American Apparel ( APP) settled a lawsuit on Monday against director Woody Allen for the use of his image in an advertising campaign.

The company paid Allen $5 million only hours before the suit was set to come to trial.

Allen sued American Apparel over a year ago, seeking more than $10 million, after an image of him the from the film Annie Hall appeared on the billboards and Web site. Allen says his reputation was damaged and his image was used for profit without his consent.

The apparel retailer is set to announce its first-quarter earnings after-market.

Shares of the company climbed 5% to $5.36 in afternoon trading.
Copyright 2009 Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.

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