Document:

Deffered Compensation Plan for Directors

 Exhibit 10.10 
 CLEARWATER PAPER CORPORATION 
 DEFERRED COMPENSATION PLAN FOR DIRECTORS
 Effective December 16, 2008 

 CLEARWATER PAPER CORPORATION 
 DEFERRED COMPENSATION PLAN FOR DIRECTORS 
 Effective December 16, 2008 
 1. ESTABLISHMENT AND PURPOSE. 
 (a) The Clearwater
Paper Corporation Deferred Compensation Plan for Directors was adopted effective December 16, 2008, by the Board of Directors of Clearwater Paper Corporation to provide Directors of Clearwater Paper Corporation an opportunity to defer
payment of their Director’s Fees. The Plan is also intended to establish a method of paying Director’s Fees, which will assist the Corporation in attracting and retaining persons of outstanding achievement and ability as members of the
Board of Directors of the Corporation. 
 (b) Deferred Equity-Based Awards, as defined herein, are subject to the terms and conditions of
this Plan. 
 (c) The Plan is intended to comply with the requirements of Section 409A of the Code. 
 2. DEFINITIONS. 
 (a) “Affiliate” means any
other entity which would be treated as a single employer with the Corporation under Section 414(b) or (c) of the Code. 
 (b)
“Beneficiary” means the person or persons designated by the Director to receive payment of the Director’s Deferred Compensation Account in the event of the death of the Director. 
 (c) “Board” and “Board of Directors” means the board of directors of the Corporation. 
 (d) “Code” means the Internal Revenue Code of 1986, as amended. 
 (e) “Committee” means the Nominating and Corporate Governance Committee of the Board. 
 (f)
“Corporation” means Clearwater Paper Corporation, a Delaware corporation. 
 (g) “Deferred Compensation Account” means
the bookkeeping account established pursuant to section 6 on behalf of each Director who elects to participate in the Plan. 
 (h)
“Deferred Equity-Based Award” means an award of Director compensation payable on a deferred basis in the form of Stock Units under the Plan and without regard to a Director’s election to participate and defer Director’s Fees
under the Plan. 
  

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 (i) “Director” means a member of the Board of Directors who is not an employee of the
Corporation or any subsidiary thereof. 
 (j) “Director’s Fees” means
the amount of compensation paid by the Corporation to a Director for his or her services as a Director, including an annual retainer and any amount payable for attendance at a Board meeting or any Board committee meeting. “Director’s
Fees” shall not include Deferred Equity-Based Awards, or any reimbursement by the Corporation of expenses incurred by a Director incidental to attendance at a Board meeting or a Board committee meeting or of any other expense incurred on behalf
of the Corporation. 
 (k) A Director shall be considered “Disabled” if the Director is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve months. 
 (l) “Distribution” means the distribution by Potlatch Corporation to its stockholders of all of the outstanding shares of the common stock of
the Corporation then owned by Potlatch Corporation, pursuant to the Separation and Distribution Agreement between Potlatch Corporation and the Corporation. 
 (m) “Dividend Equivalent” means an amount equal to the cash dividend paid on an outstanding share of the Corporation’s common stock. Dividend Equivalents shall be credited to Stock Units as if each
Stock Unit were an outstanding share of the Corporation’s common stock, except that Dividend Equivalents shall also be credited to fractional Stock Units. 
 (n) “Plan” means the Clearwater Paper Corporation Deferred Compensation Plan for Directors. 
 (o)
“Separation from Service” means termination of a Director’s service as a non-employee member of the Board consistent with Code Section 409A and the regulations promulgated thereunder. The Plan is intended to be a Plan provided to
directors, and in accordance with applicable regulations, a Director shall be treated as having Separation from Service for purposes of this Plan on the later of the date that the Director ceases to serve on the Board of Directors of the Corporation
or an Affiliate and the Director is not an independent contractor to the Corporation or an Affiliate. Continued service as an employee of the Corporation or an Affiliate shall not affect whether a Director has incurred a Separation from Service
under this Plan. 
 (p) “Stock Units” means the deferred portion of Director’s Fees, which is converted into units denominated
in shares of the Corporation’s common stock, and Deferred Equity-Based Awards credited as units denominated in shares of the Corporation’s common stock. 
 (q) “Value” means the closing price of the Corporation’s common stock as reported in the New York Stock Exchange, Inc., composite transactions reports for the Valuation Date. 
 (r) “Valuation Date” means, for the purpose of Section 6 or 7, the date on which Director’s Fees or Dividend Equivalents are
converted into Stock Units pursuant to Section 6 or 7 and, for purposes of Section 8, the last trading day of the month preceding the month in which Stock Units are converted into cash for purposes of Section 8. 
  

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 (s) “Year” shall mean the calendar year. 
 3. ELIGIBILITY 
 Each Director who receives
Director’s Fees for service on the Board of Directors shall be eligible to participate in the Plan. A Director who receives a Deferred Equity-Based Award credited under the Plan shall participate in the Plan. 
 4. PARTICIPATION FOR DIRECTOR’S FEES. 
 In order
to participate in the Plan with respect to Director’s Fees for a particular Year, a Director must file a deferral election with the Secretary of the Corporation prior to January 1 of such Year; provided, however, that in the case of a
newly elected or appointed Director an election to participate shall be effective for the Year in which the Director is first elected or appointed if it is filed no later than thirty days following the date of the Director’s election or
appointment to the Board. Any initial election filed by a newly elected or appointed Director shall apply only to Director’s Fees earned after the effective date of the election. A new Director who does not elect to make deferrals of
Director’s Fees during the initial thirty-day election period may not later elect to make deferrals of Director’s Fees for the calendar year of his or her initial eligibility. If a payment of Director’s Fees (such as annual retainer
fees or fees for serving as Chairman of a Committee) are due for services performed over a period of time which includes the period both before and the period after the date of the election, the election will apply to an amount equal to the total
amount of the Director’s Fee paid for such performance period multiplied by the ratio of the number of days remaining in the performance period after the election over the total number of days in the performance period. 
 5. DEFERRAL ELECTION. 
 A Director who elects to
participate in the deferral of Director’s Fees under the Plan shall file a deferral election on a form, which shall indicate: 
 (a) The
amount or percentage of Director’s Fees that such Director elects to defer pursuant to the terms of the Plan. This election shall apply to amounts deferred under the Plan until modified by the Director. The Director shall notify the Secretary
of the Corporation in writing of any such modification, which shall apply solely to amounts deferred with respect to Years following the Year in which the modification is made; 
 (b) The Year in which payment of the Director’s Deferred Compensation Account and/or Stock Units attributable to the Director’s deferral shall
commence; provided however, that payments shall commence no later than the Year following the Year in which the Director attains age 72 and, in the case of Stock Unit payments, to the extent that the Committee reasonably determines that earlier
payment would result in a violation of Federal securities laws, payment shall be made no earlier than six months after the last date on which Director’s Fees have been converted into Stock Units on behalf of the Director (except in the case of
payments made following the Director’s death, Disability or Separation from Service); 
  

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 (c) Whether the payment of such Director’s Deferred Compensation Account is to be made in a single
lump sum or in a series of approximately equal installments over a period of years specified by the Director (but in no event more than fifteen years). For purposes of the Plan, installment payments shall be treated as a single distribution under
Section 409A of the Code; 
 (d) Whether the percentage deferral election shall be effective only with respect to Director’s Fees
paid for the Year in which the Director’s participation in the Plan is to commence as determined pursuant to Section 4 above or shall apply with respect to Director’s Fees paid for that Year and all subsequent Years until revoked or
modified by the Director, it being intended that a Director shall have only one election in effect with respect to the Year during which payment is to commence and the form of the payment for all amounts deferred under the Plan. Changes to the Year
of commencement and form of payment may be made only in accordance with the rules of Section 5(f), below. The Director shall notify the Secretary of the Corporation in writing of any such revocation or modification of a deferral election or
permitted new election with respect to the time or form of payment, which elections shall apply solely to amounts deferred with respect to Years following the Year in which the revocation, modification or new payment election is made; and

 (e) The percentage of the Director’s Fees deferred pursuant to the election, which is to be converted into Stock Units. This election
shall apply to the Year in which the Director’s participation in the Plan commences and to all subsequent Years until modified by the Director. The Director shall notify the Secretary of the Corporation in writing of any such modification,
which shall apply solely to amounts deferred with respect to years following the Year in which the modification is made. 
 (f)
Notwithstanding any provision herein to the contrary, a Director or former Director may revoke a previous election and make a new election as to the time and form of distribution under the Plan. Such new election shall take effect 12 months
after it is filed with the Secretary of the Corporation and shall apply only to that portion of the Director’s or former Director’s Deferred Compensation Account and/or Stock Units scheduled to be paid more than 12 months after the
date the election is filed with the Secretary of the Corporation; provided, however, that the newly scheduled distribution date must be at least 5 years later than the originally scheduled distribution date. 
 6. TREATMENT OF DEFERRED ACCOUNTS. 
 (a) Upon receipt
of a duly filed deferral election, the Corporation shall establish a Deferred Compensation Account to which shall be credited an amount equal to that portion of the Director’s Fees which would have been payable currently to the Director but for
the terms of the deferral election and which is not converted into Stock Units. If the deferral election includes an election to convert a percentage of the Director’s Fees deferred pursuant to the election into Stock Units, the number of full
and fractional Stock Units shall be determined by dividing the amount subject to such an election by the Value of the Corporation’s common stock on the Valuation Date. 
  

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 Director’s Fees shall be credited to Director’s Deferred Compensation Account or converted into
Stock Units on a quarterly basis as follows: 
 (i) The deferred portion of one-fourth of the annual retainer fee (other than the portion to
be credited to Stock Units) shall be credited to a Director’s Deferred Compensation Account as of the first day of each calendar quarter; 
 (ii) The deferred portion of the fee for any meeting of the Board or any committee thereof (other than the portion to be credited to Stock Units) shall be credited to a Director’s Deferred Compensation Account as of the first day of
the month following the date of such meeting; 
 (iii) The deferred portion of one-fourth of the annual retainer fee which is to be credited
as Stock Units shall be credited as Stock Units as of the first trading day of the calendar quarter; and 
 (iv) The deferred portion of the
fees for any meetings of the Board or any committee thereof which are to be credited as Stock Units shall be accumulated in the Participant’s Deferred Compensation Account and credited as Stock Units on the first trading day of the next
calendar quarter. 
 (b) Upon receipt of a Deferred Equity-Based Award by a Director, the Corporation shall convert the award or credit the
Director with a number of full and fractional Stock Units as of the date of grant of the award or such other date as provided under the terms of the award. 
 7. TREATMENT OF DEFERRED COMPENSATION ACCOUNT AND STOCK UNITS DURING DEFERRAL PERIOD. 
 (a) Deferred Compensation
Account. Interest shall be credited on the balance of each Director’s Deferred Compensation Account commencing with the date as of which any amount is credited to the Deferred Compensation Account and continuing up to the last day of the
quarter preceding the month in which payment of the amounts deferred pursuant to the Plan is made. Such interest shall become a part of the Deferred Compensation Account and shall be paid at the same time or times as the balance of the Deferred
Compensation Account. Such interest shall be credited at 120% of the long-term applicable federal rate, with quarterly compounding, as published under Section 1274(d) of the Code for the first month of the calendar quarter. 
 (b) Stock Units. Dividend Equivalents shall be credited with respect to each Stock Unit credited to a Director on each dividend record
date. Such Dividend Equivalents shall themselves be converted into Stock Units as of the dividend payment by dividing the amount of the Dividend Equivalents by the Value of the Corporation’s Common Stock as of the dividend payment date.
Dividend Equivalents shall be credited on Stock Units attributable to a deferral of Director’s Fees and, except as otherwise provided by the terms of a Deferred Equity-Based Award, Stock Units attributable to Deferred Equity-Based Awards.

 (c) Effect of Certain Transactions. In the event that there occurs a dividend or other distribution of shares of the
Corporation’s common stock (“Shares”), a dividend in the form of 

  

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cash or other property that materially affects the fair market value of the Shares, a stock split, a reverse stock split, a split-up, a split-off, a
spin-off, a combination or subdivision of Shares or other securities of the Corporation, an exchange of Shares for other securities of the Corporation, or a similar transaction or event that materially affects the fair market value of the Shares,
the Committee, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, shall make appropriate adjustments in the number of each Director’s Stock Units determined as of
the date of such occurrence. 
 8. FORM AND TIME OF PAYMENT OF DEFERRED COMPENSATION ACCOUNT. 
 Payment of a Director’s Deferred Compensation Account shall be made or commence to be made in cash prior to January 31 in each year in which a
payment is to be made in accordance with the Director’s deferral election. Payment of a Director’s Stock Units attributable to a deferral of Director’s Fees shall also be made at such time except that, if the applicable
January 31 occurs within the six-month period beginning on the last date on which Director’s Fees have been converted into Stock Units on behalf of the Director and to the extent the Committee reasonably determines that earlier payment
would result in a violation of Federal securities laws, then payment of the Director’s Stock Units shall be made on the last day of the month in which such six-month period expires. Notwithstanding the previous sentence, Stock Unit payments
shall be made following the Director’s death, Disability or the date the Director Separates from Service, without regard to whether such six- month period has expired. A Director shall continue to be credited with Dividend Equivalents during
any such delay in payment. For the purpose of payment, Stock Units attributable to deferred Director’s Fees shall be converted to cash based on the Value of the Corporation’s common stock on the applicable Valuation Date. 
 In the case of a Director who has both a Deferred Compensation Account and Stock Units, if a partial distribution of a deferred portion of
Director’s Fees is to be made and if the Director’s Stock Units are immediately payable in accordance with the previous paragraph, payment shall be made partially from the Director’s Deferred Compensation Account and partially from
Stock Units, in proportion to the relative size of the Deferred Compensation Account and the Stock Units. If the Director’s Stock Units are not immediately payable in accordance with the previous paragraph, the partial payment shall be made
entirely from the Director’s Deferred Compensation Account. 
 Except as otherwise provided by the terms of a Deferred Equity-Based
Award, payment of a Director’s Stock Units attributable to Deferred Equity-Based Awards shall be made in a single lump sum not later than the last day of the first full month beginning after the date of the Director’s Separation from
Service, and Stock Units attributable to Deferred Equity-Based Awards shall be converted to cash based on the Value of the Corporation’s common stock on the applicable Valuation Date. 
 Notwithstanding any other provision of the Plan to the contrary: 
 (a) No distribution shall be made from the Plan that would constitute an impermissible acceleration of payment as defined in Section 409A(a)(3) of the Code and regulations promulgated thereunder; and 

 

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 (b) To the extent Code Section 409A(a)(2)(B), which applies to certain “specified
employees,” is applicable to distributions to Directors under this Plan, no payment shall be made by reason of a Separation of Service before the date which, is six (6) months and one day following the Director’s Separation of Service
or the Director’s death, if earlier. Any payments which would otherwise have been payable to a Director during the period of delay shall be made in a lump sum following the end of such delay. A Director’s Accounts shall continue to be
credited with interest and Dividend Equivalents during the period of such delay. 
 9. EFFECT OF DEATH OF PARTICIPANT. 
 Upon the death of a participating Director, all amounts, if any, remaining in his or her Deferred Compensation Account and all Stock Units shall be
distributed to the Beneficiary designated by the Director. Such distribution with respect to deferred Director’s Fees shall be made at the time or times specified in the Director’s deferral election. If the designated Beneficiary does not
survive the Director or dies before receiving payment in full of the Director’s Deferred Compensation Account and Stock Units, payment shall be made to the estate of the last to die of the Director or the designated Beneficiary. 
 10. PARTICIPANT’S RIGHTS UNSECURED. 
 The
interest under the Plan of any participating Director and such Director’s right to receive a distribution of his or her Deferred Compensation Account and Stock Units shall be an unsecured claim against the general assets of the Corporation. The
Deferred Compensation Account and Stock Units shall be bookkeeping entries only and no Director shall have an interest in or claim against any specific asset of the Corporation pursuant to the Plan. 
 11. STATEMENT OF DEFERRED COMPENSATION ACCOUNT AND STOCK UNITS. 
 The Secretary of the Corporation shall provide an annual statement of each participating Director’s Deferred Compensation Account and Stock Units as soon as practicable after the end of each calendar year.

 12. NONASSIGNABILITY OF INTERESTS. 
 The interest and property rights of any Director under the Plan shall not be subject to option nor be assignable either by voluntary or involuntary assignment or by operation of law, including (without limitation) bankruptcy, garnishment,
attachment or other creditor’s process, and any act in violation of this Section 12 shall be void. 
 13. ADMINISTRATION OF THE PLAN.

 The Plan shall be administered by the Committee. In addition to the powers and duties otherwise set forth in the Plan, the Committee shall
have full power and authority to administer and interpret the Plan, to establish procedures for administering the Plan and to take any and all necessary action in connection therewith. The Committee’s interpretation and construction of the Plan
shall be conclusive and binding on all persons. 
  

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 Within 30 days after a Change of Control (as defined in Section 16), the Committee shall
appoint an independent committee consisting of at least three (3) current (as of the effective date of the Change of Control) or former Corporation officers and directors, which shall thereafter administer all claims for benefits under the
Plan. Upon such appointment the Committee shall cease to have any responsibility for claims administration under the Plan. 
 14. AMENDMENT OR TERMINATION
OF THE PLAN. 
 (a) The Board may amend, suspend or terminate the Plan at any time. The foregoing notwithstanding, the Plan may not be
amended (including any amendment to this Section 14) or terminated by the Board if such amendment or termination would alter the provisions of this Section 14 or adversely affect or impair the Director’s rights to receive payment with
respect to the Director’s Deferred Compensation Account or Stock Units. 
 (b) Except as provided in Section 14(c) or as otherwise
permitted under Section 409A of the Code, in the event of termination of the Plan, the Directors’ Deferred Compensation Accounts and Stock Units may, in the Board’s discretion, be distributed within the period beginning twelve months
after the date the Plan was terminated and ending twenty-four months after the date the Plan was terminated, or pursuant to Section 8, if earlier. If the Plan is terminated and Deferred Compensation Accounts and Stock Units are distributed, the
Board shall terminate all account balance non-qualified deferred compensation plans with respect to all Directors and shall not adopt a new account balance non-qualified deferred compensation plan for at least three years after the date the Plan was
terminated. A termination and liquidation of the Plan under this Section 14(b) shall be made only in compliance with Treasury Regulation Section 1.409A-3(j)(4)(ix)(c). 
 (c) The Board may terminate the Plan upon a corporate dissolution of the Corporation that is taxed under Section 331 of the Code or with the
approval of a bankruptcy court pursuant to 11 U.S.C. Section 503(b)(1)(A), provided that the Directors’ Deferred Compensation Accounts and Stock Units are distributed and included in the gross income of the Directors by the latest of
(i) the Year in which the Plan terminates or (ii) the first Year in which payment of the Deferred Compensation Accounts and Stock Units is administratively practicable. 
 15. SUCCESSORS AND ASSIGNS. 
 The Plan shall be binding upon the Corporation, its successors and
assigns, and any parent corporation of the Corporation’s successors or assigns. Notwithstanding that the Plan may be binding upon a successor or assign by operation of law, the Corporation shall require any successor or assign to expressly
assume and agree to be bound by the Plan in the same manner and to the same extent that the Corporation would be if no succession or assignment had taken place. 
 16. CHANGE OF CONTROL. 
 For purposes of the Plan, “Change of Control” shall mean 
 (a) Upon consummation of a merger or consolidation involving the Corporation (a “Business Combination”), in each case, unless, following such
Business Combination, 
  

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 (i) all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the then outstanding shares of common stock of the Corporation (the “Outstanding Common Stock”) and the then outstanding voting securities of the Corporation entitled to vote generally in the election of directors
(the “Outstanding Voting Securities”) immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of directors of the corporation or other entity resulting from such Business Combination (including, without limitation, a corporation or other entity which as a result of
such transaction owns the Corporation either directly or through one or more subsidiaries), 
 (ii) no individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act)) (a “Person”) (excluding any corporation or other entity resulting from such Business Combination or
any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any of its subsidiaries or such other corporation or other entity resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or
more of, respectively, the then outstanding shares of common stock or common equity of the corporation or other entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such
corporation or other entity except to the extent that such ownership is based on the beneficial ownership, directly or indirectly, of Outstanding Common Stock or Outstanding Voting Securities immediately prior to the Business Combination, and

 (iii) at least a majority of the members of the board of directors or similar governing body of the corporation or other
entity resulting from such Business Combination were members of the Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or 
 (b) On the date that individuals who, as of 11:59 p.m. (Pacific) on the date of the Distribution, constitute the Board of Directors (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual who becomes a member of the Board on or subsequent to the day immediately following the date of the Distribution
whose election, or nomination for election by the Corporation’s stockholders, was approved by a vote of at least a majority of the members of the Board then comprising the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for purposes of this proviso, any such individual whose appointment to the Board occurs as a result of an actual or threatened election contest with respect to the election or removal of a member or
members of the Board, an actual or threatened solicitation of proxies or consents or any other actual or threatened action by, or on behalf of, any Person other than the Incumbent Board; or 
 (c) Upon the acquisition on or after the date of the Distribution by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 30% or more of either (i) the then Outstanding Common Stock or (ii) the combined voting power of the Outstanding Voting Securities; provided, however, that the following acquisitions 

  

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shall not be deemed to be covered by this paragraph (c): (A) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by the
Corporation, (B) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or (C) any acquisition of Outstanding Common Stock or
Outstanding Voting Securities by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of paragraph (a) of this Section; or 
 (d) Upon the consummation of the sale, lease or exchange of all or substantially all of the assets of the Corporation; or 
 (e) Upon the approval by the stockholders of the Corporation of a complete liquidation or dissolution of the Corporation. 
  

 10Exhibit 10.1

 Exhibit 10.1 
  
  
  

			
	 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, 19
th 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.

  

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	 	c.	By adding to Section 1.01 the following new definitions in appropriate alphabetical order: 

  

	 	    	“ “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 18, 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.”

  

	 	    	“ “Richter” means Richter Consulting, Inc.” 

  

	 	    	“ “Raw Materials Appraisal Percentage” means 60%.” 

  

	 	    	“ “Warrants” means those certain Warrants to Purchase Shares of Common Stock of American Apparel, Inc. issued to SOF Investments on December 18,
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%

  

 -3- 

  
  

	 	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 (1/60
th)” 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 

  

 -4- 

  
  

	 	    	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;” 

  

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

  

	 	    	“(l) 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;” 

  

 -5- 

  
  

	 	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 (l) or (q) of the definition thereof).” 
  

	 	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.” 
  

 -6- 

  
  

	 	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. 

  

	 	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 Outstandings 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.” 
  

	 	l.	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.” 
  

 -7- 

  
  

	 	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 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 

  

 -8- 

  
 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: 

  

	 	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.” 
  

 -9- 

  
  

	 	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 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;” 
  

 -10- 

  
  

	 	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 (l) 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 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 

  

 -11- 

  
 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.” 
  

	 	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 

  

 -12- 

  
  

	 	    	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 

  

	 	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 

  

 -13- 

  
  

	 	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. 

  

	 	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. 

  

 -14- 

  
  

	 	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. 

  

	 	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. 

  

 -15- 

  
  

	 	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: 

  

	 	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, 

  

 -16- 

  
  

	 	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. 

  

	 	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 

  

 -17- 

  
  

	 	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 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, 

  

 -18- 

  
  

	 	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] 
  

 -19- 

  
 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:	 	 /s/    Dov Charney

	Name:	 	Dov Charney
	Title:	 	Sole Manager
	
	 AMERICAN APPAREL RETAIL, INC.,
 as a
Borrower

		
	By:	 	 /s/    Dov Charney

	Name:	 	Dov Charney
	Title:	 	President
	  
 AMERICAN APPAREL DYEING & FINISHING, INC.,
 as a Borrower

		
	By:	 	 /s/    Dov Charney

	Name:	 	Dov Charney
	Title:	 	President
	  
 KCL KNITTING, LLC,
 as a Borrower

		
	By:	 	American Apparel (USA), LLC, its sole member
		
	By:	 	 /s/    Dov Charney

	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:	 	 /s/    Dov Charney

	Name:	 	Dov Charney
	Title:	 	Sole Manager
	
	 FRESH AIR FREIGHT, INC.,
 as a
Facility Guarantor

		
	By:	 	 /s/    Dov Charney

	Name:	 	Dov Charney
	Title:	 	President
	
	AMERICAN APPAREL, INC. (f/k/a Endeavor Acquisition Corp.), as a Facility Guarantor
		
	By:	 	 /s/    Dov Charney

	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:	 	 /s/    David Vega        

	Name:	 	David Vega
	Title:	 	Managing Director
	
	BANK OF AMERICA, N.A. (successor by merger to LaSalle Bank National Association), as Issuing Bank
		
	By:	 	 /s/    David Vega        

	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:
	 	 /s/    Emily Abrahamson

	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:	 	 /s/    David Orourke

	Name:	 	David Orourke
	Title:	 	Director

 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:	 	 /s/    Marc R. Lisker

	Name:	 	Marc R. Lisker
	Title:	 	General Counsel

 Signature Page to Fifth Amendment to Credit
Agreement

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