any sale, transfer
or other disposition (including pursuant to a sale-leaseback transaction, and any Permitted Disposition pursuant to clauses (e) and (g) of the definition of Permitted Disposition) of any property or asset of a Loan Party or any Subsidiary of a Loan
Party, other than a sale of inventory in the ordinary course of business or a Permitted Disposition pursuant to clauses (a) through (d) and clause (f) of the definition of Permitted Disposition;” 

(F) The following definitions are hereby inserted in Section 1.01 (Definitions) of the Credit Agreement in the appropriate
alphabetical order: 
 “Total Debt” means the outstanding principal amount of Indebtedness (not
including Hedge Agreements) of the Loan Parties and their Subsidiaries on a consolidated basis. 

“Warrants” means those certain Warrants to Purchase Shares of Common Stock of American Apparel, Inc. issued on
December 19, 2008 and any other warrants issued to Lender after the date hereof. 
 (b) Amendment to Article II
(Amount and Terms of Credit) 
 (i) Section 2.07 (Optional Prepayment of Loans; Reimbursement of Lenders) of the
Credit Agreement is hereby amended by deleting the text of clause (b) thereof and replacing it with “[Intentionally Deleted.]” 

(ii) Section 2.08 (Mandatory Prepayment; Commitment Termination) of the Credit Agreement is hereby amended by deleting
clause (a) thereof and replacing it with the following new clause (a): 
 “(a) The Borrower shall, to the
extent permitted by the Existing First Lien Credit Agreement, apply all Net Proceeds received by the Loan Parties 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 any interest-paid-in kind, if any, ratably in accordance with each Lender’s Commitment
Percentage. Notwithstanding anything to the contrary in the foregoing, at any time a mandatory prepayment pursuant to this SECTION 2.08(a) is 

3 

 

 

  
 Amendment No. 9
of American Apparel (USA), LLC 
 subject to the Payment Conditions under the terms of the Existing 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 Loan on the first Business Day following such Prepayment Event in accordance with this SECTION 2.08(a), or (ii) if the Payment Conditions cannot be 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 Loan shall be applied to prepay the Loan 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).”

 (iii) Section 2.09(a) (Additional Interest) of the Credit Agreement is hereby amended and restated in its
entirety as follows: 
 “(a) On the effective date of Amendment No. 9 to this Agreement, the Borrower shall
pay the Administrative Agent non-refundable additional interest in an amount equal to five percent (5%) of the Total Commitment (the “Additional Interest”).” 

(c) Amendments to Article V (Affirmative Covenants) 

(i) Section 5.01 (Financial Statements and Other Information) of the Credit Agreement is hereby amended by deleting
“and” at the end of clause (h) thereof, re-lettering clause (i) thereof as clause (j) and inserting the following new clause (i): 

“(i) Promptly following the delivery of any documents pursuant to Section 5.01 of the Existing First Lien Credit
Agreement which are not otherwise required to be delivered under this SECTION 5.01, such documents; and” 

(d) Amendments to Article VI (Negative Covenants) 

(i) Section 6.06 (Equity Issuances) of the Credit Agreement is hereby amended by (x) deleting clause (iii) thereof in its
entirety and replacing it with “(iii) issue any additional shares of its Capital Stock not permitted above,” and (y) deleting the proviso contained therein and replacing it with the following: 

“provided that notwithstanding anything to the contrary contained herein, nothing in this SECTION 6.06 shall prohibit
(a) the issuance of Capital Stock by Parent (other than preferred stock not permitted to be issued under clause (i) above) so long as the Net Proceeds thereof (if any) are applied to prepay the outstanding principal amount of the loans made under
the Existing First Lien Credit Agreement (without a reduction of the commitments thereunder) or, to the extent permitted by the Existing First Lien Credit Agreement, of the Loans made hereunder in accordance with SECTION 2.08(a), (b) the issuance of
options or 
 4 

 

 

  
 Amendment No. 9
of American Apparel (USA), LLC 
 stock awards, including, without limitation, issuances of options or stock
awards to employees of the Merger Subsidiary pursuant to the Merger Agreement and expressly set forth therein, or (c) the issuance of Capital Stock by Parent (other than preferred stock not permitted to be issued under clause (i) above) with respect
to the Warrants or in connection with the issuance of options, warrants or stock awards, or in connection with the exercise of options, warrants or stock awards.” 

(ii) Section 6.07(b) (Restricted Payments; Certain Payments of Indebtedness) of the Credit Agreement is hereby amended by
(w) deleting the language “mandatory payments and prepayments of interest and principal as and when due” in clause (i) thereof and replacing it with “mandatory payments of interest and principal as and when due and prepayments of
interest and principal,” (x) deleting the word “and” at the end of clause (v) thereof, (y) adding the phrase “and interest” after the phrase “any prepayments of principal” in clause (vi) thereof, and (z) adding the
new clause (vii) to the end thereof: 
 “(vii) conversions of Indebtedness under clauses (k) or (1) of the
definition of Permitted Indebtedness to equity.” 
 (iii) Section 6.11 (Financial Covenants) of the Credit
Agreement is hereby amended as follows: 
 (A) Section 6.11(b) (Minimum Consolidated EBITDA) of the Credit
Agreement is hereby deleted in its entirety and replaced with the following: 
 “(b) Minimum Consolidated
EBITDA. The Parent shall maintain, for the twelve month period ended on the last day of each month set forth below, Consolidated EBITDA for the twelve months ending on such day of not less than the amount set forth opposite such month: 

Twelve Months Ending Minimum Consolidated EBITDA 

November 30, 2008 $65,000,000 

December 31, 2008 $65,000,000 

January 31, 2009 $65,000,000 

February 28, 2009 $65,000,000 

March 31, 2009 $65,000,000 

April 30, 2009 $65,000,000 

May 31, 2009 $65,000,000 

June 30, 2009 $65,000,000 

July 31, 2009 and each month thereafter $70,000,000” 

(B) Section 6.11(c) (Maximum Senior Debt to Consolidated EBITDA) of the Credit Agreement is hereby deleted in its entirety
and replaced with the following: 
 5 

 

 

  
 Amendment No. 9
of American Apparel (USA), LLC 
 “ (c) Maximum Senior Debt to Consolidated EBITDA. The Parent shall
maintain, for the four Fiscal Quarter period ended on the last day of each Fiscal Quarter set forth below, a Senior Debt to Consolidated EBITDA ratio of not more than the ratio set forth below opposite such Fiscal Quarter: 

Four Fiscal Quarters Senior Debt To 

Ending Consolidated Ebitda 

December 31, 2008 2.20:1.0 

March 31, 2009 2.20:1.0 

June 30, 2009 2.20:1.0 

September 30, 2009 2.20:1.0 

December 31, 2009 and each 2.20:1.0” 

Fiscal Quarter thereafter 

(C) Section 6.11(d) (Total Adjusted Debt to Consolidated EBITDAR) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following: 
 “(d) Total Debt to Consolidated EBITDA. The Parent shall
maintain, for the four Fiscal Quarter period ended on the last day of each Fiscal Quarter set forth below, a Total Debt to Consolidated EBITDA ratio of not more than the ratio set forth below opposite such Fiscal Quarter: 

Four Fiscal Quarters Ending Total Debt To Consolidated Ebitda 

December 31, 2008 2.20:1.0 

March 31, 2009 2.20:1.0 

June 30, 2009 2.20:1.0 

September 30, 2009 2.20:1.0 

December 31, 2009 and each Fiscal Quarter thereafter 2.20:1.0” 

(iv) Section 6.12 (Capital Expenditures) of the Credit Agreement is hereby amended by deleting clause (b) thereof in
its entirety and replacing it with the following new clause (b): 
 “(b) in excess of (i) $9,262,000 in the
aggregate for the Fiscal Quarter ending March 31, 2009; (ii) $4,939,000 in the aggregate for the Fiscal Quarter ending June 30, 2009; (iii) $2,610,000 in the aggregate for the Fiscal Quarter ending September 30, 2009; and (iv) $2,023,000 in the
aggregate for the Fiscal Quarter ending December 31, 2009.” 
 (e) Amendment to Article VII (Events of
Default) 
 (i) Section 7.01 (Events of Default) of the Credit Agreement is hereby amended by adding the word
“or” to the end of clause (s) thereof and adding the following new clause (t) immediately after clause (s) thereof: 

6 

 

 

  
 Amendment No. 9
of American Apparel (USA), LLC 
 “(t) if, on or prior to April 1, 2009, Borrower shall not have engaged any
of the “big four” independent accounting firms, or another nationally recognized independent accounting firm reasonably acceptable to the Lender, as its auditor;” 

(f) Amendment to Article IX (Miscellaneous) 

(i) Section 9.01 (Notices) of the Credit Agreement is hereby amended by deleting clauses (a) and (c) thereof in their
entirety and replacing them with the following new clauses (a) and (c), respectively: 
 “(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 any other Credit Party, to
it at SOF Investments, L.P.—Private IV, c/o MSD Capital, L.P., 645 Fifth Avenue, 21st Floor, New York, New York 10022-5910, Attention: General Counsel, (Telecopy No. (212) 303-1772), (E-mail mlisker@msdcapital.com), with a copy to Kramer Levin
Naftalis & Frankel LLP, Attention: Ernie Wechsler, Esq. (Telecopy No. (212) 715-8000).” 
 Section 2.
Conditions Precedent to the Effectiveness of this Amendment 
 This Amendment shall become effective as of the
date first written above when, and only when, each of the following conditions precedent shall have been satisfied or duly waived by the Lender (the date on which such conditions precedent are satisfied or duly waived by the Lender is referred to as
the “Amendment Effective Date”): 
 (a) Certain Documents. The Administrative Agent shall have received
the following documents, each in form and substance reasonably satisfactory to the Lender, which satisfaction shall be evidenced by the execution and delivery by the Lender of this Amendment, and dated the Amendment Effective Date (when applicable):

 (i) this Amendment, duly executed by the Borrower, each Facility Guarantor, the Lender and the First Lien
Administrative Agent (as defined in the Intercreditor Agreement); 
 (ii) an executed copy of those certain
Warrants to Purchase Shares of Common Stock of American Apparel, Inc. in substantially the form attached as Exhibit A hereto; 

(iii) an executed copy of the Fifth Amendment to Credit Agreement with respect to the Existing First Lien Credit Agreement
in form and substance reasonably satisfactory to the Lender; 
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 Amendment No. 9
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 (iv) an executed copy of the Amended and Restated Subordination Agreement, with
respect to Indebtedness of the Borrower owed to Dov Charney in substantially the form attached as Exhibit B hereto; 

(v) the Cash Flow Projections and the Yearly Projections (each as defined in the Existing First Lien Credit Agreement);

 (vi) an opinion of counsel to the Loan Parties, addressed to the Lender, in form and substance reasonably
satisfactory to the Lender; and 
 (vii) such other and further documents as the Lender reasonably may require
and shall have identified prior to the execution of this Amendment, in order to confirm and implement the terms and conditions of this Amendment. 

(b) Corporate and Other Proceedings. All corporate and other proceedings required in connection with this Amendment, and
all documents, instruments and other legal matters in connection with the transactions contemplated by this Amendment, shall be satisfactory in all respects to the Lender, which satisfaction shall be evidenced by the execution and delivery by the
Lender of this Amendment. 
 (c) Representations and Warranties. Each of the representations and warranties
contained in Section 3 (Representations and Warranties) of this Amendment shall be true and correct. 
 (d) No
Default or Event of Default. After giving effect to this Amendment, no Default or Event of Default shall have occurred and be continuing as of the date hereof. 

(e) No Litigation. No litigation shall have been commenced against any Loan Party or any of its Subsidiaries, either on
the date hereof or the Amendment Effective Date, seeking to restrain or enjoin (whether temporarily, preliminarily or permanently) the performance of any action by any Loan Party required or contemplated by this Amendment or the Credit Agreement or
any Loan Document, in either case as amended hereby. 
 (f) Fees and Expenses Paid. The Borrower shall have paid
all Obligations due, after giving effect to this Amendment, on or before the later of the date hereof and the Amendment Effective Date including, without limitation, the fees set forth in Section 4 (Fees and Expenses) hereof, including any
Additional Interest owing under the Credit Agreement, and all costs and expenses of the Lender in connection with the preparation, reproduction, execution and delivery of this Amendment and all other Loan Documents entered into in connection
herewith (including, without limitation, the fees and out-of-pocket expenses of counsel for the Lender with respect thereto and all other Loan Documents as set forth on that invoice dated December 17, 2008) and all other costs, expenses and fees due
under any Loan Document. 
 (g) No Default or Event of Default Under Existing First Lien Credit Agreement. No
default or event of default shall have occurred and be continuing with respect to the Existing First Lien Credit Agreement on the date hereof. 

Section 3. Representations and Warranties 

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 Amendment No. 9
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 On and as of the date hereof and as of the Amendment Effective Date, after
giving effect to this Amendment, the Borrower hereby represents and warrants to the Lender as follows: 
 (a)
this Amendment has been duly authorized, executed and delivered by the Borrower and each Facility Guarantor and constitutes a legal, valid and binding obligation of the Borrower and each Facility Guarantor, enforceable against the Borrower and each
Facility Guarantor in accordance with its terms and the Credit Agreement as amended by this Amendment and constitutes the legal, valid and binding obligation of the Borrower and each Facility Guarantor, enforceable against the Borrower and each
Facility Guarantor in accordance with its terms; 
 (b) each of the representations and warranties contained in
Article III (Representations and Warranties) of the Credit Agreement, the other Loan Documents or otherwise made in writing in connection therewith are true and correct in all material respects on and as of the date hereof and the Amendment
Effective Date, in each case as if made on and as of such date except (i) to the extent that such representations and warranties specifically relate to a specific date, in which case such representations and warranties shall be true and correct in
all material respects as of such specific date, and (ii) to the extent that such statement was subsequently corrected and such correction was presented to the Lender; provided, however, that references therein to the “Credit Agreement”
shall be deemed to refer to the Credit Agreement as amended by this Amendment after giving effect to the consents and waivers set forth herein; 

(c) no Default or Event of Default has occurred and is continuing; and 

(d) no litigation has been commenced against any Loan Party or any of its Subsidiaries seeking to restrain or enjoin
(whether temporarily, preliminarily or permanently) the performance of any action by any Loan Party required or contemplated by this Amendment, the Credit Agreement or any Loan Document, in each case as amended hereby (if applicable). 

Section 4. Fees and Expenses 

The Borrower and each other Loan Party agrees to pay on demand in accordance with the terms of Section 9.03(a) (Expenses;
Indemnity; Damage Waiver) of the Credit Agreement all costs and expenses of the Lender in connection with the preparation, reproduction, execution and delivery of this Amendment and all other Loan Documents entered into in connection herewith
(including, without limitation, the fees and out-of-pocket expenses of counsel for the Lender with respect thereto and all other Loan Documents as set forth on that invoice dated December 17, 2008). In addition the Borrower agrees to pay to Lender
any Additional Interest owing under the Credit Agreement and payable on the date hereof. 
 Section 5. Covenant

 (a) The Borrower hereby covenants that on or before March 13, 2009, it shall raise $16,000,000 by issuing
Capital Stock and/or incurring Indebtedness, each in compliance with the Credit Agreement. If the Borrower has not raised such $16,000,000 in accordance with the foregoing sentence by March 13, 2009, the Borrower shall issue warrants on the terms
and conditions set forth in those certain Warrants to Purchase Shares of Common Stock of American Apparel, Inc. in the form attached as Exhibit C hereto (the “Additional Warrants”); provided that 

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 Amendment No. 9
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 in the event that the amount of the Loans outstanding under the Credit
Agreement on March 13, 2009 is less than $35,000,000, the foregoing requirement of this Section 5 shall be void and of no further force and effect, and any provisions in the Additional Warrants or any other agreement or instrument relating to such
issuance shall be, and hereby is, irrevocably waived and of no further force and effect. 
 Section 6. Reference
to the Effect on the Loan Documents 
 (a) As of the Amendment Effective Date, each reference in the Credit
Agreement to “this Agreement,” “hereunder,” “hereof” “herein,” or words of like import, and each reference in the other Loan Documents to the Credit Agreement (including, without limitation, by means of words
like “thereunder”, “thereof” and words of like import), shall mean and be a reference to the Credit Agreement as amended hereby, and this Amendment and the Credit Agreement shall be read together and construed as a single
instrument. Each of the table of contents and lists of Exhibits and Schedules of the Credit Agreement shall be amended to reflect the changes made in this Amendment as of the Amendment Effective Date. 

(b) Except as expressly amended hereby or specifically waived above, all of the terms and provisions of the Credit
Agreement and all other Loan Documents are and shall remain in full force and effect and are hereby ratified and confirmed. 

(c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as
a waiver of any right, power or remedy of the Lender under any of the Loan Documents, nor constitute a waiver or amendment of any other provision of any of the Loan Documents or for any purpose except as expressly set forth herein. 

(d) This Amendment is a Loan Document. 

Section 7. Consent of Facility Guarantors 

Each Facility Guarantor hereby consents to this Amendment and agrees that the terms hereof shall not affect in any way its
obligations and liabilities under the Loan Documents (as amended and otherwise expressly modified hereby), all of which obligations and liabilities shall remain in full force and effect and each of which is hereby reaffirmed (as amended and
otherwise expressly modified hereby). 
 Section 8. Consent of First Lien Administrative Agent 

The First Lien Administrative Agent (as defined in the Intercreditor Agreement), on behalf of itself and the lenders to
the Existing First Lien Credit Agreement, hereby consents to the amendments to the Credit Agreement described in this Amendment and the other terms and conditions set forth herein. 

Section 9. Consent to Existing First Lien Credit Agreement Amendment 

The Lender and the Administrative Agent consent to the terms of the Fifth Amendment to the Existing First Lien Credit
Agreement, in the form attached as Exhibit D hereto, and the payment of related fees and expenses. 
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 Amendment No. 9
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 Section 10. Execution in Counterparts 

This Amendment may be executed in any number of counterparts and by different parties in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that
all signature pages are attached to the same document. Delivery of an executed counterpart by telecopy or e-mail shall be effective as delivery of a manually executed counterpart of this Amendment. 

Section 11. Governing Law 

This Amendment shall be governed by and construed in accordance with the law of the State of New York. 

Section 12. Section; Titles 

The section titles contained in this Amendment are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto, except when used to reference a section. Any reference to the number of a clause, sub-clause or subsection of any Loan Document immediately followed by a reference in
parenthesis to the title of the section of such Loan Document containing such clause, sub-clause or subsection is a reference to such clause, sub-clause or subsection and not to the entire section; provided, however, that, in case of direct conflict
between the reference to the title and the reference to the number of such section, the reference to the title shall govern absent manifest error. If any reference to the number of a section (but not to any clause, sub-clause or subsection thereof)
of any Loan Document is followed immediately by a reference in parenthesis to the title of a section of any Loan Document, the title reference shall govern in case of direct conflict absent manifest error. 

Section 13. Notices 

All communications and notices hereunder shall be given as provided in the Credit Agreement or, as the case may be, the
Facility Guaranty. 
 Section 14. Severability 

The fact that any term or provision of this Amendment is held invalid, illegal or unenforceable as to any person in any
situation in any jurisdiction shall not affect the validity, enforceability or legality of the remaining terms or provisions hereof or the validity, enforceability or legality of such offending term or provision in any other situation, or
jurisdiction or as applied to any person. 
 Section 15. Successors 

The terms of this Amendment shall be binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and assigns. 
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 Amendment No. 9
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 Section 16. Waiver of Jury Trial 

EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AMENDMENT OR
ANY OTHER LOAN DOCUMENT. 
 Section 17. Submission to Jurisdiction Each Loan Party agrees that any suit for the
enforcement of this Amendment may be brought in the federal or state courts of the State of New York as the Lender may elect in its sole discretion and consents to the non-exclusive jurisdiction of such courts. Each party to this Amendment 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 Amendment shall affect any right that any Credit Party may otherwise have to bring any action or proceeding relating to this
Amendment against a Loan Party or its properties in the courts of any jurisdiction. 
 Section 18. Subordination
Agreement 
 Lender hereby agrees that the terms and conditions of the form of Subordination Agreement attached
as Exhibit E hereto between Lender and the Subordinated Creditor (as defined therein) are acceptable for purposes of clause (l)(iii) of the definition of Permitted Indebtedness. 

[Remainder of Page Left Blank] 

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 Amendment No. 9
of American Apparel (USA), LLC 
 FACILITY GUARANTORS: 

AMERICAN APPAREL, LLC, as Facility Guarantor 

By: AMERICAN APPAREL (USA), LLC (f/k/a AAI Acquisition LLC (successor by merger to American Apparel, Inc.)) 

By: Name: Title: 

FRESH AIR FREIGHT, INC., as Facility Guarantor 

By: 

Name: 

Title: 

KCL KNITTING, LLC, as Facility Guarantor 

By: AMERICAN APPAREL (USA), LLC (f/k/a AAI Acquisition LLC (successor by merger to American Apparel, Inc.)) 

By: 

Name: 

Title: 

AMERICAN APPAREL RETAIL, INC., as Facility Guarantor 

By: 

Name: 

Title: 

[SIGNATURE PAGE TO AMENDMENT NO. 9] 

 

 

  
 Amendment No. 9
of American Apparel (USA), LLC 
 AMERICAN APPAREL DYEING & FINISHING, INC., as Facility Guarantor

 By: Name: Title: 

AMERICAN APPAREL, INC., as Facility Guarantor 

By: Name: Title: 

[SIGNATURE PAGE TO AMENDMENT NO. 9] 

 

 

  
 EXHIBIT E

 (Attached) 

 

 

  
 AMENDED AND
RESTATED SUBORDINATION AGREEMENT 
 This Amended and Restated Subordination Agreement (this
“Agreement”) is made as of December 19, 2008 by and among American Apparel (USA), LLC (f/k/a AAI Acquisition LLC (successor by merger to American Apparel, Inc.), a California limited liability company (the “Borrower”), Dov
Charney, an individual (the “Subordinated Creditor”) and Bank of America, N.A. (successor by merger to LaSalle Business Credit, LLC, as Agent for LaSalle Bank Midwest National Association, acting through its division, LaSalle Retail
Finance, as Administrative Agent) (in such capacity, the “Agent”) pursuant to a certain Credit Agreement (as defined below). 

WITNESSETH 

WHEREAS, Subordinated Creditor has entered into certain financing and related arrangements with the Borrower and has made
loans or provided other financial accommodations to the Borrower pursuant to (i) that certain undocumented Promissory Note by and between the Borrower and the Subordinated Creditor, and all other documents and instruments entered into in connection
therewith (collectively, the “Existing Subordinated Debt Documents”), and (ii) that certain Promissory Note dated as of even date herewith by the Borrower payable to the Subordinated Creditor, and all other documents and instruments
entered into in connection therewith (collectively, the “New Subordinated Debt Documents”, and together with the Existing Subordinated Debt Documents, collectively, the “Subordinated Debt Documents”), which loans and other
financial accommodations, as well as the right to payment due thereunder, are and shall be unsecured; and 

WHEREAS, Agent has entered into financing arrangements with the Borrower and certain of its Affiliates as evidenced by,
among other documents and instruments, a certain Credit Agreement dated as of July 2, 2007 (as amended, restated, supplemented or otherwise modified, the “Credit Agreement”), by and between, among others, the Borrower, the other Borrowers
named therein (together with the Borrower, collectively, the “Borrowers”), the Facility Guarantors named therein (the “Facility Guarantors”, and together with the Borrowers, collectively, the “Loan Parties”), the
Lenders named therein, and Agent, pursuant to which Agent and the Lenders may, upon certain terms and conditions, make loans and provide other financial accommodations to the Borrowers secured by certain assets and properties of the Loan Parties;
and 
 WHEREAS, the parties hereto previously entered into that certain Subordination Agreement dated as of July
2, 2007 (the “Existing Subordination Agreement”), pursuant to which the parties hereto agreed to, among other things, certain terms and conditions with respect to the “Subordinated Debt Obligations” (as defined in the Existing
Subordination Agreement); and 
 WHEREAS, the Loan Parties have requested that Agent and the Lenders enter into
that certain Fifth Amendment to Credit Agreement (the “Fifth Amendment”) and consent to certain modifications to the terms of the SOF Investments Loan; and 

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 WHEREAS, Agent
and the Lenders are willing to enter into the Fifth Amendment and to consent to such modifications, subject to, among other things, the execution and delivery by the Borrower and the Subordinated Creditor of this Agreement; 

WHEREAS, in order to induce Agent and the Lenders to continue to provide the financing arrangements with the Loan Parties,
(i) Subordinated Creditor has agreed to the subordination in right of payment of the existing and future obligations of the Borrower to Subordinated Creditor to the payment of the existing and future obligations of the Borrower to Agent and the
Lenders and related matters as set forth below, and (ii) the parties hereto have agreed to amend and restate the Existing Subordination Agreement in accordance with the terms hereof; 

NOW, THEREFORE, in consideration of the foregoing and for good and valuable consideration the receipt and sufficiency of
which are hereby acknowledged, the parties agree that the Existing Subordination Agreement is hereby amended and restated to read as follows: 

1. Capitalized Terms. Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the
Credit Agreement. 
 2. Subordination: Subordinated Creditor and the Borrower hereby agree with Agent that the
principal, interest, fees, expenses and all other amounts due (collectively, the “Subordinated Debt Obligations”) under the Subordinated Debt Documents are and shall be subject to and subordinate to the Obligations on the terms and
conditions set forth in this Agreement until the date that is six months following the last to occur of (i) the expiration or termination of the Commitments, (ii) the indefeasible payment in full in cash of principal of and interest on each Loan and
all fees and other Obligations, (iii) the expiration, termination, cash collateralization or backstopping by a letter of credit reasonably acceptable to Agent and the Issuing Bank of all Letters of Credit, and (iv) the reimbursement of all Letter of
Credit Disbursements. 
 3. Agreements By Subordinated Creditor: Subordinated Creditor hereby agrees as follows
(such agreements to remain in effect until six months following the last to occur of (i) the expiration or termination of the Commitments, (ii) the indefeasible payment in full in cash of principal of and interest on each Loan and all fees and other
Obligations, (iii) the expiration, termination, cash collateralization or backstopping by a letter of credit reasonably acceptable to Agent and the Issuing Bank of all Letters of Credit, and (iv) the reimbursement of all Letter of Credit
Disbursements): 
 Subordinated Creditor shall not: 

a. Except as provided in Section 5 below, demand, accept, or receive from the Borrower, directly or indirectly, any
payment or other value, in cash or in kind, on account of the Subordinated Debt Obligations. 
 b. Amend in a
manner adverse to Agent and the Lenders the Subordinated Debt Documents or alter, amend, or change any term of payment of the Subordinated Debt Obligations (other than the forgiveness of the Subordinated Debt Obligations in whole or in part or
extension of any payment date therefor). 
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 c. Set off,
establish a contra account, or otherwise apply, all or any part of the Subordinated Debt Obligations towards satisfaction of any obligation of Subordinated Creditor to the Borrower. 

d. Enforce any of Subordinated Creditor’s rights, remedies, powers, privileges and discretions with respect to the
Subordinated Debt Obligations. 
 e. Demand, accept, or receive from the Borrower any collateral for the
Subordinated Debt Obligations or any other obligation of the Borrower to Subordinated Creditor under the Subordinated Debt Documents. 

4. Agreements By Borrower: Borrower hereby agrees as follows (such agreements to remain in effect until six months
following the last to occur of (i) the expiration or termination of the Commitments, (ii) the indefeasible payment in full in cash of principal of and interest on each Loan and all fees and other Obligations, (iii) the expiration, termination, cash
collateralization or backstopping by a letter of credit reasonably acceptable to Agent and the Issuing Bank of all Letters of Credit, and (iv) the reimbursement of all Letter of Credit Disbursements): 

Borrower shall not: 

a. Except as provided in Section 5 below, make any payment or give any value in cash or in kind to Subordinated Creditor,
directly or indirectly, on account of the Subordinated Debt Obligations. 
 b. Set off, establish a contra
account, or otherwise apply all or any part of any obligation of Subordinated Creditor to the Borrower towards satisfaction of the Subordinated Debt Obligations. 

c. Amend in a manner adverse to Agent and the Lenders the Subordinated Debt Documents or alter, amend, or change any term
of payment of the Subordinated Debt Obligations (other than the forgiveness of the Subordinated Debt Obligations in whole or in part or extension of any payment date therefor). 

d. Execute, give, or deliver any collateral for, the Subordinated Debt Obligations or any other obligation of the Borrower
to Subordinated Creditor under the Subordinated Debt Documents. 
 5. Permitted Payments of Interest: Conversion
of Debt to Equity. 
 a. The Borrower may make, and Subordinated Creditor may receive, regularly scheduled
payments of interest on account of the Subordinated Debt Obligations, provided that such payments shall be made and received by increasing the aggregate outstanding principal amount of such Subordinated Debt Obligations by the amount of such accrued
interest and shall not be made in cash. 
 b. Any portion of the Subordinated Debt Obligations may be converted
to equity. 
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 6. Further
Assurances: Subordinated Creditor and the Borrower shall each execute all such further instruments and do such other and further acts as Agent may reasonably request in furtherance of Agent’s rights hereunder and/or the purposes of this
Agreement. The respective obligations of Subordinated Creditor and the Borrower hereunder being unique, are specifically enforceable by Agent. 

7. Subordinated Creditor’s Obligations: In the event that, notwithstanding the restrictions set forth in Sections 3
and 4, above: 
 a. Subordinated Creditor receives any collateral to secure the Subordinated Debt Obligations or
any other obligation of the Borrower to Subordinated Creditor under the Subordinated Debt Documents, Subordinated Creditor shall hold the same in trust for Agent and shall deliver same to Agent, immediately upon receipt thereof. 

b. Subordinated Creditor receives any payment on account of the Subordinated Debt Obligations (other than as permitted
pursuant to Section 5 hereof), Subordinated Creditor shall hold such payment in trust for Agent and shall not commingle such payments with any other funds of Subordinated Creditor. Subordinated Creditor shall deliver all such payments to Agent
immediately upon receipt thereof by Subordinated Creditor in the identical form received, duly endorsed to Agent. 

8. Application Of Proceeds: The proceeds (if any) received by Agent on account of the Subordinated Debt Obligations shall
be applied towards the Obligations in such order and manner as Agent determines in its sole discretion. Any such proceeds received by Agent in excess of the amounts necessary to satisfy the Obligations shall be paid to Subordinated Creditor.

 9. Certain Waivers By Subordinated Creditor: Subordinated Creditor: 

a. Waives notice of non-payment, presentment, demand, notice, protest or otherwise with respect to the Obligations and/or
the Subordinated Debt Obligations. 
 b. Waives notice of the acceptance of this Agreement by Agent. 

c. Assents to any extension, renewal, indulgence or waiver, permitted to the Borrower and/or any other person liable or
obligated to Agent for or on the Obligations and waives all suretyship defenses generally. 
 d. If entitled
thereto, waives the right to notice and/or hearing prior to Agent’s exercising of Agent’s rights and remedies hereunder 

No action by Agent which has been assented to herein shall affect the obligations of Subordinated Creditor to Agent
hereunder. 
 10. Continuing Effectiveness of Subordination: 

a. Agent may continue to rely upon this Agreement and the subordination effected hereby with respect to all Obligations
which may arise hereafter. The repayment 
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 and
satisfaction of all of such Obligations shall not terminate this Agreement and the subordination effected hereby as to any Obligations which arise thereafter. 

b. The subordination effected hereby shall not be affected by any fraudulent, illegal, or improper act by the Borrower,
Subordinated Creditor, or any person liable or obligated to Agent for or on the Obligations, nor by any release, discharge or invalidation, by operation of law or otherwise, of the Obligations or by the legal incapacity of the Borrower, Subordinated
Creditor, or any other person liable or obligated to Agent for or on the Obligations. 
 c. All interest on the
Obligations for which the Borrower has agreed to be liable and all costs of collection shall continue to accrue and shall continue to be Obligations for purposes of the subordination effected hereby notwithstanding any stay to the enforcement
thereof against the Borrower or disallowance therefor against the Borrower. 
 d. This Agreement, if previously
terminated, shall be automatically reinstated, without any further action, if at any time any payment made or value received by Agent with respect to the Obligations is rescinded or must otherwise be returned by Agent upon the insolvency, bankruptcy
or reorganization of the Borrower or otherwise, all as though such payment had not been made or value received. 

11. Agent’s Books and Records: The books and records of Agent showing the accounts between Agent and the Borrower and
(if any) Agent and Subordinated Creditor shall be admissible in any action or proceeding to enforce this agreement and shall constitute prima facie evidence and proof of the items contained therein. 

12. Effect of Breach of Agreement: The Borrower and Subordinated Creditor hereby acknowledge and agree that any failure by
the Borrower or Subordinated Creditor (or both) to promptly, punctually, and faithfully perform or discharge any of their respective obligations hereunder shall be an Event of Default under the Credit Agreement. 

13. Costs of Enforcement: 

a. The Borrower will pay on demand all reasonable attorneys’ fees and out-of-pocket expenses incurred by Agent’s
attorneys and all reasonable costs incurred by Agent, including, without limitation, costs associated with travel on behalf of Agent, which costs and expenses are related to Agent’s efforts to preserve, protect, collect, or enforce any of the
obligations of Subordinated Creditor and/or any of the obligations of the Borrower and/or any of Agent’s Rights and Remedies hereunder (whether or not suit is instituted by or against Agent). 

b. Subordinated Creditor will pay on demand all reasonable attorneys’ fees and out-of-pocket expenses incurred by
Agent’s attorneys and all reasonable costs incurred by Agent, including, without limitation, costs associated with travel on behalf of Agent, which costs and expenses are related to Agent’s efforts to preserve, protect, collect, or enforce
any of the obligations of Subordinated 
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 Creditor and/or
any of Agent’s Rights and Remedies hereunder (whether or not suit is instituted by or against Agent). 
 14.
Incorporation: This Agreement constitutes the entire agreement and understanding of the parties relating to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, whether oral or written, relating to
the subject matter hereof. No provisions hereof may be altered, amended, waived, canceled, or modified, except by a written instrument executed, sealed, and acknowledged by a duly authorized officer of Agent, Subordinated Creditor and the Borrower.

 15. Agent’ Rights and Remedies: The rights, remedies, powers, privileges, and discretions of Agent
hereunder (hereinafter, the “Agent’s Rights and Remedies”) shall be cumulative and not exclusive of any rights or remedies which it would otherwise have. No delay or omission by Agent in exercising or enforcing any of Agent’s
Rights and Remedies shall operate as, or constitute, a waiver thereof. No waiver by Agent of any of Agent’s Rights and Remedies or of any default or remedy under any other agreement with the Borrower or Subordinated Creditor shall operate as a
waiver of any other default hereunder or thereunder. No exercise of Agent’s Rights and Remedies and no other agreement or transaction, of whatever nature, entered into between Agent and Subordinated Creditor and/or between Agent and the
Borrower at any time shall preclude any other or further exercise of Agent’s Rights and Remedies. No waiver by Agent of any of Agent’s Rights and Remedies on any one occasion shall be deemed a continuing waiver. All of Agent’s Rights
and Remedies and all of Agent’s rights, remedies, powers, privileges, and discretions under any other agreement with Subordinated Creditor and/or the Borrower shall be cumulative, and not alternative or exclusive, and may be exercised by Agent
at such time or times and in such order of preference as Agent in its sole discretion may determine. Agent may proceed with respect to the Subordinated Debt Obligations without resort or regard to other collateral or sources of satisfaction of the
Obligations or, if any, the obligations and indebtedness of Subordinated Creditor to Agent. 
 16. Binding
Effect: This Agreement shall be binding upon Subordinated Creditor, the Borrower and their respective, representatives, successors, and assigns, and shall inure to the benefit of Agent, and Agent’s successors and assigns. 

17. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF. 
 18. Jurisdiction; Consent to
Service of Process. Subordinated Creditor and Borrower each agrees that any suit for the enforcement of this Agreement may be brought in the courts of the Commonwealth of Massachusetts sitting in Boston, Massachusetts or any federal court sitting
therein as Agent may elect in its sole discretion and consents to the non-exclusive jurisdiction of such courts. Subordinated Creditor and the Borrower each 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. Subordinated Creditor and the Borrower each 
 6 

 

 

  
 agrees that any
action commenced by Subordinated Creditor or the Borrower asserting any claim or counterclaim arising under or in connection with this Agreement shall be brought solely in a court of the Commonwealth of Massachusetts sitting in Boston, Massachusetts
or any federal court sitting therein as Agent may elect in its sole discretion and consents to the exclusive jurisdiction of such courts with respect to such action. 

19. Waiver of Jury Trial: The Borrower and Subordinated Creditor respectively make the following waiver knowingly,
voluntarily, and intentionally and understands that Agent, in the establishment and maintenance of Agent’s relationship with the Borrower and the other Loan Parties, is relying thereon. 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 STATUES 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. 
 20. Counterparts: 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. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as
delivery of a manually executed counterpart of this Agreement. 
 21. Notices: 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 telecopy, as follows: 

a. if to the Borrower, to: American Apparel (USA), LLC, 747 Warehouse Avenue, Los Angeles, California 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); and 

b. if to Subordinated Creditor, to: Dov Charney, 1809 Apex Avenue, Los Angeles, CA 90026, with a copy to Stuart Slotnick,
Esq., Buchanan Ingersoll & Rooney, PC, 1 Chase Manhattan Plaza, New York, NY 10005; and 
 7 

 

 

  
 c. if to Agent\
to: Bank of America, N.A., 100 Federal Street, Boston, Massachusetts 02110, Attention: Stephen J. Garvin (Telecopy No. (617) 434-6865), with a copy to Riemer & Braunstein, LLP, Three Center Plaza, Boston, Massachusetts 02108, Attention: Donald
E. Rothman, Esquire (Telecopy No. (617) 880-3456). 
 Any party hereto may change its address or telecopy number
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 on the date
of receipt. 
 [SIGNATURE PAGES TO FOLLOW] 

8 

 

 

  
 IN WITNESS
WHEREOF, each of the undersigned has duly executed and delivered this Agreement as of the date above first written. This Agreement is intended to take effect as a sealed instrument. 

BORROWER: 

AMERICAN APPAREL (USA), LLC (f/k/a AAI Acquisition LLC (successor by merger to American Apparel, Inc.) 

By: 

Name: 

Title: 

SUBORDINATED CREDITOR: 

Dov Charney 

Signature Page to Amended and Restated Subordination Agreement – Dov Charney 

 

 

  
 Acknowledged
by: AGENT: 
 BANK OF AMERICA, N.A. (successor by merger to LaSalle Business Credit, LLC, as Agent for LaSalle
Bank Midwest National Association, acting through its division, LaSalle Retail Finance) 
 By: 

Name: David Vega 

Title: Managing Director 

Signature Page to Amended and Restated Subordination Agreement – Dov Charney 

 

 

  
 Exhibit K

 Form of Compliance Certificate COMPLIANCE CERTIFICATE 

Date of Certificate: 

To: Bank of America, N.A. (successor by merger to LaSalle Business Credit, LLC, as Agent for LaSalle Bank Midwest National
Association, Acting through its Division, LaSalle Retail Finance) 100 Federal Street, 9th Floor Boston, Massachusetts 02110 Attention: Mr. David Vega 

Re: Credit Agreement dated as of July 2, 2007 (as modified, amended, supplemented or restated and in effect from time to
time, the “Credit Agreement”) by and between, among others, American Apparel (USA), LLC (f/k/a AAI Acquisition LLC (successor-by-merger to American Apparel, Inc.), for itself and as agent (in such capacity, the “Lead Borrower”)
for the other Borrowers party thereto, and LaSalle Business Credit, LLC, as Agent for LaSalle Bank Midwest National Association, acting through its division, LaSalle Retail Finance, as administrative agent (the “Administrative Agent”) for
its own benefit and the benefit of the other Credit Parties. Capitalized terms used but not defined herein shall have the meanings set forth in the Credit Agreement. 

The undersigned, a duly authorized and acting Financial Officer of the Lead Borrower, hereby certifies on behalf of the
Loan Parties as of the date hereof the following: 
 1. No Defaults or Events of Default. 

(a) Since (the date of the last similar certification), and except as set forth in Appendix I, no Default or Event of
Default has occurred. 
 (b) If a Default or Event of Default has occurred since (the date of the last similar
certification), the Borrowers have taken or propose to take those actions with respect to such Default or Event of Default as described on said Appendix I. 

2. Financial Calculations. Attached hereto as Appendix II are reasonably detailed calculations with respect to Excess
Availability and Capital Expenditures for such period. 
 1 

 

 

  
 3. No Material
Accounting Changes, Etc 
 (a) The financial statements furnished to the Administrative Agent for the [Fiscal

 Year/Fiscal Month] ending were prepared in accordance with GAAP consistently applied and present fairly in all
material respects the financial condition and results of operations of the Lead Borrower and its Subsidiaries on a Consolidated basis, as of the end of the period(s) covered, subject to (i) with respect to the monthly financial statements, normal
year end audit adjustments and the absence of footnotes and (ii) any changes as disclosed on Appendix III hereto. 

(b) Except as set forth in Appendix III, there has been no change in GAAP which has been applied in the Lead
Borrower’s most recent audited financial statements since (the date of the Lead Borrower’s most recent audited financial statements), and if such a change has occurred, the effect of such change on the financial statements is detailed in
Appendix III. 
 [signature pages follow] 

2 

 

 

  
 APPENDIX II

 I. Minimum Excess Availability: 

[Please see detailed calculations made in accordance with the terms of the Credit Agreement, attached hereto] 

COVENANT: The Loan Parties shall at all times maintain Excess Availability in an amount not less than ten percent (10%) of
the lesser of (i) the Borrowing Base and (ii) the Revolving Credit Ceiling. 
 In compliance? Yes No 

II. Capital Expenditures: 

[Please see detailed calculations made in accordance with the terms of the Credit Agreement, attached hereto] 

COVENANT: The Loan Parties shall not make or incur Capital Expenditures in any Fiscal Quarter in excess of the aggregate
amount set forth for Capital Expenditures in the schedule attached to the Credit Agreement as Schedule M-1 (as such schedule may be replaced to the extent permitted hereby) for such Fiscal Quarter, provided that commencing with the Fiscal Quarter
ended June 30, 2009, in the event that the Loan Parties make Capital Expenditures in any Fiscal Quarter in an amount less than the maximum amount set forth in Schedule M-l with respect to such Fiscal Quarter, the maximum amount of Capital
Expenditures permitted for the immediately succeeding Fiscal Quarter shall be equal to the sum of (x) the amount set forth on Schedule M-l with respect to such Fiscal Quarter, plus (y) an amount equal to the difference between the amount permitted
to be expended in the immediately preceding Fiscal Quarter less the actual amount expended. Between December 1 and December 31 of each Fiscal Year commencing with the Fiscal Year ended December 31, 2009, the Loan Parties shall submit to the Agents a
new Schedule M-l for the Fiscal Year commencing on January 1 of the immediately succeeding year, which new Schedule M-l shall be in form and substance satisfactory to the Administrative Agent in the good faith exercise of its reasonable business
judgment, but in its sole discretion nonetheless. 
 In compliance? Yes No 

Appendix II to Compliance Certificate 

 

 

  
 APPENDIX III

 Except as set forth below, no change in GAAP which has been applied in the Lead 

Borrower’s most recent audited financial statements has occurred since (the date of the Lead Borrower’s most
recent audited financial statements). [If any such change has occurred, the following describes the nature of the change in reasonable detail and the effect, if any, of each such change in GAAP or in application thereof on the financial statements
delivered in accordance with the Credit Agreement]. 
 1123070.3 

Appendix III to Compliance Certificate 

 

 

  
 Exhibit M

 FINANCIAL PERFORMANCE COVENANTS 

1. Minimum Excess Availability. The Loan Parties shall at all times maintain Excess Availability in an amount not less
than ten percent (10%) of the lesser of (i) the Borrowing Base and (ii) the Revolving Credit Ceiling. 
 2.
Capital Expenditures. The Loan Parties shall not make or incur Capital Expenditures in any Fiscal Quarter in excess of the aggregate amount set forth for Capital Expenditures in the schedule attached hereto as Schedule M-1 (as such schedule may be
replaced to the extent permitted hereby) for such Fiscal Quarter, provided that commencing with the Fiscal Quarter ended June 30, 2009, in the event that the Loan Parties make Capital Expenditures in any Fiscal Quarter in an amount less than the
maximum amount set forth in Schedule M-1 with respect to such Fiscal Quarter, the maximum amount of Capital Expenditures permitted for the immediately succeeding Fiscal Quarter shall be equal to the sum of (x) the amount set forth on Schedule M-1
with respect to such Fiscal Quarter, plus (y) an amount equal to the difference between the amount permitted to be expended in the immediately preceding Fiscal Quarter less the actual amount expended. Between December 1 and December 31 of each
Fiscal Year commencing with the Fiscal Year ended December 31, 2009, the Loan Parties shall submit to the Agents a new Schedule M-1 for the Fiscal Year commencing on January 1 of the immediately succeeding year, which new Schedule M-1 shall be in
form and substance satisfactory to the Administrative Agent in the good faith exercise of its reasonable business judgment, but in its sole discretion nonetheless. 

Exhibit M to Credit Agreement 

 

 

  
 Schedule M-1

 Fiscal Quarter Ending Maximum Amount of Capital Expenditures 

March 31, 2009 $9,262,000 

June 30, 2009 $4,939,000 

September 30, 2009 $2,610,000 

December 31, 2009 $2,023,000 

1122015.10 

Schedule M-1 to Credit AgreementExhibit 10.16

 Exhibit 10.16 

 

 

  
 CREDIT
AGREEMENT 
 dated as of 

January 18, 2007 

AMERICAN APPAREL, INC. 

THE FACILITY GUARANTORS PARTY HERETO 

and 

SOF INVESTMENTS, L.P. – PRIVATE IV 

AS LENDER 

KRAMER LEVIN 

Kramer Levin Naftalis & Frankel LLP 

1177 Avenue of the Americas 

New York, New York 10036 

 

 

  
 TABLE OF
CONTENTS 
 ARTICLE I Definitions 1 

SECTION 1.01 Definitions 1 

SECTION 1.02 Terms Generally 25 

SECTION 1.03 Accounting Terms; GAAP 26 

ARTICLE II Amount and Terms of Credit 26 

SECTION 2.01 Loans 26 

SECTION 2.02 Making of Loans 27 

SECTION 2.03 Notes 27 

SECTION 2.04 Mandatory Principal and Interest Payments on Loans 27 

SECTION 2.05 Default Interest 28 

SECTION 2.06 Increased Costs 28 

SECTION 2.07 Optional Prepayment of Loans; Reimbursement of Lenders 29 

SECTION 2.08 Mandatory Prepayment; Commitment Termination 29 

SECTION 2.09 Additional Interest 30 

SECTION 2.10 Maintenance of Loan Account; Statements of Account 30 

SECTION 2.11 Payments 30 

SECTION 2.12 Settlement Amongst Lenders 32 

SECTION 2.13 Taxes 32 

SECTION 2.14 Mitigation Obligations; Replacement of Lenders 34 

SECTION 2.15 Security Interests in Collateral 35 

ARTICLE III Representations and Warranties 35 

SECTION 3.01 Organization; Powers 35 

SECTION 3.02 Authorization; Enforceability 35 

SECTION 3.03 Governmental Approvals; No Conflicts 35 

SECTION 3.04 Financial Condition 36 

SECTION 3.05 Properties 36 

SECTION 3.06 Litigation and Environmental Matters 36 

SECTION 3.07 Compliance with Laws and Agreements 37 

SECTION 3.08 Investment and Holding Company Status 37 

SECTION 3.09 Taxes 37 

SECTION 3.10 ERISA 37 

SECTION 3.11 Disclosure 38 

SECTION 3.12 Subsidiaries 38 

SECTION 3.13 Insurance 38 

SECTION 3.14 Labor Matters 38 

SECTION 3.15 Security Documents 39 

SECTION 3.16 Federal Reserve Regulations 39 

SECTION 3.17 Solvency 39 

SECTION 3.18 Licenses; Permits 40 

ARTICLE IV Conditions 40 

SECTION 4.01 Closing Date 40 

- i - 

 

 

  
 ARTICLE V
Affirmative Covenants 43 
 SECTION 5.01 Financial Statements and Other Information 43 

SECTION 5.02 Notices of Material Events 44 

SECTION 5.03 Information Regarding Collateral 45 

SECTION 5.04 Existence; Conduct of Business 46 

SECTION 5.05 Payment of Obligations 46 

SECTION 5.06 Maintenance of Properties 46 

SECTION 5.07 Insurance 46 

SECTION 5.08 Books and Records; Inspection Rights; Accountants 47 

SECTION 5.09 Compliance with Laws 48 

SECTION 5.10 Use of Proceeds 48 

SECTION 5.11 Additional Subsidiaries 48 

SECTION 5.12 Board Observer Right 49 

SECTION 5.13 Further Assurances 49 

ARTICLE VI Negative Covenants 50 

SECTION 6.01 Indebtedness and Other Obligations 50 

SECTION 6.02 Liens 50 

SECTION 6.03 Fundamental Changes 50 

SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions 50 

SECTION 6.05 Asset Sales 50 

SECTION 6.06 Equity Issuances 51 

SECTION 6.07 Restricted Payments; Certain Payments of Indebtedness 51 

SECTION 6.08 Transactions with Affiliates 52 

SECTION 6.09 Restrictive Agreements 52 

SECTION 6.10 Amendment of Material Documents 52 

SECTION 6.11 Financial Covenants 53 

SECTION 6.12 Capital Expenditures 54 

SECTION 6.13 Fiscal Year 54 

SECTION 6.14 ERISA 54 

SECTION 6.15 Environmental Laws 55 

SECTION 6.16 Additional Subsidiaries 55 

ARTICLE VII Events of Default 55 

SECTION 7.01 Events of Default 55 

SECTION 7.02 Remedies on Default 58 

SECTION 7.03 Application of Proceeds 59 

ARTICLE VIII The Agents 59 

SECTION 8.01 Appointment and Administration by Administrative Agent 59 

SECTION 8.02 Appointment of Collateral Agent 60 

SECTION 8.03 Sharing of Excess Payments 60 

SECTION 8.04 Agreement of Applicable Lenders 61 

SECTION 8.05 Liability of Agents 61 

SECTION 8.06 Notice of Default 62 

SECTION 8.07 Credit Decisions 62 

- ii - 

 

 

  
 SECTION 8.08
Reimbursement and Indemnification 62 
 SECTION 8.09 Rights of Agents 63 

SECTION 8.10 Notice of Transfer 63 

SECTION 8.11 Successor Agents 63 

SECTION 8.12 Relation Among the Lenders 64 

SECTION 8.13 Reports and Financial Statements 64 

SECTION 8.14 Agency for Perfection 65 

SECTION 8.15 Delinquent Lender 65 

ARTICLE IX Miscellaneous 66 

SECTION 9.01 Notices 66 

SECTION 9.02 Waivers; Amendments 67 

SECTION 9.03 Expenses; Indemnity; Damage Waiver 68 

SECTION 9.04 Successors and Assigns 69 

SECTION 9.05 Survival 72 

SECTION 9.06 Counterparts; Integration; Effectiveness 73 

SECTION 9.07 Severability 73 

SECTION 9.08 Right of Setoff 73 

SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process 74 

SECTION 9.10 WAIVER OF JURY TRIAL 74 

SECTION 9.11 Press Releases and Related Matters 75 

SECTION 9.12 Headings 75 

SECTION 9.13 Interest Rate Limitation 75 

SECTION 9.14 Additional Waivers 76 

SECTION 9.15 Confidentiality 78 

SECTION 9.16 Patriot Act 79 

SECTION 9.17 Foreign Asset Control Regulations 79 

- iii - 

 

 

  
 EXHIBITS

 Exhibit A: Form of Assignment and Acceptance 

Exhibit B: Form of Note 

Exhibit C: Form of Joinder 

Exhibit D: Form of Compliance Certificate 

- iv - 

 

 

  
 SCHEDULES

 Schedule 1.02(a): Lenders and Commitments 

Schedule 1.02(b): Material Agreements 

Schedule 3.01: Organization Information 

Schedule 3.05(a): Title Exceptions 

Schedule 3.05(b): Intellectual Property Title Exceptions 

Schedule 3.05(c)(i): Owned Real Estate 

Schedule 3.05(c)(ii): Leased Real Estate 

Schedule 3.06: Litigation 

Schedule 3.07: Disclosed Matters 

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 

- v - 

 

 

  
 CREDIT
AGREEMENT dated as of January 18, 2007 among: 
 (a) AMERICAN APPAREL, INC., a corporation organized under the
laws of the State of California, 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 (the “Facility Guarantors”); and 

(c) the Administrative Agent and the Collateral Agent; and 

(d) the LENDERS 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 used with the card. 
 “Acquisition” means (a) an Investment in or a purchase of a Controlling
interest in Capital Stock of a Person, (b) 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, (c) 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. 
 “Additional Interest” has the meaning provided in SECTION 2.09(a). 

“Administrative Agent” means (x) until such time as an Administrative Agent is appointed hereunder, all
references to the Administrative Agent shall be deemed to be references 
 - 1 - 

 

 

  
 to the Lender
hereunder and (y) following appointment hereunder, “Administrative Agent” shall mean the Administrative Agent so appointed. 

“Affiliate” means, with respect to a specified Person, (i) any director or officer of that Person, or (ii) 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. 

“Agreement” means this Credit Agreement, as modified, amended, supplemented or restated, 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. 

“Applicable Law” means as to any Person: (a) all laws, statutes, rules, regulations, orders, codes, ordinances
or other requirements having the force of law; and (b) 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. 
 “Applicable Lenders” means the Required Lenders or all Lenders, as
applicable. 
 “Assignment and Acceptance” means an assignment and acceptance entered into by a Lender
and an assignee (with the consent of any party whose consent is required by ), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent. 

- 2 - 

 

 

  

“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. 

“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. 

“Capital Expenditures” means, with respect to any Person for any period, (a) the additions to property, plant
and equipment and other capital expenditures of the Loan Parties that are (or would be) set forth in a Consolidated statement of cash flows of the Loan Parties for such period prepared in accordance with GAAP and (b) Capital Lease Obligations
incurred by the Loan Parties during such period. 
 “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. 
 “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 “sale” or “disposition” 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; or 

- 3 - 

 

 

  
 (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 nor (ii)
appointed by directors so nominated; or 
 (c) except with respect to existing stockholders on the date hereof,
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 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) except in connection with existing
stockholder agreements, the Borrower fails at any time to own, directly or indirectly, at least one hundred percent (100%) of the Capital Stock of each other Loan Party (other than LLC) and each Foreign Subsidiary 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 as
a result of a transaction permitted by the Loan Documents; 
 (e) Dov Charney fails to own at least 50% of the
Capital Stock of each of the Borrower and LLC; 
 Notwithstanding anything in this definition of “Change of
Control” to the contrary, the consummation of the merger and the related transactions expressly set forth in the Merger Agreement shall for purposes of this definition not be considered to be a “Change of Control.” 

“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 (a) the adoption of any law, rule or regulation after the Closing Date, (b) any change in
any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the Closing Date or (c) 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 

- 4 - 

 

 

  
 
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 January 18, 2007. 
 “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 (x) until such time as a Collateral Agent is appointed hereunder all references to the
Collateral Agent shall be deemed to be references to the Lender hereunder, and (y) following appointment hereunder, “Collateral Agent” shall mean the Collateral Agent so appointed. 

“Commitment” means, with respect to each Lender, the aggregate commitment(s) of such Lender hereunder to make
Credit Extensions to the Borrower in the amount set forth opposite its name on Schedule 1.2(a) hereto or as may subsequently be set forth in the Register from time to time. 

“Commitment Percentage” means, with respect to each Lender, that percentage of the Commitments of all Lenders
hereunder to make Credit Extensions to the Borrower, in the amount set forth opposite such Lender’s name on Schedule 1.2(a) hereto or as may subsequently be set forth in the Register from time to time. 

“Compliance Certificate” has the meaning provided in SECTION 5.01(c). 

“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, the sum (without duplication) of (a)
Consolidated Net Income for such period, plus (b) depreciation and amortization, plus (c) provisions for Taxes based on income that were deducted in determining Consolidated Net Income for such period, plus (d) Consolidated Interest
Expense that was deducted in determining Consolidated Net Income for such period. 
 “Consolidated
EBITDAR” means, with respect to any Person for any period, the sum of (a) Consolidated EBITDA of such Person for such period, plus (b) the aggregate amount of any payments made by any Loan Party or their respective Subsidiaries pursuant to any
Lease. 
 “Consolidated Fixed Charge Coverage Ratio” means, with respect to any Person for any period,
the ratio of (a) (i) Consolidated EBITDA for such period, minus (ii) Capital Expenditures, net of Capital Lease Obligations, made during such period, minus (iii) shareholder 

- 5 - 

 

 

  
 distributions
made during such period, to (b) Debt Service Charges during such period, all as determined on a Consolidated basis in accordance with GAAP. 

“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 costs under Hedge Agreements (as defined in the Existing First Lien Credit Agreement), 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 such Person in which any other Person 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 such Person accrued
prior to the date it becomes a Subsidiary of a Person or any of such Person’s Subsidiaries or is merged into or consolidated with a Person or any of its Subsidiaries or that Person’s assets are acquired by such Person or any of its
Subsidiaries, and (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. 

“Control” means the possession, directly or indirectly, of the power (a) 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 (b) 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
Extensions” means, as of any day, the sum of the principal balance of all Loans then outstanding. 

“Credit Party” means (a) the Lenders, (b) the Agents and their Affiliates, (c) the beneficiaries of each
indemnification obligation undertaken by the Borrower under any Loan Document, (d) any other Person to whom Obligations under this Agreement and other Loan Documents are owing and (e) the successors and assigns of each of the foregoing. 

“Credit Party Expenses” means, without limitation, (i) all reasonable out-of-pocket expenses incurred by the
Agents and their Affiliates, including the reasonable fees, charges and disbursements of counsel for the Agents, outside consultants for the Agents (including, without limitation, real estate appraisers, commercial finance examiners and
environmental engineers), in 
 - 6 - 

 

 

  
 
connection with the syndication of the credit facilities provided for herein, the preparation and administration of the Loan Documents or any amendments, modifications 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 Agents, including the reasonable fees, charges and disbursements of counsel
and outside consultants for each of the Agents (including, without limitation, real estate appraisers, commercial finance examiners and environmental engineers), 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 such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans; provided that the Lenders who are not 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). 

“Debt Service Charges” means for any period, the sum of (i) Consolidated Interest Expense, plus (ii) principal
payments made or required to be made on account of Indebtedness (including, without limitation, on account of Capital Lease Obligations) for such period, plus (iii) all Restricted Payments made or required to be made in cash during such period, in
each case determined in accordance with GAAP. 
 “Default” means any event or condition that
constitutes an Event of Default or that upon notice, lapse of time or both would, unless cured or waived, 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. 

“Disclosed Matters” means the items disclosed in Schedule 3.07. 

“dollars” or “$” refers to lawful money of the United States of America. 

“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 directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the Release or threatened Release of any Hazardous Materials into the environment or (e) 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. 

- 7 - 

 

 

  

“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 (a) 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); (b) the existence with respect to any Plan of an “accumulated funding deficiency”
(as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing, pursuant to Section 412(d) of the Code or Section 303(d) of ERISA, of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) 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; (e) 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; (i) 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 (g) 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. 

“Events of Default” has the meaning assigned to such term in SECTION 7.01. An “Event of Default” shall
be deemed to have occurred and to be continuing unless and until that Event of Default has been duly waived in writing in accordance with the terms of this Agreement. 

“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, (a) income or franchise taxes imposed on (or measured by) its gross or 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, (b) 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 (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under SECTION 2.14(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) or is attributable to such Foreign Lender’s failure to comply with SECTION 2.13(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 2.13(a). 

“Existing First Lien Credit Agreement” means the Financing Agreement dated as of October 31, 2005 as
amended, among Borrower, KCL Knitting, LLC, American Apparel Retail, 
 - 8 - 

 Exhibit 10.16 

 

 

  
 Inc., American
Apparel Dyeing & Finishing, Inc., each of the lenders party thereto and U.S. Bank National Association, as agent. 

“Existing Second Lien Credit Agreement” means the Amended and Restated Finance Agreement dated March 3, 2005 by
and among C3 Capital Partners, LP, Borrower, KCL Knitting, LLC and American Dyeing & Finishing, Inc. 

“Facility Guaranty” means any Guarantee of the Obligations executed by the Facility Guarantors in favor of the
Agents and the Lenders. 
 “Facility Guarantors” means each of the Subsidiaries and LLC, whether now
existing or hereafter created or acquired, other than any Foreign Subsidiaries. 
 “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. 
 “Financial Officer” means, with respect to any Loan Party, the
chief financial officer of such Loan Party. 
 “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. 

“Funding Date” means January 18, 2007. 

“GAAP” means principles which are (a) 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, and (b) consistently applied with past financial statements of the
Loan Parties adopting the same principles. 
 - 9 - 

 

 

  

“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, (a) 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, (b) 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, (c)
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 or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business. 

“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) or with respect to deposits or advances of any kind; 
 (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); 

- 10 - 

 

 

  
 (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; and 

(k) 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). 

“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 and in effect from time to time. 

“Intercreditor Agreement” means the Intercreditor Agreement dated as of the date hereof between the Senior
Lenders and the Lenders. 
 “Interest Payment Date” means the last day of each calendar month and if
such day is not a Business Day, then on the next succeeding Business Day. 
 “Interest Rate” means 16%.

 “Investment” means with respect to any Person: 

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 (a) Any Capital
Stock, evidence of Indebtedness or other security of another Person, including any option, warrant or right to acquire the same; 

(b) Any loan, advance, contribution to capital, Guarantee of any obligation of another Person, extension of credit (except
for current trade and customer accounts receivable for inventory sold or services rendered in the ordinary course of business and payable in accordance with customary trade terms) 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. 

“ISDA Master Agreement” means the form entitled “Master Agreement (Multicurrency-Cross Border)” then
currently published by the International Swap and Derivatives Association, Inc., or any successor thereto. 

“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. 

“Landlord Lien State” means Washington, Virginia, Pennsylvania and such other state(s) or province(s) in which a
landlord’s claim for rent has priority over the lien of the Collateral Agent in any of the Collateral. 

“Lease” means any agreement, whether written or oral, no matter how styled or structured, pursuant to which a
Loan Party is entitled to the use or occupancy of any space in a structure, land, improvements or premises for any period of time. 

“Lenders” means the Persons identified on Schedule 1.2 hereto 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, (b) the interest of a vendor or a lessor 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 and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such
securities. 
 “Lim Option Agreement” means the Option Agreement dated as of November 9, 2006 by and
among the Borrower, Dov Charney and Sang H. Lim (as amended and modified pursuant to the Merger Agreement), a certified copy of which is attached to the Officer’s Certificate of the Borrower delivered to the Administrative Agent on the Closing
Date. 
 “LLC” means American Apparel, LLC. 

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 “Loan
Account” has the meaning assigned to such term in SECTION 2.10(a). 
 “Loan Documents” means this
Agreement, the Notes, the Security Documents, and any other instrument or agreement now or hereafter executed and delivered in connection herewith, each as amended and in effect from time to time. 

“Loan Party” or “Loan Parties” means the Borrower and the Facility Guarantors. 

“Loans” means ail loans made pursuant to this Agreement and any interest paid-in-kind that has been added to the
principal balance of the Loans on any Interest Payment Date pursuant to SECTION 2.06(b)(iii). 
 “Make-Whole
Payment” means as of the date of any applicable prepayment three percent (3%) of the amount so prepaid plus the present value of all scheduled payments of interest (whether in cash and in-kind) through the first anniversary of the Closing
Date in respect of the amount so repaid discounted at a rate equal to the Federal Funds Rate. For purposes of calculating the Make-Whole Payment, the “Federal Funds Rate” shall mean as of any date, the rate per annum equal to the weighted
average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day so published on the next succeeding Business Day. 

“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, (a)
the business, performance, assets, financial condition or income of the Loan Parties taken as a whole, or (b) the validity or enforceability of this Agreement or the other Loan Documents, taken as a whole, or any of the material 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 in an aggregate principal amount exceeding $1,000,000. 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 January 18, 2009. 

“Maximum Rate” has the meaning provided therefor in SECTION 9.13. 

“Merger Agreement” means that certain Agreement and Plan of Reorganization by and among Endeavor, Merger
Subsidiary, Borrower, LLC., the Canadian Affiliates, Dov Charney, each of the stockholders of the Canadian Affiliates and Sang H. Lim dated as of December 18, 2006, a certified copy of which is attached to the Officer’s Certificate of the
Borrower delivered to the Administrative Agent on the Closing Date. 
 - 13 - 

 

 

  
 “Merger
Subsidiary” means AAI Acquisition Corp. 
 “Minority Lenders” has the meaning provided therefor in
SECTION 9.02(c). 
 “Moody’s” means Moody’s Investors Service, Inc. 

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA. 

“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, and (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 as a result
of such event to repay (or to establish an escrow for the repayment of) any Indebtedness (other than the Obligations) secured by such asset or otherwise subject to mandatory prepayment as a result of such event, or a Permitted Encumbrance that is
senior to the Lien of the Collateral Agent. 
 “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. 

“Observer” has the meaning set forth in SECTION 5.12. 

“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). 

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“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 with the financial
covenants in SECTION 6.11 if the Acquisition had occurred on the last day of the preceding Fiscal Quarter; 
 (c)
such Acquisition shall have been approved 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 thirty (30) 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 such other information as the Agents may reasonably require, each of which shall be reasonably satisfactory to the Agents; 

(e) the structure of the Acquisition shall be reasonably acceptable to the Agents in their discretion, which discretion
shall be promptly exercised upon the request of the Borrower; 
 (f) after consummation of the Acquisition, if
the Acquisition is an Acquisition of Capital Stock, a Borrower shall own directly or indirectly a majority of the Capital Stock in the Person being acquired and shall Control a majority of any voting interests, and/or shall otherwise Control the
governance of the Person being acquired; 
 (g) the Agents shall have received (i) the results of appraisals of
the assets (or the assets of the Person) to be acquired in such Acquisition and of a commercial finance examination of the Person which is (or whose assets are) being acquired, and (ii) such other due diligence as the Agents may reasonably require,
all of the results of the foregoing to be reasonably satisfactory to the Agents; 
 (h) any assets acquired shall
be utilized in, and if the Acquisition involves a merger, consolidation or stock acquisition, the Person which is the subject of such 

- 15 - 

 

 

  
 Acquisition
shall be engaged in, a business otherwise permitted to be engaged in by a Borrower under this Agreement; and 

(i) if the Person which is the subject of such Acquisition will be maintained as a Subsidiary of a Borrower, or if the
assets acquired in an acquisition will be transferred to a Subsidiary which is not a Borrower, such Subsidiary shall have been joined as a “Borrower” hereunder or as a Facility Guarantor, as the Administrative Agent shall determine, and
the Collateral Agent shall have received a second priority security and/or mortgage interest in such Subsidiary’s 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 Disposition” means any of the following: 

(a) 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, 2.5% of such inventory and (ii) in the aggregate from and after the Closing Date, 10% of the Cost of the “Eligible Inventory” (as defined in the Existing First Lien
Credit Agreement) of the Borrower (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 Agents; 
 (c) dispositions of
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; 

(d) sales, transfers and dispositions among the Loan Parties; 

(e) 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, as long as, if the Agents so request in connection with a sale-leaseback transaction, the Agents shall have
received an intercreditor agreement executed by the purchaser of such Real Estate on terms and conditions reasonably satisfactory to the Agents; 

(f) dispositions of cash with respect to the payment of (i) fees as expressly set forth in the Lim Option Agreement in an
amount not to exceed $1,000,000, (ii) bonuses as expressly set forth in the Merger Agreement in an amount not to exceed $2,500,000, and (iii) taxes with respect to federal and state income tax liability attributable to Sang H. Lim for the 2005, 2006
and 2007 Fiscal Years as expressly set forth in the Lim Option Agreement and to the extent such taxes have not been paid pursuant to clause (d) of the definition of “Permitted Dividends;” and 

- 16 - 

 

 

  
 
provided that all sales, transfers, leases and other dispositions permitted hereby (other than sales, transfers and other disposition permitted under clauses (d) and (f)) shall be made at
arm’s length and for fair value and for cash consideration. 
 “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 any Subsidiary of a Loan Party to a Loan Party; 

(d) the declaration and payment of cash dividends to the Loan Parties’ shareholders in an aggregate amount equal to
such shareholder’s actual federal and state income tax liability for any applicable taxable year (or applicable portion thereof) attributable to such Loan Parties’ taxable income, for each taxable year (or portion thereof) that such Loan
Parties have an effective election for federal income tax purposes to be treated as an “S” corporation; provided that (y) as a condition precedent to any such payment, (I) such Loan Parties shall deliver to the Administrative Agent a
letter, in form and substance satisfactory to the Administrative Agent, from their independent public accountants detailing the amount necessary to be applied to such shareholder’s tax liability, which letter can relate to the estimated tax
payments for the next succeeding four quarters, (II) such payment or distribution shall be limited to the amount(s) specified in said letter, (III) immediately prior to the making of the applicable payment, and after giving effect to any such
payment, no Event of Default is then occurring; and (IV) the aggregate of all such payments or distributions to all shareholders shall not exceed $450,000 per month from January, 2007 through August, 2007, and $900,000 from September, 2007 through
August, 2008, with limits thereafter to be established in the reasonable discretion of the Administrative Agent; and (z) after any re-determination of such Loan Parties’ taxable income for such period, each of the Loan Parties’
shareholders effected thereby shall be obligated to repay to such Loan Parties the aggregate amount (if any) by which any such distribution exceeded the allocable amount of such shareholder’s actual tax liability; 

(e) the payment of salary and the declaration and payment of a cash dividend by the Borrower to Dov Charney or Sang H.
Lim, which is in an amount not to exceed when taken together with all other such payments made during the Fiscal Year, $500,000 for each such Person in any Fiscal Year; provided that immediately prior to the making of the applicable payment, and
after giving effect to any such payment, no Event of Default is then occurring. Distributions made pursuant to subsection (d), above, shall not be included in the calculation of Distributions under this subsection (e); 

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 (f) a
distribution to Sang H. Lim by the Loan Parties in an amount not to exceed $67,500,000 on or prior to December 15, 2007 in respect of his Capital Stock in the Borrower pursuant to the Lim Option Agreement; and 

(g) any dividends in respect of Capital Stock expressly required to be made pursuant to the terms of the Merger Agreement
in an amount not to exceed $500,000. 
 “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; 

(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
apply to any other property or asset of any Loan Party and (ii) such Lien shall secure only the Indebtedness listed on Schedule 6.01 as of the Closing Date (and extensions, renewals and replacements thereof permitted under SECTION 6.01; 

(h) Liens on fixed or capital assets acquired by any Loan Party which are permitted under clause (e) 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 extend to any other property or assets of the Loan Parties;

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 (i) Liens in
favor the Collateral Agent, for its own benefit and the benefit of the other Credit Parties; 
 (j)
landlords’ and lessors’ Liens in respect of rent not in default; 
 (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; 

(1) Liens arising solely by virtue of any statutory or common law provisions 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 collateral agent under the Existing First Lien Credit Agreement securing the obligations of the
Borrower and its Affiliates thereunder; and 
 (n) Liens securing Indebtedness permitted under clause (i) of the
definition of Permitted Indebtedness, 
 provided however, that, except as provided in any one or more of clauses
(a) through (n) above, the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness for borrowed money. 

“Permitted Indebtedness” means each of the following: 

(a) Indebtedness created under the Loan Documents; 

(b) Indebtedness set forth in Schedule 6.01 and extensions, 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
and (iii) the holders of such Indebtedness are not afforded covenants, defaults, rights or remedies more burdensome in any material respect to the obligor or obligors than those contained in the Indebtedness being extended, renewed or replaced;

 (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, and (iii) is subordinated to the Obligations on terms reasonably acceptable to the Agents; 

(d) Guarantees by any Loan Party of Indebtedness of any other Loan Party or such Loan Party’s Subsidiaries; provided
such Guarantees guaranty obligations which (a)(i) have a maturity date which extends beyond the Maturity Date and (ii) which do not 

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 require the
payment of principal in cash prior to the Maturity Date, and (b) such Guarantees are subordinated to the Obligations on terms reasonably acceptable to the Agents; provided further that the limitations in (a) and (b) above to such Guarantees shall
not apply to any guaranty by any Loan Party of the retail space of any other Loan Party or such Loan Party’s Subsidiaries; 

(e) purchase money Indebtedness of any Loan Party 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 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 thereof; provided that the holders of such
Indebtedness are not afforded covenants, defaults, rights or remedies more burdensome in any material respect to the obligor or obligors than those contained in the Indebtedness being extended, renewed or replaced, and further provided however, that
the aggregate principal amount of Indebtedness permitted by this clause (e) and clause (i) below shall not exceed $15,000,000 at any time outstanding; 

(f) Indebtedness under Hedge Agreements, other than for speculative purposes, entered into in the ordinary course of
business; 
 (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
Existing First Lien Credit Agreement; provided that in no event shall the principal amount of such Indebtedness at any time outstanding exceed $62,500,000 less the amount of any permanent repayments or commitment reductions thereunder; provided
further that such limitation shall not apply to Protective Advances made pursuant to the Existing First Lien Credit Agreement so long as the principal amount of all such Indebtedness at any time outstanding does not exceed $70,000,000 less the
amount of any permanent repayments or commitment reductions thereunder; 
 (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 terms acceptable to the Agents; provided further, that in no event shall such Indebtedness exceed $2,000,000 at any time outstanding; 

(j) Indebtedness incurred in connection with sale-leaseback transactions permitted hereunder; 

(k) Subordinated Indebtedness not existing on the Closing Date in an aggregate principal amount not exceeding $67,500,000;
provided such Indebtedness (i) 
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 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 Agents, and (iv) such Loan Party shall be in
pro forma compliance with SECTION 6.11(a) after the incurrence of such Subordinated Indebtedness; 
 (1) other
unsecured Indebtedness in an aggregate principal amount not exceeding $12,000,000 at any time outstanding; provided 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 terms reasonably acceptable to the Agents; 

(m) 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; and 
 (n) other Indebtedness, subject to the prior written consent
of the Administrative Agent and the Required Lenders. 
 “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; 

(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; 
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 (f) Investments
existing on the Closing Date and set forth on Schedule 6.04 to the extent such Investments would not be permitted under any other clause of this definition; 

(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) Permitted Acquisitions; and 

(j) other Investments in an amount not to exceed $2,000,000 in the aggregate outstanding at any time; 

provided, however, that notwithstanding the foregoing, no such Investments shall be permitted unless such Investments are,
to the extent requested by the Agents, pledged to the Collateral Agent, as additional collateral for the Obligations, pursuant to such agreements as may be reasonably required by the Agents. 

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association,
company, partnership, Governmental Authority or other entity. 
 “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 Pledge and Security Agreement dated as of the date hereof among the Loan Parties
party thereto and the Lenders, as amended and in effect from time to time. 
 “Prepayment Event” means
any of the following events: 
 (a) any sale, transfer or other disposition (including pursuant to a sale and
leaseback transaction) of any property or asset of a Loan Party or any Subsidiary of a Loan Party, other than a sale of inventory in the ordinary course of business or a Permitted Disposition; 

(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, unless the proceeds therefrom are required to be paid to the holder of a Lien on such property or asset having priority over the Lien of the Collateral Agent; 

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 (c) the
issuance by a Loan Party or any Subsidiary of a Loan Party of any Capital Stock, other than any such issuance of Capital Stock to a Loan Party; or 

(d) the incurrence by a Loan Party or any Subsidiary of a Loan Party of any Indebtedness other than Permitted
Indebtedness. 
 Notwithstanding anything in this definition of “Prepayment Event” to the contrary,
neither the consummation of the merger or the transactions related thereto as expressly set forth in the Merger Agreement nor the transaction expressly set forth in the Lim Option Agreement shall be considered to be a “Prepayment Event”
for purposes of this definition. 
 “Protective Advances” means advances made under the Existing First
Lien Credit Agreement solely at the discretion of the Senior Lenders during the continuance of an event of default thereunder for the purpose of preserving the collateral securing, or enforcing rights and remedies in respect of, the obligations
owing thereunder. 
 “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, 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 Lenders (other than Delinquent Lenders) having Commitments aggregating more than 50% of
the Total Commitments, or if the Commitments have been terminated, Lenders (other than Delinquent Lenders) whose percentage of the outstanding Credit Extensions aggregate more than 50% of all such Credit Extensions. 

“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 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 

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 payable solely
in common stock of a Loan Party or any dividend or distribution expressly set forth in either the Merger Agreement or the Lim Option Agreement. 

“S&P” means Standard & Poor’s. 

“SEC” means the Securities and Exchange Commission. 

“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 and in effect from time to time. 

“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 Debt” means the Indebtedness owing to the Senior Lenders pursuant to the
Existing First Lien Credit Agreement. 
 “Senior Debt to Consolidated EBITDA” means the ratio of (a)
Indebtedness under this Agreement, the Senior Debt and the Capital Lease Obligations of the Loan Parties and their Subsidiaries to (b) Consolidated EBITDA. 

“Senior Lenders” means the lenders party to the Existing First Lien Credit Agreement. 

“Settlement Date” has the meaning provided in SECTION 2.12. 

“Solvent” means, with respect to any Person on a particular date, that on such date (a) 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, (b) 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, (c) 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, (d) 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 (e) 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. 
 “SPAC Transaction” means the merger of the Borrower into
the Merger Subsidiary with the Merger Subsidiary being the surviving entity pursuant to the Merger Agreement and each other related transaction expressly set forth therein (including, but not limited to, the stock option plan as set forth therein
and the transactions expressly set forth in the Lim Option Agreement). 
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“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 Foreign Subsidiary. 

“Subordinated Indebtedness” means Indebtedness 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 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 (a) 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 (b) 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 Adjusted Debt” means the sum of (a)
Indebtedness of the Loan Parties and their Subsidiaries, plus (b) the product of eight (8) multiplied by (ii) the aggregate amount of any annual payments made by any Loan Party or their respective Subsidiaries pursuant to any Lease. 

“Total Commitment” means $41,000,000. 

“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York. 

“Unanimous Consent” means the consent of Lenders holding 100% of the Commitments. 

“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 
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 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), (b) any reference herein to any Person shall be construed to
include such Person’s successors and 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 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 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. 
 ARTICLE II 

Amount and Terms of Credit 

SECTION 2.01 Loans. 

Each Lender, severally and not jointly with any other Lender, agrees, upon the terms and subject to the conditions herein
set forth, to make a Loan to, or for the benefit of, the Borrower in an amount equal to such Lender’s Commitment. It is acknowledged and agreed that the Loans will be made in one drawing on the Closing Date in an aggregate principal amount of
$41,000,000, The aggregate outstanding principal amount of the Loans shall not at any time 
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 exceed the
Total Commitments. Each repayment of principal of the Loans shall reduce the Total Commitments by the amount of such principal repayment and shall reduce the Commitments of the Lenders pro rata in proportion to the amount of the repayment received
by each Lender. 
 SECTION 2.02 Making of Loans. 

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, 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. 

(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. 

SECTION 2.04 Mandatory Principal and Interest Payments on Loans. 

(a) Loans. 

(i) 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 360 days) at a rate per annum that shall be equal to the Interest Rate compounding quarterly. 

(ii) Accrued interest on each Loan shall be payable in cash on each Interest Payment Date applicable thereto. All accrued
and unpaid interest shall be paid in cash at maturity (whether by acceleration or otherwise), after such 
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- 

 

 

  
 maturity on
demand and upon any repayment or prepayment thereof (on the amount prepaid). 
 (iii) In addition to interest
payments required to be made hereunder, and subject to the Administrative Agent’s rights of acceleration hereunder, the full unpaid principal balance of the Loans, including any interest paid-in-kind, if any, shall be payable in full on the
Maturity Date. 
 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 any interest paid-in-kind, if any, 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 five percent (5 %) per annum and such interest shall be payable in cash on each Interest Payment Date (or any earlier maturity of the
Loans). In addition, the Borrower shall pay a late fee equal to 5% of any amount that is past due for more than fifteen (15) days. 

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 

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 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. 
 SECTION 2.07 Optional
Prepayment of Loans; Reimbursement of Lenders. 
 (a) Except as provided in SECTION 2.07(b), the Borrower shall
have the right to prepay any outstanding Loans, in whole or part, upon at least three (3) Business Day’s prior written notice, telex or facsimile notice to the Administrative Agent, prior to 5 p.m., New York time. 

(b) Prior to the first anniversary of the Closing Date the Borrower may not make any prepayment; provided that the
Borrower may prepay the outstanding Loans in their entirety if such prepayment is accompanied by a Make-Whole Payment. After the first anniversary of the Closing Date, any prepayment shall be accompanied by a prepayment premium equal to three
percent (3%) of the amount prepaid. 
 (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 ratably in accordance with each Lender’s Commitment 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. 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: 

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 (a) The
Borrower shall, subject to the Existing First Lien Credit Agreement, apply all Net Proceeds and all other cash payments received by the Borrower or any of its Subsidiaries from any Person or from any source on account of any Prepayment Event to
prepay the Loans. All prepayments shall be paid to the Administrative Agent for application to the prepayment of outstanding Loans, including any interest paid-in-kind, if any, ratably in accordance with each applicable Lender’s Commitment
Percentage. 
 (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 plus (y) accrued and unpaid interest, including any
interest paid-in-kind, if any (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. Notwithstanding anything
in this SECTION 2.08(b) to the contrary, the Change of Control Offer shall not apply to the consummation of the SPAC Transaction on the terms set forth in the Merger Agreement. 

SECTION 2.09 Additional Interest. 

(a) On the Closing Date, the Borrower shall pay the Administrative Agent non-refundable additional interest in an amount
equal to three percent (3%) of the Total Commitment on such date (“Additional Interest”). 
 (b) All
Additional Interest shall be paid on the date due, in immediately available funds, to the Lender. Once due, all Additional Interest shall be fully earned and shall not be refundable under any circumstances. 

SECTION 2.10 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 and other advances made by the Lenders to the Borrower or for the Borrower’s account and (ii) 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 month, the Administrative Agent shall send to the Borrower a statement accounting for the charges, loans, advances and other transactions occurring among and between the Administrative
Agent, the Lenders and the Borrower during that month. The monthly statements shall, absent manifest error, be an account stated, which is final, conclusive and binding on the Borrower. 

SECTION 2.11 Payments. 

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 (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 2.13, or otherwise) prior to 5:00 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. Until such time as an Administrative Agent shall be appointed hereunder, all such payments shall be made to the Lender at the address listed on the signature pages hereto;
provided that in the event that an Administrative Agent is appointed hereunder, then such payments shall be made to the Administrative Agent at the Administrative Agent’s address as listed in the agreement appointing such Administrative Agent,
except that payments pursuant to SECTION 2.06, SECTION 2.07(d), SECTION 2.13 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. Any
net principal reductions to the Loans received by the Administrative Agent in accordance with the Loan Documents during such period shall not reduce such actual amount so contributed, for purposes of calculating interest due to that Lender, until
the Administrative Agent has distributed to that Lender its applicable Commitment Percentage thereof. 
 (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. 
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 SECTION 2.12
Settlement Amongst Lenders. 
 The amount of each Lender’s applicable Commitment Percentage of outstanding
Loans shall be computed weekly (or more frequently in the Administrative Agent’s discretion) and shall be adjusted based on all Loans and repayments of Loans received by the Administrative Agent as of 5 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. 

SECTION 2.13 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 2.13) 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 2.13) 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 either United States Internal Revenue Service Form W-8BEN or Form W-8ECI, or any subsequent versions thereof or successors
thereto, or, in the case of a Foreign Lender claiming 
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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”, a (i) Form W-8BEN, or any
subsequent versions thereof or successors thereto and (ii) if such Foreign Lender delivers a Form W-8BEN, a certificate representing that such Foreign Lender is not (A) 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 Parties (within the meaning of Section 864(d)(4) of the Code), 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 not 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 2.13(e), a Foreign Lender shall not be required to deliver any form pursuant to this SECTION 2.13(e)that such Foreign Lender is not legally able to deliver. 

(f) The Borrower shall not be required to indemnify any Foreign Lender or to pay any additional amounts to any Foreign
Lender in respect of U.S. Federal 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 Foreign Lender to comply with the provisions of
paragraph (e) above. 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) If any Loan Party shall be required pursuant to this SECTION 2.13 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 2.13(g); 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 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. 
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 (h) If any
Credit Party reasonably determines that it has actually and finally realized, by reason of a refund, deduction or credit of any Taxes paid or reimbursed by the Loan Parties pursuant to subsection (a) or (c) above in respect of payments under
the Loan Documents, a current monetary benefit that it would otherwise not have obtained and that would result in the total payments under this SECTION 2.13 exceeding the amount needed to make such Credit Party whole, such Credit Party shall pay to
the Borrower, with reasonable promptness following the date upon which it actually realizes such benefit, an amount equal to the lesser of the amount of such benefit or the amount of such excess, in each case net of all out of pocket expenses
incurred in securing such refund, deduction or credit. 
 SECTION 2.14 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 2.13, 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 2.13, 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 2.13, 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); 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, accrued interest thereon, accrued fees and all other amounts payable to it hereunder from the assignee (to the
extent of such outstanding principal and 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 2.13, 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. 

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 SECTION 2.15
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 second priority security interest in all of the Collateral pursuant hereto and 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 the
following representations and warranties to each Credit Party with respect to each Loan Party: 
 SECTION 3.01
Organization; Powers. 
 Each Loan Party 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 to execute and deliver and perform all its obligations under all Loan Documents to which
such Loan Party is a party. Each Loan Party 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 powers and have been duly authorized by all necessary corporate, membership, partnership or other 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 Applicable Law or the Charter Documents of any Loan 
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 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. 

The Borrower has heretofore furnished to the Agents the 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, 2005 and as of and for the three Fiscal Quarters ending September 30, 2006, 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. Since the date of such financial statements, there have been no changes in the assets, liabilities, financial condition or business of the Borrower and its Subsidiaries other than changes in
the ordinary course of business which have not had a Material Adverse Effect. 
 SECTION 3.05 Properties.

 (a) Except as disclosed on Schedule 3.05(a), each Loan Party 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) Except as disclosed on Schedule 3.05(b), each Loan Party owns or is licensed to use, all patents, trademarks, trade
names, trade styles, brand names, service marks, logos, copyrights, and other intellectual property material to its business, and the use thereof by the Loan Parties 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. No Loan Party expects that any of the matters listed on Schedule 3.05(b) will have a Material Adverse Effect. 

(c) Schedule 3.05(c)(i) sets forth the address (including county) of all Real Estate that is owned by the Loan Parties as
of the Closing Date, together with a list of the holders of any mortgage or other Lien thereon. Schedule 3.05(c)(ii) sets forth the address (including county) of all Real Estate that is leased by the Loan Parties as of the Closing Date, together
with a list of the lessor with respect to each such Lease and the holders of any mortgage or other Lien thereon. Each of such Leases is in full force and effect and the Loan Parties are not in default of the terms thereof except for any defaults
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) Except as set forth on Schedule 3.06, there are no actions, suits or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of the 
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 Loan Parties,
threatened in writing against or affecting 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 (other than Disclosed Matters). 
 (b) Except for Disclosed Matters, no Loan
Party (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.

 (c) Since the date of this Agreement, there has been no material change in the status of the Disclosed
Matters. 
 SECTION 3.07 Compliance with Laws and Agreements. 

Except as set forth on Schedule 3.07, 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. 

SECTION 3.08 Investment and Holding Company Status. 

No Loan Party is (a) an “investment company” as defined in, or subject to regulation under, the Investment
Company Act of 1940 or (b) a “holding company” as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935. 

SECTION 3.09 Taxes. 

Each Loan Party 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 has set aside on its books adequate reserves, and as to which no Lien has arisen. Proper and accurate amounts have been withheld by each Loan Party 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

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 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. 
 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 is subject, and (y) all other matters known to any of them that, 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 to any Credit Party in connection with the negotiation of this Agreement or any other Loan Document 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 misleading, 

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. LLC has no Subsidiaries. 

(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. 

To the knowledge of any Loan Party or Subsidiary thereof, there are no strikes, lockouts or slowdowns against 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. Except for Disclosed Matters, all payments due
from any Loan Party or Subsidiary thereof, or for which any claim may be made against any Loan Party or Subsidiary 

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 thereof, on
account of wages and employee health and welfare insurance and other benefits, have been paid 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, management agreement, employment agreement, bonus, restricted stock, stock option, or stock appreciation plan or agreement or any similar plan, agreement or
arrangement. 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. 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 under any collective
bargaining agreement 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 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 fully perfected and opposable second priority 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. 
 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. 

Each of the Loan Parties and the Subsidiaries thereof is Solvent, except that no representation or warranty is being made
with respect to Subsidiaries organized under the laws of Mexico. 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. 

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 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 material 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. 

ARTICLE IV 

Conditions 

SECTION 4.01 Closing Pate. 

The obligation of the Lenders to make each Loan, on the Closing Date is subject to the following conditions precedent:

 (a) The Agents (or their counsel) shall have received from each party either (i) a counterpart of this
Agreement and all other Loan Documents signed on behalf of such party or (ii) written evidence satisfactory to the Agents (which may include telecopy transmission of a signed signature page of this Agreement) that such party has signed a counterpart
of this Agreement and all other Loan Documents. 
 (b) The Agents shall have received a favorable written opinion
(addressed to each Agent and the Lenders 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 Required Lenders shall
reasonably request. The Loan Parties hereby request such counsel to deliver such opinions. 
 (c) The Agents
shall have received Charter Documents and such other documents and certificates as the Agents 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 their counsel. 

(d) The Agents shall have received a certificate, reasonably satisfactory in form and substance to the Agents, (i) with
respect to the Solvency of the Loan Parties as of the Closing Date, (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 and that no
Default or Event of Default exists and (iii) attaching copies of each of the Merger Agreement and the Lim Option Agreement and certifying that such copies are true, accurate and complete. 

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 (e) The Agents
shall have received the Security Documents, and, subject to the Intercreditor Agreement, certificates evidencing any stock being pledged thereunder, together with undated stock powers executed in blank, each duly executed by the applicable Loan
Parties. 
 (f) The Agents shall have received a written report regarding the results of a commercial finance
examination of the Loan Parties, which shall be reasonably satisfactory to the Agents. 
 (g) The Agents 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 that there has been no Material Adverse Effect since the date of the most
recent financial information delivered to the Agents. 
 (h) The Administrative Agent 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, in each case, a Consolidated income statement, balance sheet and
statement of cash flows. 
 (i) There shall not be any other Indebtedness of the Loan Parties outstanding
immediately after the Closing Date other than as set forth in Schedule 6.01. 
 (j) Except as disclosed on
Schedule 3.06, there shall not be pending any litigation or other proceeding, the result of which could reasonably be expected to have a Material Adverse Effect. 

(k) 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. 

(I) The Agents shall have received results of searches or other evidence reasonably satisfactory to the Agents (in each
case dated as of a date reasonably satisfactory to the Agents) 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. 
 (m) The Agents shall have received all documents and instruments,
including Uniform Commercial Code financing statements, required by law or reasonably requested by the Agents to be filed, registered, published or recorded to create or perfect the second priority Liens intended to be created under the Loan
Documents and ail such documents and instruments shall have been so filed, registered, published or recorded to the satisfaction of the Agents. 

(n) The Agents shall have received a payoff letter from the Existing Second Lien Credit Agreement to the Borrower, as well
as a tender of releases and discharges of all collateral security for the Borrower’s Indebtedness under the Existing Second Lien Credit Agreement, each in form and substance satisfactory to the Agents. Such Indebtedness shall be repaid
contemporaneously with the making of the Loan hereunder. 
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 (o) The Agents
shall have received, and be satisfied with, evidence of the Loan Parties’ insurance, together with such endorsements as are required by the Loan Documents. 

(p) All Additional Interest due at or immediately after the Closing Date, including all amounts due and payable pursuant
to SECTION 2.09(b) 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 Agents), shall have been paid in full.

 (q) The consummation of the transactions contemplated hereby shall not 

(i) violate in any material respect any Applicable Law or any Charter Document or 

(ii) conflict with, or result in a default or event of default under, any Material Agreement of any Loan Party. No event
shall exist which is, or solely with the passage of time, the giving of notice or both, would be a default under any Material Agreement of any Loan Party. 

(r) All necessary consents and approvals to the transactions contemplated hereby shall have been obtained and shall be
satisfactory to the Administrative Agent. 
 (s) The Agents shall have entered into the Intercreditor Agreement
with the agent for the Lenders under (and as defined in) the Existing First Lien Credit Agreement on terms and conditions satisfactory to the Agents (or any sub-agent thereof). 

(t) The Agents shall have received evidence that the Lender has been named as additional insured and loss payee on the
Borrower’s insurance policies pursuant to SECTION 5.07(b). 
 (u) There shall have been delivered to the
Agents such additional instruments and documents as the Agents or counsel to the Agents reasonably may require or request. 

(v) All representations and warranties contained in this Agreement and the other Loan Documents or otherwise made in
writing in connection herewith or therewith shall be true and correct in all material respects (except for such representations or warranties which are qualified by “material” or “Material Adverse Effect”, which shall instead be
true and correct) on and as of the date of the Closing Date. 
 (w) On the date of each Borrowing hereunder and
after giving effect thereto, the Loan Parties shall be in compliance with all of the terms and provisions set forth herein and in the other Loan Documents to be observed or performed and no Default or Event of Default shall have occurred and be
continuing. 
 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 5:00 p.m. Eastern Standard Time, on January 18, 2007 (and, in the event such conditions are not so satisfied or
waived, this Agreement shall terminate at such time). The request by the Borrower for, and the acceptance by the Borrower of, each extension of credit hereunder shall be deemed to be a representation and warranty by the Loan Parties that 

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the conditions specified in this SECTION 4.01 have been satisfied at that time and that after giving effect to such extension of credit the Borrower shall continue to be in compliance with the
provisions set forth herein. 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 Administrative Agent, in whole or in part, without prejudice to the
Administrative Agent or any other Credit Party. 
 ARTICLE V Affirmative Covenants 

Until (i) the Commitments shall have expired or been terminated and (ii) the principal of and interest on 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, 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 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 consistently applied and (ii) within forty-five (45) days after the end of each Fiscal Quarter 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, setting forth in each case
in comparative form the Consolidated figures for the previous Fiscal Quarter, 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 consistently applied, subject to normal year end audit adjustments and the absence of footnotes; 

(b) Within thirty (30) days after the end of each Fiscal Month of the Borrower, 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(c) 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 
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 Consolidated
basis in accordance with GAAP consistently applied, subject to normal year end audit adjustments and the absence of footnotes; 

(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 SECTION 6.11 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 ninety (90) 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, all in form and substance satisfactory to the Lenders; 
 (f) Promptly upon
receipt thereof, copies of all reports submitted to any Loan Party 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’ 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) Notice of any intended sale or other disposition of material assets of any Loan Party permitted hereunder at least ten
(10) Business Days prior to the date of consummation such sale or disposition or incurrence of such Indebtedness; and 

(i) Promptly following any request therefor, such other information regarding the operations, business affairs and
financial condition of any Loan Party, 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. 

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 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, would 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, would reasonably be expected to
result in a Material Adverse Effect; 
 (d) Any development that results in, or would reasonably be expected to
result in, a Material Adverse Effect; 
 (e) Any change in any Loan Party’s chief executive officer or chief
financial officer; 
 (f) The discharge by any Loan Party 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 becomes a party, or the application for the certification of a collective bargaining agent; 

(h) The filing of any Lien for unpaid Taxes against any Loan Party known to any Loan Party; and 

(i) 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, any office in which it maintains books or records
relating to Collateral owned by it or any office or facility at which Collateral owned by it is located (including the establishment of any such new office or facility) or location from which Accounts 

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 are invoiced or
paid; (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 all filings, publications and registrations, have been made 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 second priority security interest in all the Collateral for its own benefit and the benefit of the other Credit
Parties. 
 SECTION 5.04 Existence; Conduct of Business. 

Each Loan Party will, and will cause each of its Subsidiaries to, except as expressly set forth in the Merger Agreement,
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, patents, copyrights, trademarks and trade names
material to the conduct of its business; 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 obligations, including Tax
liabilities, and 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, (c) such contest effectively suspends collection of the contested obligation and no Lien is securing such obligation, and (d) the failure to
make payment could not reasonably be expected to result in a Material Adverse Effect. Without limitation of the foregoing, each Loan Party will pay all obligations when due and owing to any third party warehousemen storing any of the inventory of
any Loan Party. 
 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 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 Agents (or, to the extent consistent with prudent business practice, a program of self-insurance approved by 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 

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 Documents);
(ii) maintain such other insurance as may be required by law; and (iii) furnish to 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 Agents, which endorsements or
amendments shall provide, subject to the Intercreditor Agreement, that the insurer shall pay all proceeds otherwise payable to the Loan Parties under the policies directly to the Collateral Agent and that the insurance, to the extent of the
Collateral Agent’s interest therein, shall not be impaired or invalidated, in whole or in part, by reason of any act or neglect of any Loan Party or by the failure of any Loan Party to comply with any warranty or condition of the policy, (ii) a
provision to the effect that none of the Loan Parties, Credit Parties or any other Person shall be a co-insurer, and (iii) such other provisions as 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 Collateral Agent as an additional insured. Business interruption policies shall name the Collateral Agent as a loss payee and shall be endorsed or amended to include (i) a provision
that, from and after the Closing Date, the insurer shall, subject to the terms of the Intercreditor Agreement, pay all proceeds otherwise payable to the Loan Parties under the policies directly to the Collateral Agent, (ii) a provision to the effect
that none of the Loan Parties, the Administrative Agent, the Collateral Agent or any other party shall be a co-insurer and (iii) such other provisions as the Agents may reasonably require from time to time to protect the interests of the Credit
Parties. Each such policy referred to in this SECTION 5.07(b) shall also provide 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 Collateral Agent (giving the Collateral Agent the right to cure defaults in the payment of premiums) or (ii) for any other reason except upon not less than thirty (30) days’ prior written notice thereof by the insurer to
the Collateral Agent. The Borrower shall deliver to 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 Collateral Agent, including an insurance binder) together with evidence satisfactory to 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 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 and to examine and make extracts from its books and records, all at such reasonable times and as often as reasonably
requested. 
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 (b) The Loan
Parties shall at all times retain independent certified public accountants who are reasonably satisfactory to the Agents and shall instruct such accountants to cooperate with, and be available to, the Agents or their representatives to discuss the
Loan Parties’ 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 Agents. 

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: (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 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 that is reasonably likely to result in Environmental Liabilities; 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 that could
reasonably be expected to result in Environmental Liabilities, 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 and the Special Equipment Term Loan and Term Loan Subfacility loans outstanding (and as defined in) the Existing First 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 Lender and the Borrower and for general corporate purposes, and (iii) to reduce outstanding trade payables in an amount equal to $5,000,000. 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 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 

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 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 Administrative Agent or the Required Lenders shall request and (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 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 may be limited to 65% of the outstanding shares of Capital Stock of such Subsidiary).

 SECTION 5.12 Board Observer Right. 

For so long as the Obligations remain outstanding, Lender shall have the right at its option, to appoint one person to
attend meetings of the board of directors of Borrower as an observer (the “Observer”). Other than the right to vote, the Observer shall have all rights of a member of the board of directors including the right to receive copies of all
written materials (including copies of meeting minutes) given to members of the board of directors in connection with such meetings (and if the Borrower proposes to act by written consent, the Borrower shall provide Lender with copies of all written
materials given to directors in connection with such action). The Borrower will give the Observer written notice of each meeting of the board of directors (whether annual or special) at the same time and in the same manner as written notice is given
to directors in the ordinary course. The Borrower shall pay all reasonable expenses incurred by the Observer in connection therewith, including, without limitation, travel expenses. 

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 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 Agents, from time to time upon request, evidence reasonably satisfactory to the Agents as to the perfection and priority of the Liens created or intended to be created by
the Security Documents. 
 (b) If any assets are acquired by any Loan Party after the Closing Date (other than
assets constituting Collateral under the Security Documents that become subject to the Lien of the Security Documents upon acquisition thereof), the Borrower will notify the Administrative Agent thereof, and 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. 
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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 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. 

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 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 into the Borrower in a transaction in which the Borrower is the surviving corporation, (ii) any Subsidiary may merge into any other Subsidiary that is a Facility Guarantor, (iii) Permitted Acquisitions
(subject to an aggregate principal amount not to exceed $5,000,000) 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 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, and (iv) the SPAC Transaction may be consummated
in accordance with the terms of the Merger Agreement and applicable law. 
 (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 on the date of execution of this Agreement and businesses reasonably related thereto, or reasonably related to
the manufacture or retailing of clothing. 
 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 and any transfer of the Capital Stock of LLC to the Borrower as expressly set forth in the Merger Agreement. 

SECTION 6.05 Asset Sales. 

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 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,
and (iv) the transfer of Capital Stock owned by the Loan Parties as expressly set forth in the Merger Agreement. 

SECTION 6.06 Equity issuances. 

No Loan Party will, or will permit any Subsidiary to, (i) issue any preferred stock or other Capital Stock (except for
preferred stock (x) all dividends in respect of which are to be paid (and all other payments in respect of which are to be made) in additional shares of such preferred stock, in lieu of cash until all Obligations are paid in full and all Commitments
terminated, (y) that is not subject to redemption other than redemption at the option of the Loan Party issuing such preferred stock and (z) all payments in respect of which are expressly subordinated to the Obligations, (ii) except as permitted
above and pursuant to arrangements existing on the Closing Date and disclosed to the Lenders prior to the Closing Date, be or become liable in respect of any obligation (contingent or otherwise) to purchase, redeem, retire, acquire or make any other
payment in respect of (x) any shares of Capital Stock of any Loan Party or Subsidiary or (y) any option, warrant or other right to acquire any such shares of Capital Stock of any Loan Party or Subsidiary, or (iii) issue any additional shares of its
Capital Stock (other than Capital Stock by the Borrower); provided that nothing in this SECTION 6.06 shall prohibit the issuance of options or stock awards to employees of the Merger Subsidiary pursuant to the Merger Agreement and expressly set
forth therein. 
 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 Permitted Dividends and Permitted Dispositions, without the. prior consent of the Administrative Agent and the Required Lenders. 

(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 interest on any 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 or termination of any Indebtedness, except: 

(i) mandatory payments and prepayments of interest and principal as and when due in respect of any Permitted Indebtedness;

 (ii) payments on account of Indebtedness outstanding as of the Closing Date and as set forth on Schedule 6.01:

 (iii) payments on account of Subordinated Indebtedness to the extent permitted under any subordination
agreement or provisions governing such Indebtedness and including any payments to be made pursuant to the Merger Agreement in an amount not to exceed $5,000,000; and 

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 (iv)
refinancings of Indebtedness to the extent permitted under this Agreement. 
 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) transactions in the ordinary course of business that are at prices and
on terms and conditions not less favorable to such Loan Party than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among the Loan Parties not involving any other Affiliate, (c) sales of
inventory by the Loan Parties to any Subsidiaries at the cost of such property plus an agreed upon markup and extensions of credit in connection with such transfers, (d) any Loan Party’s transfer of inventory to The American Apparel Group of
Canada, a company which owns stores in Canada and that is owned by family members of Dov Charney, for a sales price not less than the Loan Party’s cost of such property; provided that such transactions provided for under this clause (d) are in
the ordinary course of business and consistent with past practice and that such transactions do not include inventory having a selling price in excess of $15,000,000 per Fiscal Year, (e) Permitted Dividends, (f) Permitted Investments, (g) Permitted
Dispositions, (h) transactions in respect of the 59th Street Facility and (i) the transfers and transactions expressly set forth in the Lim Option Agreement or the Merger Agreement. 

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 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 restrictions and conditions imposed by Applicable Law or by any Loan Document, (ii) clause (a) of the foregoing shall not apply to 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, (iii) clause (a) of the foregoing shall not apply to
customary provisions in leases restricting the assignment or subleasing thereof, and (iv) clause (a) of the foregoing shall not apply to provisions in the Merger Agreement restricting the ability of the Borrower and LLC to incur or permit to exist
Liens on their respective properties or assets. Notwithstanding anything in this SECTION 6.09 to the contrary, the prohibitions, restrictions and impositions of conditions expressly set forth in the Merger Agreement and the Lim Option Agreement
shall not be prohibited by this SECTION 6.09; provided that such prohibitions, restrictions and impositions of conditions would not result in a Material Adverse Effect. 

SECTION 6.10 Amendment of Material Documents. 

No Loan Party will, or will permit any Subsidiary to, amend, modify or waive any of its rights under (a) its Charter
Documents, (b) any Material Agreement or (c) any Material 
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 Indebtedness,
in each case to the extent that such amendment, modification or waiver would reasonably likely to have a Material Adverse Effect. 

SECTION 6.11 Financial Covenants. 

(a) Consolidated Fixed Charge Coverage Ratio. The Borrower shall maintain a Consolidated Fixed Charge Coverage Ratio for
the applicable twelve (12) month period (or shorter cumulative period since January 2007) ended on the last day of any Fiscal Quarter of not less than the ratio set forth below opposite such Fiscal Quarter: 

FISCAL QUARTER ENDING MINIMUM CONSOLIDATED 

FIXED CHARGE RATIO 

March 31, 2007 1.0 to 1.0 

June 30, 2007 1.15 to 1.00 

September 30, 2007 1.15 to 1.00 

December 31, 2007 and the 1.15 to 1.0 

last day of each Fiscal 

Quarter thereafter 

(b) Minimum EBITDA. The Borrower shall have, as of the last day of each Fiscal Quarter set forth below, Consolidated
EBITDA for the four Fiscal Quarters ending on such day of not less than the following: 
 FISCAL QUARTER ENDING
MINIMUM EBITDA 
 December 31, 2006 $23,000,000 

March 31, 2007 $25,250,000 

June 30, 2007 $27,500,000 

September 30, 2007 $29,750,000 

December 31, 2007 $32,000,000 

March 31, 2008 $33,250,000 

June 30, 2008 $34,500,000 

September 30, 2008 $35,750,000 

December 31, 2008 $37,000,000 

(c) Maximum Senior Debt to EBITDA. The Borrower shall have, as of the end of each Fiscal Quarter set forth below, a Senior
Debt to Consolidated EBITDA ratio for the Fiscal Quarter ending on such day of not more than the ratio set forth below opposite such Fiscal Quarter: 

FISCAL QUARTER ENDING SENIOR DEBT TO CONSOLIDATED EBITDA 

December 31, 2006 4.00:1.0 

March 31, 2007, June 30, 3.75:1.0 

2007, September 30, 2007 

and December 31, 2007 

March 31, 2008, June 30, 3.50:1.0 

2008, September 30, 2008 

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 and December
31, 2008 
 (d) Total Adjusted Debt to Consolidated EBITDAR. The Borrower shall have, as of the last day of each
Fiscal Quarter set forth below, a Total Adjusted Debt to Consolidated EBITDAR ratio of not more than the ratio set forth below opposite such Fiscal Quarter: 

FISCAL QUARTER ENDING TOTAL ADJUSTED DEBT TO 

CONSOLIDATED EBITDAR 

December 31, 2006 7.00:1.0 

March 31, 2007, June 30, 6.75:1.0 2007, September 30, 2007 

and December 31, 2007 

March 31, 2007, June 30 6.50:1.0 2007, September 30, 2007 

and December 31, 2008 

SECTION 6.12 Capital Expenditures. 

The Loan Parties shall not make or incur, nor permit a Subsidiary to make or incur, Capital Expenditures in any Fiscal
Year in excess of $18,000,000 in the aggregate. 
 SECTION 6.13 Fiscal Year. 

No Loan Party will, or will permit any Subsidiary to, change its 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 
 (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) adopt an amendment to any Pension Plan requiring the provision of security under Section 307 of
ERISA or Section 401(a)(29) of the IRC which could reasonably be expected to result in a Material Adverse Effect; or 

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 (e) terminate
any Pension 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 

(f) 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, or, with respect to any Pension Plan, permit to exist any material “accumulated funding deficiency” (within the meaning of Section 302
of ERISA and Section 412 of the IRC) which could reasonably be expected to result in a Material Adverse Effect; or 

(g) 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, (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 is reasonably likely 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 
 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 

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 Agreement or
any other Loan Document and such failure shall continue for a cumulative amount often (10) days during the term of this Agreement; 

(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 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 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 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), SECTION 7.01(c), or SECTION 7.01(d)), and such failure shall continue unremedied for a period of fifteen (15) days after notice thereof from the Administrative Agent to the
Borrower; 
 (f) any event or condition occurs that results in any Material Indebtedness becoming due prior to
its scheduled maturity or that 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; 

(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 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 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 shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under the Bankruptcy Code or 

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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 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 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, whether by vote of the Loan Parties’ board of directors or otherwise to: suspend the operation of the Loan Parties’ business in the ordinary course, liquidate all or substantially all of the
Loan Parties’ 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’
assets or Store locations; 
 (k) one or more final and nonappealable judgments for the payment of money in an
aggregate amount in excess of $1,000,000 excess of insurance coverage shall be rendered against any Loan Party or any combination of Loan Parties 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 to enforce any such judgment; 

(1) 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 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; 
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 (o) any Lien
purported to be created under any Security Document shall 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) a material breach by the Borrower or any other party under any of the Material Agreements subject to the applicable
cure periods as prescribed by such Material Agreement; 
 (r) the indictment of, or institution of any legal
process or proceeding by any governmental agency against, any Loan Party, 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 or available include the forfeiture of any property of any Loan Party, unless the Administrative Agent, in its reasonable discretion, determines that the indictment is not material; or 

(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 with respect to any Loan Party described in SECTION 7.01(g), or SECTION
7.01(h)), 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, 
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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; 
 (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 in respect of the Loans to the
Borrower until paid in full; 
 (e) FIFTH, ratably to pay any other Obligations and Other Liabilities of the
Borrower; 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 
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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. Until such time as an Administrative Agent is appointed hereunder, all references to the Administrative Agent shall be deemed to
be references to the Lender hereunder. At such time as there is more than one Lender, the Lenders shall appoint an Administrative Agent in accordance with SECTION 8.11 below. 

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 he 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 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. Until such time as a Collateral Agent is appointed hereunder, all references to the Collateral Agent shall be deemed to be references to the Lender hereunder. At such time
as there is more than one Lender, the Lenders shall appoint a Collateral Agent in accordance with SECTION 8.11 below. 

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 (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 Commitment 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 

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 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 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 

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 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 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. 

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 Each Credit
Party (other than the Agents) agrees to (i) reimburse the Agents for such Credit Party’s applicable Commitment 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 Commitment 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. 

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 

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Event of Default under 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(g), SECTION 7.01(h), SECTION 7.01(i), or SECTION 7.010), 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. 
 SECTION 8.13 Reports
and Financial Statements. 
 By signing this Agreement, each Lender: 

(a) agrees to furnish the Administrative Agent on the first day of each month with a summary of all Other Liabilities due
or to become due to such Lender; 
 (b) is deemed to have requested that the Administrative Agent furnish such
Lender, promptly after they become available, copies of all financial statements required to be delivered by the Borrower hereunder and all commercial finance examinations received by the Administrative Agent (collectively, the “Reports”);

 (c) expressly agrees and acknowledges that the Administrative Agent (i) makes no representation or
warranty as to the accuracy of the Reports and (ii) shall not be liable for any information contained in any Report; 

(d) expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that the
Administrative Agent or any other party performing any audit or examination will inspect only specific information regarding the Loan Parties and will rely significantly upon the Loan Parties’ books and records, as well as on representations of
the Loan Parties’ personnel; 
 (e) agrees to keep all Reports confidential and strictly for its internal
use, and not to distribute except to its participants, or use any Report in any other manner; and 
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 (f) without
limiting the generality of any other indemnification provision contained in this Agreement, agrees: (i) to hold the Administrative Agent and any such other Lender preparing a Report harmless from any action the indemnifying Lender may take or
conclusion the indemnifying Lender may reach or draw from any Report in connection with any Credit Extensions that the indemnifying Lender has made or may make to the Borrower, or the indemnifying Lender’s participation in, or the indemnifying
Lender’s purchase of, a Loan or Loans of the Borrower; and (ii) to pay and protect, and indemnify, defend, and hold the Administrative Agent and any such other Lender preparing a Report harmless from and against, the claims, actions,
proceedings, damages, costs, expenses, and other amounts (including attorney costs) incurred by the Administrative Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part
of any Report through the indemnifying Lender. 
 SECTION 8.14 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 8.15 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 Commitment 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 Commitment 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 Commitment 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. 

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 (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 Commitment 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. 
 (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 Commitment 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 telecopy 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: Ken Cieply,
CFO (Telecopy No. (213) 225-1212), (E-Mail ken.cieply@americanapparel.net), with a copy to Hallstrom, Crucillo & Christensen LLP, 15615 Alton Pkwy, Suite 175, Irvine, Ca 92618, Attention: Grant J. Hallstrom, Esquire (Telecopy No.
(949) 450-1588), (E-Mail granth@hccllp.com); 
 (b) if to the Administrative Agent or the Collateral Agent,
to the address set forth in the instrument appointing such Agents; 
 (c) if to any other Credit Party, to it at
its address (or telecopy number or electronic mail address) set forth on the signature pages hereto or on any Assignment and Acceptance. 

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 or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and other communications given to any party 

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 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 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 affected thereby; 

(iii) Without prior written Unanimous Consent of all Lenders: 

(A) 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; 

(B) except for Permitted Dispositions, release any material portion of the Collateral from the Liens of the Security
Documents; 
 (C) increase the Total Commitments; 

(D) release any Loan Party from its obligations under any Loan Document or limit its liability in respect of such Loan
Document; 
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 (E) change
SECTION 2.08 or SECTION 7.03; 
 (F) 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; or 
 (G) 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. 
 (iv) 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 financial institutions, 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, and fees) 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 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 unless signed by the Borrower or other applicable Loan Party. 
 SECTION 9.03 Expenses; Indemnity;
Damage Waiver. 
 (a) The Loan Parties shall jointly and severally pay all Credit Party Expenses. 

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 (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 Credit Extension 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 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 Credit Extension or the use of the
proceeds thereof. 
 (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 on 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 
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Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of 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 assign to one or more Persons 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 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 $5,000,000, 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 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 at one of its
offices in New York, New York, 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. 
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 (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(a), 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)(ii) or SECTION 9.02(b)(iii)(A) that 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 2.13 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to SECTION 9.04(b); 

(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.l03 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 
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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 2.13, 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 2.13 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 2.13 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 2.13(e) as though it were a Lender and such Participant is eligible for exemption from the withholding Tax referred to therein, following compliance with SECTION 2.13(e). 

(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. 
 (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 
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\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 2.13, 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 telecopy or e-mail shall be effective as delivery of a manually executed counterpart of this Agreement.

 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 

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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 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. 
 (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 
 - 74 - 

 

 

  
 
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 Administrative Agent
and without the prior written consent of 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 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 Administrative Agent reserves the right to provide to industry trade organizations information necessary and customary for inclusion in league table measurements.

 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 

- 75 - 

 

 

  
 
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 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 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 
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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 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 on account of 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 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 
 - 77 - 

 

 

  
 
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 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,” 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 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 the extent required by the Merger Agreement, (e) to any other party to this Agreement, (f) 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, or (g) 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 

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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, which information includes the name and address of the Borrower and other information that
will allow such Lender to identify the Borrower 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 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. 
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 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: 

Name: 

Title: CEO 

AMERICAN APPAREL RETAIL 1090 THIRD NYC, INC., as Facility Guarantor 

By: 

Name: 

Title: CEO 

AMERICAN APPAREL, LLC, as Facility Guarantor 

By: 

Name: Title: CEO 

FRESH AIR FREIGHT, INC., as Facility Guarantor 

By: 

Name: 

Title: CEO 

[Signature Page to Credit Agreement] 

 

 

  
 KCL KNITTING,
LLC, as Facility Guarantor 
 By: 

Name: Title: CEO 

AMERICAN APPAREL RETAIL, INC., as Facility Guarantor 

By: 

Name: 

Title: CEO 

AMERICAN APPAREL DYEING & FINISHING, INC., as Facility Guarantor 

By: 

Name: 

Title: CEO 

[Signature Page to Credit Agreement] 

 

 

  
 SOF
INVESTMENTS, L.P. – PRIVATE IV, as Lender 
 By: 

Name: Marc R. Lisker 

Title: Manager and General Counsel 

Address: 

c/o MSD Capital, L.P. 

645 Fifth Avenue, 21st Floor 

New York, New York 10022-5910 

Attn: John S. Licciardello 

Telephone: (212) 303-1761 

Telecopy: (212) 303-1642 

With a copy to 

Kramer Levin Naftalis & Frankel LLP 

1177 Avenue of the Americas 

New York, New York 10036 

Attn: Ernest S. Wechsler, Esq. 

Telephone: (212)715-9211 

Telecopy: (212) 715-8000 

[Signature Page to Credit Agreement] 

 

 

  
 Schedule 1.2(a)

 Lenders and Commitments 

Lender 

Commitment 

SOF Investments, L.P. – Private IV 

$41,000,000 

 

 

  
 Schedule
1.02(b) Material Agreements 
 1.) Option Agreement dated November 9, 2006 by and among American Apparel,
Inc., a California corporation, Dov Charney, an individual, and Sang Ho Lim, an individual also known as Sam Lim; and 

2.) Agreement and Plan of Reorganization dated December 18, 2006 by and among Endeavor Acquisition Corp., a Delaware
corporation (“Parent”), AAI Acquisition Corp., a California corporation and a wholly-owned subsidiary of Parent (“Merger Sub”), American Apparel, Inc., a California corporation (“AAI”), American Apparel, LLC, a
California limited liability company (“LLC”), each of the corporations (each an affiliate of AAI and/or the Stockholder, as defined below), formed under the laws of the applicable provinces of Canada or the Canada Business Corporation Act
as set forth on Schedule A thereto, (all of which companies referred to collectively as the “CI Companies”), Dov Charney (as the “Stockholder”), with respect to certain provisions only, each of the stockholders of CI; and with
respect to certain provisions only, Sam Lim (“Lim”). 
 3.) U.S. Bank Financing Agreement (the
“Finance Agreement”) dated October 31, 2005 by and among American Apparel, Inc., a California corporation, KCL Knitting, LLC, a California limited liability company, American Apparel Retail, Inc., a California corporation, American
Apparel Dyeing & Finishing, Inc., a California corporation, the Lenders (as defined in the Finance Agreement), and U.S. Bank National Association, a national banking association, as Agent and LC Issuer and the documents and agreements
entered into in connection therewith, as amended. 

 

 

  
 Schedule 3.01

 ORGANIZATION INFORMATION 

Name 

State of Incorporation or Organization 

Type of incorporation or organization 

Corp. or Company ID No. 

Federal EIN 

American Apparel, Inc. 

Incorporated 2-11-4 California 

Corporation 

C2453845 

91-2188314 

American Apparel Dyeing & Finishing, Inc. 

Incorporated 9-14-2004 California 

Corporation 

C2687444 

41-2150324 

American Apparel Retail, Inc. 

Incorporated 2-11-2004 California 

Corporation 

C2605535 

72-1577829 

KCL Knitting, LLC 

Filed 8-21-2000 California 

Limited liability company 

200023610152 

95-4819518 

American Apparel Retail 1090 Third NYC, Inc. 

Incorporated 9-13-2004 California 

Corporation 

C2687365 

75-3166644 

American Apparel, LLC 

Filed 6-30-1998 California 

Limited liability company 

101998181051 

95-4695584 

Fresh Air Freight, Inc. 

Incorporated 10-23-2003 California 

Corporation 

C2527267 

45-0533870 

 

 

  
 Schedule 305
(a) 
 (revised 1-9-07) 

Title Exceptions 

1. ) Liens or encumbrances pursuant to the UCC Financing Statements listed and attached hereto in this “Exhibit
3.05(a).” 
 2. ) Security interests granted pursuant to the Amended and Restated Finance Agreement (the
“Agreement”), a loan agreement dated March 3, 2005 by and among C3 Capital Partners, LP, a Delaware limited partnership, and American Apparel, Inc., a California corporation, KCL Knitting, LLC, a California limited liability company,
and American Apparel Dyeing & Finishing, Inc., a California corporation, and the documents and agreements entered into in connection therewith.1 

3. ) U.S. Bank Financing Agreement (the “Finance Agreement”) dated as of October 31, 2005 by and among
American Apparel, Inc., a California corporation, KCL Knitting, LLC, a California limited liability company, American Apparel Retail, Inc., a California corporation, American Apparel Dyeing & Finishing, Inc., a California corporation, the
Lenders (as defined in the Finance Agreement), and U.S. Bank National Association, a national banking association, as Agent and LC Issuer and the documents and agreements entered into in connection therewith. 

4. ) Waiver and First Amendment to Financing Agreement (the “Waiver and Amendment”) dated March 10, 2006 by
and among U.S. Bank National Association, a national banking association as Administrative Agent, Cathay Bank, as Special Equipment Term Loan Agent from and after the Special Equipment Term Loan Effective Date, the Lenders (as defined in the Waiver
and Amendment), and American Apparel, Inc., a California corporation, KCL Knitting, LLC, a California corporation, and American Apparel Retail, Inc., a California corporation, and American Apparel Dyeing & Finishing, Inc., a California
corporation, and the documents and agreements entered into in connection therewith. 
 5. ) Permitted
Encumbrances (as such term is defined in the Credit Agreement). 
 6. ) Restrictions on transfer of real property
leases pursuant to lease agreements. 
 7. ) Waiver and Second Amendment to Financing Agreement (“Waiver and
Second Amendment”) dated January , 2007 by and among U.S. 
 1 These exceptions will be terminated at
closing. 
 1 

Schedule 3.05(a) 

 

 

  
 Bank National
Association, a national banking association, as Administrative Agent, Cathay Bank, as Revolving Loan Note Agent, the Lenders as defined in the Waiver and Second Amendment, and American Apparel, Inc., a California corporation, and KCL Knitting, LLC,
a California corporation, and American Apparel Retail, Inc., a California corporation, and American Apparel Dyeing & Finishing, Inc., a California corporation, and the documents and agreements entered into in connection therewith.

 2 

Schedule 3.05(a) 

 

 

  
 SCHEDULE
3.05(b) 
 Trademark Oppositions 

1/10/2007 

DOMESTIC TRADEMARK OPPOSITIONS 

None Filed 

INTERNATIONAL TRADEMARK OPPOSITIONS 

Trademark 

American Apparel EE) 

Community Trademark Application No. 3935335 

Spain Trademark Application No. 2.671.096-aA 

Community Trademark Application No. 2769552 

Opposer 

American Airlines 

American Apparel 

Pedro Miralles Roman 

Opposer’s Trademark(s) 

American Airlines CTM 3254604 

Status 

Extension to cooling off period filed 4/13/06 to allow parties 1 year to negotiate respective rights in trademarks

 Opposition filed 11/16/05; Opposition rejected by examiner 6/22/06; No appeal required 

Opposition pending; Appeal filed 2/2/06; Appeal dismissed by Second Board of Appeal on 9/1/06; 

LIST OF SIMILAR TRADEMARKS AND TRADE NAMES 

Trademark None in USPTO database 

AAFA AMERICAN APPAREL & | FOOTWEAR ASSOCIATION (Reg. 

No. 2,677,491) 

AMERICAN APPAREL MANUFACTURERS | ASSOCIATION (Reg. No. 1,949,992) 

www. americanapparel.com 

Corporate Entity 

American Apparel, Inc. 

American Apparel and Footwear Association, The Fashion Association 

American Apparel Manufacturers Association 

American Apparel Knits 

(aka) AA Knits and American Apparel, Inc. 

Goods/Services Provided 

Manufactures military clothing for Federal 

government 

Provides association and educational services in the fields of fashion, apparel and footwear manufacturing 

Newsletter and association services re: apparel manufacturing 

Previously manufactured knit golf shirts for third parties in Mississippi; 

Currently does embroidery and hems Dants 

Comments/Miscellaneous 

Trademark cancelled 10/26/2002 for failure to file Section 8 affidavit of use 

Website redirects to the americanapparel.net website 

 

 

  
 Schedule 3.05
(c)(i) Owned Real Estate 
 None. 

 

 

  
 SCHEDULE
3.05(c)(ii) 
 Leased Real Estate 

Retail Leases 

Store # Name Address City County State Zip Tennant 

01 Broadway 712-714 Broadway New York New York City NY 10003 AAR 

02 Echo Park 2113-15-17 Sunset Blvd Los Angeles Los Angeles CA 90026 AAR 

03 Waverly 373 6th Ave New York New York City NY 10014 AAR 

04 Robertson 104 S. Robertson Blvd Los Angeles Los Angeles CA 90048 AME 

05 LES 183 Houston St New York New York City NY 10014 AAR 

06 SOHO 121 Spring St. NewYork New York City NY 10012 AME 

07 Little Tokyo 374 East Second St. Los Angeles Los Angeles CA 90012 AME 06 Cherokee 6611 Hollywood Blvd Los Angeles Los
Angeles CA 90028 AAR 
 09 Los Feliz 4665 Hollywood Blvd Los Angeles Los Angeles CA 90027 AAR 

10 Williamsburg 104N.6th St. Brooklyn New York City NY 11211 AME 

11 Lincoln Road 718-720 Lincoln Rd Miami Miami-Dade FL 33139 AME 

12 Melrose 7763 Melrose Ave Los Angeles Los Angeles CA 90046 AME 

14 Woodbury 640 Bluebird Ct Central Valley Orange NY 10917 AME 

16 Hawthorne 3416 SE Hawthorne Portland Multnomah OR AAR 

17 Stark 1234 SW Stark St Portland Multnomah OR AAR 

18 6922 Hollywood 6922 Hollywood Blvd Los Angeles Los Angeles CA AAR 

19 Court St 112 Court St Brooklyn New York City NY AME 2D UES 1090 Third Ave New York New York City NY AA1090 

21 Hillcrest 3867 4th Ave San Diego San Diego CA 92103 AAR 

22 Ocean Dr 840 Ocean Drive Miami Miami-Dade FL AAR 

24 Back Bay 138 Newbury St Boston Suffolk/Middlesex MA 2116 AAR 

25 Wicker Park 1563 N. Milwaukee Ave Chicago Cook IL AAR 

26 Evanston 950 Church St Evanston Cook IL AAR 

27 Haight St 1615 Haight St San Francisco San Francisco CA AAR 

28 Union St 2174 Union St San Francisco San Francisco CA AAR 

Camarillo Premium Outlets. 840 

29 Camarillo Ventura Blvd #718 Camarillo Ventura CA 93010 AAR 

30 Belmar Belmar, CO Belmar CO AAR 

31 Berkeley 2301 Telegraph Ave Berkeley Alameda CA 94704 AAR 

32 Las Vegas 740 S. Rampart Suite 6. Building 7 Las Vegas Clark NV 89145 AAR 

Mockingbird Station Shopping Ctr. 

33 Mockingbird 5331E Mockingbird Lane. Suite 175 Dallas Dallas TX 75206 AAR 

34 University 4345 University Way NE Seattle King WA AAR 

35 China Gate no signed lease yet AAR 

935-939 N Rush St and 44-48 E 

36 Gold Coast Walton St space 935D Chicago Cook IL 60611 AAR 

37 West Hollywood 802 N San Vicente Blvd Los Angeles Los Angeles CA AAR 

38 Bakersfield no signed lease yet Kern AAR 

39 Tempe 526 S Mill Ave Tempe Maricopa AZ AAR 

40 Florida Keys 608 Duval St Key West Monroe FL 33040 AAR 

41 Federal Hill 1125-1127 Light Street Baltimore Baltimore MD 21230 AAR 

43 Westwood Village 1060 Westwood Blvd Westwood Plumas/Lassen CA AAR 

44 Santa Monica 2654 Main Street Santa Monica Los Angeles CA AAR 

45 Pacific Beach 1280 Garnet Ave San Diego San Diego CA AAR 

46 Armitage 837 W. Armrtage Chicago Cook IL 60601 AAR 

47 Ann Arbor 613 E. Liberty Street Ann Arbor Washtenaw Ml 48104 AAR 

48 Coconut Grove 3030 Grand Ave Coconut Grove Miami-Dade FL AAR 

49 U Penn 3661 Walnut Street Philadelphia Philadelphia PA 19104 AAR 

50 Puerto Rico 206 Del Cristo Street Old San Juan Puerto Rico AAR 

KEY 

AAR American Apparel Retail. Inc 

AME American Apparel, Inc 

AA1090 American Apparel Retail 1090 NYC. Inc 

KCL KCL Knitting, LLC 

AADF American Apparel Dyeing & Finishing. Inc. 

Page 1 of 3 

 

 

  
 SCHEDULE
3.05(c)(ii) 
 Leased Real Estate 

Retail Leases 

Store # Name Address City County State Zip Tennant 

51 Charleston 348 King Street Charleston Charleston SC 29401 AAR 

52 Providence l59 Weybosset Providence Providence Rl AAR 

53 122 Robertson Blvd 122 S. Robertson Los Angeles Los Angeles CA AAR 

54 Washington DC 55511th St 

Washington DC District of Columbia 20004 AAR 

55 Broadway—Chicago 3126 North Broadway Chicago Cook IL AAR 

56 Huntington Beach 207 Main Street Huntington Beach Orange CA 92648 AAR 

57 Rittenhouse Philly 2 1611 Walnut Street 

Philadelphia Philadelphia PA AAR 

58 Coral Gables 225 Miracle Mile Coral Gables Miami-Dade FL 33134 AAR 

59 Columbus Circle 1841 Broadway NewYork New York City NY 10023 AAR 

60 Chelsea 181 8th Avenue New York New York City NY 10011 AAR 

800 Spring Street, Auxiliary 

Space B-2 (66 5th Street) and Auxiliary Space 

62 GA Tech B-5 (64 5th Street) 

Atlanta Fulton GA 30308 AAR 

63 Eugene 860 E. 13th Ave Eugene Lane OR AAR 

64 Boulder 1130 Peart Street Boulder Boulder CO AAR 

65 Gramercy 119-121 e. 23RD St New York New York City NY AAR 

66 Royal Oak 405 S. Washington Royal Oak Oakland Ml AAR 

67 Columbus 1221 N High St Columbus Franklin OH 43201 AAR 

68 Hoboken 80 Hudson Street Hoboken Hudson NJ 07030 AAR 

69 Los Gatos 

25 N. Santa Cruz Ave Los Gates Santa Clara CA AAR 

70 Burlington 145 Cherry Street Burlington Chittenden VT 05401 AAR 

71 Lady St, SC 701 Lady Street Suite B Columbia Richland SC 29201 AAR 

72 Coventry 1792 Coventry Rd Cleveland Cuyahoga OH AAR 

73 Claremont Village 1 N. Indian Hill Blvd, Building D Claremont LosAngeles CA 91711 AAR 

74 Larimer 1512 Larimer Street, Space R-27-R28 Denver Denver CO 80202 AAR 

75 Santa Cruz 1531 Pacific Ave Santa Cruz Santa Cruz CA AAR 

76 Savannah 318 W. Broughton Savannah Chatham GA AAR 

77 SONO 59 N. 

Main Street South Norwalk Fairfield CT AAR 

78 Flatbush 314 Flatbush Avenue Brooklyn New York City NY AAR 

79 UNLV no signed lease yet Clark AAR 

80 Cedarhurst 457 Central Avenue Cedarhurst Nassau NY AAR 

81 Euclid Ave 1133 Euclid Avenue Atlanta Fulton GA 30307 AAR 

82 Shadyside 5511 Walnut Street-Shadyside Pittsburgh Allegheny 

PA AAR 

83 Tribeca 140 West Broadway New York New York City NY AAR 

84 E Lansing 115 East Grand River Ave East Lansing Ingham Ml AAR 

85 Charlotte 1510 Camden Road. Suite 3D0 Charlotte Mecklenburg NC 28203 AAR 

86 Richmond 3140A West Cary Street Richmond City of Richmond VA 23221 AAR 

87 5th & Broadway 312 W. 5th Street Los Angeles Los Angeles CA AAR 

88 Memphis 528 & 530 South Main Memphis Shelby TN 38103 AAR 

89 Silver Springs 8701 Colesville Road Silver Spring Montgomery MD 20910 AAR 

90 Downtown Miami NE 1 Avenue, Miami Miami Miami-Dade FL 33132 AAR 

91 Cincinnati 243 W. McMillan Street Cincinnati Clermont/Hamilton OH AAR 

92 Gainesville 15 SW 1st Ave Gainesville Alachua FL 32601 AAR 

93 Smith St 237-239 Smith Street Brooklyn New York City NY AAR 

94 Capitol Hill 200 Broadway Ave. E Seattle King WA 98102 AAR 

95 Sunset—Miami, FL 5855 Sunset Dr Miami Miami-Dade FL 33143 AAR 

96 La Jolla 7925 Girard Ave La Jolla San Diego CA 92037 AAR 

97 Houston, TX 1665 Westheimer Houston Hams TX AAR 

98 Nashville, TN 320 Broadway Nashville Davidson TN AAR 

99 Pittsburgh 2 3805 Forbes Ave, 4th Ward Pittsburgh Allegheny PA 15213 AAR 

Page 2 of 3 

 

 

  
 SCHEDULE
3.05(c)(ii) 
 Leased Real Estate 

Retail Leases 

Store # Name Address City County State Zip Tennant 

100 New Orleans 3310 Magazine St New Orleans Orleans Parish LA 70115 AAR 

101 Austin, TX n/a—POP UP STORE ONLY Austin TX AAR 

102 142 5th Ave 142 5th Ave New York New York City NY AAR 

103 2831 Broadway 2831 Broadway New York New York City NY AAR 

104 Santa Ana 200 N. Broadway Santa Ana Orange CA 92701 AAR 

105 Santa Barbara 1019 State St Santa Barbara Santa Barbara CA 93101 AAR 

106 Lennox—Atlanta GA 3400 Lenox Rd NE Atlanta Fulton GA 30326 AAR 

107 Cambridge MA 47 Brattle St Cambridge Middlesex MA 02138 AAR 

108 Oowntown Seattle 1500 6th Ave Seattle King WA 98101 AAR 

109 Tucson AZ 988 East University Blvd Tucson Pima AZ 85719 AAR 

110 Scottsdale, AZ Scottsdale/Camelback Rd. Scottsdale Maricopa AZ 85252 AAR PENDING 

111 Palo Alton, CA 170 University Avenue Palo Alto Santa Clara CA 94301 AAR PENDING 

112 San Francisco, CA 363 Grant St. San Francisco San Francisco CA 94108 AAR PENDING Los Angeles 747 Warehouse Street Los
Angeles Los Angeles CA 90021 AME Hawthorne 12537 Cerise Avenue Los Angeles Los Angeles CA 90250 AADF Los Angeles 1020 E 59th Street Los Angeles Los Angeles CA 90001 KCL 

Page 3 of 3 

 

 

  
 SCHEDULE 3.07
(DISCLOSED MATTERS) 
 EFFECTIVE DATE: January 16, 2007 

1.) CAM dispute with Alameda Produce Market, Inc. 

2.) Defaults under the Amended and Restated Finance Agreement (the 

“Agreement”), dated March 3, 2005 by and among C3 Capital Partners, LP, a Delaware limited partnership, and
American Apparel, Inc., a California corporation, KCL Knitting, LLC, a California limited liability company, and American Apparel Dyeing & Finishing, Inc., a California corporation, and the documents and agreements entered into in
connection therewith. 
 3.) Defaults under the U.S. Bank Financing Agreement (the “Finance 

Agreement”), dated October 31, 2005 by and among American Apparel, Inc., a California corporation, KCL Knitting,
LLC, a California limited liability company, American Apparel Retail, Inc., a California corporation, American Apparel Dyeing & Finishing, Inc., a California corporation, the Lenders (as defined in the Finance Agreement), and U.S. Bank
National Association, a national banking association, as Agent and LC Issuer and the documents and agreements entered into in connection therewith, as amended. 

4.) The matters set forth in Schedule 3.06. 

 

 

  
 SCHEDULE OF
INSURANCE 
 AMERICAN APPAREL, INC 

PolicyType 

Stock Through Put 

Property General liability Umbrella 

Workers Compensation Paid Loss Retro w/ Deductible) 

NY Disability Benefits Law 

Effective Dates 

11-14-05 /o6 

03-05-06 Tp 04-01-07 

03-05-06 to 04-01-07 

03-06-06 to 04-01-07 

04-01-06/07 All states OR only 

10-29-06/06 

#TF263 

St. Paul Travelers #Y-660-7265B352-TIL-08 

St Paul Travelers 

#Y-CUP-72658352-TIL-05 

St. Paul Travelers Ins. Co. #Y-810-5168B471.TlL-05 

Liberty Mutual Insurance #WA7-661-0646B0-O15 

#WC7-661-0B4880-025 

NY State Insurance Fund #DBL528194-5 $ 2,600. Fees $ 175,089. 

$ 47,235. 

$ 85,582. subject to audit 

$ 930,226. 

+$ 93,824. Taxes & TRIA +$ 86,000. Claim Fund + Claims & claim charges 

$ 2,249. estimate 

Directors & Officers 08-30-06 / 07 and E P.LI 

U.S. Specialty insurance Co. $97,010. Primary #14MGU06A12900 

Foreign Package 09-27-06 / 07 

Mexico Package (locally admitted) 

Credit Indemnity 10-01-06 / 07 

ACE/INA 

#DOXG23622312001 Gotham Insurance 

#52752D0206 

St. Paul Travelers #GB06100567 

ING Comerclal America #£NA389400000 

Euler Hermes ACI #3926877 $64,162. 1st Excess $30,653. 2nd Excess 

$ 22,815 

$ 7,120. 

$ 1,068. IVA Tax 

$110,500. 

Pollution Legal Liability (3 year) 03-01-06 / 09 

AIO Environmental / AISLIC $25,408. #1737863 $ 807. SLA taxes 

Overview Listing 

Carrier & Policy Number Annual Premium Lloyds, London (Besso UK) $ 240,200. #B0595JL691004T+$ 7,628. Taxes

 Affiliated FM insurance Co $214,164. Excluding TRIA 

Automobile 11-15-05/06 (48 Vehicles, 4 scooters) 

03-29-06 / 07 

01 

 

 

  
 SCHEDULE OF
INSURANCE AMERICAN APPAREL, INC. 
 Policy Type: Stock Through Put 

Insurer 1) Primary: Besso Ltd / Lloyds, London—Light Manufacturing Lineslip 

2) Excess: Besso Ltd./ Lloyds, London—Excess Lineslip 

A.M. Bests: Not applicable—Surplus Lines / approved, non-admitted 

Subject; Goods or merchandise consisting of, but not limited to, Material, Cloth, 

Clothing. Related Accessories, finished and In various stages of manufacture. 

Locations: Scheduled Locations, Unnamed Locations, Connecting Conveyance, or Vessels Territory: Anywhere in the world by
any route, or at any location, subject to policy wording. 
 Total Location Limits: $ 30,000,000. 747 Warehouse
St., Los Angeles, CA 90021 
 Total Location Limits: $ 30,000,000. 758 Terminal St, Los Angeles, CA 90021

 Location Limit: $ 1,500,000. 4851 S. Alameda St #2, Los Angeles, CA 90058 

Location Limit: $ 1,500,000. 12637 Cerise Avenue, Hawthorne, CA 90260 

Location Limits: $ 2,500,000. Dye Houses—various locations 

Transit Limit: $ 600,000. Any Transit Conveyance (land, air, ocean, or parcel) 

Unnamed Location limit: $ 1,000,000. Any One Unnamed Location, not to exceed the following: Sublimit (a) $ 1,000,000.
Any One Unnamed Outworker (contractor) 
 Sublimit (c) $ 130,000. Any One Exhibition or Trade Show

 (Including Trade Show booth & accessories) Sublimit (d) $ 6,000. Salemen’s Samples

 Earthquake Limit $ 3,000,000. Annual Aggregate for Earthquake or EQSL losses 

Valuation: “Selling Price less Unincurred costs and expenses” on Sold but not delivered goods. Otherwise,
Replacement Cost + 25% where goods are not sold under contract. 
 Deductibles: $12,800. Transit claims or
Exhibition losses $ 25,000. Inventory or Stock losses $ 75,000, Earthquake or EQSL losses 
 Coverage: “All
Risk” including Strike, Riot, and Civil Commotion, subject to major policy exclusions. Major exclusions are: mysterious disappearance, theft from unattended/unlocked vehicles, stock shortage, unexplained loss or shortage discovered upon taking
normal inventory, money, securities, electronics. See policy for complete listing. 
 Garment Cover:including
Color, Size & Range endorsement (aka: Pairs & Sets) 
 including Contingent Consequential Loss
(aka: Extra Expense) up to $50,000. 
 Premium Rate: .0083% Gross Sales (0.63 cents per $100 Sales) Initial
Estimate: $203,000,000 Gross Sales as defined (Retail sales at wholesale equivalent) Initial Premium: $214,500. + $6,918. Taxes + $500 Inspection Fees (Billing in 4 installments) Final Premium: 1) 80% of premium Is minimum earned. 

2) Audit at expiry only if the actual sales exceed the estimate by 5% or more. TRIA act (Terrorism): Optional. Offered at
$50,000. additional premium 
 02 

 

 

  
 SCHEDULE OF
INSURANCE 
 AMERICAN APPAREL, INC. 

COVERAGE DETAIL 

Policy Type: Commercial Property—Excluding Stock Insurer: Affiliated FM Insurance Company A.M. Best’s: Rating:
A+14 / Admitted in all states 
 Subject: Business Personal Property—excluding Stock (except at Store
locations) Including Equipment, Machinery, Office Contents, and EDP Equipment Business Income & Extra Expense 

Locations: 1. 747 Warehouse St., Los Angeles, GA 90021 

2. 748 Terminal St. Los Angeles, CA 90021 

3. 4851 S. Alameda St. Unit #2, Los Angeles, CA 90058 

4. 12537 Cerise Avenue, Hawthorne, CA 90250 

5. All Retail Locations are “unnamed” and receive $2,000,000 coverage 

Policy Limits: $13,300,000. Business Personal Property (Excluding stock) 

$ 1,350,000. Tenant’s Improvements 

$ 2.200,000. EDP / Computer Hardware & Media 

$16,850,000. Collectively as “Business Personal Property” 

$25,000,000. Gross Earnings / Extra Expense / Rental Income 

Other: 90 Day Ordinary payroll inclusion 

Other 30 Days of Interruption caused by Civil Authority 

$ 5,500,000. Real Property at 12537 Cerese Av., Hawthorne, CA 

$ 25,000. Real Property Misc. (to include plate glass) 

Policy Limit: Building Ordinance—A: Undamaged Building 

$ 1,000,000. Building Ordinance—B: Demolition 

$ 1,000,000. Building Ordinance—C: Compliance with the Law 

$ 1,000,000. Building Ordinance—D: Business Interruption 

Sub-Limits: $ 2,000.000. Unnamed Locations (Business Income, Stock & Equipment) 

Note: All RETAIL stores are underwritten as “Unnamed Locations” 

$ 2,000,000. Newly Acquired Property 

$ 250,000. Contingent Business interruption (suppliers or customers) 

$15,000,000. Boiler & Machinery 

$ 250,000. Boiler & Machinery Hazardous Substances 

$ 250,000. Boilar & Machinery Ammonia Contamination 

$ 800,000. Accounts Receivable 

$ 250,000. Valuable Papers & Records 

$ 250,000. Fine Arts 

$ 100,000. FlreFighting Materials & Expenses 

$ 100,000. Professional Fees 

$ 250,000. Expediting Expenses 

$ 250,000. Pavements and Roadways 

$ 50,000. Pollution land & water clean-up 

$ 250,000. Installation Boater 

$ 100,000. Errors & Omissions 

$ 250,000. Transit Coverage 

$ 100,000. Certified or Non-Certified Acts of Terrorism 

03 

 

 

  
 PROPERTY
Sub-Limits (Continued) 
 $ 1,000,000. Fungus, Mold, or Mildew 

$ 100,000. Deferred Payment 

$ 100,000. Arson Reward 

$ 100,000. Money & Securities (theft, disappearance, destruction) 

$ 100,000. Locks & Keys 

$ 100,000. Tenant’s Legal Liability Expense 

$ 100,000. Soft Costs Business Income Sub-Limits 

60 Days Ordinary Payroll 

30 Days Civil Authority Interruption 

30 Days Extended Period of Indemnity 

$ 260,000. Oft Premises Service Interruption 

$ 250,000. Contingent Business Interruption (supplier or customer) 

$ 250,000. Research & Development Expense 

$ 250,000, Ingress / Egress Interruption 

$ 100,000. Tax Treatment Coinsurance: 90% applies to Business Personal Property 70% applies to Gross Earnings OTHER:
AGREED AMOUNT PENDING 
 Coverage: Special Form, Excluding Earthquake & Flood, per Affiliated FM
manuscript form Boiler & Machinery 
 Earthquake Sprinkler Leakage (EQSL) included TRIA Terrorism Is
Optional 
 Deductible: $10,000. all Losses, except $2,500 on plate glass 

5% min. $100,000. Wind/Hail on locations Tier 1 or 2 (see list attached) 

24 Hours an Business Income, Utility Services, or Boiler & Machinery time element 

Valuation: Replacement Cost—as to Equipment & Business Personal Property; except 

finished goods manufactured by the insured sold awaiting delivery at Selling Price 

at the location where the loss occurred. 

Actual Loss Sustained as to Business Income & Extra Expense 

Audit terms: Insured will report new stores as new leases are signed. 

Agent will report new store locations to the carrier at 6 and 12 months. Additional premium to be based on .075 per
$100 value If added in first 6 months, and .0375 per $100 If added during second 6 months. 
 ANNUAL
PREMIUMS: 
 $214,154. Premium 

$ 2,000. Loss Control Engineering fees 

$ 500. Brokerage (Worldwide Facilities, Inc.) 

$216,654. TOTAL 

Average Rate calculation: $ 47,375,000. Named Locations 

$ 56.428,000, Unnamed Locations $103,603,000. Total Insurable Values 

Average Rate = .21 per $100. 

04 

 

 

  
 SCHEDULE OF
INSURANCE AMERICAN APPAREL, INC. 
 COVERAGE DETAIL 

Policy Typo: Commercial General Liability 

insurer St. Paul Travelers 

A.M. Bests: Rating: A 15/ Admitted 

CQL OCCURRENCE FORM 

General Aggregate Limit: $2,000,000. 

Products/ Completed Operations Aggregate: $2,000,000. 

Personal / Advertising Injury: $1,000,000. 

Each Occurrence: $1,000,000. 

Fire Legal Liability: $ 500,000. 

Medical Payments: $ 10,000. 

Employee Benefits Liability—each claim $1,000,000. 

Employee Benefits Liability—aggregate limit $2,000,000. 

Blanket Additional Insureds by contract or agreement are Included 

Exclusions: Policy form, including but not limited to: 

Mold & Bacteria, Asbestos, Employment Related Practices, Intellectual Property, Intercompany Products Liability,
Abuse or Molestation, Total Pollution. 
 Premium Basis: Gross Sales (wholesale and retail) Audit Rates:
Composite Rate: $0.70 per $1,000. 
 Initial Estimates: $161,900,000. Manufacturing / Wholesale $ 88,460,000.
Retail 
 Initial Premium; $175,089. Final Premium; Subject to audit 

Endorsements: Exclusion of Intercompany receipts for Products Liability 

Note: Retail locations will be added at pro-rata sales estimates, 

as stores are opened. 

Disclaimer: Summary intended for brief informational overview only. This summary does not alter, amend, or extend
coverage. Policy terms and conditions prevail. 
 05 

 

 

  
 SCHEDULE OF
INSURANCE 
 AMERICAN APPAREL, INC. 

COVERAGE DETAIL 

Policy Typo: Workers’ Compensation 

Plan Type: Large Deductible / Paid Loss Retro plan 

Except for Oregon—Incurred Loss Retro plan Insurer Liberty Mutual Insurance Group A.M. Best’s: Rating: A15 /
Admitted 
 Coverage Summary 

Part 1. Workers’ Compensation—All States except monopolistic Part 2. Employer’s Liability $1,000,000. /
$1,000,000. / $1,000,000. 
 Options: 

USL&H No 

Voluntary Compensation No 

Broad Form All States Yes (except ND, OH, WA, WY, MA, Wi) 

including Officers No 

Stop Gap Liability Yes (for ND, OH, WA, WY, MA, WI) 

Rating Detail Litany Mutual Insurance Group 

ciassMon Payroll Estimates composite Net Rate 

2501—Clothing Manufacturing $50,000,000. 2362—Knitting Operations NOC $ 1,400.000. 8610—Clerical Office $
8,500,000. 
 8008-Storea-CIothing-Retail $17,552,000. 2413-Textile Dyeing $ 2,300,000. 

8742—Salespersons Outside $ 75.000. 

Total Estimate: $80,827,000. $ 1.1064 per $100. 

+ .11608 Taxes & TRIA 

Basic Premium Estimate: $ 930,226. + $30,905. TRIA + $62,919. Taxes 

Final Basic Premium: Subject to annual audit 

Per Occurrence Deductible; $ 350,000. (Add’l $86,000 Escrow Deposit collected up front) 

Aggregate Deductible: $7,100,000. (Adjustable at $ 8.8169 per $100 payroll) 

Claims Billing: Monthly paid losses, plus per claim charges: 

$2,026. each indemnity claim $ 145. each medical only claim $ 71. each record only 

Deposits: $342,013. (= first installment, Tax, TRIA, 26% Claim fund, and 3290 hours Loss Control) Deposit may be financed,
25% down + 9 installments 
 Installments: 8 monthly basic premium installments of $96,004. 

Disclaimer Summary intended for brief Informational overview only. This summary does not alter, amend, or extend coverage.
Policy terms and conditions prevail. 
 06 

 

 

  
 SCHEDULE OF
INSURANCE AMERICAN APPAREL, INC 
 Policy Type: Automobile 

Insurer St. Paul Travelers 

A.M. Best’s: Rating: A16 / CA Admitted 

Coverage: $1,000,000. Liability—Bodily Injury & Property Damage $1,000,000. Uninsured Motorists Bodily Injury $
6,000. Medical Payments Included Collission Deductible Waiver 91.000. Deductible-Comprehensive 91,000. Deductible -Collision 9 35,000. Limit Hired Auto Physical Damage 969 per day / $750 maximum—Hired Autos—loss of use $50 per day /
91,500 maximum—Transit expense—for theft claims 
 Regularly Scheduled Drivers: 

“Fernando Orrego DovCharney | ElizabethHoeckel I Matthew Werth 

Fernando Romano Aristades Garda-Estrada Rolen Atwood Patrick Lell 

Gabriel Alarco Klesaan Allen Adrians Collins Austin Calhoon 

Martin Balley Carolina Crespo Patti Chen EriKa Martinez 

Sam Lim Luddivina Megallon Dionislo Rodriguez Lauren Constantine 

Jose Esperza Nathan Scott Louise Paradis ~ Vanessa Rico 

Juan Cananza Josh Castro David Godhall Pablo Valladares Giron 

Juvenal Galeno | Candice Rivera Monica Solis Nlchole Bowman 

Miguel Peralta Matthew Bennett Matthew Swenson Paul Mellings 

Guy Gironda Frank Glambattista I Dina Ruelas I Zoralda Candelario 

Juan Acosta 

Composite Rates; 1) Private Passenger. $1,783. Full coverage 2) Light Trucks: $2,305. Full coverage 3) Heavy Trucks:
$3,658. Full coverage 
 07 

 

 

  
 Vehicles:

 1) 2000 Isuzu 1 1/2 Ton Van #4KL8481R8YJ80024B 

2) 1993 Ford Escort LX #1FAPP15J7PW131683 

3) 2003 Mercury Grand Marquis #2MEFM75W43X657371 

4) 1988Mercedes Benz 190E*WDBA24C7FF046489 

5) 1987 BMW 325e #WBAAA1303H23Z5477 

6) 1993 International 3 Ton Van #1HTSDNZN1PH4939Q2 

7) 1969 Ford 2 1/2 Ton Van #1FDNK74P4KVA17272 

8) 1985 BMW 325e #WBAAB6407F 1211496 

9) 1990 Mercedes 190E VWDBDA29DBLF726978 

10) 1690 Ford cargo van #lFOKE37Q2LHA85748 

11) 199B Ford cargo van #1FTNE2428XHB3B7Q4 

12) 1993 Mercedes Benz 400E #WD8EA34B3PM9529B3 

13) 1903 Honda CMc hatchback JHMSR3321DS023924 

14) 1992 Mercedes Benz 420E #WDBEA34E0NBB12BBB 

15) 1993 Mercedes Benz 190E #WDBDA28D4PG041748 

16) 1993 BMW626I #WBAHD8311PBJB3379 

17) 2000 Dodge Van (right cargo van) #2B7JB21Y3YK100621 

18) 1986 Ford Ranger 1/2 ton PU #1FTBR10A2GUB86fi64 

19) 2008 Kemco 50cc Scooter #RFBBAAA265B1053S9 

20) 1992 Mercedes Benz 190E #WDBDA29DONF872763 

21) 1996 Mercedes Benz C280 #WDBHA28E5SF185334 

22) 1984 Merdeces Benz 190E #WDBDA24AOEAD50037 

23) 1998 GMC box van #1GDJ7H1JSSJ603604 

24) 1992 GMC box van #1GDJ7H1M2NJ523405 

25) 1996 Isuzu box van #JALC4B1KST7006684 

26) 1994 GMC box van #1GDJ7H1J1RJB06347 

27) 2001 Dodge Caravan #tB8GP25GX1B109398 

28) 1999 Hyundai Sonata #KMHWF39V1XA048797 

29) 1995 Ford F-150 #2FTEF 16YXSCA06036 

30) 1998 Ford E-260 Cargo Van (NY) #1FTNE2427WHB71Q83 

31) 1990 Mercedes Benz 190E #WDBDA29D2LF696084 

32) 1987 Mercedes Benz 300E #WDBEA30D2HA5O9258 

33) 1991 Mercedes Benz 190E ftWOBDA29D5MF77074S 

34) 1986 Mercedes Benz 300E AWDBEA30D9GA279992 

35) 1992 Mercedes Benz 300E SWDBEA26D2NB624516 

38) 1993 Mercedes Benz 190E #WDBDA28D9PG832238 

37) 2006 Vecuod VC SOco Scooter #LFETAA1806700 

38) 1993 Mercedes Benz 190E #WDBDA29D3FF999500 

39) 1992 Mercedes Benz 190E #WD8DA2BD8NFB8B588 

40) 1992 Mercedes Benz 190E #WDBDA28D3NF984483 

41) 1988 Mercedes Benz 280E #WDBEA26DXJ600978 

42) 1986 Mercedes Benz 300E WVDBEA30DXJA765637 

43) 1991 Mercedes Benz 190E #WDBDA29D9MF801222 

44) 1988 Mercedes Benz 260E SWDBEA26D4JA764976 

45) 1990 Mercedes Benz 190E ffWDBDA2909LF687916 

46) 1981 Toyota Starlet #JT2KP61GB86526765 

47) 1983 BMW733I #WBAFF8402D7851311 

48) 1990 Ford E-360 Van #1FTJE34G8LHA31480 

49) 1983 Honda Civic #JHMWO8S2eoS016329 

50) 2006 Roketa scooter (FL) #U4TCKPA20069000660 

51) 2008 Roketa scooter (FL) #U4TCKPA16Q00374 

52) 2006 Subaru Forester (NY) #JF13G836X6H759620 

53) 2006 Genuine, Buddy 50 scooter (NY) #RFVPAP5A761000138 

54) 2006 Dodge Sprinter 2800 cargo van #WDOPD744666950178 

55) 2007 Subaru Forester (NY) #JF1SG63807H705700 

56) 2007 Subaru Forester (NY) #JF1SG63667H7038B3 

57) 2007 Subaru Forester (NY) #JF1SG83637H709370 

58) 2007 Subaru Forester (NY) #JF1 SG63807H708689 

59) 2007 Subaru Forester (FL) #JF1SG63607H711478 

60) 2007 Subaru Forester (FL) #JF1SG63617H7041B6 

61) 2007 Subaru Forester (CA) #JF1SG63087H712162 

08 

 

 

  
 SCHEDULE OF
INSURANCE AMERICAN APPAREL, INC. 
 COVERAGE DETAIL 

Policy Type: NEW YORK Disability Benefits Law Insurers: New York State Insurance Fund 

DISABILITY BENEFITS LAW Classification 

Females—6 per store x 4 stores x $17,680 max per employee ratable wage Males- 0 per store 

Rates: Females .63 per $100. x 424,430 = $ 2,249. premium Males .22 per $100. x 0. =$ 0. 

Disclaimer Summary intended for brief informational overview only. This summary does not alter, amend, or extend coverage.
Policy terms and conditions prevail. 
 09 

 

 

  
 SCHEDULE OF
INSURANCE AMERICAN APPAREL, INC. 
 COVERAGE DETAIL 

Policy Type: Umbrella Liability insurer: St Paul Travelers A.M. Bests: Rating: A 15/ Admitted 

Limits of Insurance 

$ 6,000,000. Per Occurrence Limit 

$ 6,000,000. General Aggregate Limit 

$ 6,000,000. Products / Completed Operations Aggregate 

$ 0. Self Insured Retention 

Major Exclusions: Please see proposal attached 

- Pollution 

- Asbestos 

- Nuclear energy 

- War 

Underlying Requirements 

General Liability—as per St. Paul Travelers $1,000,000 primary Automobile Liability—as per St. Paul Travelers
$1,000,000 primary Employers Liability—as per Liberty Mutual $1,000,000 primary 
 Disclaimer. Summary
Intended for brief informational overview only. This summary does not alter, amend, or extend coverage. Policy terms and conditions prevail. 

10 

 

 

  
 SCHEDULE OF
INSURANCE 
 AMERICAN APPAREL, INC. 

COVERAGE SUMARY 

Policy Typo: Directors & Officers Liability / Employment Practices Liability 

Insurers: 1) U.S. Specialty Insurance Company $3,000,000. 

2) ACE / Westchester Fire Insurance Co. $3,000,000. x/s $3mm 

3) Gotham Insurance Company $4,000,000. x/s $6mm 

A.M. Bests: 1) A+ 11 Admitted; 2) A+ 11 admitted; 3) A 8 non-admitted Effective: August 30, 2006 to August 30, 2007

 Coverage: Directors, Officers, and Company Reimbursement Coverage Employment Practices Liability 

Type: Claims Made—Retro Date is 08-30-04 

Total Limits: Three policies with limits to total $10,000,000. as shown above. $10,000,000. Each Claim—including
costs & expenses $10,000,000. Aggregate Limit—Including costs & expenses 
 Retention: $
75,000. each D & O claim $150,000. each EPLI claim 
 Third Party: Third Party coverage is included

 Defense: Defense Costs are included within the limits. 

Policy is reimbursement, and not “duty to defend” 

Discovery: Following cancellation or non-renewal of this policy, the insured may elect to extend the time period for
reporting of occurrences to which this Insurance applied for up to 12 months, at a premium of 100% of the annual premium, or 24 Months at a premium of 200%. 

11 

 

 

  
 SCHEDULE OF
INSURANCE AMERICAN APPAREL, INC. 
 COVERAGE DETAIL 

Other: TRIA Terrorism exclusion 

Products Liability Exclusion with A-Side & Security Carvebacks Full Severability 

Order of Payments endorsement 

Sub-retention for Employment Practices Liability ($150,000 retention) 

Policy Type: Foreign Package 

Insurer: St Paul Travelers Insurance Company 

A.M. Bests: Rating: A 15/ Admitted 

NAMED INSURED (Foreign) American Apparel, inc. American Apparel Retail, Inc. American Apparel Dyeing & Finishing,
Inc. American Apparel U.K. Limited American Apparel Camaby Limited American Apparel Japan, Inc. American Apparel Deutchrand GNBH American Apparel Israel, Inc. American 

Apparel Korea, Inc. American Apparel Mexico, S. de R.L de C.V. American Apparel Labor, S. de R.L, de C.V. 

Locations: As per schedule of locations 

Limits of Insurance: As per schedule on file with the company 

International Property coverage 

$11,352,000. Total Insured Values / Business Personal Property $ 7,557,000. Total Insured Values / Earnings and Expanse $
26,000. Unscheduled Locations coverage 
 Major Exclusions: Earthquake, Flood, War & Terrorism, Mold &
Bacteria 
 Deductibles: $10,000. all perils except $50,000 Theft Valuation: Replacement Cost 

Coinsurance; 90% 

Additional Benefits: 

Accounts Receivable: $50,000. 

Building Ordinances or Laws $260,000. or 10% of applicable limit, whichever less 

Catastrophe Allowance $10,000. 

Coinsurance Deficiency: $100,000. 

Debris Removal: 25% up to $25,000 per location 

Deferred Payments: $25,000. 

Depositors Forgery: $10,000. 

Devaluation of Currency: $100,000. 

Employee Theft $10,000. 

Extra Expense: $26,000. 

Exhibition: $25,000. as per Unscheduled Locations coverage 

Fire Arts $25,000. 

Fire Department Service: $25,000. 

Fire Protection Equipment $25,000. 

Installation at a Jobsite $26,000. as per Unscheduled Locations coverage 

Lost Key $10,000. 

Newly Acquired Property $250,000. Building limit (180 Days) 

Newly Acquired Property $250,000. Business Personal Property limit (180 days) 

Off Premises Utility Failure: $50,000. 

Outdoor Property $25,000. 

12 

 

 

  
 SCHEDULE OF
INSURANCE 
 AMERICAN APPAREL, INC. 

COVERAGE DETAIL 

Policy Type: Foreign Package—CONTINUED Insurer: St. Paul Travelers Insurance Company A.M. Bests: Rating: A 15/
Admitted 
 Property Benefits (continued) 

Outdoor Property: $25,000. 

Personal Belongings: $25,000. 

Pollution Clean up and Removal: $26,000. 

Portable Computer Hardware: $25,000. 

Radioactive Contamination: $25,000. 

Random Attack-Hacking / Virus: $25,000. 

Sewer Backup: $10,000. 

Spoilage: $100,000. 

Tax Liability: $25,000. 

Valuable Papers and Research: $25,000. 

Voluntary Surrender $26,000. 

International General Liability 

General Total Limit: $2,000,000. 

Products & Completed Work Total Limit $2,000,000. 

Personal Injury ft Advertising Injury: $1,000,000. 

Each Event Limit $1,000,000. 

Premises Damage Limit: $ 100,000. 

Medical Expense Limit—per person: $ 10,000. 

Employee Benefits Liability: $1,000,000. / Deductible: $1,000. 

Hired & Non Owned Auto Liability: $1,000,000. including $10,000 Medical Payments 

International Workers’ Compensation, end Employers’ Liability 

Part 1 Statutory, according to the laws of the state and/or country as declared. U.S. Nationals: State of Hire 

Third Country Nationals: Country of Origin 

Local Hires: Not covered. Local Employer’s Liability is available at add’l cos 

Part 2 Employers Liability 

$1,000,000. Bodily Injury by accident, each accident $1,000,000. BodHy Injury by disease, policy limit $1,000,000. Bodily
Injury by disease, each person 
 Repatriation Expense Limit: $100,000 per person / $250,000 policy limit

 Kidnap A Ransom Protection 

$100,000 limit applies to each Item: 

Ransom, Transit Crisis Response Fees & Expenses, Additional Expenses, and Legal Liability 

Covered Persons: Present & Future Directors, Officers, and Employees of the Insured. 

13 

 

 

  
 SCHEDULE OF
INSURANCE AMERICAN APPAREL, INC. 
 COVERAGE DETAIL 

Policy Type: Mexico Package 

Insurer: 1NG Comercial America 

Rating: Locally admitted Mexican insurance 

I. Property/Business Interruption 

Locations: 1. Presidents Masaryk #169, Col. Chapultepec, Mexico, DP CP 11570 

2. Ave. 10 Sur con la Sur s/n, Centro Comercial Paseo del Carmen, #17-18, Manzan Lote 1, Col. Centro, Playa del Carmen,
Solidaridad, Quintana Roo, CP 77710 
 Limits: $400,000. Contents—each location 

$350,000. Business Interruption—each location 

Deductibles: Property Damage (All Risk) $10,000. deductible 

Business Interruption 3 days deductible 

Hurricane / Wind / Hall / Flood / Mudslide: Above plus 10% co-payment 

Earthquake: 2% deductible + 25% co-payment 

Valuation: Replacement Cost 

Other Debris removal sublimit = 10% 

Other: Business Interruption Is Loss of Profits, fixed expenses & salaries for 3 months 

Other: Earthquake excludes Loss of Profits 

II. Burglary (robbery with violence) 

Coverage Limit $100,000. 

Coverage definition: Theft of contents within premises with violence and/or assault, 

Major exclusion: Mysterious Disappearance 

Deductible: 10% of loss, subject to $10,000. minimum 

III. Civil General Liability 

Coverage Limit: $1,000,000. Combined single limit Bl / PD 

Sublimit: $ 100,000. for Tenants Liability 

Coverage; Premises / Operations; Products / Completed Operations; 

Tenants Liability (fire legal liability), and Excess Auto Liability for 

excess of $100,000. US Deductible: 10% of loss, subject to $1,000. minimum. 

IV. Money & Securities Coverage Limit: $10,000. 

Coverage: Inside & Outside Premises 

Deductible: 10% of lose, subject to $1,000. minimum 

14 

 

 

  
 SCHEDULE OF
INSURANCE 
 AMERICAN APPAREL, INC. 

COVERAGE DETAIL 

Policy Type: Credit Indemnity Insurer: Euler Hermes ACI 

Rating: A 8/Admitted 

Policy Type: Domestic Markets 

Inception Date: 10-1-06/07 

Estimated covered Bales: $86,000,000. (true up only on sales above $85mm) 

Covered Products: Apparel 

Named Coverage (estimate) $9,315,000. 

Policy Amount $3,000,000. 

Policy Deductible: $16,000. Coinsurance: 10% (90% indemnity) 

Discretionary Credit Limit: NONE 

Policy Premium: $110,600. (with true-up only sales above $85mm) 

Premium Factor $0.13 per $100 sales 

Maximum terms of sales: up to 60 days 

Non qualifying loss: $2,000. 

Limit Underwriting fees: $60. each domestic report, $26. for each RRCL (30 Free) 

Past due reporting: 60 day threshold, and $10,000. 

Maximum Claim Filing: Greater of 180 days from shipment or 90 days from due date, 

But no longer than 180 days after the end of the policy period. 

15 

 

 

  
 SCHEDULE OF
INSURANCE 
 AMERICAN APPAREL, INC. 

COVERAGE DETAIL Policy Type; Pollution Legal Liability- Select 

Insurer: A.I.G. / American International Surplus Lines Insurance Company Rating: A+ 15 / Non-Admitted (approved on CA list
of eligible surplus lines) 
 Policy Term: Three Years 

Other: The limit of liability of shared over the policy term. The limit is not an 

annual limit of liability, and therefore is not reinstated each year within the policy term. 

Coverage Amount: $5,000,000. Each Incident Limit 

$5,000,000. Coverage Section Aggregate Limit 

Deductible: $10,000. Each Incident 

Coverage Sections: B,C,E,F 

Coverage Sections: B: On-Site Clean-up of new conditions 

C: Third-Party claims for on-site bodily Injury and property damage E: Third-Party claims for off-site clean-up resulting
from new conditions P: Third-Party claims for off-site bodily injury and property damage 
 TRIA Terrorism:
Declined by insured 
 Major Exclusion; Microbial matter is excluded. 

Pollution shall not include Microbial matter meaning fungi, mold, or mildew 

Disclaimer Summary intended for brief informational overview only. This summary does not alter, amend, or extend coverage.
Policy terms and conditions prevail. 
 16 

 

 

  
 Schedule 3.14
Collective Bargaining Agreements 
 None. 

 

 

  
 Schedule 6.01
(rev. 1-15-07) Existing Indebtedness 
 Lease Guaranty dated June 2, 2005 by American Apparel, Inc., a
California corporation, in favor of CEG HAWTHORNE, LLC, CEG HAWTHORNE 2, LLC, CEG HAWTHORNE 3, LLC, CEG HAWTHORNE 4, LLC, CEG HAWTHORNE 5, LLC, CEG HAWTHORNE 6, LLC, each a Delaware limited liability company as assignee of Titan Real Estate
Investment Group, Inc., a California corporation, for the lease of the premises at 12537 Cerise Avenue, Hawthorne, California (the site of the Collateral held by American Apparel Dyeing & Finishing, Inc.); 

US Bank Guaranty made by American Apparel, LLC, a California limited liability company and American Apparel Retail 1090
Third NYC, Inc., a California Corporation (“Retail 1090” and together with Apparel LLC collectively “Guarantors”) jointly and severally, to, and for the benefit of U.S. Bank National Association, as Agent for the benefit of the
Secured Creditors as defined therein, dated October 31, 2005; 
 C3 Capital Loan Guaranties made by American
Apparel, LLC a California limited liability company and American Apparel Retail 1090 Third NYC, Inc., a California corporation (each a “Guarantor” and collectively the “Guarantors”), to, and for the benefit of C3 Capital
Partners, LP., dated October 29, 2004; and1 
 Guaranties of Real Property Leases depicted on Schedule
3.05(c) (ii). 
 Guaranties of Real Property Leases of All Foreign Subsidiaries. 

Guaranties made in relation to the formation of foreign entities. 

Indebtedness shown on attached Schedule 6.01(b) 

1 This guaranty will be paid off at closing. 

Indebtedness shown on attached Schedule 3.05(a). 

 

 

  
 Existing
Indebtedness 
 (continued) 

Outstanding Indebtedness at 12/31/06 

Client Current Long-term 

Reference Interest Rate Terms Maturity Date Collateral Portion Portion Total 

Capital Leases 

TOTAL CAPITAL LEASES 2,840,029 $ 2,889,385 $ 5.729,414 ok 

Long Term Debt 

Bierrebi Loan# GG $ 59,438 $ 59,438 

Omni National Bank Y 10.45% 36 1,998 $—$ 1,998 

Omni National Bank I 8.86% 36—$ - 

Omni National Bank AA 7.79% 36 14,240 $—$14,240 

Omni National Bank BB 10.64% 36 52,472 $— $ 52,472 

Omni National Bank CC 9.25% 36 47,369 47,369 

TOTAL LONG TERM DEBT $ 175.517 $— $ 175,5I7 ok 

ok 

Term Loan 

US Bank C/G2 Market Principal $7,500,000.00 09/15/07 3,749.997 $ 3.749.997 ok 

US Bank Equipment loan C/G6 Market Principal $2,304,000.00 03/12/10 $ 576,000 $ 1,296,000 $ 1,872,000 ok 

S. Bay Bank 6426 Prime+ l% Principal $124,525.97 0/25/07 Light fixtures 51,886 : 51,886 ok 

Solar electric 

S. Bay Bank 6451 Prime + 1% Principal $57I.277 12/31/08 power system 194,461 194,720 1 391,180 ok 

Quebec DD 11.99% monthly pmts of $1537 05/01/07 7,455 7,455 ok 

TOTAL TERM LOANS $4,581,798.18 $1,490,719.67 $ 6,072,517.85 ok 

All assets 

LIBOR + 3% or Facility—$45,000,000 Personally 

Bank’s prime rate plus Borrowing Base guaranteed by 

Line of Credit—US Bank 5% $45,000,000 shareholders $ 48,568,366 ok 

C3 Capital $ 14,200,516.00 ok 

Notes Payable to Individuals (27100-00) Interest/Month 

Eric Ribner no relation 15% interest paid monthly due on demand unsecured $ 382,262 $ 382,262 4,778.27 

~ Eric Ribner no relation _ 24% interest paid monthly due on demand unsecured $ 100,000 $100,000 2,000.00 

Eric Ribner no relation 20% interest paid monthly due on demand unsecured $ 600,000 $ 600,000 10,000,00 

Eric Ribner-Maxine no relation 14% interest paid monthly due on demand unsecured $ 200,000 $ 200,000 2,333.33 

Ellen Gutierrez no relation 14% interest paid monthly due on demand unsecured 100,000 $ 100,000 1,166.67 

David Vogelhut employee 12% interest paid monthly | due on demand unsecured $10,000 $ 10,000 100.00 

Peter Ma no relation 10% interest paid monthly due on demand unsecured_ $ 500,000 $ 500,000 4,166.67 

Marty Bailey | no relation 18% | interest paid monthly due on demand unsecured | $ 100,000 | $ 100,000 1,500.00

 Sylvia Sadfie relative of s/h 12% Compounded monthly due on demand unsecured $ 456,566 $ 456,566 

Sylyia Sadfe relative of s/h 18% Compounded monthly due on demand unsecured $ 243,044 $ 243,044 

Maya Charney relative of s/h 12% Compounded monthly due on demand unsecured $ 50,068 $ 50,068 

Lilian Safdie relative of s/h 12% Compounded monthly due on demand unsecured $ 10,995 $ 10,995 

Bhaiti kapadia no relation 18% Compounded monthly due on demand unsecured $ 53,251 $ 53,251 

Jinal kapadia no relation 18% Compounded monthly due on demand unsecured $ 26,168 $ 26,168 

Chintesh Kapadia no relation 18% Compounded monthly due on demand unsecured $ 26,168 $ 26,168 

Kelly Devanathan no relation 18% Compounded monthly due on demand unsecured $ 20,187 $ 20,187 

srael Charney relative of s/h 12% I interest paid monthly due on demand unsecured $ 30,000 I $ 30,000 I 300.00 

Audrey Vogelhut _ no relation 12% interest paid monthly due on demand unsecured $ 30,000__ $ 30,000 300.00 

Audrey Voselhut no relation 18% interest paid monthly due on demand unsecured $ 70,000 $ 70,000 1,050.00 

Seth Vogelhut no relation 18% interest paid monthly due on demand unsecured $ 10,000 $ 10.000 150.00 

YC Textile no relation 12% interest paid monthly due on demand unsecured $ 400,000 $ 400,000 4,000.00 

Coast II Coast no relation 18% interest paid monthly due on demand unsecured $ 150,000 $ 150.000 2,250.00 

Gregory Lorber no relation 12% interest paid monthly due on demand unsecured $ 150,000 $ 150,000 1,500.00 

Michael Pozner no relation 16% interest paid monthly due on demand unsecured $ 66,667 $ 66,667 888.89 

Clara Reis | no relation 14% interest paid monthly due on demand unsecured $ - 

Paul Willianson no relation 12% interest paid monthly due on demand unsecured $ 50,000 $ 50,000 500.00 

Oscar Crespo no relation 18% interest paid monthly due on demand secured 350,000 $ 350,000 5,250.00 

Moshe Safdie & Associates no relation 18% interest paid monthly due on demand unsecured $ 1,500,000 $ 1,500,000
22,500.00 
 Philip Klaparda no relation 18% interest paid monthly due on demand unsecured $ 50,000 $ 50,000
750.00 
 Morton Schrader no relation 18% interest paid monthly due on demand unsecured $ 100,000 $ 100,000
1,500.00 
 John Brod no relation 18% interest paid monthly due on demand unsecured $ 50,000 $ 50,000 750.00

 Jonathan Kim no relation 18% interest paid monthly due on demand unsecured $ 80,000 $ 80,000 1,200.00

 Adrian Kowalewski no relation 18% interest paid monthly due on demand unsecured $ 10,000 $ 10,000 150.00

 Rabi Satareh no relation 18% interest paid monthly due on demand unsecured $ 50,000 $50,000 750.00 

Mark Lorenzana no relation 18% interest paid monthly due on demand unsecured $ 100,000 $ 100,000 1,500.00 

173560/Gabriel Safdie relative of s/h 18% interest paid monthly due on demand unsecured $ 100,000 $ 100,000 1,500.00

 Billy Mauer no relation 18% interest paid monthly due on demand unsecured $ 500,000 $ 500,000 7,500.00

 Koi Suwannagate no relation 18% interest paid monthly due on demand unsecured $ 200.000 $ 200.000 3,000

 Rod Kazazi no relation 18% interest paid monthly due on demand unsecured $ 100,000 $ 100,000 1,500.00

 Michael C Perer no relation 18% interest paid monthly | due on demand _unsecured $ 50,000 $ 50,000 750.00

 Said Salek no relation 18% interest paid monthly due on demand unsecured $ 200,000.00 $ 200,000 3,000.00

 TOTAL NOTES PAYABLE $ 7,275,377 $ 7,275,377 $ 88,584 ok 

Subordinated Notes Payable to Related Parties (AC# 27000-00) 

Sam Lim | shareholder 12% interest paid monthly due on demand unsecured $180,000 $ 180,000 $ 1,800 

Morris Charney relative of s/h 18% interest paid monthly due on demand unsecured $ 180,000 $ 180,000 I $ 2,700 

Notes Payable—Long Term (AC#24200-00) 

Morris Charney | relative of s/h 18% interest paid monthly | due on demand | unsecured $ 1,099,990 | $ 1,099,990 | $
16,499.85 
 Dov Charney shareholder 18% Compounded monthly due on demand unsecured $ 185,700 $ 185,700

 $ 1,285,690 $ 1,285,690 $ 16,499.85 ok 

TOTAL INDEBTEDNESS ok 

$ 83,667,398 | $ 109,583.67 

TOTAL SUB NOTES PAYABLE $ 360,000 $ 360,000 _ $ 4,500 

Credit Agreement, dated as of January 18, 2007 (the “SOF Agreement”), among AAUSA, the Facility Guarantors, and
SOF Investments, L.P.—Private IV (“SOF”) 

 

 

  
 Schedule 6.02

 Existing Encumbrances 

[See Schedule 3.05(a)—“Title Exceptions”] 

 

 

  
 Schedule 6.04
Existing Investments 
 None. 

 

 

  
 Schedule 5.13

 Post-Closing Items 

1. Landlord’s consents for properties set forth on Annex A. 

2. Bailee waivers for properties set forth on Annex B. 

3. Amendments to deposit account control agreements. 

 

 

  
 Annex A

 1. 1020 E. 59th Street, Los Angeles, CA (KCL Knitting Facility) 

2. 747 Warehouse Street, Los Angeles, CA (Distribution Center) 

3. 12537 Cerise Avenue, Hawthorne, CA (Dyeing & Finishing Facility) 

 

 

  
 Annex B

 1. HP Textiles — 6519 McKinley Avenue, Los Angeles, CA 

2. Richland 

3. PJ Textiles — 5215 S. Boyle Avenue, Vernon, CA 

4. Paul’s Knitting — 871 Artesia Boulevard, Carson, CAFashion Mania — 201 W. 132nd St., Los Angeles, CA

 5. YC Textile — 1821 E. 48th Place, Los Angeles, CA 

6. John’s Knitting — 17107 Kingsview Avenue, Carson, CA 

7. Hana — 1600 E. 25th St., Los Angeles, CA 

8. Magic Textile (M Tex) — 1401 E. 27th St., Los Angeles, CA 

9. Clover Knits — 1075 Jackson Heights, Clover, SC 

10. US Dyeing & Finishing Inc. — 12641 Industry St., Garden Grove, CA 

11. Expo Dyeing & Finishing Inc. — 1365 Knollwood Circle, Anaheim, CA

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