Severance Agreement - J Crew Operating Corp. and Michael Scandiffio
October 17, 2002
Mr. Michael Scandiffio
3 Smith Ridge Lane
New Canaan, CT 06840
Dear Michael:
This letter will confirm our understanding of the arrangements under which
your Employment Agreement, dated May 17, 2001, with the Company ("Employment
Agreement") is terminated. The terms and conditions of the termination of your
employment with the Company are set out below.
1. The parties hereby acknowledge and confirm that your employment
with the Company is terminated effective as of October 17, 2002
(the "Termination Date").
2. Subject to this Agreement becoming effective (as described in
Paragraph 18 hereof), the Company will continue to pay you your
base salary of $480,000 per annum for the twelve (12) month
period beginning on the day immediately following the Termination
Date ("Severance Period"), payable in accordance with the
Company's regular payroll practices for its employees. You will
also continue to have medical coverage during the Severance
Period on the same terms and conditions as medical coverage is
then made available to the employees of the Company. The
foregoing payments shall be reduced by any required tax
withholdings and shall not be taken into account as compensation
and no service credit shall be given after the Termination Date
for purposes of determining the benefits payable under any other
plan, program, agreement or arrangement of the Company. You
acknowledge that, except for the foregoing payments, you are not
entitled to any payment by the Company in the nature of either
severance or termination pay or other compensation of any kind.
3. As of the Termination Date, you have vested options to purchase
8,000 shares of Common Stock ("Common Stock") of J. Crew Group,
Inc. ("Parent") at $19.18 per share (collectively, the "Vested
Options"). You acknowledge that (i) your right to exercise the
Vested Options shall expire 90 days immediately following the
Termination Date (i.e. January 15, 2003) and (ii) all of your
other options which have not yet vested (totaling 32,000 options
to purchase Common Stock at $19.18 per share) terminate effective
immediately, in accordance with the provisions of your stock
option agreements with Parent and the J. Crew Group, Inc. 1997
Stock Option Plan, as amended (the "Option Plan").
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4. By signing this Agreement, you agree that in exchange for the
consideration set forth herein, you hereby voluntarily, fully and
unconditionally release and forever discharge the Company,
Parent, their present and former parent corporation(s),
subsidiaries, divisions, affiliates and otherwise related
entities and their respective incumbent and former employees,
directors, plan administrators, officers and agents, individually
and in their official capacities (collectively, the "Releasees"),
from any and all charges, actions, causes of action, demands,
debts, dues, bonds, accounts, covenants, contracts, liabilities,
or damages of any nature whatsoever, whether now known or
claimed, to whomever made, which you have or may have against any
or all of the Releasees for or by reason of any cause, nature or
thing whatsoever, up to the present time, arising out of or
related to your employment with the Company or the termination of
such employment, including, by way of examples and without
limiting the broadest application of the foregoing, any actions,
causes of action, or claims under any contract or federal, state
or local decisional law, statues, regulations or constitutions,
any claims for notice, pay in lieu of notice, wrongful dismissal,
breach of contract, defamation or other tortious conduct,
discrimination on the basis of actual or perceived disability,
age, sex, race or any other factor (including, without
limitation, any claim pursuant to Title VII of the Civil Rights
Act of 1964, Americans with Disabilities Act of 1990, the Age
Discrimination in Employment Act of 1967, as amended, the Family
and Medical Act of 1993, the Equal Pay Act of 1963, the Fair
Labor Standards Act, the State, City and local laws of New York,
and the equal employment law or laws of the state and/or city in
which you work), any claim pursuant to any other applicable
employment standards or human rights legislation or for severance
pay, salary, bonus, incentive or additional compensation,
vacation pay, insurance, other benefits, interest, and/or
attorney's fees. You acknowledge that this general release is not
made in connection with an exit incentive or other employment
termination program offered to a group or class of employees.
If you have made or should hereafter make any complaint, charge,
claim, allegation or demand, or commence or threaten to commence
any action, complaint, charge, claim or proceeding, against any
or all of the Releasees for or by reason of any cause, matter or
thing whatsoever existing up to the present time, this Agreement
may be raised as and shall constitute a complete bar to any such
action, complaint, charge, claim, allegation or proceeding, and,
subject to a favorable ruling by a tribunal of final
jurisdiction, the Releasees shall recover from you, and you shall
pay to the Releasees, all costs incurred by them, including their
attorneys' fees, as a consequence of any such action, complaint
charge, claim, allegation or proceeding; provided, however, that
this shall not limit you from enforcing your rights under this
Agreement, your rights under your stock option agreement with
Parent and the Option Plan or any rights to indemnification you
may have under the Company's or Parent's certificates of
incorporation and by-laws (including without limitation pursuant
to their directors' and officers' liability insurance) with
respect to claims relating to or arising out of your employment
with the Company, and in the event any action is commenced to
enforce your rights under this Agreement, each party shall bear
its own legal fees and expenses; and provided further, however,
that this is not intended to interfere with your right to file a
charge with the Equal Employment Opportunity Commission ("EEOC")
in connection with any claim you believe you may have
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against any Releasee. However, by signing this Agreement, you
agree to waive any right to recover in any proceeding you may
bring before the EEOC (or any state human rights commission) or
in any proceeding brought by the EEOC (or any state human rights
commission) on your behalf.
You specifically release all claims under the Age Discrimination
in Employment Act ("ADEA") relating to your employment and its
termination.
5. You acknowledge that the payments described in Section 2 above
that you are receiving in connection with the foregoing release
are in accordance with your Employment Agreement.
6. You hereby agree and acknowledge that you shall be bound by and
comply with the restrictive covenants provided in Section 4 of
the Employment Agreement (the "Restrictive Covenants"), and that
such Restrictive Covenants are hereby made part of this Agreement
as if specifically restated herein and that the payments
described in Section 2 above that you are receiving are subject
to and contingent upon your compliance with Restrictive
Covenants.
7. You acknowledge and agree that, notwithstanding any other
provision of this Agreement, if you breach any of your
obligations under this Agreement or any Restrictive Covenant, (a)
you will forfeit your right to receive the payments and benefits
described in Section 2 above (to the extent the payments were not
theretofore paid) and the Company shall be entitled to recover
any payments already made to you or on your behalf, (b) the
Vested Options shall expire as of the date of such breach to the
extent not theretofore exercised and, if exercised as of the date
of such breach, you shall immediately reimburse the Company for
the profit upon exercise (such profit calculated as the
difference between the (i) greater of either the Fair Market
Value (as defined in the Option Plan) of a share of Common Stock
on the date of exercise or the amount paid by the Company to you
per share of Common Stock for the purchase of the shares acquired
upon exercise, and (ii) exercise price, times the number of
options exercised).
8. You hereby agree that the breach of any Restrictive Covenant may
cause the Company to suffer irreparable harm for which money
damages would not be an adequate remedy and therefore, if you
breach a Restrictive Covenant, the Company would be entitled to
temporary and permanent injunctive relief in any court of
competent jurisdiction (without the need to post any bond)
without prejudice to any other remedies under this Agreement or
otherwise.
9. You agree that you will hold in strict confidence proprietary or
Confidential Information (as defined in the Employment
Agreement). It shall not be a violation of this Agreement if you
are compelled to disclose such information pursuant to a
subpoena, court order or similar process; provided that you agree
that, in the event that you are served with legal process or
other request purporting to require you to testify, plead,
respond or defend and/or produce documents at a legal proceeding,
threatened proceeding, investigation or inquiry involving the
Releasees, you will: (1) refuse to provide testimony or documents
absent a subpoena, court order or similar process from a
regulatory agency: (2) within three (3) business days or as soon
thereafter as practical, provide oral notification to the
Company's Executive Vice-President of Human Resources of
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your receipt of such process or request to testify or produce
documents; and (3) provide to the Company's Executive
Vice-President of Human Resources by overnight delivery service a
copy of all legal papers and documents served upon you. You
further agree that in the event you are served with such process,
you will meet and confer with the Company's designee(s) in
advance of giving such testimony or information. You also agree
to cooperate, taking into account your own schedule, fully with
the Releasees in connection with any existing or future
litigation against the Releasees, whether administrative, civil
or criminal in nature, in which and to the extent the Releasees
deem your cooperation necessary. The Company agrees to reimburse
you for your reasonable out-of-pocket expenses incurred in
connection with the performance of your obligations under this
Section 9.
10. This Agreement does not constitute an admission of liability or
wrongdoing of any kind by you or the Company or its affiliates.
11. The terms of this Agreement shall be binding on the parties
hereto and their respective successors, assigns, heirs and
representatives.
12. This Agreement, together with your stock option agreements with
Parent and the Option Plan, constitute the entire understanding
of the Company and you with respect to the subject matter hereof
and supersedes all prior understandings, written or oral. The
terms of this Agreement may be changed, modified or discharged
only by an instrument in writing signed by the parties hereto. A
failure of the Company or you to insist on strict compliance with
any provision of this Agreement shall not be deemed a waiver of
such provision or any other provision hereof. If any provision of
this Agreement is determined to be so broad as to be
unenforceable, such provision shall be interpreted to be only so
broad as is enforceable.
13. This Agreement shall be construed, enforced and interpreted in
accordance with and governed by the laws of the State of New
York.
14. The parties hereto acknowledge and agree that each party has
reviewed and negotiated the terms and provisions of this
Agreement and has contributed to its revision. Accordingly, the
rule of construction to the effect that ambiguities are resolved
against the drafting party shall not be employed in the
interpretation of this Agreement. Rather, the terms of this
Agreement shall be construed fairly as to both parties hereto and
not in favor or against either party.
15. This Agreement may be executed in any number of counterparts and
by different parties on separate counterparts, each of which
counterpart, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together,
shall constitute but one and the same Agreement.
16. You acknowledge that, by your free and voluntary act of signing
below, you agree to all of the terms of this Agreement and intend
to be legally bound thereby.
17. You acknowledge that you have received this Agreement on or
before October 17, 2002. You understand that you may consider
whether to agree to the terms
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contained herein for a period of twenty-one (21) days after the
date hereof. However, the operation of the provisions of Sections
2 through 4 above may be delayed until you execute this Agreement
and return it to the Company and it becomes effective as provided
below. You acknowledge that you have consulted with an attorney
prior to your execution of this Agreement or have determined by
your own free will not to consult with an attorney.
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18. This Agreement will become effective, enforceable and irrevocable
seven days after the date on which it is executed by you (the
"Effective Date"). During the seven-day period prior to the
Effective Date, you may revoke your agreement to accept the terms
hereof by indicating in writing to the Executive Vice-President
of Human Resources your intention to revoke. If you exercise your
right to revoke hereunder, you shall forfeit your right to
receive any of the payments and other benefits provided for
herein, and to the extent such payments or benefits have already
been made, you agree that you will immediately reimburse the
Company for the value of such payments and benefits.
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If the foregoing correctly reflects our understanding, please sign the
enclosed copy of this letter agreement, whereupon it will become a binding
agreement between us.
J. CREW OPERATING CORP.
By: _____________________
David F. Kozel
Executive Vice-President,
Human Resources
AGREED TO AND ACCEPTED:
By:_________________________
Michael Scandiffio
Dated: _________, 2002
Acknowledgment
STATE OF _________________)
ss:
COUNTY OF _______________)
On the __ day of _______, 2002, before me personally came Michael Scandiffio
who, being by me duly sworn, did depose and say that he resides at 3 Smith Ridge
Lane, New Canaan, CT 06840, and did acknowledge and represent that he has had an
opportunity to consult with attorneys and other advisers of his choosing
regarding the Agreement set forth above, that he has reviewed all of the terms
of the Agreement and that he fully understands all of its provisions, including
without limitation, the general release and waiver set forth therein.
__________________________
Notary Public
Date:_____________________
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