WAIVER TO CREDIT AGREEMENT
LASALLE
RETAIL FINANCE
Date: June
5, 2008
THIS WAIVER TO CREDIT
AGREEMENT (this “Waiver”) is made to
the Credit Agreement (as amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”)
dated as of July 2, 2007 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, as agent for itself and the
other Borrowers party thereto (in such capacity, the “Lead
Borrower”);
THE BORROWERS now or hereafter
party to the Credit Agreement;
THE FACILITY GUARANTORS now or
hereafter party to the Credit Agreement;
LASALLE BUSINESS CREDIT, LLC,
AS AGENT FOR LASALLE BANK MIDWEST NATIONAL ASSOCIATION, ACTING THROUGH ITS
DIVISION, LASALLE RETAIL FINANCE, with offices at 000 Xxxxxxx Xxxxxx, 0xx Xxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, as administrative agent (in such capacity, the
“Administrative
Agent”) for its own benefit and the benefit of the other Credit
Parties;
LASALLE BUSINESS CREDIT, LLC,
AS AGENT FOR LASALLE BANK MIDWEST NATIONAL ASSOCIATION, ACTING THROUGH ITS
DIVISION, LASALLE RETAIL FINANCE, with offices at 000 Xxxxxxx Xxxxxx, 0xx Xxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, 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;
XXXXX FARGO RETAIL FINANCE,
LLC, with offices at Xxx Xxxxxx Xxxxx, 00xx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000, as collateral monitoring agent (in such capacity, the “Collateral Monitoring
Agent”) for its own benefit and the benefit of the other Credit
Parties;
the LENDERS party to the Credit
Agreement; and
LASALLE BANK NATIONAL
ASSOCIATION, a national banking association with offices at 000 Xxxxx
XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, as Issuing Bank;
in
consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
1
BACKGROUND
A. Reference
is made to that certain Waiver and Consent to Credit Agreement dated as of May
16, 2008 (the “May
2008 Waiver”) entered into by and among the parties hereto, pursuant to
which, among other things, the Loan Parties agreed to enter into, by May 31,
2008, each in form and substance satisfactory to the Agents and each Lender in
their discretion, (i) an amendment to the Credit Agreement and related documents
(collectively, the “Fourth Amendment
Documents”), which Fourth Amendment Documents may, among other things,
(a) effect a joinder by American Apparel, Inc. (f/k/a Endeavor Acquisition
Corp.) to the Loan Documents, whereby American Apparel, Inc. (f/k/a Endeavor
Acquisition Corp.) shall become a Facility Guarantor thereunder, and (b) delete
certain financial performance covenants, including, without limitation, the
financial performance covenant relating to Capital Expenditures, in each case in
accordance with the Summary of Terms and Conditions set forth as Exhibit B to the May
2008 Waiver, and (ii) an amendment to the Pledge Agreement, pursuant to which,
among other things, the parties thereto shall amend Schedule I thereto to
include all Subsidiaries in existence as of the date of such
amendment. Pursuant to the May 2008 Waiver, the failure of the Loan
Parties to enter into the Fourth Amendment Documents by May 31, 2008 constitutes
an Event of Default under the Credit Agreement.
B. The
Loan Parties have failed to enter into the Fourth Amendment Documents by May 31,
2008 (such failure, the “Specified Event of
Default”).
C. In
light of the foregoing, the Lead Borrower has requested that the Agents and the
Required Lenders waive the Specified Event of Default. The Agents and
the Required Lenders are willing to waive the Specified Event of Default, on the
terms and conditions set forth herein
Accordingly,
it is hereby agreed as follows:
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1.
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Waiver of Specified
Event of Default. The Agents and the Required Lenders
hereby waive the Specified Event of Default. The Loan Parties
acknowledge and agree that:
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(a)
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The
foregoing waiver is a one-time waiver and shall not be deemed to
constitute a waiver of any other Event of Default or a waiver of any other
requirement of the Credit Agreement or any other Loan Document (including,
without limitation, the May 0000 Xxxxxx) with respect to any other
circumstance.
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(b)
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The
consent and waiver provided above shall not take effect upon the execution
of this Agreement, and shall only take effect upon satisfaction of each
and all of the requirements of Section 2,
below.
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2.
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Conditions to
Effectiveness. The Waiver provided in Section 1 above
shall be effective as of the date hereof upon the fulfillment of the
following conditions precedent:
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(a)
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All
actions on the part of the Loan Parties necessary for the valid execution,
delivery, and performance by the Loan Parties of this Waiver shall have
been duly and effectively taken.
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2
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(b)
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The
Administrative Agent shall have received an original copy of this Waiver
duly executed and delivered by the Loan Parties, the Agents, and the
Required Lenders.
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(c)
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The
Administrative Agent shall have received, for the ratable benefit of the
Lenders executing this Waiver, a waiver fee in the amount of $75,000.00,
which shall be fully earned on the date hereof and shall not be subject to
refund or rebate in whole or in part under any
circumstance. The Administrative Agent is hereby authorized to
make a Credit Extension to pay the waiver
fee.
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(d)
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The
Administrative Agent shall have received reimbursement from the Loan
Parties for all reasonable costs, expenses, and legal fees incurred by the
Administrative Agent through June 5, 2008 in connection with the
negotiation, preparation, and execution of this
Waiver. Provided that the Administrative Agent shall have
notified the Lead Borrower of the amount of such costs, expenses, and
legal fees incurred through such date, the Administrative Agent is hereby
authorized to make a Credit Extension to reimburse the Administrative
Agent for such costs, expenses, and legal fees. Each of the
Loan Parties acknowledges and agrees that additional statements for all
reasonable costs, expenses, and legal fees incurred by the Administrative
Agent in connection with the negotiation, preparation, and execution of
this Waiver for periods after June 5, 2008 will be rendered and paid as
set forth in the Credit Agreement.
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3.
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Amendment; Joinder;
Pledge; Alternate Sources of
Funding.
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(a)
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Each
Loan Party hereby agrees to take all commercially reasonable actions that
are necessary or advisable to enable such Loan Party to enter into, by
June 20, 2008, an amendment to the Credit Agreement (the “Fourth
Amendment”) and related documents (together with the Fourth
Amendment, collectively, the “New Fourth Amendment
Documents”). Such Fourth Amendment shall be
substantially in the form of Exhibit A
annexed hereto (or with such other changes as are mutually agreed upon by
the Lead Borrower, the Agents and the Lenders in their
discretion). Such other Fourth Amendment Documents shall, among
other things, amend and restate each of the Pledge Agreement, the pledge
agreement entered into on December 28, 2007 by the Parent and the
Collateral Agent, the Facility Guaranty, and the Guarantee entered into on
December 28, 2007 by the Parent for the benefit of, among others, the
Agents. Each of the New Fourth Amendment Documents shall be in
form and substance satisfactory to the Agents and each Lender in their
reasonable discretion. The failure of the Loan Parties to enter
into the New Fourth Amendment Documents by June 20, 2008 shall constitute
an Event of Default under the Credit Agreement (such Event of Default, the
“Amendment Event
of Default”) for all purposes without further action or notice
required by any Person but shall not invalidate the waiver provided in
Section 1 above.
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(b)
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If
an Event of Default occurs as a result of the failure of the Loan Parties
to enter into the New Fourth Amendment Documents by June 20, 2008, without
limiting
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any
Agent’s or Lender’s rights and remedies arising as a result of the
occurrence of such Amendment Event of Default or any other Event of
Default, the Agents may (and at the direction of the Required Lenders,
shall) elect to (i) terminate negotiations, (ii) terminate the commitments
of the Lenders to make loans and advances and to grant financial
accommodations to or for the benefit of the Loan Parties, and (iii)
accelerate the maturity of the Obligations. The Agents and the
Lenders expressly reserve all rights and remedies arising as a result of
the occurrence of the Amendment Event of Default or any other Event of
Default, including, without limitation, the right to charge the Default
Rate of interest. Any loans, advances, and financial
accommodations made from and after the occurrence and during the
continuation of the Amendment Event of Default or any other Event of
Default shall be made in the sole and exclusive discretion of the
Lenders. Further, if any such loans, advances, and financial
accommodations are made, the Lenders expressly reserve the right to
suspend making additional loans and advances and granting financial
accommodations at any time from and after the occurrence and during the
continuation of the Amendment Event of Default or any other Event of
Default, without further notice to the Loan
Parties.
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4.
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No Continuing
Waiver. The Loan Parties acknowledge and agree that
since the Closing Date, in addition to the Specified Event of Default,
certain Events of Default (together with the Specified Event of Default,
collectively, the “Past Events of
Default”) have occurred as a result of the Loan Parties’ actions in
violation of the Credit Agreement and failure to obtain prior consent from
the Agents and the Lenders for such actions, as such Past Events of
Default are more specifically described herein and in (i) that certain
Default Waiver dated as of November 23, 2007, by and among the
Administrative Agent, certain of the Lenders, and the Lead Borrower, (ii)
that certain Second Amendment and Waiver dated as of November 26, 2007, by
and between, among others, the Agents, the certain of the Lenders, and the
Loan Parties, (iii) that certain Waiver and Consent dated as of December
28, 2007, by and among the Agents, certain of the Lenders, and the Lead
Borrower, (iv) that certain Waiver to Credit Agreement dated as of
February 29, 2008, by and among the Agents, the Lenders and the Loan
Parties, and (v) the May 2008 Waiver. The Agents and the
Lenders have consented to waive such Past Events of Default based on their
consideration of certain facts and circumstances presented at the time of
each request from the Loan Parties for such waiver. The Loan
Parties further acknowledge and agree that the Agents and the Lenders are
under no obligation to waive any future Event of Default arising after the
date hereof and that the Agents and the Lenders shall determine whether to
waive any such Event of Default based on facts and circumstances in
existence when such Event of Default arises. Nothing herein or
in any other communication with any Agent or any Lender shall be deemed an
agreement by any Agent or any Lender to forbear from exercising any and
all of their rights, remedies, powers, and privileges with respect to any
other Events of Default.
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5.
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Representations and
Warranties; Ratification of Loan Documents. In order to
induce the Agents and the Lenders to enter into this Waiver, each Loan
Party hereby represents and warrants that except for the Specified Event
of Default, no Default or Event of Default by any Loan Party exists under
the Credit
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4
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Agreement
or under any other Loan Document. Except as expressly provided
in this Waiver, all terms and conditions of the Credit Agreement and the
other Loan Documents shall remain in full force and effect. The
Loan Parties hereby ratify, confirm, and re-affirm all terms and
provisions of the Loan Documents, except that any representation or
warranty made as of a specific date shall be true and correct only as of
the date so specified.
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6.
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Acknowledgement of
Obligations. Each of the Loan Parties hereby
acknowledges and agrees that there is no basis nor set of facts on which
any amount (or any portion thereof) owed by the Loan Parties under the
Credit Agreement and the Loan Documents could be reduced, offset, waived,
or forgiven, by rescission or otherwise; nor is there any
claim, counterclaim, offset, or defense (or other right, remedy, or basis
having a similar effect) available to any of the Loan Parties with regard
thereto; 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.
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7.
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Waiver of Claims and
Release. 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
Waiver, all of them are hereby expressly WAIVED, and each of the Loan
Parties hereby RELEASES such Persons from any liability
therefor.
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8.
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Binding
Effect. The terms and provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their
representatives, successors and
assigns.
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9.
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Multiple
Counterparts. This Waiver may be executed in
multiple counterparts, each of which shall constitute an original and
together which shall constitute but one and the same
instrument.
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10.
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Governing
Law. This Waiver shall be construed, governed, and
enforced pursuant to the laws of the Commonwealth of Massachusetts,
without giving effect to principles of conflicts of
laws.
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11.
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Loan
Document. This Waiver shall constitute a Loan Document
for all purposes. Capitalized terms used herein but not
otherwise defined herein shall have the meanings assigned to them in the
Credit Agreement.
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[signature
pages follow]
5
IN
WITNESS WHEREOF, the parties hereto have duly executed this Waiver as of the
date above first written. This Waiver is intended to take effect as a
sealed instrument.
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AMERICAN
APPAREL (USA), LLC,
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as
Lead Borrower and as a Borrower
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By:
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/s/
Xxx Xxxxxxx
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Name:
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Xxx
Xxxxxxx
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Title:
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Chief
Executive Officer
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AMERICAN APPAREL RETAIL,
INC.,
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as
a Borrower
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By:
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/s/
Xxx Xxxxxxx
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Name:
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Xxx
Xxxxxxx
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Title:
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Chief
Executive Officer
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AMERICAN
APPAREL DYEING &
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FINISHING, INC., as a
Borrower
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By:
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/s/
Xxx Xxxxxxx
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Name:
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Xxx
Xxxxxxx
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Title:
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Chief
Executive Officer
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KCL KNITTING, LLC, as a
Borrower
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By:
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American
Apparel (USA), LLC, its
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By:
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/s/
Xxx Xxxxxxx
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Name:
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Xxx
Xxxxxxx
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Title:
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Chief
Executive Officer
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AMERICAN APPAREL, LLC,
as a
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Facility
Guarantor
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By:
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American
Apparel (USA), LLC, its
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By:
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/s/
Xxx Xxxxxxx
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Name:
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Xxx
Xxxxxxx
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Title:
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Chief
Executive Officer
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FRESH AIR FREIGHT, INC.,
as a
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Facility
Guarantor
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By:
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/s/
Xxx Xxxxxxx
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Name:
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Xxx
Xxxxxxx
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Title:
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Chief
Executive Officer
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LASALLE
BUSINESS CREDIT, LLC,
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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
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By:
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/s/
Xxxxxxx X. Xxxxxx
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Name:
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Xxxxxxx
X. Xxxxxx
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Title:
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Vice
President
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LASALLE
BANK NATIONAL ASSOCIATION,
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as
Issuing Bank
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By:
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/s/
Xxxxxxx X. Xxxxxx
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Name:
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Xxxxxxx
X. Xxxxxx
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Title:
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Vice
President
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XXXXX FARGO RETAIL FINANCE,
LLC,
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as
Collateral Monitoring Agent and as a Lender
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By:
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/s/
Xxxxx Xxxxxxxxxx
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Name:
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Xxxxx
Xxxxxxxxxx
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Title:
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Assistant
Vice President/Account Executive
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NATIONAL CITY BUSINESS CREDIT,
INC.,
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as
a Lender
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By:
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/s/
Xxxxxxx X. Xxxxxx
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Name:
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Xxxxxxx
X. Xxxxxx
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Title:
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Vice
President
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Signature Page to Waiver
to Credit Agreement
