Services Agreement - J Crew Group Inc. and Millard S. Drexler
SERVICES AGREEMENT
AGREEMENT, dated this 24/th/ day of January, 2003 (this "Agreement"),
among J. Crew Group, Inc., a New York Corporation (the "Parent") and its
operating subsidiary J. Crew Operating Corp. (collectively with the Parent, the
"Company"), with offices at 770 Broadway, New York, New York, 10003 Millard S.
Drexler, Inc. (the "Service Company") and Millard S. Drexler (the "Principal").
l. Term; Position and Responsibilities; Company Headquarters and
Principal Work Location.
(a) Term. Unless the Service Period (as defined below) is terminated
earlier pursuant to Section 4 hereof, the Company shall engage the Service
Company and the Principal on the terms and subject to the conditions of this
Agreement for a five year term commencing on January 27, 2003 (the "Commencement
Date") and ending on the day immediately preceding the fifth anniversary of the
Commencement Date (the "Service Period").
(b) Position and Responsibilities. During the Service Period, the
Company hereby agrees to cause the Principal to be elected as Chairman of the
Board of Directors of the Company (the "Board") and to employ the Principal,
both directly and through the Service Company, as the Company's Chief Executive
Officer and such other position or positions with the Company as the Board and
the Principal may agree from time to time, provided that following the third
anniversary of the Commencement Date, the Principal may step down as Chief
Executive Officer, serve as the Company's Executive Chairman and delegate his
duties and responsibilities to the appropriate executive officers of the
Company, including to any newly-appointed or, if appropriate to hire such
officer, newly-hired Chief Executive Officer. During the Service Period, the
Principal, on behalf of the Service Company, shall perform the duties and
responsibilities that are customarily assigned to individuals serving in such
position or positions and such other duties and responsibilities commensurate
with such positions as the Board may reasonably specify from time to time,
including but not limited to recruitment and retention of key personnel of the
Company, hiring and terminating senior executives of the Company, establishment
and execution of brand vision, and direct responsibility for assembling and
guiding product, merchandising and marketing functions, and oversight of and
accountability for the financial and strategic performance of the Company (the
"Services"). The Principal shall report to the Board.
(c) During the Service Period, excluding any periods of vacation and
sick leave to which the Principal is entitled, (i) the Principal shall devote
substantially all of his working time and attention to the performance of his
duties and responsibilities hereunder, provided that following the third
anniversary of the Commencement Date if the Principal elects to step down as
Chief Executive Officer and serve as the Executive Chairman of the Company, he
shall no longer be required to devote substantially all of his working time to
the performance of his duties hereunder. Following the Principal's resignation
as Chief Executive Officer, he shall provide such oversight, direction and
assistance as he deems appropriate and, in either case, he shall faithfully and
diligently endeavor to promote the business and best interests of the
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Company, and (ii) the Principal may not, without the prior written consent of
the Company, operate, participate in the management, operations or control of,
or act as an employee, officer, consultant, agent or representative of, any type
of business or service (other than as an Chairman and Chief Executive Officer of
the Company), provided that it shall not be a violation of the foregoing for the
Principal to (A) act or serve as a director, trustee, committee member or
principal of any type of business or civic or charitable organization, (B)
manage his personal, financial and legal affairs, and (C) pursue a very limited
number of small retail and other consumer brand building ventures without TPG
and TPG Ventures (provided that the activities described in clauses (A), (B) and
(C) do not interfere with the performance of his duties and responsibilities to
the Company as provided hereunder). Notwithstanding anything to the contrary in
this Section 1(c), the Principal may pursue emerging retail and other consumer
brand building opportunities with TPG and TPG Ventures and their affiliates.
(d) Company Headquarters; Principal Work Location. Unless otherwise
mutually agreed upon, the Company's headquarters shall be the New York
metropolitan area. The Company intends to establish a West Coast merchandising
office at the Principal's reasonable direction, which will be the Principal's
principal work location,. The Principal shall travel as reasonably required to
carry out his duties and obligations hereunder, including to New York.
2. Compensation; Expenses; Benefits and Perquisites. During the
Service Period, as compensation for the performance of the Services, the Service
Company and the Principal, as applicable shall be entitled to the following
compensation from the Company, which subsections (a), (b) and (c) below shall
not exceed an aggregate of $700,000 per annum:
(a) Base Salary. The Company shall pay the Principal, not less than
once a month pursuant to the Company's normal and customary payroll procedures,
a base salary at the rate of $200,000 per annum (the "Base Salary"). The Board
shall annually reevaluate the Principal's salary and bonus opportunities for
increase based on the Company's performance and the Principal's contributions to
the Company for the preceding fiscal year.
(b) Annual Bonus. In addition to the Base Salary, the Service Company
shall have an opportunity to earn an annual bonus (the "Bonus") in respect of
each fiscal year in accordance with the terms of the J. Crew Operating Corp.
Performance Incentive Plan then existing for such fiscal year based on the
achievement of performance objectives as may be established from time to time by
the Board or a committee thereof; provided, however, that the Bonus for any
fiscal year shall be payable to the Service Company only if the Principal,
through the Service Company, is employed by the Company on the date on which
such Bonus is paid. The actual Bonus that may become payable shall be determined
by the Board, in its sole discretion.
(c) Business Expenses. The Company shall promptly reimburse the
Service Company for all reasonable business expenses incurred by the Service
Company in connection with the performance of the Services, including without
limitation airfare, upon the presentation of statements of such expenses in
accordance with the Company's policies and procedures now
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in force or as such policies and procedures may be modified with respect to all
senior executive officers of the Company.
(d) Employee Benefits. During the Service Period, the Principal shall
be eligible to participate in the employee benefit plans and programs maintained
by the Company from time to time and generally available to senior executives of
the Company, including, to the extent maintained by the Company, medical,
dental, accidental and disability insurance plans and profit sharing, pension,
retirement, deferred compensation and savings plans, to the extent permitted by
and in accordance with the terms and conditions of the applicable plan and
applicable law in effect from time to time.
(e) Vacation. During the Service Period, the Principal shall be
entitled to twenty-five days of paid time off per annum pursuant to the
Company's Paid Time Off Policy, without carryover accumulation, which may be
taken at the Principal's sole discretion.
3. Grant of Stock Options and Restricted Stock.
(a) Initial Stock Options. As soon as reasonably practicable after the
Commencement Date, the Company shall cause the Board or a committee thereof to
grant to the Principal a non-qualified option to purchase 557,926 shares of
common stock of the Parent (the "Common Stock") at an exercise price per share
equal to $6.82 per share (the "Initial Option") in exchange for consideration
paid by the Principal to the Company, within three business days after
shareholder approval of such grant, in the amount of $200,000. The terms and
conditions of the Initial Option shall be evidenced by a separate stock option
agreement executed by the Company and the Principal (the "Initial Option
Agreement") which shall contain terms consistent with the Company's 2003 Equity
Incentive Plan as it may be amended from time to time (the "Equity Plan"), this
Section 3(a) and other customary terms. The Initial Option Agreement shall
provide, among other things, for the following:
(i) The Initial Option shall vest in equal installments on the
second, third, fourth and fifth anniversaries of the Commencement
Date; provided that the Service Period is not terminated prior to any
such applicable anniversary date;
(ii) Notwithstanding the foregoing, (A) in the event that the
Company terminates the Service Period without Cause (as defined below)
or the Principal terminates the Service Period for Good Reason (as
defined below) prior to the consummation of a Change in Control (as
defined in the Equity Plan), that portion of the Initial Option that
would have become vested and exercisable on the anniversary of the
Commencement Date immediately following the Date of Termination (as
defined below) shall vest and become immediately exercisable and any
remaining portion of the Initial Option that has not become vested and
exercisable shall immediately expire and be forfeited, (B) in the
event that, within the two-year period following the consummation of a
Change in Control, the Company terminates the Service Period without
Cause or the Principal terminates the Service Period for Good Reason,
all or any portion of the Initial Option that has not yet become
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exercisable shall vest and become immediately exercisable, or (C) if
the Service Period terminates for any other reason, any portion of the
Initial Option which has not become exercisable on such Date of
Termination shall immediately expire and be forfeited; and
(iii) Any portion of the Initial Option which has become vested
and exercisable shall expire on the earlier of (A) the tenth
anniversary of the date of grant, (B) the commencement of business on
the date the Service Period is terminated for Cause, (C) ninety days
after the Service Period is terminated by the Principal without Good
Reason, or (D) the second anniversary of the date the Service Period
is terminated (x) on account of the Principal's death or Disability,
(as defined below), (y) by the Company without Cause, or (z) by the
Principal for Good Reason.
(b) Premium Stock Options. As soon as reasonably practicable after
the Commencement Date, the Company shall cause the Board or a committee thereof
to grant to the Principal a non-qualified option to purchase 836,889 shares of
Common Stock at an exercise price per share equal to $25.00 per share (the
"Premium Option Tranche 1") and an additional non-qualified option to purchase
836,889 shares of Common Stock at an exercise price per share equal to $35.00
per share (the "Premium Option Tranche 2" and, collectively with Premium Option
Tranche 1, the "Premium Options") . The terms and conditions of the Premium
Options shall be evidenced by a separate stock option agreement executed by the
Company and the Principal (the "Premium Option Agreement") which shall contain
terms consistent with the Equity Plan, this Section 3(b) and other customary
terms. The Premium Option Agreement shall provide, among other things, for the
following:
(i) The Premium Options shall vest in equal installments on the
second, third, fourth and fifth anniversaries of the Commencement
Date; provided that the Service Period is not terminated prior to any
such applicable anniversary date;
(ii) Notwithstanding the foregoing, (A) in the event that the
Company terminates the Service Period without Cause or the Principal
terminates the Service Period for Good Reason prior to the
consummation of a Change in Control, that portion of the Premium
Option that would have become vested and exercisable on the
anniversary of the Commencement Date immediately following the Date of
Termination shall vest and become immediately exercisable and any
remaining portion of the Premium Option that has not become vested and
exercisable shall immediately expire and be forfeited, (B) in the
event that, within the two-year period following the consummation of a
Change in Control, the Company terminates the Service Period without
Cause or the Principal terminates the Service Period for Good Reason,
all or any portion of the Premium Option that has not yet become
exercisable shall vest and become immediately exercisable, or (C) if
the Service Period terminates for any other reason, any portion of the
Premium Option which has not become exercisable on such Date of
Termination shall immediately expire and be forfeited; and
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(iii) Any portion of the Premium Option which has become vested
and exercisable shall expire on the earlier of (A) the tenth
anniversary of the date of grant, (B) the commencement of business on
the date the Service Period is terminated for Cause, (C) ninety days
after the Service Period is terminated by the Principal without Good
Reason, or (D) the second anniversary of the date the Service Period
is terminated (x) on account of the Principal's death or Disability,
(y) by the Company without Cause, or (z) by the Principal for Good
Reason.
(c) Restricted Stock. As soon as reasonably practicable following the
Commencement Date, the Principal shall purchase from the Company 725,303
restricted shares (the "Restricted Shares") of Common Stock under the Equity
Plan in exchange for consideration paid by the Principal to the Company, within
three business days after shareholder approval of such grant, in the amount of
$800,000. The terms and conditions of the Restricted Shares shall be evidenced
by a separate restricted stock agreement executed by the Company, the Service
Company and the Principal (the "Restricted Stock Agreement") which shall contain
terms consistent with this Section 3(c) and other customary terms. The
Restricted Stock Agreement shall provide, among other things, that the
Restricted Shares shall vest in equal installments on the first, second, third
and fourth anniversaries of the Commencement Date; provided that (i) in the
event that the Company terminates the Service Period without Cause or the
Principal terminates the Service Period for Good Reason, all or any portion of
the Restricted Shares not previously forfeited shall vest, or (ii) in the event
that the Service Period terminates for any other reason, the Restricted Shares
which have not vested on such Date of Termination shall be immediately forfeited
by the Principal (or Service Company in the event of their assignment) and
returned to the Company. The Company shall use its reasonable efforts to
cooperate with the Principal, provide the necessary information and make or
assist in making the necessary filings for the Principal or the Service Company,
as applicable, to make an election to include an amount equal to the difference,
if any, between the value of the Restricted Shares and the purchase price in
current income under Section 83(b) of the Internal Revenue Code of 1986, as
amended (the "Code").
In addition to the Restricted Shares described above, as soon as
reasonably practicable after the date hereof, the Company shall grant the
Service Company 55,793 restricted shares (the "Additional Restricted Shares") of
Common Stock under the Equity Plan. The terms and conditions of the Restricted
Shares shall be evidenced by a separate restricted stock agreement executed by
the Company, the Service Company and the Principal which shall contain terms
consistent with this Section 3(c) and other customary terms and shall be
immediately vested upon grant.
(d) Special Shareholders' Meeting. As soon as reasonably practicable
after the date hereof (but no later than thirty days after approval of this
Agreement by the Board) and prior to the grant of the foregoing equity awards,
the Company shall hold a special shareholders' meeting for the purpose of
approving the Equity Plan and shall use its reasonable efforts to provide
disclosure to the shareholders that would satisfy the provisions of Section 280G
of the Code and obtain shareholder approval of the equity awards provided in
Sections 3(a), (b) and (c) herein.
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(e) Stockholders' Agreement. Unless otherwise specified, all shares of
Common Stock and all other securities issued in connection with this Agreement
or acquired by the Service Company and/or the Principal under this Agreement or
otherwise on or after the date hereof shall be subject to the Stockholders'
Agreement attached hereto as Exhibit A.
4. Termination of Services.
The Service Period may be terminated prior to the fifth anniversary of
the Commencement Date (the "Scheduled Termination Date") upon the earliest to
occur of the following events (at which time the Services provided hereunder
shall be terminated):
(a) Death. The Services hereunder shall terminate upon the Principal's
death.
(b) Disability. The Company shall be entitled to terminate the
Services hereunder by reason of the Principal's "Disability" if, as a result of
the Principal's incapacity due to physical or mental illness, the Principal
shall have been unable to perform his duties hereunder for a period of six (6)
consecutive months or for 180 days within any 365-day period, and within 30 days
after written Notice of Termination (as defined below) for Disability is given
following such 6-month or 180-day period, as the case may be, the Principal
shall not have returned to the performance of his duties in accordance with this
Agreement.
(c) Cause. The Company may terminate the Services hereunder for Cause.
For purposes of this Agreement, the term "Cause" shall mean: (1) the willful and
continued failure of the Principal substantially to perform the Principal's
duties under this Agreement (other than as a result of physical or mental
illness or injury), after the Board delivers to the Principal a written demand
for substantial performance that specifically identifies the manner in which the
Board believes that the Principal has not substantially performed the
Principal's duties; (2) the willful engaging by the Principal in illegal conduct
or gross misconduct which is materially and demonstrably injurious to the
Company; and (3) a breach of any of the obligations under Sections 9, 10 and 11
or any of the representations and covenants contained in Section 13 hereof. Any
act or failure to act that is based upon authority given pursuant to a
resolution duly adopted by the Board, or the advice of counsel for the Company,
shall not constitute Cause. Cause shall not exist unless and until the Company
has delivered to the Principal a copy of a resolution duly adopted by a majority
of the Board at a meeting of the Board called and held for such purpose (after
reasonable but in no event less than thirty (30) days' notice to the Principal
and an opportunity for the Principal, together with his counsel, to be heard
before the Board), finding that, in the good faith opinion of the Board, the
Principal was guilty of the conduct set forth above and specifying the
particulars thereof in detail. This Section 4(c) shall not prevent the Principal
from challenging in any court of competent jurisdiction the Board's
determination that Cause exists or that the Principal has failed to cure any act
(or failure to act) that purportedly formed the basis for the Board's
determination.
(d) Good Reason. The Principal may cause the Service Company to
terminate the Services hereunder for "Good Reason," for any of the following
reasons enumerated in this Section 4(d): (i) the diminution of, or appointment
of anyone other than the Principal to serve in
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or handle, the Principal's positions, authority, duties or responsibilities from
the positions, authority, duties or responsibilities set forth in Section 1 of
this Agreement without the Principal's consent, provided that any diminution or
delegation of the Principal's duties in connection with the Principal ceasing to
act as the Chief Executive Officer of the Company in accordance with Section
1(b) shall not constitute Good Reason; (ii) any purported termination of the
Service Period by the Company for a reason or in a manner not expressly
permitted by this Agreement; (iii) relocation of the Principal's principal work
location to more than fifty (50) miles from the Principal's principal work
location, (iv) any failure by the Company to comply with Sections 2 or 3 of this
Agreement, including any failure to obtain the shareholder approval described in
Section 3(d) above, or any other material breach of this Agreement, including
without limitation Section 14(e)(ii), or (v) the removal of the Principal or any
of the Principal's nominees as directors under Section 4(d) of the Stockholders'
Agreement. Termination of the Services by the Principal, on behalf of himself
and the Service Company, pursuant to this Section 4(d) shall not be effective
until the Principal delivers to the Board a written notice specifically
identifying the conduct of the Company which he believes constitutes a reason
enumerated in this Section 4(d) and the Principal provides the Board at least
thirty (30) days to remedy such conduct and then provides an additional Notice
of Termination in the event the Company does not cure such conduct.
(e) Without Cause. The Company may terminate the Services hereunder
without Cause.
(f) Without Good Reason. The Principal may cause the Service Company
to terminate the Services hereunder without Good Reason, provided that the
Principal provides the Company with notice of intent to terminate without Good
Reason at least three months in advance of the Date of Termination. The
Principal and the Company shall mutually agree on the time, method and content
of any public announcement regarding the termination of the Services hereunder
and neither the Principal nor the Company shall make any public statements which
are inconsistent with the information mutually agreed upon by the Company and
the Principal and the parties hereto shall cooperate with each other in refuting
any public statements made by other persons, which are inconsistent with the
information mutually agreed upon between the Principal and Company as described
above.
5. Termination Procedure.
(a) Notice of Termination. Any termination of the Services hereunder
by the Company or by the Principal, on behalf of himself and the Service
Company, during the Service Period (other than termination pursuant to Section
4(a)) shall be communicated by written notice of termination ("Notice of
Termination") to the other party hereto in accordance with Section 14(a).
(b) Date of Termination. "Date of Termination" shall mean (i) if the
Services are terminated by reason of the Principal's death, the date of his
death, (ii) if the Services are terminated pursuant to Section 4(b), thirty (30)
days after Notice of Termination (provided that the Principal shall not have
returned to the substantial performance of his duties in accordance with this
Agreement during such thirty (30) day period), (iii) if the Services are
terminated
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pursuant to Section 4(f), a date specified in the Notice of Termination which is
at least three months from the date of such notice as specified in such Section
4(f); and (iv) if the Services are terminated for any other reason, the date on
which a Notice of Termination is given or any later date (within thirty (30)
days (or any alternative time period agreed upon by the parties) after the
giving of such notice) set forth in such Notice of Termination.
6. Termination Payments.
(a) Without Cause or for Good Reason. In the event of the termination
of the Services during the Service Period by the Company without Cause or by the
Principal, on behalf of himself and the Service Company, for Good Reason, the
Service Company and the Principal, as applicable, shall be entitled to (i) a
payment, within ten (10) days following the Date of Termination, of Base Salary
through the Date of Termination (to the extent not theretofore paid), any
accrued vacation pay, and any unreimbursed expenses under Sections 2(c) and (d)
(the "Accrued Obligations") and (ii) subject to the effectiveness of the Service
Company's and the Principal's execution of a general release and waiver of all
claims against the Company, its affiliates and their respective officers and
directors related to the Services and the related arrangements including without
limitation, certain related investments in the Company, but excluding his rights
to receive the benefits provided under this Agreement or under any agreement
entered into in connection herewith and to be indemnified in accordance with the
provisions of the Company's charter and bylaws and Section 8 hereof, in a form
reasonably satisfactory to the Company and subject to the Service Company's and
the Principal's compliance with the terms and conditions contained in this
Agreement, (A) the continued payment of Base Salary for the one year period
following the Date of Termination; (B) the immediate vesting of any portion of
the Restricted Shares that have not yet become vested as of the Date of
Termination and (C) that portion of the Initial Option and the Premium Options
that would have become vested and exercisable on the anniversary of the date of
grant immediately following the Date of Termination shall vest and become
immediately exercisable and any remaining portion of the Initial Option and
Premium Options that has not become vested and exercisable shall immediately
expire and be forfeited, provided that if such termination occurs after the
consummation of a Change in Control, any portion of the Initial Option and
Premium Option that has not become exercisable shall become immediately
exercisable on such Date of Termination. The Company shall have no additional
obligations under this Agreement.
In no event shall the Principal be obligated to seek other employment
or take any other action by way of mitigation of the amounts payable to the
Principal under any of the provisions of this Agreement, and such amounts shall
not be reduced, regardless of whether the Principal obtains other employment.
(b) Cause, Death, Disability or Without Good Reason. If the Services
are terminated during the Service Period by the Company for Cause, by the
Principal, on behalf of himself and the Service Company, without Good Reason, or
as a result of the Principal's death or Disability, the Company shall pay the
Accrued Obligations to the Service Company within thirty (30) days following the
Date of Termination. The Company shall have no additional obligations under this
Agreement.
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(c) Other Rights and Benefits. In the event of the termination of
the Service Period for any reason, the Principal shall retain his rights under
all employee benefit plans, including the Equity Plan, in accordance with the
terms and conditions of such plans, provided that in no event will the Principal
be entitled to any payments in the nature of severance or termination payments
except as specifically provided herein.
8. Indemnification.
The Company agrees that if the Principal is made a party or
threatened to be made a party to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), other than any
Proceeding related to any contest or dispute between the Principal and the
Company or any of its affiliates with respect to this Agreement or the Services
of the Principal hereunder, by reason of the fact that the Principal is or was a
director or officer of the Company, or any subsidiary of the Company or is or
was serving at the request of the Company, as a director, officer, member,
employee or agent of another corporation or a partnership, joint venture, trust
or other enterprise, the Principal shall be indemnified and held harmless by the
Company to the fullest extent authorized by applicable law. In addition, the
Principal has represented that he has no applicable non-solicit, non-compete, or
other restriction that could adversely affect his ability to perform the
Services contemplated by this Agreement. Based on this representation, the
Company agrees to pay, promptly and contemporaneously, all losses, including
without limitation, reasonable legal fees and legal expenses, incurred by the
Principal in connection with any action brought by his former employer related
to his commencement of employment with or the performance of services for the
Company.
9. Non-Solicitation.
During the Service Period and for a period of two years following
the Date of Termination, the Principal hereby agrees not to, directly or
indirectly, for his own account or for the account of any other person or
entity, (i) solicit or hire or assist any other person or entity in soliciting
or hiring any employee of the Company or any of its subsidiaries or affiliates
to perform any services for any entity (other than the Company or their
respective subsidiaries or affiliates), attempt to induce any such employee to
leave the employ of the Company or any affiliates of the Company, or otherwise
interfere with or adversely modify such employee's relationship with the Company
or any of its subsidiaries or affiliates, or (ii) induce any employee of the
Company who is a member of management to engage in any activity which the
Principal is prohibited from engaging in under any of Sections 9, 10 or 11 of
this Agreement. For purposes of this Agreement, "employee" shall mean any
natural person anywhere in the world who is employed by or otherwise engaged to
perform services for the Company or any of its affiliates on the Date of
Termination or during the one-year period preceding the Date of Termination.
10. Non-Compete.
In connection with the Services of the Principal performed under
this Agreement and in recognition that the Principal shall be a significant
stockholder in the Company, and except as specifically provided in Section 1(c)
above, the Principal hereby agrees that, during the
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Service Period and for the one year period following any termination of the
Services of the Principal (other than a termination without Cause or for Good
Reason as described in Sections 4(d) and 4(e) above), the Principal shall not
become associated with any entity, whether as a principal, partner, employee,
consultant or shareholder (other than as a holder of a passive investment of not
in excess of 5% of the outstanding voting shares of any publicly traded
company), that is actively engaged in retail apparel business in any geographic
area in which the Company or any of its subsidiaries or affiliates are engaged
in such business.
11. Confidentiality; Non-Disclosure.
(a) The Principal hereby agrees that, during the Service Period and
thereafter, he will hold in strict confidence any proprietary or Confidential
Information related to the Company and its affiliates. For purposes of this
Agreement, the term "Confidential Information" shall mean all information of the
Company or any of its affiliates (in whatever form) which is not generally known
to the public, including without limitation any inventions, processes, methods
of distribution or customers' or trade secrets.
(b) The Principal hereby agrees that, upon the termination of the
Service Period, he shall not take, without the prior written consent of the
Company, any drawing, blueprint, specification or other document (in whatever
form) of the Company or its affiliates, which is of a confidential nature
relating to the Company or its affiliates, or, without limitation, relating to
its or their methods of distribution, or any description of any formulas or
secret processes and will return any such information (in whatever form) then in
his possession.
12. Injunctive Relief.
It is impossible to measure in money the damages that will accrue
to the Company in the event that the Principal breaches any of the restrictive
covenants provided in Sections 9, 10 or 11 hereof. In the event that the
Principal breaches any such restrictive covenant, the Company shall be entitled
to an injunction restraining the Principal from violating such restrictive
covenant. If the Company shall institute any action or proceeding to enforce any
such restrictive covenant, the Principal hereby waives the claim or defense that
the Company has an adequate remedy at law and agrees not to assert in any such
action or proceeding the claim or defense that the Company has an adequate
remedy at law. The foregoing shall not prejudice the Company's right to require
the Principal to account for and pay over to the Company, and the Principal
hereby agrees to account for and pay over, the compensation, profits, monies,
accruals or other benefits derived or received by the Principal, directly or
indirectly, as a result of any transaction constituting a breach of any of the
restrictive covenants provided in Sections 9, 10 or 11 of this Agreement.
13. Representations and Covenants; Certain Reimbursements.
(a) The Principal and the Company hereby represent to each other
that they have full power and authority to enter into this Agreement on behalf
of themselves and with respect to the Principal, the Service Company, and that
the execution of, and performance of duties or obligations under, this Agreement
shall not constitute a breach of or otherwise violate
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any other agreement to which the Principal or the Company, as applicable, is a
party. Notwithstanding the foregoing, the parties hereto understand that the
Company intends and is required to have the Equity Plan approved by the
shareholders of the Company and that such grants are subject to such shareholder
approval.
(b) The Principal hereby represents to the Company that he will not
utilize or disclose any confidential information obtained by the Principal in
connection with his former employment with respect to his duties and
responsibilities hereunder, and the Company covenants that it will not ask the
Principal to do so.
(c) The Principal represents and warrants that all of the capital
stock of the Service Company are and will be throughout the Service Period owned
by him, his immediate family members and no more than ten percent (10%) by
employees of or service providers to the Service Company.
(d) The Principal agrees that he will not cause any person other
than the Principal to perform the Services or any other obligations of the
Service Company under this Agreement.
(e) The Principal agrees that he shall not sell, transfer,
hypothecate, assign, transfer or otherwise dispose of his interest in the
Service Company (other than to his immediate family members, upon his death to
his heirs, and up to 10% of the Service Company to employees of or service
providers to the Service Company) during the Service Period.
(f) The Company represents to the Principal that the Company is in
material compliance with all financial reporting requirements under the
securities laws and is not aware of any material misstatement, or of any other
issue that may potentially result in an accounting restatement, in any financial
document that has been publicly issued or filed with the U.S. Securities and
Exchange Commission prior to the Commencement Date.
14. Miscellaneous.
(a) Any notice or other communication required or permitted under
this Agreement shall be effective only if it is in writing and delivered
personally or sent by registered or certified mail, postage prepaid, addressed
as follows (or if it is sent through any other method agreed upon by the
parties):
If to the Company:
J. Crew Group, Inc.
770 Broadway
New York, NY 10003
Attention: Board of Directors and Secretary
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with a copy to:
Paul Shim, Esq.
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, NY 10006
If to the Service Company:
To the Principal,
with a copy to:
Stephen T. Lindo, Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019-6099
If to the Principal:
To the address on file with the Company,
with a copy to:
Stephen T. Lindo, Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019-6099
or to such other address as any party hereto may designate by notice to the
others, and shall be deemed to have been given upon receipt.
(b) The Company shall reimburse the Service Company and the
Principal for reasonable legal fees incurred by the Service Company and/or the
Principal in connection with the negotiation of this Agreement and the related
agreements.
(c) This Agreement constitutes the entire agreement among the
parties hereto with respect to the employment of the Principal, directly and
through the Service Company, and supersedes and is in full substitution for any
and all prior understandings or agreements with respect to such employment.
(d) This Agreement may be amended only by an instrument in writing
signed by the parties hereto, and any provision hereof may be waived only by an
instrument in writing signed by the party or parties against whom or which
enforcement of such waiver is sought. The failure of any party hereto at any
time to require the performance by any other party hereto of any provision
hereof shall in no way affect the full right to require such performance at any
time
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thereafter, nor shall the waiver by any party hereto of a breach of any
provision hereof be taken or held to be a waiver of any succeeding breach of
such provision or a waiver of the provision itself or a waiver of any other
provision of this Agreement.
(e) (i) This Agreement is binding on and is for the benefit of the
parties hereto and their respective successors, heirs, executors, administrators
and other legal representatives. Neither this Agreement nor any right or
obligation hereunder may be assigned by the Company, the Service Company or the
Principal.
(ii) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in the Agreement, the "Company" shall mean
both the Company as defined above and any such successor that assumes and agrees
to perform this Agreement, by operation of law or otherwise.
(f) If any provision of this Agreement or portion thereof is so
broad, in scope or duration, so as to be unenforceable, such provision or
portion thereof shall be interpreted to be only so broad as is enforceable.
(g) The Company may withhold from any amounts payable to the
Service Company and/or the Principal hereunder all federal, state, city or other
taxes that the Company may reasonably determine are required to be withheld
pursuant to any applicable law or regulation.
(h) This Agreement shall be governed by and construed in
accordance with the laws of the State of NEW YORK, without reference to its
principles of conflicts of law.
(i) Any disagreement, dispute, controversy or claim arising out of
or relating to this Agreement or the interpretation hereof or any agreements
relating hereto or contemplated herein or the interpretation, breach,
termination, validity or invalidity hereof shall be settled exclusively and
finally by arbitration; provided that the Company shall not be required to
submit claims for injunctive relief to enforce the covenants contained in
Sections 9, 10 or 11 of this Agreement to arbitration. The arbitration shall be
conducted in accordance with the Commercial Arbitration Rules (the "Rules") of
the American Arbitration Association (the "AAA"), except as amplified or
otherwise varied hereby. The Company and the Principal jointly shall appoint one
individual to act as arbitrator within thirty (30) days of initiation of the
arbitration. If the parties shall fail to appoint such arbitrator as provided
above, such arbitrator shall be appointed by the President of the Association of
the Bar of the City of New York and shall be a person who maintains his or her
principal place of business in the New York metropolitan area and shall be an
attorney, accountant or other professional licensed to practice by the State of
New York who has substantial experience in employment and executive compensation
matters. All fees and expenses of such arbitrator shall be shared equally by the
Company and the Principal. The situs of the arbitration shall be New York City.
Any decision or
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award of the arbitral tribunal shall be final and binding upon the parties to
the arbitration proceeding. The parties hereto hereby waive to the extent
permitted by law any rights to appeal or to seek review of such award by any
court or tribunal. The arbitration award shall be paid within thirty (30) days
after the award has been made. Judgment upon the award may be entered in any
federal or state court having jurisdiction over the parties and shall be final
and binding. Each party shall be required to keep all proceedings related to any
such arbitration and the final award and judgment strictly confidential;
provided that either party may disclose such award as necessary to enter the
award in a court of competent jurisdiction or to enforce the award, and to the
extent required by law, court order, regulation or similar order.
(j) This Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
(k) The headings in this Agreement are inserted for convenience of
reference only and shall not be a part of or control or affect the meaning of
any provision hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
J. CREW GROUP, INC.
_______________________________
Name:
Title:
J. CREW OPERATING CORP.
_______________________________
Name:
Title:
MILLARD S. DREXLER, INC.
________________________________
Name: Millard S. Drexler
Title: Principal
________________________________
Millard S. Drexler
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