PAUL HASTINGS LLP

ELENA R. BACA 160564)
2 elenabaca@paulhastings.com
DENNIS S. ELLIS 178196)

 

 

3 dennisellis@paulhastings.com .   .
NICHOLAS J. BEGAKIS 253588) 
4 nickbegakis@paulhastings.com 

SCOTT KLAUSNER 292070) JUN 1 2015
5 scottklausner@paulhastings.com

  
   
    
   
    
   
   
  
    

515 South Flower Street SherriR. .51: Omen/Clark
6- Twenty-Fifth Floor 33,   Deputy
Los Angeles, CA 90071?2228 0m
7 Telephone: (213) 683-6000
Facsimile: (213) 627?0705
1 8
Attorneys for Defendants
9 American Apparel, Inc. and Colleen Brown
 10
SUPERIOR COURT OF THE STATE OF CALIFORNIA
11
COUNTY OF LOS ANGELES
12
13
DOV CHARNEY, an individual, CASE NO. BC581602
14 .
Plaintiff, DECLARATION OF COLLEEN BROWN
15 IN SUPPORT OF AMERICAN APPAREL .
v. AND SPECIAL MOTION TO
16 STRIKE PURSUANT TO CAL. CODE OF

AMERICAN APPAREL, INC., a Delaware CIV. PROC. 425.16 ET SEQ.
17 corporation; COLLEEN BROWN, an
individual; and DOES 1 to 50, inclusive,

18 Date: September 30, 2015
Defendants. Time: 8:45 am.
19 Dept: 14
Judge: Hon. Terry A. Green
20

[Notice of Motion and Motion; Memorandum of
21 Points and Authorities in support of 
Motion; and Request for Judicial Notice ?led and
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DECLARATION OF COLLEEN BIRDNOW BROWN

1, Colleen Birdnow Brown, hereby declare and state as follows:

1. I am the Chairperson of the Board of Directors of American Apparel, Inc.
(?American Apparel? or the ?Company?) and have held that position since December 2014. I
have sat on the Company?s Board of Directors (the ?Board?) since August 2014. I was a member
of the Company?s Suitability Committee (as discussed in detail below) and I also sit on the
Company?s Nominating Committee and Corporate Governance Committee (which I previously
chaired) and its Audit Committee. In addition to serving as the Chairperson of the Board of
American Apparel, I am a board member of TrueBlue, Inc. and serve on that company?s
nominating and corporate governance committee, as well as its compensation and technology
committees. From 2005 through approximately August of 2013, I was a Director, President and 
Chief Executive Of?cer of Fisher Communications, Inc. Fisher Communications, Inc. was a
leading provider of ABC, CBS, NBC and FOX af?liated television stations, radio stations and
interactive networks. I have personal knowledge of the facts set forth below, and if called as a
witness, I would and could testify competently thereto.

2. In my capacity as a Director of American Apparel and a member of the Audit
Committee and the Suitability Committee, I have reviewed documents related to the investigation I
of Plaintiff Dov Chamey Charney?). I have reviewed and am familiar with minutes of
Board meetings that occurred prior to my appointment. These minutes were taken in the ordinary
course and scope of the meetings of the Board and its committees, were made at or near the time
of the meetings re?ected therein, and are maintained in the records kept by the Board.

3. Based upon my review of the minutes of Board meetings, I understand that, in the
spring of 2014, the Company?s Audit Committee launched an investigation into alleged
misconduct by Mr. Charney. During the investigation, the facts uncovered by the Audit

Committee concerning Mr. Chamey led the Company?s independent directors to recommend that,

interim action be taken against him before the investigation was completed.

4. Based upon my review of the minutes of the meeting of the Board that took place

on June 18, 2014, I am aware that the independent directors of the Company presented

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Mr. Charney with two options: remain on as a paid consultant for the Company without any
supervisory or ?nancial authority, or be suspended pending completion of theongoing
investigation. When Mr. Charney and the Board were not able to reach an agreement regarding
either option, the Board unanimously voted to suspend Mr. Charney pending completion of the
investigation. I understand that the Board offered Mr. Charney a consulting role with American
Apparel in the hopes of ensuring Mr. Charney?s departure from the Company would be smooth
and uneventful.

5. Mr. Charney?s suspension was effective as of June 18, 2014, and formalized in a
letter (the ?Suspension Letter?), a true and correct copy of which is attached hereto as Exhibit A.
The Suspension Letter identi?ed certain misconduct by Mr. Charney, including, but not limited
to, the following:

Mr. Charney was ?aware of, but took no steps to prevent an employee
under [his] direct supervision and control from creating and maintaining false, defamatory and
impersonating blog posts about former American Apparel employees?;

Mr. Charney ?presented signi?cant severance packages to numerous
former employees,? (paid for by the Company itself and not Mr. Charney) in order to ensure that
Mr. Chamey?s ?misconduct vis-a-vis these employees would not subject [him] to personal
liability?;

Mr. Charney ?repeatedly engaged in conduct that violated the Company?s
sexual harassment and anti-discrimination policy,? and ?engaged in conduct that repeatedly put
[himself] in a position to be sued by numerous former employees for claims that include
harassment, discrimination and assault?;

Mr. Charney ?made derogatory and disparaging cements directed at
persons of certain ethnicities or related to their gender, sexual orientation or religious persuasion
that [were] discriminatory and offensive and . . . not in accordance with Company policies?; and

(6) Mr. Charney ?used corporate assets in an inappropriate manner and for
personal, non-business reasons without approval of the Board.?

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The Audit Committee?s independent counsel, Jones Day (which never served as outside general
counsel to the Company), retained FTI Consulting, Inc. to assist in the investigation into
Mr. Chamey?s alleged wrongdoing.

6. Based upon my review of documents maintained by the Board, I am aware that on
or about July 9, 2014, Mr. Chamey resigned as a director of the Company pursuant to an
agreement among Mr. Charney, the Company, and Standard General LP. (and af?liated funds)
(the ?Standstill Agreement?). A true and correct copy of the Standstill Agreement is attached
hereto as Exhibit B. Pursuant to that agreement, to which Mr. Chamey was a party, a ?Suitability
Committee? of the Board, which was ultimately composed of myself and two other independent
directors, assumed oversight and control of the ongoing investigation into Mr. Chamey?s conduct
that was being conducted by FTI.

7. On December 15, 2014, I attended a meeting at which the Suitability Committee
voted unanimously that Mr. Chamey was not suitable to return to the Company as CEO or serve
as an of?cer or employee of the Company, and the Board voted that Mr. Chamey should be
terminated for cause. The Suitability Committee met several times between
August 2014 and December 2014 for the purpose of reviewing the extensive evidence uncovered
during the course of the investigation and considering whether Mr. Chamey was ?t to return to
the Company. Pursuant to the terms of the Standstill Agreement, the Suitability Committee also

invited Mr. Chamey and his counsel to attend a preliminary meeting on September 29, 2014, at

which time the Suitability Committee, Jones Day, and FTI reviewed with Mr. Chamey and his

counsel the evidence that had then been collected. The evidence reviewed therein was
subsequently made available for Mr. Chamey and his counsel to review ?irther.

8. The evidence collected in the investigation concerned a number of topics including
Mr. Charney?s involvement in the ?Impersonation Blogs? described below, and the resulting
litigation; Mr. Chamey?s sexual liaisons with employees and models, and the resulting litigation;
Mr. Chamey?s verbal abuses and physical assaults on employees, and the resulting litigation; Mr.
Charney?s use of Company funds to pay personal legal fees; Mr. Charney?s receipt of loans and
advances without prior approval; and Mr. Chamey?s practice of removing or directing the

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 Laremoval of cash from American Apparel retail stores without documenting the business use of
such funds. In short, the evidence (which was voluminous) corroborated the key allegations of
misconduct asserted against Mr. Charney in the Suspension Letter and revealed an abundance of
newly discovered employee abuse and sexual and ?nancial misdeeds.

The ?Impersonation Blogs?

9. As alleged in several legal proceedings against the Company, Mr. Charney
encouraged American Apparel employee Kyung Chung to create internet blogs in the names of
former Company employees and models. These blogs were created in an effort to retaliate
against women who made accusations against Mr. Chamey. The blogs purported to include
statements from employees regarding their sexual harassment claims against the Company that
made it look like the sexual harassment suits were baseless and extortionate. Additionally, the
blogs featured nude or semi-nude photographs of the women being impersonated on the blogs?
photos obtained from Mr. Charney?s devices. Several of these blogs resulted in legal proceedings
against the Company. In one such action, Mr. Chamey provided testimony expressing his
approval of the blogs. The Suitability Committee reviewed transcripts of Mr. Charney?s
testimony in which he stated that he was ?proud? of Ms. Chung for creating the Impersonation
Blogs, noting am proud of [Chung]. Let?s be clear. Proud.? When asked why he failed to
discipline Ms. Chung, Mr. Chamey said that she ?made an effort to protect my honor. The word 
discipline is not in the realm. What?s in the realm is a hug and a thank you.? The Impersonation
Blogs resulted in multi-million dollar settlements and awards paid by the Company. The
Impersonation Blogs that involved at least four former employees/models: Kimbra Lo, Tesa
Lubans DeHaven, Irene Morales and Alyssa Ferguson. Each of these individuals brought claims
against Mr. Chamey, Ms. Chung and the Company.

10. Kimbra Lo was an employee of the Company and also worked as a model. The
Kimbra Lo Impersonation Blog, which featured nude photographs of Ms. Lo, was created in an
attempt to retaliate against Ms. Lo for reporting Mr. Chamey?s inappropriate behavior including,
but not limited to, Mr. Chamey?s sexual assault of Ms. Lo. Incredibly, this was done even though
M3. L0 had contacted the police, and informed them (as later recorded in a police report) that

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Mr. Chamey sexually assaulted her. The assault occurred after she had left the Company and
Mr. Chamey summoned her to his residence to discuss her return to the Company. Ms. Lo
described the assault in a detailed report ?led with the Los Angeles Police Department.

1 1. Kimbra Lo pursued claims in an arbitration proceeding against Mr. Chamey,

Ms. Chung and the Company, L0 v. American Apparel, Ina, JAMS Case No. 1220042475, Los
Angeles Superior Court Case No. BC457920. As a result of the potential exposure to the
Company, the case settled prior to the arbitration hearing for a con?dential amount.

12. Tesa Lubans-DeHaven was a former employee of the Company who initiated a
sexual harassment suit against Mr. Chamey and the Company. Following the ?ling of that
lawsuit, Ms. Chung created an Impersonation Blog, which featured suggestive pictures of
Ms. Lubans-DeHaven. Additionally, it set forth comments suggesting that Ms. Lubans-
DeHaven?s lawsuit was without merit. Ms. Lubans-DeHaven made claims regarding the
Impersonation Blog in the arbitration proceeding commenced in April 2014, Lubans-DeHaven v.
American Apparel, Inc, JAMS Case No. 1220043539, Los Angeles Superior COurt Case No.
BC457920. As a result of the potential exposure to the Company, the case was settled by the
Company?s insurance carrier prior to the arbitration hearing for a con?dential amount.

13. Irene Morales?s initial sexual harassment lawsuit received widespread media
coverage. She alleged that Mr. Chamey began sexually harassing her when she was 17 and that
Mr. Charney kept her locked in his apartment and forced her to have sex with him under threat of
being ?red. Following the ?ling of Ms. Morales?s lawsuit, Ms. Chung created an Impersonation
Blog that included false statements suggesting that Ms. Morales?s lawsuit was meritless and
extortionate. The blog featured nude or semi-nude photographs of Ms. Morales.

14. Ms. Morales pursued claims in an arbitration proceeding against Ms. Chung,

Mr. Charney and the Company, Morales v. American Apparel, Ina, JAMS Case No. 1220042473,
New York Supreme Court, County of Kings Index Nos. 5018/2011 and 5122/2011 for, among
other things, creation of the Impersonation Blogs. An arbitration hearing was held and the
arbitrator found that Ms. Chung and the Company were liable because Ms. Chung?s
Impersonation Blogs contained false statements of fact and were created with actual malice. As a.

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result, the arbitrator found that Ms. Chung violated California Penal Code Section 528.5, and was
liable for that violation as well as for defamation, invasion of privacy and intentional in?iction of
emotional distress. The arbitrator found that the Company was vicariously liable for Ms. Chung?s
actions in creating the Morales Impersonation Blog based largely on Mr. Charney?s testimony
that he approved of and appreciated Ms. Chung?s actions. The arbitrator also found that the
Company had rati?ed Ms. Chung?s conduct based on Charney?s prior knowledge of the blogs and
failure to stop Ms. Chung. The arbitrator awarded Ms. Morales $1,559,159.87.

15. Alyssa Ferguson began as an employee in one of the Company?s retail stores and
was later recruited by Ms. Chung to do modeling work. While working as a model, Ms. Ferguson
alleged that Ms. Chung asked her to pose nude and ?do raunchy things? with mannequins during
a photo shoot. Following that photo shoot, she claimed that she was sexually assaulted by
Mr. Charney while staying at Ms. Chung?s loft. Ms. Ferguson?s allegations are set forth in a
chilling report that was ?led with the Los Angeles Police Department.

16. Following Ms. Ferguson?s ?ling of a sexual harassment lawsuit against
Mr. Charney, Ms. Chung created an Impersonation Blog that included false statements suggesting
that Ms. Ferguson?s lawsuit was meritless and extortionate. The blog featured nude or semi-nude
photographs of Ms. Ferguson.

17. Ms. Ferguson ultimately made claims against Ms. Chung, Mr. Charney and the
Company related to the Impersonation Blog in an arbitration proceeding, Ferguson v. American
Apparel, Ina, JAMS Case No. 1220042480, Los Angeles Superior Court Case No. BC457920. A
hearing was held and the arbitrator determined that Ms. Chung violated California Penal Code
Section 528.5 by ?knowingly creating? blog posts impersonating Ms. Ferguson for a ?harm??
purpose? and ?at a minimum? to intimidate Ms. Ferguson. The arbitrator also found that Ms.
Chung was liable for defamation and invasion of privacy. The arbitrator also found that Mr.
Charney and the Company rati?ed Ms. Chung?s conduct based on Mr. Chamey?s knowledge that
Ms. Chung was working on the Impersonation Blogs and his failure to do anything about it. The
arbitrator awarded Ms. Ferguson $1,819,178.89.

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Sexual Liaisons

18. The Company discovered voluminous evidence of Mr. Charney?s sexual liaisons
with employees and models. This evidence included explicit emails, text messages, videos and
still photographs. These materials were all recovered from Company computers and/or devices,
and there is evidence that Company devices were used to (1) send illicit emails and text messages,
(2) take illicit photographs, and (3) record illicit videos.

19. These emails and text messages reveal that Mr. Chamey repeatedly sent illicit
messages to employees. He sent messages that included pornographic videos (or links thereto), 
pornographic photographs and other nude pictures. Additionally, he frequently engaged in
inappropriate sexual banter, infantilizing women and referring to himself as ?Daddy.? Some
examples of the many illicit email and text messages sent by Mr. Charney to employees included
in the evidence reviewed by the Suitability Committee include the following:

?Your ass in that photo is the perfect cum target!?

?Jack off fun for a bad daddy?

I ?Daddy is so excited to play with the most little tiny blonde cum kitten in
the whole school?

?Should I unload my cock Like a ?lthy pig??

?The feeling of your spit dripping down my ass crack would drive me
crazy?

?icking need a phone fuck?

am jerking my dick for you and telling you how awful and disgusting I
am?

like the idea of pulling your hair and fucking the shit out of you as I ride
your body like you were a perfect blond pony? i
want baby girl all over my cock?
20. The Company also discovered videos and photographs of Mr. Chamey engaged in
all manner of sexual behavior with numerous models and employees, which for some incredible
reason had been saved by Mr. Chamey to the Company?s network server by him with the use of

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his Company computer. For example, the evidence included videos and images of a model orally
copulating Mr. Chamey?s penis, testicles and anus during a photo shoot; images of another model
orally copulating Mr. Chamey?s penis, testicles and anus and engaging in sexual intercourse with
Mr. Chamey; images and videos of another model engaging in mutual masturbation with Mr.
Chamey, orally copulating Mr. Chamey?s penis and engaging in sexual intercourse with Mr.
Chamey; and images and video of another model engaging in mutual masturbation with Mr.
Chamey and orally copulating his penis. At least one of these encounters appears, based on the
pictures and videos, to have taken place in Mr. Charney?s of?ce at the Company?s headquarters.

21. The Suitability Committee reviewed evidence that Mr. Chamey attempted to
destroy evidence of his sexual liaisons, sending emails to employees asking them to ?delete
naughty emails!?

22. The Company, as a result of Mr. Chamey?s sexual liaisons, incurred $8.2 million
in insured litigation costs and $1.2 million in uninsured litigation costs through September 2014.

Verbal and Physical Abuse

23. In addition to his sexual harassment and abuse, Mr. Chamey also engaged in
verbal and physical abuse of employees and others that resulted in litigation. Numerous
pleadings have been ?led by employees alleging verbal and physical abuse. The pleadings
described below, as is the case with the sexual liaisons described above, represent only a small
sampling of this verbal and physical abuse.

24. Former American Apparel employee eneleen Floyd initiated litigation alleging
that Mr. Chamey stormed into her of?ce screaming and yelling and threatened repeatedly to ?kick
her ass.? Ms. Floyd alleged that she was ?so terrorized by [Mr. Chamey?s] verbal and physical
threats that she believed that she was in imminent harm of being physically struck and banned.?

25. Former American Apparel employee Laura Barry initiated litigation alleging that
Mr. Chamey berated her and ?became increasingly threatening and violent.? She alleged that
Mr. Chamey called her a ?fucking moron,? and asked whether she ?fucking graduated from high

school.? Ms. Barry also alleged that Mr. Chamey ?stood inches from [her] and mimed holding a.

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shotgun to her forehead, cocking the shotgun and pulling the trigger.? Ms. Barry alleged that this
made her fear for her life.

26. . Former American Apparel employee Michael Bumblis, who managed the Malibu
retail store, initiated litigation alleging that Mr. Charney berated him for the store?s poor
performance, screaming, ?You should have been fucking ?red months ago . . . You?re a fucking 
Jew! You should know, you are a fucking long haired wanna be Jew. Get your fucking shit
together fag.? Mr. Bumblis alleged that Mr. Charney went on to say, ?Where is your fucking
creativity? Get some fucking girls in bikinis to stand on PCH and have them waive a fucking
American ?ag. Are you a fag?? Mr. Bumblis further alleged that after this exchange
Mr. Charney ?dove at [him], grabbed [his] throat with both hands and began to forcibly squeeze
[his] throat in an attempt to choke and strangle After choking him, Mr. Charney
?proceeded to scoop up the dirt and forcibly attempt to rub the dirt on [Mr. Bumblis?s] face.?

27. Employees at the Company?s La Mirada facility lodged complaints after a meeting
attended by Mr. Charney with the manufacturing accounting department. Mr. Charney began the
meeting by shouting at the accounting staff, ?you?re all fucking me.? Mr. Charney then verbally
abused Filipino employees calling them ?Filipino pigs . . . with your faces in the trough,? and
telling them he would be their ?[Ferdinand] Marcos. I will tell you what to do.? Mr. Charney
repeatedly referred to the Filipino employees as ?Filipino pigs? and threatened to fire them.

28. A female employee sent an email to Mr. Charney complaining about the work
environment at American Apparel and about Mr. Chamey?s conduct in particular. In that email,
the employee states, ?First, don?t ever, ever hit or slap me in the face again. Don?t call me a slut,
whore, slave or bitch. Don?t call me stupid.? The employee also laments what she believes to be
perception of female employees at American Apparel: be associated with Arnerican
Apparel, especially as a woman, was once a bit of a status symbol?something to be proud of.
Now it means you?re a whore. . . . People think we?re a bunch of empty ?sluts? because a man we
call our ?daddy? Mr. Charney] has to cum all over our faces 5 times a day.?

29. A female employee sent an email describing an incident in which Mr. Charney

grabbed her hand and placed it on another woman?s breast on the factory ?oor as workers passed

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by. The employee states that she pulled her hand away and told Mr. Charney to stop, but

Mr. Charney ?just laughed.? The employee stated in her email, ?I?m confused and scared[.] Dov
has always said I was a dumb Mexican. Maybe I The employee also states that she was .
concerned about her future with the Company because Mr. Charney ?told [the employee] he can
get a younger girl that can suck him and fuck him and pay her a lot less than [the employee].?

30. In October 2013, at the Company?s La Mirada facility, Mr. Charney became
enraged and shouted at an employee, ?You weakling! . . . There?s not enough Spartans in here!
And you?re the weakest of the group! . . . You pathetic loser! Loser! Ten miles of fucking piece
of shit loser!? Mr. Charney then exclaimed, ?Fuck!? and threw a full bottle of ibuprofen, striking
an employee in the face. Mr. Charney then stated, didn?t mean to do that, but I?ll tell you one
thing, . . . you fucking pushed me!?

Improper Use 'of Corporate Assets

31. As set out in the SuSpension Letter, Mr. Charney ?used corporate assets in an
inappropriate manner and for personal, non-business reasons without approval of the Board.?
This included, but is not limited to, causing the Company to pay his personal legal expenses,
receiving cash advances and loans from the Company without Board or Audit Committee
approval, and removing, or directing the removal of, cash from retail stores.

Operative Company Policies

32. American Apparel has numerous policies and procedures that Mr. Charney, as
CEO, was responsible for implementing and complying with. Those policies include, but are not
limited to:

A non-discrimination policy pursuant to which ?American Apparel seeks to
hire, retain, promote, and otherwise treat all applicants and employees without regard to race,
color, religion, age, sex, gender or gender identity, sexual preference, marital status, national
origin, ancestry, citizenship, . . . or any other characteristic protected by law.?

An anti-retaliation policy pursuant to which employee will be
retaliated against for making a complaint or bringing inappropriate conduct to the Company?s

5

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anti-harassment policy prohibiting harassment on the basis of race,
religion, sex, national origin or other legally protected status.

A policy against sexual harassment including unwelcome or unsolicited
sexual advances.

An electronic information and web resources policy prohibiting
inappropriate use of electronic resources including phones, cameras, computers, computer
accounts, email accounts and networks.

33. In December 2014, following a six-month investigation into Mr. Charney?s
conduct, the Suitability Committee voted unanimously that Mr. Charney was not suitable to
return to the Company as CEO or serve as an of?cer or employee of the Company, and the Board
voted that Mr. Charney should be terminated for cause under the terms of his employment
agreement.

34. Immediately thereafter, Mr. Charney began a campaign to attack the Company and
its reputation, and the reputation of its Directors and new CEO, Paula Schneider, by
communicating with employees, investors and the press. As part of his recent attempts to
disparage the Company, Mr. Charney has attempted to incite labor unrest and has orchestrated the
?ling of dozens of claims against the Company in various lawsuits and with the National Labor
Relations Board Mr. Chamey?s attorney, Keith Fink, recently admitted to the press
that Mr. Charney is ?directly involved? in the NLRB charges and other lawsuits against the
Company. Mr. Fink also promised a ?tidal wave? of new lawsuits against the Company. A
Delaware Chancery Court recently issued a temporary restraining order against Mr. Charney that
prevents him from continuing in his efforts to publicly malign the Company and its Directors.

35. Mr. Charney?s recent communications regarding the Company are false and were
made with the intent to disrupt the day-to-day Operations of the Company. For example, a
number of emails were sent to American Apparel employees by Mr. Charney through
intermediaries diSparaging the Board and the Company. One such email contained the subject
line ?If You Care About Your Job With American Apparel Please Read.? The email contained a

link to a petition supporting Mr. Charney and stated as follows about the Company?s new

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leadership: ?We have a bunch of consultants draining our company sitting in a room all day
making 6 ?gures a month. THAT IS NOT AMERICAN The email referenced me
by name and suggested that American Apparel employees should not be comfortable with the
Company ?in [my] hands.? Email forensics indicates that these emails were sent from
Mr. Charney?s house.

36. A number of employees made inquiries of their supervisors regarding
Mr. Charney?s status with American Apparel. In response to these inquiries, and in an attempt to
allay the concerns of Company employees, I sent a letter dated April 24, 2015, a copy of which is
attached to Mr. Charney?s Complaint in this Action as Exhibit E. Attached to that letter was a
copy of the Suspension Letter sent on June 18, 2014, which has been publicly available on the
internet since that date. My sole purpose in sending this letter was to provide American Apparel
employees with an update regarding Mr. Chamey?s future with the Company, which I believe I
they needed and deserved in light of the concerns expressed by many employees regarding'the
same. i

37. In the letter, I set forth the basis for Mr. Chamey?s termination for cause as I
understood it in my role as Chairperson of the Board and a member of the Suitability
Committee?that is, that Mr. Charney was terminated f0r the reasons set out in the Suspension
Letter and otherwise publicly disclosed by the Company. The letter also set forth my opinion that
Mr. Charney will not return to American Apparel in any capacity. Based on the information
known to the Board of Directors about Mr. Charney?s involvement with the Impersonation Blogs,
his abusive and discriminatory manner of dealing with American Apparel employees, his threats I
of violence, and his long history of inappropriate sexual relationships with Company employees
and models, I believe the risk Mr. Charney poses to American Apparel and its employees is far
too signi?cant for the Company to entertain the possibility of maintaining any future working
relationship with him.

38. Speci?c statements in my April 24, 2015 letter were all supported by, inter alia,
independent evidence revealed. For example: 

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The letter states ?Many of you have expressed concern that Mr. Charney
continues to claim he is returning to American Apparel. He is not.? This statement is supported
by the Standstill Agreement attached hereto as Exhibit pursuant to which Mr. Charney?agreed
to abide by the ?ndings of the Suitability Committee and, as noted below, not to return as an
executive or employee of the Company. Additionally, this statement is supported by
Mr. Charney?s misconduct including, but not limited to, the misconduct described above which
supported the determination of the Suitability Committee.

The letter states that ?Mr. Charney repeatedly violated the Company?s
sexual harassment and anti-discrimination policy and used. corporate assets for personal, non-
business reasons.? Each of these statements is supported by the evidence uncovered in the
investigation. Mr. Charney sent illicit text messages and emails, engaged in sexual liaisons, some
of which were allegedly not consensual, and used Company electronic resources to engage in this,
behavior. These actions violate Company policy as set forth above. Likewise, Mr. Charney?s
verbal and physical abuse of employees, including using racial, ethnic and religious slurs such as
?wannabe Jew,? Asian and African American slurs, ?Filipino pigs,? and other such slurs and
insults violated Company policy as set forth above. Mr. Charney obtained loans and advances
without Board or Audit Committee approval and removed, or directed the removal of, a
substantial amount of cash from American Apparel retail stores without documenting the business
use of such ?inds. Additionally, he used Company funds to pay his personal legal fees.

Mr. Charney?s actions in this regard, without prior Board or Audit Committee approval, were a
misuse of corporate assets.

The letter states that Mr. Charney ?agreed in writing, in a contract on ?le
with the Securities and Exchange Commission (SEC), that if he was found to be not suitable . . .
he would not return as CEO, an executive or as an employee of the Company.? This statement is
entirely true as evidenced by the Standstill Agreement attached hereto as Exhibit B. 

The letter states ?Mr. Charney was found not suitable and the Board ?red
him for cause.? As set forth above, on December 15, 2014, the Suitability Committee voted
unanimously that Mr. Charney was not suitable to return to the Company as CEO or serve as an

-13-
LEGAL US E#l15400862.2

DECLARATION OF C. BROWN IN SUPPORT OF MOTION

 

 

 

 

 

 



of?cer or employee of the Company, and the Board voted to terminate Mr. Chamey for cause
under the terms of his employment agreement.

(6) The letter states ?the SEC has noti?ed the Company that they have
launched a formal investigation into possible violations of the securities regulations during the
time that Mr. Chamey was This statement is accurate.

The letter states ?given this set of facts . . . it would be hard to ?nd any
Board of any company (public or private) that would be willing to hire Mr. Chamey as its CEO,
executive, or employee. The risk to the Company and its shareholders would just be too great.?
In my opinion as a longtime executive with extensive experience in the management of public
and private companies, with a particular focus on corporate governance (including as a director of
three public companies), this is an accurate statement. Notwithstanding all of the above, just days
after my April 24, 2015 letter was sent, Mr. Chamey initiated this Action on May 12, 2015, in my
opinion to silence me from communicating to the American Apparel employees who have
inquired regarding Mr. Chamey?s status with the Company.

39. In addition to his antics, Mr. Chamey has initiated an arbitration proceeding
related to his perceived wrongful termination. That proceeding is ongoing.

I declare under penalty of perjury of the laws of ?re State of California that the foregoing
is true and correct.

Executed this/i day of June, 2015 at Los Angeles, California.

Br  

Colleen Birdnow Brown

LEGAL us 1154008622 '14-
DECLARATION OF IN SUPPORT OF ANT I-SLAPP MOTION

 

 

 

 

 

 

 

 

 

 

. 



 EXHIBIT A:

 

CONFIDENTIAL

June 18,2014

Via Hand Deliveg To:
Dov Chamey in New York

Via Certi?ed Mail (7005 1820 0006 1200 8242)

Return Receipt Requested To:
Dov Chamey

l8 Apex Avenue
Los Angeles, California 90026

747 Warehouse Street
Los Angeles, California 90021

Re: Notice of Events and Circumstances Amounting to Cause
Notice of Intent to Terminate Employment

Dear Mr. Chamey:

Pursuant to Section 7(a) of your Employment Agreement dated April 1, 2012
(the ?Employment Agreement?), the Board of Directors of American Apparel, Inc. (the
?Company") hereby provides notice that you have willfully and continuously failed to
substantially perform your job duties under the Employment Agreement and (ii) you have
engaged in willful misconduct that has materially injured the ?nancial condition and business
reputation of the Company. Based on your failures and misconduct, the Board intends to
terminate your employment with the Company for cause effective July 19, 2014 unless you are
able to fully effect a cure in accordance with the terms of the Employment Agreement.

The Board?s investigation of your misconduct is ongoing and has been hindered by the
fact that certain information has not been made available to the Board. However, to date, the
events and circumstances by which you failed to perform your job duties and the details of your
willful misconduct include the following:

1. Breach of Fiduciary Duty. As an of?cer and director of American Apparel, you
owe ?duciary duties to the Company. Among other things, your fiduciary obligations require
you to act in the best interests of the Company, to act in good faith and to refrain from conduct
that amounts to self dealing or presents a con?ict of interest. You have violated the fiduciary
obligations owed to the Company in several material ways. For example, you were aware of, but
took no steps to prevent an employee under your direct supervision and control from creating
and maintaining false, defamatory and impersonating blog posts about former American Apparel
employees. You were in a position to prevent this conduct from occurring but, since it
bene?tted you personally, you allowed it to continue. Your failure to act was not in the best
interest of the Company. It exposed the Company to liability and at least in once instance.

a?

 

 

 

 

 

 

 

Dov Charney CONFIDENTIAL
June 18, 2014

Page 2 of 4

directly resulted in an arbitrator ?nding that the Company acted with malice. Your failure to?act
also directly resulted in one arbitrator ?nding that the Company was vicariously liable for the
conduct of your subordinate. Those ?ndings, in turn, exposed the Company to a signi?cant
punitive damages award. You engaged in similar misconduct with respect to several other
former American Apparel employees, resulting in material payments and probable future
settlements of such claims.

We also recently learned that you presented signi?cant severance packages to numerous
former employees (including packages to Tina Pellegrino, Shannon Nadj and Josephine Delapaz)
to ensure that your misconduct vis?a-vis these employees would not subject you to personal
liability. None of these severance packages were discussed with or approved by the Board of
Directors. These severance packages were material expenditures of Company funds that were
not in the best interests of the Company and instead were to protect you from personal liability
for misconduct.

Moreover, we were recently appraised that you engaged in misconduct including the
potential subordination of perjury in a pending litigation matter and that your misconduct will
undermine the Company?s position in that case.

2. Violation of Company Policy. You have violated numerous Company policies
and have failed to take action to enforce the Company?s policies in derogation of your
obligations as Chief Executive Of?cer. As is evident from a number of recent court rulings and
arbitrator awards and decisions, you repeatedly engaged in conduct that violated the Company?s
sexual harassment and anti-discrimination policy. urthermore, you engaged in conduct that
repeatedly" put yourself in a position to be sued by numerous former employees for claims that
include harassment, discrimination and assault.

In the recent past, you refused to participate in mandatory sexual harassment training and
undermined the Company?s policies by interrupting employee sexual harassment training
mandated under California law. By engaging in such conduct, you violated the Company?s Code
of Ethics which, among other things, requires you to deter wrongdoing and promote compliance
with applicable law, rules and regulations. You also violated the Code of Ethics by failing to
stop your subordinate from posting false and defamatory blogs as discussed above. Furthermore,
on several occasions you have made derogatory and disparaging remarks directed at persons of
certain ethnicities or related to their gender, sexual orientation or religious persuasions that are
discriminatory and offensive and are not in accordance with Company policies.

3. Misuse of Corporate Assets. You have used corporate assets in an inappropriate
manner and for personal, non-business reasons without approval of the Board. For example, you
continue to seek reimbursement by the Company for personal services such as legal consultation
and certain property rentals and related expenses for various employees/consultants. The Board
has reason to believe that many of these expenses were not legitimately incurred to advance the
interests of the Company. These funds were instead used for personal reasons and to advance
your personal objectives. Additionally, you have used Company assets to make substantial
severance payments to protect you from personal liability. You have provided to employees

 

 

 

 

Dov Chamey CONFIDENTIAL
June 18, 2014

Page 3 of 4

various salary increases, bonuses, and commission payments that were not meant to reward
exemplary performance or further the Company?s interests. Instead, you authorized these
payments to induce employees to sign release agreements that were aimed at protecting you from
personal liability for your misconduct. These payments, like the severance payments discussed
above, were incurred for personal reasons and not to advance the legitimate business interests of
the Company. You also have engaged in self dealing by purchasing travel for family members
with Company funds. These self-dealing transactions were not approved by the Board.

Your misconduct has injured the Company?s financial condition and business reputation.
In terms of ?nances, your conduct has required the Company to incur signi?cant and
unwarranted expenses, including expenses associated with litigation and defense costs,
signi?cant settlement payments, substantial severance packages that were granted to employees,
and unwarranted business expenses that you incurred for personal reasons. The Company?s
employment practices liability insurance retention has grown to $1 million from $350,000,
causing an unacceptable level of risk for the Company, and the premiums for this insurance are
well outside of industry standards. These risks and costs to the Company are a direct result of
your actions. The resources American Apparel had to dedicate to defend the numerous lawsuits
resulting from your conduct, and the loss of critical, quali?ed Company employees as a result of
your misconduct are also costs that cannot be overlooked.

Your misconduct has also harmed the business reputation of the Company. This is
illustrated by voluminous press reports describing your behavior and the fact that the Company
has had a very dif?cult time raising capital and securing debt ?nancing at reasonable rates
because of your actions. Indeed, many ?nancing sources have refused to become involved with
American Apparel as long as you remain involved with the Company. When the Company has
been able to secure ?nancing, it has been required to pay a signi?cant premium for that ?nancing
in signi?cant part because of your conduct.

Based on the events and circumstances detailed above, you are hereby suspended and
placed on administrative leave effective today,I June 18, 2014. Your suspension and
administrative leave will last until July 19, 20l4 or until such earlier time as you are able to fully
effect a cure of your misconduct. On July 19, 2014 we will inform you of our ?nal decision
concerning your employment status.

Effective immediately, you will be relieved of all of your job duties and obligations,
including as President and Chief Executive Of?cer; your power to act on the Company?s behalf
is hereby suspended. During your suspension, you shall not. on behalf of the Company,
negotiate or enter into contracts, disburse funds. make any statements on the Company?s behalf
to the press, public or vendors (or induce, condone or fail to prevent others from making such
statements). attempt to communicate with current employees or former employees with
continuing contractual obligations to the Company (including under severance arrangements), or
disrupt or interfere in any way with the Company?s operations. You remain subject to and must
continue to abide by the Company's policies, including the Company?s con?dentiality and non-
disparagement policy. You also remain subject to continuing obligations under federal securities
laws (including the prohibition against unauthorized disclosure of, or trading while in possession

 

fa

 

 

 

Dov Chamey CONFIDENTIAL
June l8,_2014
Page 4 of 4

of. material non-public information) and continuing fiduciary duties under state law. During your
suspension, you are not permitted to access directly or indirectly the Company?s computer
systems or ?les, use any of the Company?s assets, or interact with any of the Company?s
employees or former employees with continuing contractual obligations to the Company, visit
the Company?s facilities (including but not limited to its manufacturing facilities, headquarters,
distribution center, apartments and stores), or contact vendors or landlords, unless you obtain

i advance written permission from the Board of Directors and your request is tied directly to an

attempt to cure the violations and misconduct described herein. If you violate the directives
outlined in this paragraph, the Board will consider such conduct an additional ?cause? to
terminate your employment. During your suspension, you will continue to receive your 
salary and the other bene?ts required to be paid under your Employment Agreement.

The Board is continuing to investigate the scepe and extent of your misconduct. The
Board reserves the right to notify you of additional events and circumstances that constitute
cause to terminate your employment. The Board also reserves the right to supplement and
amend this notice as additional information is learned through the course of its ongoing
investigation into your actions.

If you require additional details concerning the events and circumstances amounting to
cause as outlined in this letter, please contact Tobias S. Keller, the Company?s Interim General
Counsel at (213) 488-0226.

Sincerely,

097

On behalf of of Directors
of American pp 1, Inc.

 

 

 

 

 

 

 

 

 

 

.



Bi'

 

.. . Exhibit 10.1

NOMINATION, STANDSTILL AND SUPPORT AGREEMENT

This Nomination, Standstill and Support Agreement, dated as of July 9, 2014 (this Agreement is by and among the persons and
entities listed on Schedule A hereto (collectively, the Standard General Group? and each, individually, a ?member? of the Standard General
Group), and American Apparel, Inc., a Delaware corporation (the Company 

RECITALS

WHEREAS, the Standard General Group bene?cially owns 74,560,813 shares of common stock of the Company, par value $0.000]
per share (the Common Stock (excluding 1,178,097 shares of Common Stock held by Standard General Master Fund L.P. for its own
account and 361,903 shares of Common Stock held by STANDARD GENERAL LTD. for its own account), representing approximately
42.98% of the Common Stock issued and outstanding as of May 1, 2014; and

WHEREAS, the Company and the Standard General Group have determined that it is in their respective best interests to come to an
agreement with respect to certain matters, as provided in this Agreement.

NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements set forth herein, and for
other good and valuable consideration, the receipt and suf?ciency of which are hereby acknowledged, the parties hereto agree as follows:

1. Board Matters .

The Directors identi?ed on Schedule (the Directors as resigning directors (the Resigging Directors shall resign
from the Board of Directors of the Company (the irector Resiggations with effect on the tenth day following the date of the Company?s
?ling of an Information Statement on Schedule 14f-1 (the Schedule 14f-1 with the United States Securities and Exchange Commission (the
relating to such Director Resignations and the Director Appointments (as de?ned herein) pursuant to Rule 14f-1 promulgated under

the Securities Exchange Act of 1934 (as amended) (the Exchange Act 

Immediately following the Director Resignations, the Directors then still in of?ce shall appoint the following individuals to
?ll the vacancies resulting from the Director Resignations: one individual designated by Standard General L.P. Standard General to the
Company to serve as a Class A director of the Company (the Class A Desiggee two other individuals designated by Standard General to
the Company to serve as Class directors of the Company (the Class Desiggees and, together with the Class A Designee, the Standard
General Designees and two other individuals

 

 

 

mutually agreed between Standard General and the Company to serve as Class directors of the Company (the Joint Designees and
together with the Standard General Designees, the New Board Designees each to serve until their successors are duly elected and quali?ed
(the Director Appointments David Danziger and Allan Mayer shall each continue to serve as a Co-Chairman of the Board.

Charney will not serve as a Board member or be nominated by the Company or Standard General as a Board member.

As as practicable following the date of this Agreement, and in any event within ?ve business days after the date
hereof, the Company shall ?le with the SEC and transmit to applicable holders of securities of the Company the Schedule 14f-1. The Standard
General Group shall provide the Company, and in any event within three business days after the date hereof, any information
reasonably necessary concerning the Standard General Designees in connection therewith and requested by the Company within one business
day a?er the date hereof, including the Nomination Documents (as hereinafter de?ned).

(6) Each New Board Designee, other than the Class A Designee, L) constitutes an independent director of the Board under the
rules of the NYSE MKT LLC (an Independent Director 1) is not af?liated with or have any material relationship with the Standard
General Group and is not affiliated with or have any material relationship with Dov Charney Charney The Board shall make a
determination as to the Class A Designee?s independence under applicable NYSE MKT LLC independence rules after the Director
Resignations and the Director Appointments have occurred, and, if he or she is determined to so qualify, he or she shall be an Independent
Director for all purposes hereunder.

For so long as no member of the Standard General Group (other than Charney) has breached Section 3 of this Agreement,
and subject to compliance by the members of the Board with their ?duciary duties, the Company shall use its reasonable best efforts to cause
the election, at the 2015 Annual Meeting of Stockholders of the Company (the 2015 Annual Meeting of each such New Board Designee as
a director of the Company (including by including each such New Board Designee in the Company?s proxy statement for such Annual
Meeting, recommending that the Company?s stockholders vote in favor of the election of each such New Board Designee and otherwise
supporting each such New Board Designee for election in a manner no less rigorous and favorable than the manner in which the Company
supports its other nominees).

Each committee of the Board existing as of the date of this Agreement or created after the date hereof (a Board Committee
shall consist of Independent Directors, provided that the Class A Designee shall be permitted to serve on any such committee, subject to
NYSE MKT LLC independence rules and other independence rules

 

 

under applicable law and regulation and ii) the Suitability Committee (as de?ned herein) shall have the composition set forth herein. So long
as any Standard General Designee serves on the Board, at least one Standard General Designee shall be offered the opportunity to be a member
of each Board Committee, provided that such Standard General Designee meets independence requirements under applicable regulatory
standards, and, upon the acceptance of any Standard General Desi gnee of any offer to become a member of any Board Committee, the Board
shall effect such change in the composition of such Board Committee immediately (and no less than two business days following such
acceptance); provided further that the majority of the members of each Board Committee shall be comprised of Independent Directors other
than Standard General Designees and at least 1/3 of the members of each such Board Committee shall be Standard General Designees unless
Standard General otherwise agrees.

. For so long as a Standard General Designee is a member of the Board, except as otherwise provided in Section the
Board shall not create an executive committee, and shall cause the dissolution of any currently existing executive committee, including the
Executive Succession Committee. For purposes of this Section the term ?executive committee? shall include any committee of the Board
that is empowered, instructed to, tasked with or otherwise takes any action or proposes to take any action regarding any matter that relates to
the Company?s strategic direction, extraordinary transactions or any other matters that are of a material nature to the Company; provided that
nothing in this Section 1(g) shall prohibit the Company or the Board from creating a committee that does not include any Standard General
Designees to consider speci?c matters that involve conflicts of interests between the Company and any member of the Standard General Group
(other than Chamey) if it would be prudent as a matter of law to exclude the Standard General Designees from membership on such committee.

As as practicable after the date hereof, and in any event within three business days after the date hereof, the
Standard General Group and the Board shall provide to the Company an executed consent from each New Board Designee and a completed 
Questionnaire in the form previously provided to the Standard General Group (collectively, the Nomination Documents After the
date hereof, each New Board Designee shall provide to the Company, as requested by the Company from time to time, such
information as the Company is entitled to reasonably receive from other members of the Board, including as is required to be disclosed in the
Schedule 14f-1 and proxy statements under applicable law.

At all times while serving as a member of the Board, the New Board Designees shall comply with all policies, procedures,
processes, codes, rules, standards and guidelines applicable to Board members, including the Company?s code of business conduct and ethics,
securities trading policies, Regulation FD-related policies, director con?dentiality policies and corporate governance guidelines, in each case
that have been identi?ed to the New Board Designees, and preserve the con?dentiality of Company

3

 

 

 

 

business and information, including discussions or matters considered in meetings of the Board or Board Committees (all subject to Section 4
of this Agreement); provided however, that the Company acknowledges that Standard General and its Af?liates (except for Chamey, the?
Standard General Af?liates manage a large pool of capital in its normal course of business and invest in many public and private securities,
and the Company agrees that the service of the Standard General Designees on the Board shall not prevent Standard General and its Af?liates
from investing in any companies or businesses in the ordinary course of business of Standard General or such Af?liates so long as such
investment was not made on the basis of con?dential information received by a Standard General Desi gnee in his or her capacity as a member
of the Board or any Committee. For purposes of this Agreement, the term Af?liate shall have the meaning set forth in Rule 12b-2
promulgated by the SEC under the Exchange Act. 

So long as any Standard General Designee is a member of the Board, and subject to Section the Company shall not
take any action, or support or encourage any action, to amend the Bylaws of the Company (the Company Bylaws to increase the size of the
Board or change the number of votes any member of the Board has with respect to any matter; provided however that the Board may amend
the Company Bylaws to increase the size of the Board of Directors in connection with any capital raising activity after the Director
Appointments have occurred with the consent of Standard General (which consent shall not be unreasonably withheld, conditioned or delayed).

(I) So long as any Standard General Designee is a member of the Board, no single individual shall serve as both Chairman
of the Board and Chief Executive Officer CEO of the Company and i) the Chairman of the Board shall be an Independent Director.

The Company and the Standard General Group shall use their reasonable best efforts to procure from Lion Capital
(Guernsey) II Limited Lion a waiver of Lion?s right to designate persons for nomination for election to the Board pursuant to the
Investment Agreement, dated as of March 13, 2009, between the Company and Lion (as amended).

The Standard General Designees shall be appointed to the Board as provided herein unless the representations of Standard
General set forth in Section 10(c)(ii) (viewing the independence rules of NYSE MKT LLC from the perspective of a board of directors acting
reasonably) are inaccurate with respect to any such Standard General Designee. In such event, Standard General shall nominate a new
Standard General Designee with respect to whom such representations are accurate to ?ll such vacancy and such Standard General Designee
shall be appointed to the Board as provided herein. Each of the Joint Designees shall be evaluated by the Nominating and Corporate
Governance Committee. In the event that the Nominating and Corporate Governance Committee determines that it is unable to support any
Joint Designee for appointment as

 

 

 

 

a member of the Board, the parties hereto shall agree in good faith on a replacement for such Joint Designee. The parties shall use all efforts to
ensure that in no event shall the foregoing delay or prevent the appointment of the New Board Designees as contemplated hereby.

2. Certain Other Matters .

 

Standard General commits to timely provide, or to cause one or more of its Af?liates (other than Chamey) or third parties
approved by the Company to provide, additional capital or other ?nancial support to the Company in an aggregate amount up to $25 million,
to the extent necessary to permit the Company to repay amounts due under the Credit Agreement, dated as of May 22, 2013, by and among
the Company, the facility guarantors party thereto, and Lion/Hollywood L.L.C. (as amended) and amounts related thereto (or, if any such
amounts previously have been repaid by the Company, replenishment of such amounts used to pay such amounts), and 1) for any other
purposes as the Board, following the Director Appointments, may determine are appropriate. Any such capital or ?nancial support shall be
provided on market terms reasonably agreed by Standard General and the Company unless Standard General accepts other terms. Standard
General and the Company shall work together reasonably and in good faith to structure the terms and conditions of the provision of such
additional capital or other ?nancial support as soon as practicable, and in such a manner as to comply with applicable NYSE MKT LLC
rules and applicable legal requirements.

Chamey hereby irrevocably withdraws his letter dated June 27, 2014 providing notice to the Company of his call of a special
meeting of stockholders on September 25, 2014 (the Special Meeting Request 

Prior to the execution of this Agreement and the execution of the Cooperation Agreement (as de?ned herein), the Board has
amended the Rights Agreement, dated as of June 27, 2014, between the Company and Continental Stock Transfer Trust Company (the 
Rights Aggeement to ?x the Final Expiration Date (as de?ned in the Rights Agreement) to 5:00 pm. Eastern Time on July 24, 2014 and to
clarify that no Person shall become an ?Acquiring Person? under the Rights Agreement as a result of the negotiation of and entry into this
Agreement, i) the performance of such Person?s obligations or the exercise of such Person?s rights under this Agreement or the 3
performance of obligations or the exercise of rights under the Letter Agreement, including but not limited to entry into the Cooperation
Agreement and the other agreements and arrangements described in the Letter Agreement (including, without limitation, the SG Loan
Documents and related pledge of Additional Shares and Original Shares, and the Warrant Agreements and Warrants, in each case as such
capitalized terms are de?ned in the Letter Agreement), and the performance of obligations or the exercise of rights thereunder. The Company
shall not assert that any communications, agreements or any other actions taken by or among the members of the Standard General Group in
connection with the negotiation of this Agreement or otherwise have caused or would cause the Standard General Group or any member
thereof to become an ?Acquiring

 

 

 

 

 

Person? under the Rights Agreement, and the Company shall oppose any such claim asserted by any stockholder of the Company.

following the execution of this Agreement, the Board shall amend and restate the Company Bylaws to the form
adopted on October 1, 2010, except that the size of the Board shall be ?xed at nine directors.

Between the date hereof and the Director Appointments, except with the prior written consent of Standard General (which
consent shall not be unreasonably withheld, conditioned or delayed), the Company shall, and shall cause its subsidiaries to, conduct its business
in the ordinary course in all material respects, consistent with past practice.

The Company shall honor and comply with all severance arrangements between the Company and any of its employees or
directors entered into or modi?ed between May 1, 2014 and the date hereof that have been disclosed to Standard General in writing prior to the
date hereof (including such arrangements pending ?nal documentation, the material terms of which have been disclosed in writing to Standard
General). The Company represents that all such arrangements have been disclosed to Standard General in writing prior to the date hereof, and
agrees that no further such arrangements will be entered into or modi?ed prior to the occurrence of the Director Resignations and the Director
Appointments.

The Company shall abide by its obligations under its Amended and Restated Certi?cate of Incorporation, the Company
Bylaws and other indemni?cation agreements in effect on the date hereof (it being understood that no such agreements have been entered into
within the last three months other than in the ordinary course of business consistent with past practice and not in connection with the matters
contemplated hereby) to indemnify its existing Independent Directors and of?cers and all New Board Designees for any damages arising out of
actions to remove Chamey as CEO and all related matters, including negotiation and execution of this Agreement and the transactions and
covenants contemplated thereby.

Concurrently with the execution of this Agreement, Chamey and Stande General shall enter into a cooperation agreement
(the Cooperation Agreement?) in the form previously provided to the Company. The Cooperation Agreement shall not be amended in any
manner, terminated or superseded, directly or indirectly, to circumvent any of the agreements contemplated by this Agreement.

3. Standstill . Until completion of the 2015 Annual Meeting, no member of the Standard General Group or any of its Af?liates
(as to the Standard General parties, Af?liates that are directly or indirectly controlled by Soohyung Kim or his successor as Chief Executive
Of?cer of Standard General (the Controlled Af?liates directly or indirectly, shall:

6

 

 

 

solicit proxies or written consents of holders of Common Stock or become a ?participant? (as such term is de?ned in
Instruction 3 to Item 4 of Schedule 14A promulgated under the Exchange Act) in or assist any other person in any ?solicitation? of any proxy,
consent or other authority (as such terms are de?ned under the Exchange Act) with respect to any shares of Common Stock (other than such
encouragement, advice or in?uence as is consistent with the Board?s recommendation in connection with such matter) (for the avoidance of
doubt, excluding such activities among members of the Standard General Group and their Controlled Af?liates); or (ii) encourage any other
person to solicit or withhold any proxy, consent or other authority with respect to any shares of Common Stock or otherwise advise, encourage
or in?uence any other person with reSpect to voting any shares of Common Stock (other than such encouragement, advice or in?uence as is
consistent with the Board?s recommendation in connection with such matter);

form or join in a partnership, limited partnership, syndicate or other group, including a ?group? as de?ned under Section 13
of the Exchange Act, with respect to the Common Stock (for the avoidance of doubt, excluding any group composed solely of members of
the Standard General Group and their Controlled Af?liates) or otherwise support or participate in any effort by any third party with respect to
the matters set forth in clause above;

present at any Special Meeting of Stockholders or through action by written consent any proposal for consideration for
action by stockholders or seek the removal of any member of the Board or propose any nominee for election to the Board or seek representation
on the Board (excluding the actions of any Standard General Designee taken in his or her capacity as a member of the Board);

grant any proxy, consent or other authority to vote with respect to any matters (other than to the named proxies included in
the Company?s proxy card for any Special Meeting of Stockholders) or deposit any shares of Common Stock in a voting trust or subject them
to a voting agreement or other arrangement of similar effect with respect to any Special Meeting (except as provided in Section 4 below or as
among members of the Standard General Group and their Controlled Af?liates) or action by written consent (excluding customary brokerage
accounts, margin accounts, prime brokerage accounts and the like);

without the prior approval of a majority of the members of the Board who are not Standard General Designees, separately or
in conjunction with any other person or entity in which it is or proposes to be either a principal, partner or ?nancing source, publicly propose or
participate in, effect or seek to effect, any extraordinary corporate transaction, tender offer or exchange offer, merger, acquisition,
reorganization, restructuring, recapitalization, change in the Company?s dividend policy, change in the Company?s Amended and Restated
Certi?cate of Incorporation or the Company Bylaws (other than as contemplated by this Agreement), business combination involving the

7

 

 

 

 

 

 

 

Company or a material amount of the assets or businesses of the Company or any action which would result in a class of securities of the
Companybeing delisted from a national securities exchange or to ceasing to be authorized to be quoted in an inter-dealer quotation system of a
registered national securities association or becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act
or encourage any other person in any such activity (excluding the actions of any Standard General Designee taken in his or her capacity as a
member of the Board). Notwithstanding the foregoing, the Company agrees that the Standard General Group shall not be deemed to be in
breach of this Agreement in the event that a Standard General Designee receives an unsolicited inquiry regarding a potential transaction
proposed by a third party, does not engage in any negotiations or substantive discussions without the prior approval of the Board (including by
a majority of the members who are not Standard General Designees) and apprises the Company?s lead independent director of the
foregoing if required by his or her ?duciary duties to the Company;

purchase or cause to be purchased or otherwise acquire or agree to acquire bene?cial ownership of any shares of Common
Stock (other than in connection with a stock split, dividend or similar transaction); provided however, that any Common Stock received by
Standard General Designees as equity grants in connection with their service as directors or o?icers of the Company or (ii) acquired by
Chamey in connection with his anti-dilution agreement (in the form in effect as of the date hereof and without amendments thereto) shall not be
deemed to be bene?cially owned by the Standard General Group under this clause provided further that the consummation of the
agreements and arrangements contemplated by the June 25, 2014 Letter Agreement among certain members of the Standard General Group (in
the form ?led by Chamey on June 27, 2014 with the SEC and without amendments thereto, the Letter Agreement shall not be deemed to
violate this clause 

disclose any intention, plan or arrangement inconsistent with the foregoing;
instigate, encourage, join, act in concert with or assist any third party to do any of the foregoing;
take any action that would reasonably be expected to require the Company to make a public announcement regarding the

possibility of any of the events described in this Section 3; or

request that the Company or the Board or any of their respective representatives amend or waive any provision of this
Section 3 (including this sentence) or for the Board to speci?cally invite any member of the Standard General Group to take any of the actions
prohibited by this Section 3.

 

 

 

The foregoing provisions of this Section 3 shall not be deemed to prohibit the transfer of shares of Common Stock bene?cially owned
by any member of the Standard General Group to any of its Af?liates, provided that such Af?liate agrees to be bound by the terms and
conditions of this Agreement as a member of the Standard General Group.

. 4. Voting . Until completion of the 2015 Annual Meeting, each member of the Standard General Group and its Af?liates
(in respect of Chamey) and its Controlled Af?liates (in respect of Standard General) shall cause all Common Stock bene?cially owned by them
as of the record date for any Annual or Special Meeting of Stockholders (the Applicable Record Date Holding to be present at such
meeting for quorum purposes, and i) to the extent that the Applicable Record Date Holding exceeds 33 and one-third percent of the
outstanding Common Stock at any Annual or Special Meeting of Stockholders or any adjoumments or postponements thereof, the Standard
General Group shall cause any excess stock over 33 and one-third percent of the outstanding Common Stock to be voted for any proposals or
other business that comes before any such meeting in proportion to the votes for such proposals or other business cast by the other stockholders
of the Company voting at such meeting; provided that nothing contained herein shall prevent Chamey from performing his obligations under
the Investment Voting Agreement, dated March 13, 2009, between Chamey and Lion Capital (Guernsey) 11 Limited (in the form in effect as of
the date hereof and without amendments thereto).

5. Investigation of Chief Executive Of?cer .
'No later than one business day following the Director Resignations, the Company shall form a committee of the Board (the 

Suitabilig Committee consisting of David Danziger, one Standard General Designee and one Joint Designee. All decisions of the Suitability
Committee shall be made by majority vote of the members of the Suitability Committee. The Suitability Committee shall oversee the
investigation (the nvestigation of alleged misconduct by Charney. In connection with the Investigation, and subject to the timeframe for
the Investigation set forth in Section FTI Consulting, Inc. shall be permitted to complete its investigation pursuant to 
existing engagement with the Company, including having full and unrestricted access to relevant employees, servers and Company-owned
equipment. Chamey agrees to be interviewed as part of the Investigation, and Chamey may make a statement to the applicable representatives
of FTI in connection with such interview.

The Investigation shall continue until the Suitability Committee determines, consistent with its ?duciary duties, that the
Investigation is complete, provided that the Suitability Committee shall use its reasonable best efforts to conclude the Investigation as 
as practicable but no later than 30 days after the date hereof (the Completion Date (subject to any extensions that the Suitability
Committee, by majority vote, determines in good faith are reasonably required to satisfy its members? ?duciary duties or to comply with formal
and informal requests from auditors, regulators

 

 

 

 

 

and other governmental authorities). Based on the ?ndings of the Investigation, the Suitability Committee shall determine, by majority vote
and in good faith and consistent with its members? ?duciary duties, whether it is under the circumstances for Charney to be
reinstated as CEO of the Company or serve as an of?cer or employee of the Company or any of its subsidiaries (the Clearance Determination
The Clearance Determination shall be made (based solely on the information available to the Suitability Committee at the time of such
determination) no later than the earlier of 10 days after the conclusion of the Investigation under this Section and (ii) the Completion

Date if the Investigation is not concluded by the Completion Date and Chamey so elects in writing not later than 15 days prior to the
Completion Date.

Not less than one week prior to the Suitability Committee making its ?nal determination pursuant to Section the
Suitability Committee shall provide Chamey and his legal advisors the opportunity to meet with the Suitability Committee (such meeting, the 
Prelimin Meetin At the Preliminary Meeting, Chamey and his legal advisors shall be presented a summary of the evidence and
preliminary ?ndings of the Investigation. Chamey and his legal advisors shall be given a reasonable opportunity to ask questions and respond
to such evidence and preliminary ?ndings at such Preliminary Meeting. A ?nal meeting between the Suitability Committee and Chamey and
his legal advisors shall be held prior to the Suitability Committee making its ?nal determination under Section 5(b) (such meeting, the 
Meeting At the Final Meeting, Chamey and his legal advisors shall be given another opportunity to ask questions and respond to the
evidence and preliminary ?ndings presented at the Final Meeting or the Preliminary Meeting. Nothing shall prevent the Suitability Committee
from holding additional meetings, in addition to the Preliminary Meeting and the Final Meeting, with Chamey and his legal advisors relating to
the Investigation and/or the Suitability Committee?s Clearance Determination. Chamey shall not, in any way, interfere with or attempt to
in?uence the outcome of the Investigation. Unless speci?c authorization has been granted by the Suitability Committee, Chamey shall not

directly or indirectly access the Company?s computer systems; provided however, that upon request, Chamey shall be provided with a copy of
his Company email mailbox.

Chamey shall not serve as CEO of the Company or serve as an of?cer or employee of the Company or any of its subsidiaries
unless and until the Investigation is completed and the Suitability Committee makes a Clearance Determination in favor of such service. From
the date hereof through the date of the Clearance Determination, Chamey shall serve as a consultant to the Company with no supervisory
authority over any employees of the Company. The terms of such consulting relationship shall be negotiated by the Board as soon as
practicable following the Director Appointments. Pursuant to such consulting relationship, from the date hereof through the date of the
Clearance Determination, Chamey shall receive compensation equal to the base salary payable under his existing employment agreement with
the Company (without duplication of any payments received in connection with his employment agreement).

10

 

 

 

i Chamey agrees, without prejudice to any claim for damages relating to allegations of wrongful dismissal, to stay the pending
arbitration proceeding relating thereto (the Arbitration until the Suitability Committee makes its Clearance Determination under Section 5
If the Suitability Committee makes a Clearance Determination that permits Chamey to be reinstated as CEO, and Chamey is reinstated as
CEO, Chamey agrees to dismiss with prejudice all claims asserted or that could have been asserted by Chamey in the Arbitration
(and, for the avoidance of doubt, not to bring future claims relating thereto in arbitration or litigation).

6. Public Announcements; Non Disnaragement .

following the execution of this Agreement, the Company and the Standard General Group shall announce this
Agreement and the material terms hereof by means of a jointly issued press release in the form attached hereto as Exhibit (the Egg
Release Neither the Company (and the Company shall cause each of its Affiliates, and its and their directors and of?cers not to) nor the
Standard General Group or any Controlled Af?liate of Standard General or Af?liate of Chamey shall (and each shall cause their respective
directors and of?cers not to) make or cause to be made any public announcement or public statement that is inconsistent with or contrary to the
statements made in the Press Release, except as required by law or the rules of any stock exchange or with the prior written consent of Standard
General, the Company and Chamey. The Company acknowledges that members of the Standard General Group intend to ?le this Agreement
and the Press Release as an exhibit to its Schedule 13D pursuant to an amendment that the Company will have an opportunity to review in
advance.

 

The members of the Standard General Group, their respective of?cers, directors, representatives and Af?liates (with respect
to the Standard General parties, their Controlled Affiliates) shall refrain from making or causing to be made to any third party, including but
not limited to by press release or similar public statement to the press or media or to any analyst, any statement or announcement, whether
orally or in writing, that disparages or otherwise negatively re?ects upon the Company, its employees, of?cers or directors or any person who
has served as an employee, of?cer or director of the Company in the past, or who serves on or following the date of this Agreement as an
employee, of?cer or director of the Company. The Company and its directors, of?cers and employees (including the Resigning Directors)
shall refrain from making or causing to be made to any third party, including but not limited to by press release or similar public statement to
the press or media or to any analyst, any statement or announcement, whether orally or in writing, that disparages or otherwise negatively
re?ects upon Standard General, the Standard General Af?liates or (subject to the ?nal results of the Investigation as determined by the
Suitability Committee) Chamey, except disclosures relating to Chamey to the extent the Company in good faith determines such disclosure is
required as a result of applicable law, regulation, order by a governmental authority or

11

 

 

 

SEC or stock exchange rules, or is required or advisable in connection with any arbitration or other legal proceeding. The non-disparagement -

agreements set forth in this Section 6(b) shall not apply to any statement, position, argument, brie?ng or communication of any nature that
takes place in or relates to the Arbitration or any legal proceeding.

7. Company Philosophy . In the Press Release, Standard General shall publicly af?rm its commitment to the Company?s
sweatshop-free, ?Made in the manufacturing philosophy, maintaining the Company?s manufacturing headquarters in Los Angeles,
California, and the Company?s tradition of passion, creativity, contrarian thinking, social responsibility, ethical business practices and fair
treatment of employees.

8. Con?dentiality Agreement . The Company hereby agrees that: the Standard General Designees are permitted to and
may provide con?dential information to certain speci?ed persons subject to and solely in accordance with the terms of the con?dentiality I
agreement in the form attached hereto as Exhibit (the Con?dentiality Agreement?) (which the Standard General Group shall execute and
deliver to the Company simultaneously with the Standard General Group?s execution and delivery of this Agreement) and i) the Company
shall execute and deliver the Con?dentiality Agreement to the Standard General Group substantially contemporaneously with execution and
delivery thereof by the other signatories thereto.

9. Mutual Release; Reservation of Rights: No Admission .

The Company, on the one hand, and the Standard General Group, on the other hand, on behalf of themselves and for all of
their past and present af?liated, associated, related, parent and subsidiary entities, joint ventures and partnerships, successors, assigns, and the
respective owners, of?cers, directors, partners, members, managers, principals, parents, subsidiaries, predecessor entities, agents,
representatives, employees, shareholders, advisors, consultants, attorneys, heirs, executors, administrators, successors and assigns of any said
person or entity, security holders of any said person or entity, and any other person claiming (now or in the future) through or on behalf of any
of said persons or entities (collectively Released Persons irrevocably and unconditionally release, settle, acquit and forever discharge the
other and all of their Released Persons, from any and all causes of action, claims, actions, rights, judgments, obligations, damages, amounts,
demands, losses, controversies, contentions, complaints, promises, accountings, bonds, bills, debts, dues, sums of money, expenses, specialties
and fees and costs (whether direct, indirect or consequential, incidental or otherwise, including attorney?s fees or court costs, of whatever
nature) incurred in connection therewith of any kind whatsoever, whether known or unknown, suspected or unsuspected, in their own right,
representatively, derivativer or in any other capacity, in law or in equity or liabilities of whatever kind or character, arising under federal,
state, foreign, or common law or the laws of any other relevant jurisdiction (the Claims to the extent such Claims have arisen, could have
arisen, arise now, or hereafter may arise out of the

12

 

 

 

 

 

allegations, facts, events, transactions, acts, occurrences, statements, representations, misrepresentations, omissions or any other matter, thing,
or cause whatsoever, or any series thereof, embraced, involved, arising out of or set forth in the formation of the Standard General Group, its
acquisition prior to the date hereof of bene?cial ownership of Common Stock, the public disclosure by its members with respect thereto, any
existing arrangements or agreements between Chamey and any Standard General Af?liates and those contemplated by the Letter Agreement,
the Special Meeting Request, actions taken by the Suitability Committee (as to the Company and the Suitability Committee), the negotiation of
this Agreement and, if the Suitability Committee makes a Clearance Determination that is favorable to Chamey, actions taken to remove
Charney from his position as CEO (collectively, the Released Claims provided however, the Released Claims shall not include claims to
enforce the terms of this Agreement. It is further understood and agreed that each of the parties expressly waives all rights as to the Released
Claims under Section 1542 of the California Civil Code. Said Section reads as follows: GENERAL RELEASE DOES NOT EXTEND TO
CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM 0R HER MUST HAVE MATERIALLY AFFECTED HIS OR HER
SETTLEMENT WITH THE 

The parties acknowledge and agree that they may be unaware of or may discover facts in addition to or different from those
which they now know, anticipate or believe to be true related to or concerning the Released Claims. The parties know that such presently
unknown or unappreciated facts could materially affect the claims or defenses of a party or parties. It is nonetheless the intent of the parties to
give a full, complete and ?nal release and discharge of the Released Claims. In furtherance of this intention, the releases herein given shall be
and remain in effect as full and complete releases with regard to the Released Claims notwithstanding the discovery or existence of any such
additional or different claim or fact. To that end, with respect to the Released Claims only, the parties expressly waive and relinquish any and
all provisions, rights and bene?ts conferred by any law of the United States or of any state or territory of the United States or of any other
relevant jurisdiction, or principle of common law, under which a general release does not extend to claims which the parties do not know or
suspect to exist in their favor at the time of executing the release, which if known by the parties might have affected the Parties? settlement. The
parties acknowledge and agree that the inclusion of this Section 9(b) was separately bargained for and is a material term of this Agreement.

The parties hereto reserve all rights not speci?cally limited by this Agreement. Nothing in this Agreement shall be
construed as an admission of liability or fault by any party hereto, which liability and fault, with respect to each party hereto, are expressly
denied by such party.

13

 

 

 

 

In connection with any arbitration or litigation proceeding brought by Charney against any of the Released Persons relating
to allegations of wrongful dismissal or related matters, the prevailing party, as determined by the ?nal judgment of an arbitrator or a court of
competent jurisdiction (as applicable), shall be entitled to reimbursement for all reasonable legal fees and costs incurred in connection
therewith.

10. Representations and Warranties .

Each party represents and warrants to each other party that: such party has all requisite power and authority to execute
and deliver this Agreement and to perform its obligations hereunder; ii_) this Agreement has been duly and validly authorized, executed and
delivered by it and is a valid and binding obligation of such party, enforceable against such party in accordance with its terms; and this
Agreement will not result in a violation of any terms or conditions of any agreements to which such person is a party or by which such party
may otherwise be bound or of any law, rule, license, regulation, judgment, order or decree governing or affecting such party.

The Company represents and warrants to the Standard General Group that the Rights Agreement has been amended so that
the negotiation of and entry into this Agreement and the performance by the Standard General Group of its obligations hereunder and under the
Letter Agreement would not cause the Standard General Group or any member thereof to become an ?Acquiring Person? under the Rights
Agreement.

Each member of the Standard General Group represents and warrants to the Company that, as of the date of this
Agreement, the Standard General Group bene?cially owns 74,560,813 shares of Common Stock and that no Controlled Af?liate of any
member of the Standard General group bene?cially owns any shares of common Stock other than as a member of the Standard General Group
(excluding 1,178,097 shares of Common Stock held by Standard General Master Fund L.P. for its own account and 361,903 shares of Common
Stock held by STANDARD GENERAL LTD. for its own account), i) that each New Board Designee, other than the Class A Designee is
?independent? under the rules of the NYSE MKT LLC and is not affiliated with and does not have any material relationship with the Standard
General Group and is not af?liated with and does not have any relationship with Dov Chamey and that it has no agreements,
arrangements or understandings (written or oral) with respect to any shares of Common Stock (including voting arrangements) other than this
Agreement, the Letter Agreement the other agreements referenced herein.

11. Miscellaneous . The parties acknowledge and agree that if for any reason any of the provisions of this Agreement are not
performed in accordance with their speci?c terms or are otherwise breached, immediate and irreparable harm or injury would be caused for
which money damages would not be an adequate remedy. Accordingly, each party agrees that in addition to other remedies the other party
shall be entitled to at law or equity, the other party shall be entitled to seek an injunction or injunctions to

14

 

 

 

 

 

 

prevent breaches of this Agreement and to enforce speci?cally the terms and provisions of this Agreement exclusively in the Court of Chancery
or other federal or state courts of the State of Delaware. Furthermore, each of the parties hereto g) consents to submit itself to the exclusive
personal jurisdiction of the Court of Chancery or other federal or state courts of the State of Delaware in the event any dispute arises out of this
Agreement or the transactions contemplated by this Agreement, (LL) agrees that it shall not attempt to deny or defeat such personal jurisdiction
by mction or other request for leave from any such court, agrees that it shall not bring any action relating to this Agreement or the
transactions contemplated by this Agreement in any court other than the Court of Chancery or other federal or state courts of the State of
Delaware, Q) irrevocably waives the right to trial by jury and irrevocably consents to service of process by a reputable overnight mail
delivery service, signature requested, to the address. set forth in Section 14 (if applicable), the address of such party?s principal place of
business (if the address of such party is not set forth in Section 14) or such party?s address as determined pursuant to applicable law. THIS
AGREEMENT SHALL BE GOVERNED IN ALL RESPECT S, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE -
LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS EXECUTEDAND TO BE PERFORMED WHOLLY WITHIN
SUCH STATE WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES OF SUCH STATE. For avoidance of doubt, the
provisions of subsections (3) through of this Section 11 do not apply to any arbitration or litigation between or among any of the Released
Persons relating to Chamey?s employment by the Company and his dismissal from such employment.

12. No Waiver . Any waiver by any party of a breach of any provision of this Agreement shall not operate as or be construed to
be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement. The failure of a party to insist
upon strict adherence to any term of this Agreement on one or more occasions shall not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term of this Agreement.

13. Entire Agreement . This Agreement, the Con?dentiality Agreement, the Letter Agreement and the Cooperation Agreement
contain the entire understanding of the parties with respect to the subject matter hereof.

14. Notices . All notices, consents, requests, instructions, approvals and other communications provided for herein shall be in

writing and shall be deemed validly given, made or served, if given by email, when such email is sent to the email address set forth below
and the appropriate con?rmation is received or b) if given by any other means, when actually received during normal business hours at the
address speci?ed in this subsection: 

If to the Company:

15

 

 

 

 

 

 

American Apparel, Inc.

747 Warehouse Street

Los Angeles, CA 90021

Attention: General Counsel

Email: 

With a copy to (which shall not constitute notice):

Skadden, Arps, Slate, Meagher Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Jeffrey H. Cohen

David C. Eisman
Email: 
david.eisman@skadden.con1

 


i If to the Standard General Group:

c/o Standard General LP.

767 Fifth Avenue, 12th Floor

New York, New York 10153
Attention: Gail Steiner

Email: gsteiner@standgen.com

 

With copies to (which shall not constitute notice):

Debevoise Plimpton LLP

919 Third Avenue

New York, New York 10022

Attention: Jonathan E. Levitsky
Email: jelevitsky@debevoise.com

and

Glaser, Weil, Fink, Howard, Avchen Shapiro LLP
10250 Constellation Blvd., 19th Floor

Los Angeles, California 90067

Attention: Jeffrey C. Soza

Email: jsoza@glaserweil.com

15. Countemarts . This Agreement may be executed in two or more counterparts which together shall constitute a single
agreement.

16

 

 

 

 

 

16. Successors and Assi ns . This Agreement shall not be assignable by any of the parties hereto. This Agreement, however,

 

shall be binding on successors of the parties hereto.

17. Third Party Bene?ciaries . The Directors identi?ed on Schedule shall be, and are hereby, named as an express third-party
bene?ciaries of Sections 6(b) and 9 of this Agreement, with full rights as such. Except as otherwise provided by the preceding sentence,
this Agreement is not enforceable by any persons other than the parties hereto.

18. Interpretation and Construction . Each party acknowledges that it has been represented by counsel of its choice throughout
all negotiations that have preceded the execution of this Agreement, and that it has executed the same with the advice of said independent
counsel. Each party and its counsel cooperated and participated in the drafting and preparation of this Agreement and the documents referred
to herein, and any and all drafts relating thereto exchanged among the parties shall be deemed the work product of all of the parties and may
not be construed against any party by reason of its drafting or preparation. Accordingly, any rule of law or any legal decision that would
require interpretation of any ambiguities in this Agreement against any party that dra?ed or prepared it is of no application and is hereby
expressly waived by each party hereto, and any controversy over interpretations of this Agreement shall be decided without regards to events of
drafting or preparation. The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. The term ?including? shall be deemed to mean ?including without limitation? in all instances.

l9. Liability Several and Not Joint . Notwithstanding anything contained herein to the contrary, the obligations of the members
of the Standard General Group hereunder are several and not joint or collective. .

20. Amendments . This Agreement may only be amended pursuant to a written agreement executed by Standard General,
Chamey and the Company and approved by a majority of the members of the Board who are not Standard General Designees.

[Signature Pages Follow]

17

 

 

 

IN WITNESS WHEREOF, each party has executed this Agreement as of the date ?rst above written.

AMERICAN APPAREL, INC.

By: John Luttrell
Name: John Luttrell

Title: Interim Chief Executive Of?cer, Executive Vice President

and Chief Financial Of?cer

STANDARD GENERAL L.P.

By: David Glazek

 

Name; David Glazek
Title: Partner

STANDARD GENERAL MASTER FUND L.P.

 

 

By: David Glazek

Name: David Glazek

Title: Partner of its investment manager
STANDARD GENERAL LTD.

By: David Glazek

Name: David Glazek

Title: Partner of its investment manager
DOV CHARNEY

ls/ Dov Chamey

 

 

 

 

SCHEDULE A

Standard General LP.

Standard General Master Fund L.P.
STANDARD GENERAL LTD.
Dov Chamey

19

 

 

35.;

 

 

 

Dov Chamey 
Alberto Chehebar 
David Danziger
Robert Greene 
Marvin Igelman 
Billy Mauer 
Allan Mayer

 

Denotes Resigning Directors

SCHEDULE 

 

 

 

 

EXHIBIT A
CONFIDENTIALITY AGREEMENT

AMERICAN APPAREL, INC.

July 9, 2014

To: Each of the persons or entities listed on Schedule A hereto (collectively, the Standard General Group or? you and each, individually,
a? member of the Standard General Group)

 

Ladies and Gentlemen:

This letter agreement shall become effective upon the appointment of any Standard General Desi gnee to the Board of Directors (the 
Board of American Apparel, Inc. (the Company Capitalized terms used but not otherwise de?ned herein shall have the meanings given
to such terms in the Nomination, Standstill and Support Agreement, dated as of July 9, 2014 (the Nomination, Standstill and Support
Agreement by and among the Company and the members of the Standard General Group.

The Company acknowledges and agrees that, subject to the terms of this letter agreement, each Standard General Designee may, if and
to the extent be or she desires to do so, con?dentially disclose information he or she obtains while serving as a member of the Board to you and
the persons set forth on Schedule hereto (collectively, the Speci?ed Standard General Personnel and may discuss such information with
any and all such persons. As a result, you may receive certain non-public information regarding the Company. You acknowledge that this
information is proprietary to the Company and may include trade secrets or other business information the. disclosure of which could harm the
Company. In consideration of, and as a condition of, such information being furnished to you and, subject to the restrictions in paragraph 2,
you agree to treat such information (regardless of the manner in which it is furnished, including in written or electronic format or orally,
gathered by visual inspection or otherwise), together with the relevant portion of any notes, analyses, reports, models, compilations, studies,
interpretations, documents, records or extracts thereof to the extent containing, referring, relating to, based upon or derived from such
information, in whole or in part (collectively, Evaluation Material in accordance with the provisions of this letter agreement.

1. The term ?Evaluation Material? does not include information that is or has become generally available to the public
other than as a result of a direct or indirect disclosure by you or the Speci?ed Standard General Personnel in violation of this letter agreement,
i) was within your or any of the Speci?ed Standard General Personnel?s

 

sea

 

 

 

possession on a non-con?dential basis prior to its being furnished to you by any Standard General Designee, or by or on behalf of the Company
or its agents, representatives, attorneys, advisors, directors, of?cers or employees (collectively, the? Company Representatives or is
received from a source other than any Standard General Designee, the Company or any of the Company Representatives; provided that in the
case of clauses (ii) and above, the source of such information was not known by you to be bound by a contractual, legal or ?duciary
obligation of con?dentiality to any other person with respect to such information at the time the information was disclosed to you.

2. You and the Speci?ed Standard General Personnel shall, and you shall cause theSpeci?ed Standard General Personnel to,
1) keep the Evaluation Material strictly con?dential and not disclose any of the Evaluation Material in any manner without the prior
written consent of the Company; provided however that you may privately disclose any of such information to the Speci?ed Standard
General Personnel who need to know such information for the sole purpose of advising you with respect to your investment in the
Company and i) who are informed by you of the con?dential nature of such information; provided further that you will be responsible for
any violation of this letter agreement by the Speci?ed Standard General Personnel as if they were parties hereto. It is understood and agreed
that no Standard General Designee shall disclose to you or the Speci?ed Standard General Personnel any Legal Advice (as de?ned below) that
may be included in the Evaluation Material with respect to which such disclosure would constitute a waiver of the Company?s attorney-client
privilege or attorney work product privilege; provided however that a Standard General Designee may provide such disclosure of Legal
Advice if such Standard General Designee shall not have taken any action, or failed to take any action, that has the purpose or effect of waiving
attomey-client privilege or attorney work product privilege with respect to any portion of such Legal Advice. Legal Advice as used herein
shall be solely and exclusively limited to the advice provided by legal counsel and shall not include any factual information or the formulation
or analysis of business strategy that is not protected by the attomey-client or attorney work product privilege.

3. In the event that you or any of the Speci?ed Standard General Personnel are required or requested by applicable
interrogatory, subpoena or any similar process relating to any legal proceeding, investigation, hearing or otherwise to disclose any of the
Evaluation Material, you will notify (except where such notice would be legally prohibited) the Company in writing by electronic
mail and certi?ed mail so that the Company may seek a protective order or other appropriate remedy (and, if the Company seeks such an order,
you will provide such cooperation as the Company shall reasonably request), at the Company?s sole cost and expense. Nothing herein shall be
deemed to prevent you or the Speci?ed Standard General Personnel, as the case may be, from honoring a subpoena, legal process or other legal
requirement that requires or requests discovery, disclosure or production of the Evaluation Material if 1) you produce or disclose only that
portion of the Evaluation Material which your outside legal counsel of

 

 

 

 

 

 

national standing advises you is legally required to be so produced or disclosed and you inform the recipient of such Evaluation Material of the
con?dential nature of such Evaluation Material; or the Company consents in writing to having the Evaluation Material produced or
disclosed pursuant to the subpoena, legal process or other legal requirement or request. In no event shall you or any of the Speci?ed Standard
General Personnel oppose action by the Company, at its sole expense, to obtain a protective order or other relief to prevent the disclosure of the
Evaluation Material or to obtain reliable assurance that con?dential treatment will be afforded the Evaluation Material. For the avoidance of
doubt, it is understood that there shall be no ?legal requirement? requiring you to disclose any Evaluation Material solely by virtue of the fact
that, absent such disclosure, you would be prohibited from purchasing, selling, or engaging in derivative or other voluntary transactions with
respect to the Common Stock or otherwise proposing or making an offer to do any of the foregoing, or you would be unable to ?le any proxy
materials in compliance with Section 14(a) of the Exchange Act or the rules promulgated thereunder. The foregoing obligations and
requirements in this paragraph shall not be required or apply in connection with disclosures made to the extent required by law to, or requested
by, a federal or state regulatory agency, self-regulatory organization or supervisory authority in the course of such authority?s routine
examinations or supervisory inspections not related to the Company; provided that you agree to notify the Company of any actual
disclosures made so long as you are permitted to do so under applicable law.

4. You acknowledge that a) neither the Company nor any Company Representative makes any representation or warranty,
express or implied, as to the accuracy or completeness of any Evaluation Material, and neither the Company nor any Company 
Representative shall have any liability to you or to any of the Speci?ed Standard General Personnel relating to or resulting from the use of the
Evaluation Material or any errors therein or omissions therefrom, except in the case of fraud.

5. All Evaluation Material shall remain the property of the Company. Neither you nor any of the Speci?ed Standard General
Personnel shall by virtue of any disclosure or use of any Evaluation Material acquire any rights with respect thereto, all of which rights
(including all intellectual property rights) shall remain exclusively with the Company. At any time after the date on which no Standard General
Designee is a director of the Company, upon the written request of the Company for any reason, you will return to the Company or?
destroy, at your election, all hard copies of the Evaluation Material and use commercially reasonable efforts to permanently erase or delete all
electronic copies of the Evaluation Material in your or any of the Speci?ed Standard General Personnel?s possession or control (and, upon the
written request of the Company, shall certify to the Company that such Evaluation Material has been destroyed, erased or deleted, as
the case may be); provided however that you may retain such copies of Evaluation Material as may be required to be retained by you
pursuant to applicable law, regulation or as part of your bona ?de information technology system

3

 

 

 

 

back-ups or your internal compliance policies. Notwithstanding the destruction, return or erasure or deletion of Evaluation Material, you and 1?
the Speci?ed Standard General Personnel will continue to be bound by the obligations contained herein.

6. You acknowledge, and will advise the Speci?ed Standard General Personnel, that the Evaluation Material may constitute

material non-public information under applicable federal and state securities laws, and that the United States securities laws prohibit any person
who has received from an issuer any material, non-public information from purchasing or selling securities of such issuer or from
communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to
purchase or sell such securities.

7. You hereby represent and warrant to the Company that you have all requisite power and authority to execute and deliver
this letter agreement and to perform your obligations hereunder, i) this letter agreement has been duly authorized, executed and delivered by
you, and is a valid and binding obligation, enforceable against you in accordance with its terms, this letter agreement will not result in a
violation of any terms or conditions of any agreements to which you are a party or by which you may otherwise be bound or of any law, rule,
license, regulation, judgment, order or decree governing or affecting you, and ii) your entry into this letter agreement does not require
approval by any owners or holders of any equity or other interest in you (except as has already been obtained).

8. Any waiver by the Company of a breach of any provision of this letter agreement shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other provision of this letter agreement. The failure of the Company to
insist upon strict adherence to any term of this letter agreement on one or more occasions shall not be considered a waiver or deprive the
Company of the right therea?er to insist upon strict adherence to that term or any other term of this letter agreement.

9. You acknowledge and agree that the value of the Evaluation Material to the Company is unique and substantial, but may be
impractical or dif?cult to assess in monetary terms. You further acknowledge and agree that in the event of an actual or threatened violation of
this letter agreement, immediate and irreparable harm or injury would be caused for which money damages would not be an adequate remedy.
Accordingly, you acknowledge and agree that, in addition to any and all other remedies which may be available to the Company at law or
equity, the Company shall be entitled to seek an injunction or injunctions to prevent breaches of this letter agreement and to enforce
speci?cally the terms and provisions of this letter agreement exclusively in the Court of Chancery or other federal or state courts of the State of
Delaware.

10. Each of the parties hereto consents to submit itself to the personal jurisdiction of the Court of Chancery or other federal
or state courts of the State of 

 

 

 

 

 

Delaware in the event any dispute arises out of this letter agreement, agrees that it shall not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (9) agrees that it shall not bring any action relating to this letter
agreement in any court other than the Court of Chancery or other federal or state courts of the State of Delaware, and d) irrevocably waives
the right to trial by jury, and g) irrevocably consents to service of process by a reputable overnight mail delivery service, signature requested,
to the address set forth in Section 12. THIS LETTER AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING
VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS
EXECUTED AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE WITHOUT GIVING EFFECT TO THE CHOICE OF LAW
PRINCIPLES OF SUCH STATE.

11. This letter agreement and the Nomination, Standstill and Support Agreement contain the entire understanding of the parties
with respect to the subject matter hereof and thereof and supersedes all prior or contemporaneous agreements or understandings, whether
written or oral. This letter agreement may be amended only by an agreement in writing executed by the parties hereto.

12. All notices, consents, requests, instructions, approvals and other communications provided for herein shall be in writing and
shall be deemed validly given, made or served, if given by email, when such email is sent to the email address set forth below and the
appropriate con?rmation is received or if given by any other means, when actually received during normal business hours at the address
speci?ed in this subsection:

If to the Company:

American Apparel, Inc.

747 Warehouse Street

Los Angeles, CA 90021

Attention: General Counsel

Email: 

With a copy to (which shall not constitute notice):

Skadden, Arps, Slate, Meagher Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Jeffrey H. Cohen
David C. Eisman
Email: jeffrey.cohen@skadden.com
david.eisman@skadden.com

5

 

 

 

 

If to the Standard General Group:

c/o Standard General LP.

767 i?h Avenue, 12th Floor

New York, New York 10153

Attention: Gail Steiner

Email: - gsteiner@standgen.com

With copies to (which shall not constitute notice):

Debevoise Plimpton LLP

919 Third Avenue

New York, New York 10022

Attention: Jonathan E. Levitsky
Email: jelevitsky@debevoise.com

and

Glaser, Weil, Fink, Howard, Avchen Shapiro LLP
10250 Constellation Blvd, 19th Floor 
Los Angeles, California 90067 i

Attention: Jeffrey C. Soza
Email: jsoza@glaserweil.com
13. If at any time subsequent to the date hereof, any provision of this letter agreement shall be held by any court of competent.

jurisdiction to be illegal, void or unenforceable, such provision shall be of no force and effect, but the illegality or unenforceability of such
provision shall have no effect upon the legality or enforceability of any other provision of this letter agreement.

14. This letter agreement may be executed (including by facsimile or PDF) in two or more counterparts which together shall

constitute a single agreement.

15. This letter agreement and the rights and obligations herein may not be assigned or otherwise transferred, in whole or in part,
by you without the express written consent of the Company. This letter agreement, however, shall be binding on successors of the parties

hereto.

16. This letter agreement shall expire on the ?rst anniversary of the date on which a Standard General Designee no longer serves
as a director of the Company; except that you shall maintain in accordance with the con?dentiality obligations set forth herein any Evaluation
Material constituting trade secrets for such longer time (if any) as

 

 

 

 

such information constitutes a trade secret of the Company as de?ned under 18 U.S.C. 1839(3).

17. Each party acknowledges that it has been represented by counsel of its choice throughout all negotiations that have preceded
the execution of this letter agreement, and that it has executed the same with the advice of said counsel. Each party and its counsel cooperated
and participated in the drafting and preparation of this letter agreement and the documents referred to herein, and any and all drafts relating
thereto exchanged among the parties shall be deemed the work product of all of the parties and may not be construed against any party by
reason of its drafting or preparation. Accordingly, any rule of law or any legal decision that would require interpretation of any ambiguities in
this letter agreement against any party that drafted or prepared it is of no application and is hereby expressly waived by each of the parties
hereto, and any controversy over interpretations of this letter agreement shall be decided without regards to events of drafting or preparation.
The term ?including? shall in all instances be deemed to mean ?including without limitation.?

18. Notwithstanding anything contained herein to the contrary, the obligations of the members of the Standard General Group
hereunder are several and not joint or collective.

[Signature Pages Follow]

7

 

 

 

 

 

 

I . Please con?rm your agreement with the foregoing by signing and returning one copy of this letter agreement to the undersigned,
whereupon this letter agreement shall become a binding agreement between you and the Company.

AMERICAN APPAREL, INC.

By:

 

Very truly yours,
I
I

Name:
Title:

[Signature Page to the Con?dentiality Agreement between American Apparel, Inc. and the Standard General Group]

 

 

 

 

 

STANDARD GENERAL L.P.

Accepted and agreed as of the date ?rst written above:

By:

 

Name:
Title:

STANDARD GENERAL MASTER FUND L.P.

By:

 

Name:
Title:

STANDARD GENERAL LTD.

By:

 

Name:
Title:

DOV CHARNEY

 

[Signature Page to the Con?dentiality Agreement between American Apparel, Inc. and the Standard General Group]

 

 

SCHEDULE A

Standard General L.P.

Standard General Master Fund L.P.

STANDARD GENERAL LLC

Dov Chamey, along with his attorneys, representatives and agents

 

 

 

SCHEDULE 

Any employee or principal of Standard General LP. or its Affiliates that is involved in monitoring the American Apparel, Inc. investment, and
any attorney or accountant of Standard General LP. or its Af?liates that advises Standard General LP. or its Af?liates in connection with the -
American Apparel, Inc. investment

 

 

 

 

EXHIBIT 

American Apparel 
American Apparel Signs Support Agreement with Standard General

LOS ANGELES July 9, 2014 American Apparel, Inc. (NYSE MKT: APP) today announced it has reached a Nomination, Standstill and
Support Agreement with Standard General LP. and company founder Dov Chamey, the bene?cial owners of nearly 44% of the Company?s
outstanding stock. Under the agreement, Standard General will provide up to $25 million in immediate ?nancial support to the Company, the
Company?s board will be reconstituted, and an independent board committee will be formed to oversee the continuing investigation into
alleged misconduct by Mr. Chamey.

As part of the agreement, Standard General af?rmed its support for American Apparel?s sweatshop-free, ?Made in manufacturing
philosophy and commitment to maintain the Company?s manufacturing headquarters in Los Angeles. Standard General and Mr. Chamey also
agreed to certain standstill and voting limitations through the Company?s 2015 annual meeting.

Other key points of the agreement include:

A reconstitution of the Company's board of directors in which ?ve of the current seven members, including Mr. Chamey, will
voluntarily step down. The departing directors will be replaced by two new directors, chosen jointly by Standard General and the
current board, and three new directors designated by Standard General. All but one of the new directors are expected to be
independent directors and unaf?liated with either Standard General or Mr. Chamey. The board will continue to be led by its current
co-chainnen, David Danziger and Allan Mayer. Mr. Chamey will not serve as a board member?or be nominated by the Company or
Standard General as a board member. 

0 A continuation of the ongoing investigation into Mr. Chamey?s alleged misconduct overseen by a newly appointed, independent
board committee. Mr. Chamey will serve as strategic consultant until the end of the investigation. Based on the ?ndings of the
investigation, the committee will determine if it is appropriate for Mr. Chamey to serve as CEO or an of?cer or employee of American
Apparel.

0 Adoption of a standstill agreement through the Company?s 2015 annual meeting that, among other things, prohibits Standard General
and Mr. Chamey from acquiring any additional shares in American Apparel and limits their vote to no more than one third of the
Company?s shares on any issue put to stockholders; their remaining shares would be voted proportionately to the vote of other
stockholders.

?This truly marks the beginning of an important new chapter in the American Apparel story,? said Mr. Mayer. ?With the support of Standard
General, we are con?dent the Company will ?nally be able to realize its true potential.?

?The last few weeks have been dif?cult ones for the company, and we are especially indebted to our special committee members Robert
Greene, Marv Igelman, and William Mauer, who have worked so tirelessly on the company?s behalf,? said Mr. Danziger. ?Any success the
company enjoys in the future will in large part be the result of their efforts.?

 

 

 

 

 

 

The Company is concurrently ?ling a Current Report on Form 8-K with the SEC attaching the Nomination, Standstill and Support Agreement
in its entirety.

THE COMPANY URGES INVESTORS TO READ THE INFORMATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS
THAT THE COMPANY MAY FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. Stockholders will be able to obtain, free of charge, copies of the Information Statement and any other
documents ?led by the Company with the SEC at the website at and at the Company?s website at 
AmericanappareLnet.



About American Apparel

American Apparel is a vertically integrated manufacturer, distributor, and retailer of branded fashion basic apparel based in downtown Los
Angeles, California. As of May 31, 2014, American Apparel had approximately 10,000 employees and operated 249 retail stores in 20
countries, including the United States, Canada, Mexico, Brazil, United Kingdom, Ireland, Austria, Belgium, France, Germany, Italy,
Netherlands, Spain, Sweden, Switzerland, Australia, Japan, South Korea, and China. American Apparel also operates a global e-commerce site
that serves over 60 countries worldwide at In addition, American Apparel operates a leading wholesale
business that supplies high quality T-shirts and other casual wear to distributors and screen printers. 

About Standard General L.P.

Standard General LP. is a New York City?based SEC-registered investment advisor that manages event?driven opportunity funds. Standard
General was founded in 2007 and primarily manages capital for public and private pension funds, endowments, foundations and high net worth
individuals.

This press release, and other statements that the Company may make, may contain forward-looking statements. Forward-looking statements are
statements that are not historical facts and are based upon the current beliefs and expectations and are subject to risks and uncertainties which
could cause actual results and/or the timing of events to differ materially from those set forth in the forward-looking statements. More detailed
information about these and other factors are detailed in the Company?s ?lings with the Securities and Exchange Commission, including the
Company?s Annual Report on Form 10-K for the year ended December 31, 2013 and Quarterly Report on Form 10-Q for the quarter ended
March 31, 2014. The Company?s ?lings with the SEC are available at You are urged to consider these factors carefully in
evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are
quali?ed in their entirety by this cautionary statement. The forward-looking statements Speak only as of the date on which they are made and
the Company undertakes no obligation to publicly update such forward-looking statements to re?ect subsequent events or circumstances.

Media Contact 

For American Apparel
Mike Sitrick

Sitrick And Company
310-788-2850

For Standard General
John Dillard

Weber Shandwick
212-445-8052

 

 

 

 

 

. . Exhibit 99.1

American Apparel Signs Support Agreement with Standard General

American Apparel 

LOS ANGELES July 9, 2014 American Apparel, Inc. (NYSE MKT: APP) today announced it has reached a Nomination, Standstill and
Support Agreement with Standard General LP. and company founder Dov Chamey, the bene?cial owners of nearly 44% of the Company?s
outstanding stock. Under the agreement, Standard General will provide up to $25 million in immediate financial support to the Company, the
Company?s board will be reconstituted, and an independent board committee will be formed to oversee the continuing investigation into
alleged misconduct by Mr. Chamey.

As part of the agreement, Standard General af?rmed its support for American Apparel?s sweatshop-free, ?Made in manufacturing
philosophy and commitment to maintain the Company?s manufacturing headquarters in Los Angeles. Standard General and Mr. Chamey also
agreed to certain standstill and voting limitations through the Company?s 2015 annual meeting.

Other key points of the agreement include:

A reconstitution of the Company?s board of directors in which ?ve of the current seven members, including Mr. Chamey, will
voluntarily step down. The departing directors will be replaced by two new directors, chosen jointly by Standard General and the
current board, and three new directors designated by Standard General. All but one of the new directors are expected to be
independent directors and unaf?liated with either Standard General or Mr. Chamey. The board will continue to be led by its current
co-chairmen, David Danziger and Allan Mayer. Mr. Chamey will not serve as a board member or be nominated by the Company or
Standard General as a board member.

0 . A continuation of the ongoing investigation into Mr. Charney?s alleged misconduct overseen by a newly appointed, independent
board committee. Mr. Chamey will serve as strategic consultant until the end of the investigation. Based on the ?ndings of the
investigation, the committee will determine if it is appropriate for Mr. Chamey to serve as CEO or an of?cer or employee of American
Apparel.

0 Adoption of a standstill agreement through the Company?s 2015 annual meeting that, among other things, prohibits Standard General
and Mr. Chamey from acquiring any additional shares in American Apparel and limits their vote to no more than one third of the
Company?s shares on any issue put to stockholders; their remaining shares would be voted prOportionately to the vote of other
stockholders.

?This truly marks the beginning of an important new chapter in the American Apparel story,? said Mr. Mayer. ?With the support of Standard
General, we are con?dent the Company will ?nally be able to realize its true potential.?

?The last few weeks have been dif?cult ones for the company, and we are especially indebted to our special committee members Robert
Greene, Marv Igeiman, and William Mauer, who have worked so tirelessly on the company?s behalf,? said Mr. Danziger. ?Any success the
company enjoys in the future will in large part be the result of their efforts.?

 

 

The Company is concurrently ?ling a Current Report on Form 8-K with the SEC attaching the Nomination, Standstill and Support Agreement
in its entirety.

THE COMPANY URGES INVESTORS TO READ THE INFORMATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS
THAT THE COMPANY MAY FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. Stockholders will be able to obtain, free of charge, copies of the Information Statement and any other
documents ?led by the Company with the the website at and at the Company?s website at 
Americanapparel.net.


About American Apparel

American Apparel is a vertically integrated manufacturer, distributor, and retailer of branded fashion basic apparel based in downtown Los
Angeles, California. As of May 31, 2014, American Apparel had approximately 10,000 employees and operated 249 retail stores in 20
countries, including the United States, Canada, Mexico, Brazil, United Kingdom, Ireland, Austria, Belgium, France, Germany, Italy,
Netherlands, Spain, Sweden, Switzerland, Australia, Japan, South Korea, and China. American Apparel also operates a global e-commerce site
that serves over 60 countries worldwide at In addition, American Apparel operates a leading wholesale
business that supplies high quality T-shirts and other casual wear to distributors and screen printers.

About Standard General L.P.

Standard General LP. is a New York City-based SEC-registered investment advisor that manages event-driven opportunity funds. Standard
General was founded in 2007 and primarily manages capital for public and private pension funds, endowments, foundations and high net worth
individuals.

This press release, and other statements that the Company may make, may contain forward-looking statements. Forward-looking statements are
statements that are not historical facts and are based upon the current beliefs and expectations and are subject to risks and uncertainties which
could cause actual results and/or the timing of events to differ materially from those set forth in the forward-looking statements. More detailed
information about these and other factors are detailed in the Company?s ?lings with the Securities and Exchange Commission, including the
Company?s Annual Report on Form 10-K for the year ended December 31, 2013 and Quarterly Report on Form 10-Q for the quarter ended -
March 31, 2014. The Company?s ?lings with the SEC are available at You are urged to consider these factors carefully in
evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are
quali?ed in their entirety by this cautionary statement. The forward-looking statements speak only as of the date on which they are made and
the Company undertakes no obligation to publicly update such forward-looking statements to re?ect subsequent events or circumstances.

Media Contact 

For American Apparel
Mike Sitrick

Sitrick And Company
310-788-2850

For Standard General
John Dillard
Weber Shandwick

212-445-8052